Londrina Esporte Clube, Fédération Internationale de Football Association (FIFA)

I. THE PARTIES

1. Londrina Esporte Clube (the “Club” or the “Appellant”) is a professional Brazilian football club affiliated with the Confederação Brasileira de Futebol (the “CBF”), which in turn is affiliated with the Fédération Internationale de Football Association.

2. The Fédération Internationale de Football Association (“FIFA” or the “Respondent”) is the world governing body of Football, whose headquarters are located in Zürich, Switzerland.

V. CAS JURISDICTION AND ADMISSIBILITY OF THE APPEAL

30. In accordance with the Swiss Private International Law Act (Article 186), the CAS has power to decide upon its own jurisdiction.

31. Article R47 of the CAS Code states as follows: “An appeal against the decision of a federation, association or sports-related body may be filed with the CAS if the statutes or regulations of the said body so provide or if the parties have concluded a specific arbitration agreement and if the Appellant has exhausted the legal remedies available to him prior to the appeal, in accordance with the statutes or regulations of that body”.

32. With respect to the Decision, the jurisdiction of the CAS derives from Article 58 of the FIFA Statutes and Article 64 of the FIFA Disciplinary Code. In addition, neither the Appellant nor the Respondent objected to the jurisdiction of the CAS, and both Parties confirmed the CAS jurisdiction when signing the Order of Procedure.

33. It follows that the CAS has jurisdiction to decide on the appeal of the Decision.

34. The grounds of the Decision were notified to the Appellant on 19 February 2018, and the Appellant’s Statement of Appeal was lodged on 12 March 2018, i.e. within the statutory time limit of 21 days set forth in Article R49 of the CAS Code, which is not disputed. Furthermore, the Statement of Appeal and the Appeal Brief complied with all the requirements of Articles

35. It follows that the CAS has jurisdiction to decide on the Appeal and that the Appeal is admissible.

VI. APPLICABLE LAW

36. Article R58 of the CAS Code states as follows: “The Panel shall decide the dispute according to the applicable regulations and, subsidiarily, to the rules of law chosen by the parties or, in the absence of such a choice, according to the law of the country in which the federation, association or sports-related body which has

issued the challenged decision is domiciled or according to the rules of law the Panel deems appropriate. In the latter case, the Panel shall give reasons for its decision”.

37. The Parties agree that the applicable regulations in these proceedings for the purpose of Article R58 of the CAS Code are the rules and regulations of FIFA and, additionally, Swiss law since the present appeal is directed against a decision issued by the FIFA DC applying the rules and regulations of the same.

38. Based on the above, and with reference to the Parties’ submissions, the Panel is satisfied to accept the application of the various regulations of FIFA and, additionally, Swiss law.

VII. MERITS

39. Initially, the Panel notes that the PSC Decision of 27 July 2016 is uncontested by the Parties, according to which, inter alia:

• The Appellant has to pay to ASB FC, within 30 days as from the date of notification of this decision, the amount of 750,000 Brazilian Real.

• If the aforementioned sum is not paid within the stated time limit, interest at a rate of 5% p.a. will fall due as of the expiry of the stipulated time limit, and the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

• The final costs of the proceedings in the amount of CHF 18,000 are to be paid by the Appellant within 30 days as from the date of notification of the present decision as follows:

• The amount of CHF 13,000 has to be paid to FIFA.

• The amount of CHF 5,000 has to be paid directly to ABS FC.

40. It is further uncontested that the Appellant never paid any of these amounts, either in full or in part, and it is also uncontested that the Appellant failed to enter into a payment plan with ASB FC.

41. Based on that the foregoing, on 10 November 2017, the FIFA DC rendered its Decision as follows (main points):

“1. [The Club] is pronounced guilty in failing to comply with the decision passed by the Single Judge of the Players’ Status Committee on 27 July 2016 and is, therefore, in violation of art 64 of the FIFA Disciplinary Code.

2. [The Club] is ordered to pay a fine to the amount of CHF 15.000. The fine is to be paid within 30 days of notification of the present decision. […].

3. [The Club] is granted a final period of grace of 30 days as from the notification of the present decision in which to settle its debt to the creditors, the club Association Sportive Bebe Football Club and FIFA.

4. If payment is not made by this deadline, the creditor may demand in writing from the secretariat to the FIFA Disciplinary Committee that six (6) points be deducted from the debtor’s first team in the domestic league championship. Once the creditor has filed his request, the points will be deducted automatically without a further formal decision having to be taken by the FIFA Disciplinary Committee. The order to implement the points deduction will be issued on the association concerned by the secretariat to the FIFA Disciplinary Committee.

5. If [the Club] still fails to pay the amount due even after the deduction of points in accordance with point iii./4 above, the FIFA Disciplinary Committee will decide on a possible relegation of the debtor’s first team to the next lower division.

6. As a member of FIFA, [the CBF] is reminded of its duty to implement this decision and, if so requested, provide FIFA with proof that the points have been deducted. If [the CBF] does not comply with this decision despite being ordered to do so, the FIFA Disciplinary Committee will decide on appropriate sanctions on the member, this can lead to the expulsion from all FIFA competitions.

7. The costs of these proceedings amounting to CHF 2,000 are to be borne by [the Club] and shall be paid according to the modalities stipulated under point iii./2 above”.

42. In relation to this, at dispute over a number of issues has been raised by the Parties. In essence, the Appellant submits that the Decision is to be declared null and void due to the fact that the Appellant was under insolvency proceedings when the matter was decided upon by the FIFA DC.

43. Furthermore, and in any case, the FIFA DC failed to take into consideration mandatory principles set out in the FIFA Disciplinary Code and, in particular, Swiss law, and the FIFA DC also failed to take into consideration the exceptional circumstances of this case, which led to the imposition of disproportional sanctions on the Appellant.

44. Thus, the main issues to be resolved by the Panel are:

A) What are the legal consequences in relation to the present dispute, if any, of the Appellant being under judicial administration?

B) In the event that the answer to question A) does not lead to the Decision being declared null and void, did the Respondent comply with the applicable rules and regulations during the process, and do the imposed sanctions have the necessary legal basis and proportionality?

A. What are the legal consequences in relation to the present dispute, if any, of the

Appellant being under judicial administration?

45. The Panel initially notes that Art. 107 of the FIFA Disciplinary Code states as follows:

“Proceedings may be closed if: a) The parties reach an agreement; b) A party declares bankruptcy; c) They become baseless”.

46. Furthermore, the Panel notes that it is uncontested by the Parties that by Order of 27 October 2006, the Labour Court of Londrina decided to put the Appellant under the administration of a judicial administrator, who from that moment assumed the obligation to supervise the assets of the Appellant.

47. It follows from the said Order from the Labour Court of Londrina, that, inter alia, “It’s now set forth that, from this moment on, no administrative act of the [Appellant] shall be performed without this administrator’s authorization, who will be vested with authority, also to administrate current accounts and any other financial availabilities of the [Appellant]”. Furthermore, the judicial administrator needs the authorisation from a professional judge to make any payment on behalf of the Appellant.

48. Based on the facts of the case and the Appellant’s submissions, the Panel finds that it is up to the Appellant to demonstrate the applicability of the Order from the Labour Court of Londrina and to discharge the burden of proof to establish that the judicial administration, under which the Appellant was and still is subject, is equivalent to a declaration of bankruptcy, which can justify the application of Art. 107 of the FIFA Disciplinary Code, or to discharge the burden of proof to establish that the Appellant, due to the judicial administration, in any other way was legally prevented from fulfilling its obligations pursuant to the PSC Decision.

49. In doing so, the Panel adheres to the principle established by CAS jurisprudence that “in CAS arbitration, any party wishing to prevail on a disputed issue must discharge its burden of proof, i.e. it must meet the onus to substantiate its allegations and to affirmatively prove the facts on which it relies with respect to that issue. In other words, the party which asserts facts to support its rights has the burden of establishing them (…). The Code sets forth an adversarial system of arbitral justice, rather than an inquisitorial one. Hence, if a party wishes to establish some fact and persuade the deciding body, it must actively substantiate its allegations with convincing evidence” (e.g. CAS 2003/A/506, para. 54; CAS 2009/A/1810 & 1811,

50. However, the Panel finds that the Appellant has failed to discharge the burden of proof to establish that the judicial administration, to which the Appellant was and still is subjected, is equivalent to a declaration of bankruptcy, which can justify the application of Art. 107 of the FIFA Disciplinary Code, or to discharge the burden of proof to establish that the Appellant, due to the judicial administration, in any other way was legally prevented from fulfilling its obligations pursuant to the PSC Decision.

51. The Panel notes initially in this connection that it is evident from the wording of the Labour Court Order that the judicial administration cannot, from a legal point of view, be recognised as equivalent to a declaration of bankruptcy.

52. On the contrary, the Panel merely regards the judicial administration as an administration scheme under the supervision of the judicial administrator in consultation with a professional judge that is intended to safeguard the interests of the Appellant’s creditors in connection with the continued operations of the Appellant.

53. The Panel does not dispute that the Labour Court Order apparently makes it mandatory to obtain explicit authorisation for payments from the judicial administrator and a professional judge, but this is not tantamount to claiming that the Appellant is legally prevented from paying its creditors, notwithstanding that payment is apparently subject to prior authorisation.

54. This assessment is supported by the testimony of Ms Suzuki, who said – in her capacity as the Appellant’s in-house lawyer – that the Appellant had requested the judicial administrator in early 2018 to pay the amounts covered by the PSC Decision and that she expected an authorisation for these payments to be issued within the next six months. Payment is therefore possible, but requires a formal prior authorisation.

55. Moreover, the Panel notes that the Appellant, in the period since the Labour Court Order was pronounced against the Appellant in October 2006, has continued its operations, and further takes note that the transfer agreements which form the basis for the claim lodged by ASB FC against the Appellant were both concluded in the period after the Appellant came under judicial administration.

56. Notwithstanding that the transfer agreements in question, according to Ms Suzuki’s testimony, had apparently not been formally authorised by the judicial administrator, and the fact that the Appellant is apparently struggling with financial difficulties notwithstanding, the Appellant is nonetheless obliged to fulfil its contractual obligations in good faith in accordance with the principle of pacta sunt servanda. Hence, the Appellant’s possible financial difficulties are not a justification for failing to pay its debt to ASB FC.

57. The Panel further notes in this context that the Appellant has in no way explained why a request for payment of the Appellant’s debt to ASB FC was not submitted to the judicial administrator at a much earlier stage or why no attempt was apparently made to negotiate a payment plan with the said club, given the fact that ABS FC’s claim arose in connection with the Player’s transfer to Cruzeiro as far back as June 2015.

58. In the light of these circumstances alone, the Panel thus finds that the contents of the Labour Court Order are not of a nature to justify the application of Art. 107 of the FIFA Disciplinary Code, which provision is not exclusively intended to protect debtors with financial problems against the legitimate financial claims of creditors.

59. Furthermore, the Panel finds that the Appellant cannot in any other manner be assumed to be or have been legally prevented from fulfilling its financial obligations as stipulated in the PSC Decision.

60. Since it is also undisputed during the proceedings that the Appellant has neither settled its debts with ASB FC, nor has entered into a payment plan with a view to such settlement, the Panel concludes that the FIFA DC was fully entitled to apply Art. 64 of the FIFA Disciplinary Code to the present case of non-compliance.

B. Did the Respondent comply with the applicable rules and regulations during the

process, and do the imposed sanctions have the necessary legal basis and proportionality?

61. Art. 64 of the FIFA Disciplinary Code states, inter alia, as follows:

“1. Anyone who fails to pay another person (such as a player, a coach or a club) or FIFA a sum of money in full or part, even though instructed to do so by a body, a committee or an instance of FIFA or a subsequent CAS appeal decision (financial decision), or anyone who fails to comply with another decision (non-financial decision) passed by a body, a committee or an instance of FIFA, or by CAS (subsequent appeal decision): a) will be fined for failing to comply with a decision; b) will be granted a final deadline by the judicial bodies of FIFA in which to pay the amount due or to comply with the (non-financial) decision; c) (only for clubs) will be warned and notified that, in the case of default or failure to comply with a decision within the period stipulated points will be deducted or relegation to a lower decision ordered A transfer ban may also be pronounced. d) […]. […] 3. If points are deducted, they shall be proportionate to the amount owed. […]”.

62. Furthermore, Art. 15, par. 2, of the same Code states as follows:

“The fine shall not be less than CHF 300, or in the case of a competition subject to an age limit not less than CHF 200, and not more that CHF 1,000,000”.

63. The Panel initially notes that the FIFA DC is not allowed to analyse a case decided by the relevant body as to substance, but has been assigned with the sole task of analysing whether the debtor complied with a final and binding decision.

64. In the case under review, it can be regarded as undisputed that the Appellant has failed to pay a sum of money to another club, even though instructed to do so by the FIFA Players’ Status Committee, for which reason the basic conditions for applying Art. 64 of the FIFA Disciplinary Code have been met.

65. However, the Appellant submits in essence that, by not rendering a decision with the necessary grounds and in predictable manner, the FIFA Disciplinary Committee violated mandatory rules set out in the FIFA Statutes and the FIFA Disciplinary Code as well as principles of

Swiss law. Furthermore, the potential deduction of six points in this matter clearly ignores any premise of proportionality and has no legal grounds whatsoever, and the Disciplinary Committee furthermore failed to take into consideration the exceptional circumstances caused by the judicial administration of the Appellant.

66. With regard to the alleged non-compliance with the “predictable test”, the Panel initially notes that according to the principle of the association’s autonomy, the existence of which has been confirmed by the CAS jurisprudence (CAS 2008/A/1583 & 1584) under Swiss law, the right of associations to impose sanctions or disciplinary measures on clubs is not the exercise of a power delegated by the State, rather it is the expression of the freedom of associations and federations to regulate themselves. Indeed, when passing a decision, the FIFA disciplinary proceedings are meant to protect the essential objectives of FIFA, such as taking all appropriate steps to prevent infringements of the Statutes, regulations or decisions of FIFA or of the Laws of the Game (Art. 2 of the FIFA Statutes).

67. There is indeed general consensus that certain contents of the principle of nulla poena sine lege are also applicable to disciplinary provisions and proceedings in the context of sports organisations. The CAS, in particular, has adopted certain contents of this principle with regard to disciplinary proceedings and regulations of sports organisations by establishing a socalled “predictability test”.

68. The Panel agrees with FIFA that disciplinary provisions and proceedings of FIFA must be considered to be in line with the principle of nulla poena sine lege if:

• The relevant regulations and provisions emanate from duly authorised bodies.

• The relevant regulations and provisions have been adopted in constitutionally proper ways.

• The relevant regulations and provisions are not the product of an obscure process of accretion.

• The relevant regulations and provisions are not mutually qualifying or contradictory.

• The relevant regulations and provisions are not able to be understood only on the basis of the de facto practice over the course of many years of a small group of insiders.

• There is a clear connection between the incriminated behavior and the sanction imposed.

69. In the matter at stake, the Appellant never contested that the FIFA Disciplinary Code emanates from a duly authorised body and was adopted in a fair manner and in a transparent way complying with the rules of the association (Arts. 60 et seq. of the Swiss Civil Code). The Appellant has neither claimed that the FIFA Disciplinary Code cannot be understood generally or that such rules are contradictory.

70. In the opinion of the Panel, it must have been clear to the Appellant that it was not fulfilling its financial obligations towards ASB FC, thus breaching the disciplinary regulations, and that an appropriate sanction would therefore be imposed.

71. In order for the principle of predictability and legality to be respected, it is not necessary for the sanctioned stakeholder to know in advance the exact sanction that will be imposed. On the contrary, the Panel agrees with a former Panel, which has clearly explained that “Such fundamental principles are satisfied whenever the disciplinary rules have been properly adopted, describe the infringement and provide, directly or by reference, for the relevant sanction. The fact that the competent body applying the FIFA DC has the discretion to adjust the sanction mentioned in the rules deemed applicable to the individual behavior of a player breaching such rules is not inconsistent with those principles” (CAS

72. Furthermore, it is worth noting that the Swiss Federal Supreme Court has deemed as lawful the system of sanctions used by the Respondent in the event of non-compliance with its decisions or those of the CAS, which have been applied in the present case (decision of the Swiss Federal Supreme Court dated 5 January 2007, ATF 4P.240/2006).

73. The Panel finds in this connection that a decision cannot be required to contain an elaborate list of all deliberations made by the legal body when deciding on sanctions as long as the sanctions fall within an appropriate and predictable framework and it is possible to establish with sufficient certainty the considerations and deliberations providing the basis for the decision and the sanctions imposed.

74. Therefore, in view of above, the Panel finds that the FIFA Disciplinary Committee has not violated the FIFA Statutes, the FIFA Disciplinary Code or any provisions of Swiss law since the system and procedure concerning the application of Art. 64 of the FIFA Disciplinary Code is solid and lawful.

75. With regard to the disproportionally of sanctions imposed on the Appellant, the Panel agrees with the Respondent’s position that the CAS shall amend a disciplinary decision of a FIFA judicial body only in cases in which it finds that the relevant FIFA judicial body exceeded the margin of discretion accorded to it by the principle of association autonomy, i.e. only in cases in which the FIFA judicial body concerned must be held to have acted arbitrarily (cf. RIEMER H. M., Berner Kommentar, Die Vereine, no 230 on art. 70). This is, however, not the case if the Panel merely disagrees with a specific sanction, but only if the sanction concerned is to be considered as evidently and grossly disproportionate to the offence (CAS 2014/A/3562).

76. The FIFA disciplinary authorities always adopt a case-by-case approach, and analyze and take into account all the specific circumstances of each case as foreseen under art. 39 par. 4 of the FIFA Disciplinary Code and as confirmed by the CAS: “similar cases must be treated similarly, but dissimilar cases could be treated differently” (cf. CAS 2012/A/2750).

77. In connection with decisions on sanctions to be imposed, it is essential to mention by way of explanation that imposing financial sanctions above a certain limit would be counterproductive. Indeed, it must be underlined that it is not the intention of the FIFA Disciplinary Committee or the logic behind art. 64 of the FIFA Disciplinary Code to impose sanctions that engender additional financial difficulties for the debtor which might compromise the payment of the outstanding amount due to another football stakeholder subject to enforcement.

78. In this sense, and in line with the above-mentioned general considerations, the Panel takes into account the fact that when deciding upon the possible sanctions to be imposed in casu, the FIFA Disciplinary Committee always takes into consideration the outstanding amount due and decides in line with the longstanding jurisprudence of the FIFA Disciplinary Committee, which has been repeatedly confirmed by the CAS (cf. inter alia CAS 2012/A/2730).

79. In this сase, the outstanding amounts owed by the Appellant are BR 750,000 (approx. EUR 184,000) and CHF 5,000 (due to ASB FC) and CHF 13,000 (due to FIFA).

80. As a consequence, the FIFA Disciplinary Committee considered that, in the present case, a fine in the amount of CHF 15,000 would be appropriate and proportionate in the light of the amount of the outstanding debt. The purpose of the fine is to serve as a deterrent to parties who do not wish to comply with decisions of, amongst others, the FIFA bodies (CAS

81. Based on the evidence of the case and the FIFA jurisprudence submitted by FIFA during these proceedings, the Panel finds itself convinced that the Decision was passed in accordance with the overriding principle of proportionality as well as in line with the FIFA Disciplinary Committee’s longstanding practice, although the existence of certain earlier decisions that provide otherwise cannot be denied.

82. With regard to the period of grace granted to the Appellant, the Panel recalls that the FIFA Disciplinary Committee’s margin of discretion foreseen under Art. 39, par. 1, of the FIFA Disciplinary Code refers not only to the imposition of the pertinent fines and points to be deducted, but also to the establishment of the conditions under which such sanctions are to be served. Undeniably, the final period of grace that the FIFA Disciplinary Committee may grant in accordance with Art. 64, par. 1(b), of the FIFA Disciplinary Code falls under such scope of discretion and, therefore, the imposition of a 30-day deadline also demonstrates the case-by-case analysis that was carried out in this case and the proportionality of the disciplinary measures imposed.

83. Furthermore, the Panel would like to point out that the Appellant has had knowledge of ASB FC’s claim since 2015, but that the Appellant – during this period of time – has neither paid the outstanding amount nor made any attempt to negotiate a payment plan in this regard.

84. With regard to the potential imposition of the six-point deduction from the Appellant in case of its continued failure to pay the outstanding amount due within the period of grace, the Panel stated already that such sanction was imposed by taking into account the outstanding amount due. This has indeed been the longstanding practice of the FIFA Disciplinary Committee and is in accordance with the FIFA Disciplinary Code.

85. The Panel agrees with FIFA that in the present case a six-point deduction is to be considered an appropriate sanction in line with the FIFA Disciplinary Committee’s longstanding practice,

especially taking into account the outstanding amount that has been unlawfully withheld from the ASB FC.

86. Finally, the Panel would like to underline the fact that the CAS has regularly confirmed the legality and the proportionality of the enforcement system created by the FIFA and the sanctions related thereto, in particular the deduction of points. In this sense, it should be noted that the CAS has regularly confirmed that the wording of Art. 64 of FDC provides for a clear statutory basis and precisely reflects the principle of proportionality: a first decision may only include a fine and the deduction of points since it is the less severe and therefore proportionate sanction for a first infringement of the obligation to comply with a FIFA body decision. However, in case of continued failure to comply with the said decision, a more severe sanction must be possible (i.e. relegation to a lower division), in order to take account of the continued disrespect of the FIFA’ judicial authority (cf. inter alia CAS 2005/A/944; CAS 2011/A/2646;

87. The Panel finds that the deduction of points is certainly not one of the most severe sanctions that the FIFA Disciplinary Committee can impose on its stakeholders, but it agrees that relevant sporting and financial consequences may arise from its implementation. However, the Appellant can avoid the imposition of the point deduction by paying the debt owed, given that the enforcement of such sanction may only be requested once the final deadline of 30 days granted in the Appealed Decision has elapsed.

88. The Appellant is also free to negotiate a payment plan with the SB FC (who is free to accept it or not), which would have as a consequence the suspension of the disciplinary proceedings.

89. In conclusion, the Panel finds that the disciplinary measures imposed by the FIFA Disciplinary Committee in the Decision have been proven to be proportionate to the offence committed and, what is more, they were imposed in compliance with the FIFA Disciplinary Code and the FIFA Disciplinary Committee’s longstanding jurisprudence, for which reason all arguments brought forward by the Appellant as regards the proportionality of the Appealed Decision are rejected.

90. Furthermore, the fact that the Appellant was and still is under judicial administration does not constitute exceptional circumstances which, in the matter at hand, could justify less severe sanctions.

91. To conclude, therefore, the Panel finds that in this case, and given the specific circumstances surrounding it, the Disciplinary Committee of the FIFA was correct in imposing the disciplinary sanctions on the Appellant, i.e. to continue the enforcement of the CAS Award according to Article 64 of the FIFA Disciplinary Code. Consequently, the Panel dismisses the Appellant’s appeal.

VIII. SUMMARY

92. Based on the foregoing and after taking into consideration all evidence produced and all arguments made, the Panel finds that the Appellant has not adequately discharged the burden of proof to establish that the judicial administration under which the Appellant was and still is subject is not equivalent to a declaration of bankruptcy, which can justify the application of Art. 107 of the FIFA Disciplinary Code, nor discharged the burden of proof to establish that the Appellant, due to the judicial administration, in any other way was legally prevented from fulfilling its obligations pursuant to the PSC Decision.

93. Furthermore, the Panel finds that the Respondent complied with the applicable rules and regulations during the proceedings and that the sanctions imposed on the Appellant pursuant to the Decision have the necessary legal basis and proportionality.

94. The Appeal filed against the Decision is therefore dismissed.