Jarmo Ahjupera v. Ujpest 1885 FC

II. FACTUAL BACKGROUND — A. Background Facts

3. Below is a summary of the relevant facts and allegations based on the parties’ written submissions. Additional facts and allegations found in the parties’ written submissions and evidence may be set out, where relevant, in connection with the legal discussion that follows. While the Sole Arbitrator has considered all the facts, allegations, legal arguments and evidence submitted by the parties in the present proceedings, it refers in his Award only to the submissions and evidence he considers necessary to explain his reasoning.

4. On 1 July 2013, the Player signed an employment contract with Ujpest FC Kft (“Ujpest FC”), which was valid until 30 June 2015 (the “Ujpest FC Contract”) and provided inter alia the following:

“I. THE SUBJECT OF THE CONTRACT

1. Based on this present contract, the Employer employs Employee to work in the position of a professional athlete (football player) - FEOR 3716. During the term of this contract, the Employer exclusively possesses the right of disposition of Employee’s registration.

(…)

II. THE TERM OF THE CONTRACT

The Employer and Employee agree that Employer employs Employee for a specified term from the day of signing present contract to 30 June 2015 in the framework of an employment relationship under this present specified-term work contract with the consideration that the condition for this present contract to enter into force is that according to the findings of the medical examination specified by the Employer, the Employee is suitable for professional competing as a professional football player.

(…)

IV. REMUNERATION

a) The Employer and the Employee agree that the Employee’s monthly gross salary until 30 June 2014 the sum which equals net 7,000 EUR, in words a monthly gross salary equivalent to seven thousand Euros net, from 01 July 2014 to 30 June 2015 is net 7,500 EUR, in words a monthly gross salary equivalent to seven thousand five hundred Euros net, the sums specified above are paid by the Employer to the Employee until

day 10 of the month following the month concerned and include the wage supplements specified in Articles 140-142 of the Labour Code.

(…)

VI. TERMINATION AND CANCELLATION OF THE CONTRACT

1. This present contract is terminated at the end of the term specified in Point II.

(…)

6. The Parties are entitled to terminate this present contract by mutual consent prior to the term of the contract specified in Point II.

(…)

Annex I: Premium Regulation

a) If the Employee is on the referee’s sheet in the adult, eleven-a-side first division championship (NB/1) matches or Hungarian Cup matches played by the football team of UJPEST FC and if on these matches the football team is successful, which means that they win the match or play a draw, based on the point or points awarded, the Employee is entitled to net 50,000 HUF/points as premium, wh ich shall be paid by the Employer to the Employee in a single sum in aggregate form during the coming month”.

5. There is disagreement between the parties as to the facts relevant to the contractual dispute at issue here. The Sole Arbitrator will refer to such disputed matters explaining what the position of each party is, whenever possible.

6. On 16 October 2013, the Player suffered an injury during a Hungarian League Cup match and had to undergo treatment. Ujpest FC referred the Player to a hospital in Antwerp, Belgium, where he was diagnosed with inflamed thigh muscle injury and hormone injection therapy was prescribed. The Player was instructed to resume practice after a few weeks and returned to Budapest. However, the Player was still unable to participate in practice until 12 January 2014, when the team resumed practice sessions after the winter break. As a result, he was prescribed a new course of treatment by Ujpest FC.

7. On 25 January 2014, the Player participated in a preparation match and after that continued his light practicing sessions under the supervision of the medical staff of Ujpest FC.

8. In February 2014, as the Player was still not fit to play, the President of Ujpest FC decided that the Player should undergo a second medical examination in Belgium. The doctors’ assessment was that the Player’s thigh muscle injury required operation and rehabilitation time.

9. On 8 March 2014, the Player returned to Budapest and together with the medical staff of Ujpest FC it was decided that the Player was to undergo surgery in Estonia. Ujpest FC approved the

Player’s decision and allowed him time for surgery and rehabilitation until the beginning of the 2014-2015 season.

10. On 25 March 2014, the President of Ujpest FC, Mr Roderick Duchâtelet, requested an emergency meeting with all the players of the team. According to the Player, during that meeting he and his teammates were informed that Ujpest FC was facing severe financial probl ems and was in the verge of bankruptcy. The Player further argues that, in order for Ujpest FC to avoid relegation and liquidation, a decision was made to transfer the license and assets of Ujpest FC, including all the players, to a different legal entity under the name Ujpest 1885 Futball Kft (“Ujpest 1885” or the “Club”). To secure this transfer, the Player and his teammates would have to sign termination contracts of their employment relationships, thus freeing Ujpest FC from any liability and, at the same time, sign new employment contracts with Ujpest 1885, which would allegedly include identical terms as their previous contracts with Ujpest FC. On the other hand, Ujpest 1885 argues that in the said meeting “most of the players of Ujpest FC decided to sign a contract with Respondent and some players, as they were going to be ‘free status players’ decided to go on another path”.

11. On the same day on 25 March 2014, the Player signed a resignation letter (the “Resignation”) with the following content:

“Dear UJPEST FC Kft., With regard to the liquidation of UJPEST FC Kft., I hand in my immediate resignation based on Article 8(6) of Act 1 of 2004 on Sports. My present statement shall enter into force on the starting date of the liquidation of UJPEST FC Kft.

I state that I do not have any claims, requirements towards UJPEST FC Kft. in addition to my salary due by the date when the liquidation enters into force.

Budapest 25 March 2014”.

12. The Player submits that on the same day he also signed an employment contract with Ujpest 1885 (the “Ujpest 1885 Contract”), allegedly containing the same terms and provisions as the Ujpest FC Contract and with the same expiration date. Ujpest 1885 disputes that the Player requested, was offered, and eventually signed any such contract.

13. The Player further asserts that Ujpest 1885 refused several times to provide him with a copy of the “Ujpest 1885 Contract”, on the basis of various excuses and over a period of several weeks, following its conclusion on 25 March 2014.

14. On 16 April 2014, Ujpest 1885 transferred the amount of HUF 2,162,439 (which is equivalent to a little over EUR 7,000 in the HUF/EUR exchange rate of April 2014) to the Player’s bank account.

15. On 9 May 2014, Mr Duchâtelet wrote a letter to the Club Licensing Committee of the Union of European Football Associations (“UEFA”) as the owner of Ujpest FC, in order to “ensure

its continuity”. In such letter, Mr Duchâtelet claims that he was forced to create “a brand new company” to avoid the consequences of the actions of the previous owner of the Ujpest FC, who was allegedly facing numerous lawsuits and police investigation. He also states that:

“The players and staff were all offered a new contract by the new company, and thus we could continue to play in the Hungarian league. From the side of the HFF, the players’ licenses were adapted, the competi tion points were kept and so on”.

16. On 25 June 2014, the Player signed an employment contract with Nomme JK Kalju, an Estonian football club. According to the FIFA Transfer Matching System (“TMS”), the termination of the Player’s contract with Ujpest FC was uploaded in the section “Proof of last contract end date”.

B. Proceedings before the FIFA Dispute Resolution Chamber

17. On 24 March 2016, the Player lodged a claim with the Dispute Resolution Chamber of FIFA (the “FIFA DRC”) against Ujpest 1885, requesting payment of (i) EUR 111,000 corresponding to the monthly remuneration he was supposed to receive from Ujpest 1885 for the period between April 2014 until June 2015 under the “Ujpest 1885 Contract”, and EUR 15,322 corresponding to bonuses under the annex of the “Ujpest 1885 Contract”, i.e. a total of EUR 126,322, (ii) EUR 8,211 corresponding to interest for late payment, (iii) EUR 30,000 corresponding to non-material damage, and (iv) reimbursement of his costs and legal fees. The Player submitted that he still does not have a copy of the “Ujpest 1885 Contract”.

18. Ujpest 1885, by way of its response, rejected the Player’s claim and submitted that (i) the Player had freely agreed to the termination of the Ujpest FC Contract and (ii) the Player was not deceived and no employment contract was ever signed between Ujpest 1885 and him.

19. On 24 November 2016, the FIFA DRC rendered its decision (the “Appealed Decision”), by means of which it rejected the Player’s claim.

20. On 8 March 2017, FIFA communicated to the parties the grounds of the Appealed Decision, following a request of the Player, which, inter alia, determined the following:

“9. In view of this dissent between the parties in respect of the basic question as to whether or not an employment contract between them had been concluded, the members of the Chamber firstly referred to art. 12 par. 3 of the Procedural Rules, according to which any party claiming a right on the basis of an alleged fact shall carry the respective burden of proof. The application of the said principle in the present matter led the members of the Chamber to conclude that it was up to the Claimant to prove that the employment contract, on the basis of which he claims compensation for breach of contract from the Respondent, indeed existed.

10. Having stated the above, the DRC recalled that the Claimant maintained that he was unable to provide a copy of the contract allegedly signed with the Respondent, since the contract was allegedly collected by it and not returned to him. However, the Claimant held that indeed a contract was concluded with the

Respondent, as on 16 April 2014, the Respondent paid an amount to him via bank transfer. Moreover, to support his allegations regarding the events of 25 March 2014, and in order to prove that the alleged employment contract was concluded with the Respondent, the Claimant submitted several written testimonies of other players, text message conversations he had with his agent and enclosed a photograph of a contract allegedly signed on that same date between another player and the Respondent.

11. In this regard, the Chamber turned its attention to the payment made on 16 April 2014, which the Claimant maintained to be a proof that a contract was concluded with the Respondent, whereas the Respondent held that such payment was made to the Claimant due to an agreement between Ujpest FC and the Respondent, as Ujpest FC could not perform the payments any more. In this respect, the Chamber acknowledged that the relevant document presented by the Claimant in support of his position, stated that on 16 April 2014 “Ujpest 1885 Futball FFT” deposited Hungarian Forints HUF 2.162.439.00, as “2014.03 salary”. Consequently, the Chamber concluded that this document refers to a payment for the month of March 2014, and therefore does not substantiate the Claimant’s allegation that such payment was made on the basis of the alleged employment contract between the parties, nor does it prove the existence of such alleged contract.

12. Furthermore, the Chamber took note of the other evidence submitted by the Claimant, namely, written testimonies of other players, text message conversations he had with his agent, as well as the photograph of a contract allegedly signed on that same date between another player and the Respondent. In this respect, the DRC underscored that the probative value of the testimonies of other players and the text conversation held with his agent is reduced in view of the fact that they consist in personal statements that may be subject to impartiality. Moreover, in respect to the photograph of a contract allegedly signed on that same date between another player and the Respondent, the DRC pointed out that this cannot indisputably lead to the conclusion that the parties indeed entered into an employment contract, since said alleged contract refers to another player.

13. Having duly taken note of the aforementioned documentation presented by the Respondent, the members of the Chamber held that in order for the Chamber to be able to assume that the Claimant and the Respondent had indeed been bound through a contractual relationship with the terms as described by the Claimant, it had to be established, beyond doubt, by documentary evidence, that the said parties had indeed entered into a respective labour agreement, and, if so, under which terms. In general, the members of the Chamber held that they could not assume that an employment contract had been concluded by and between parties simply based on circumstances, which, in general, may be likely but are not certain to indicate the signing of a contract. In addition, the members of the Chamber agreed that the Dispute Resolution Chamber must be very careful with accepting documents, other than the employment contract, as evidence for the conclusion of a contract.

14. In respect of the foregoing, the members of the Chamber had to conclude that the documents presented by the Claimant did not prove beyond doubt that the Respondent and the Claimant had validly entered into an employment contract.

15. What is more, even if it would have been possible to establish on the basis of the documents on file, other than an employment contract, that the parties had entered into a labour agreement, the Chamber wished

to highlight that it would need to be in possession of such labour agreement in order to be able to properly assess the claim of the Claimant.

16. As a consequence, the Chamber decided that, since the Claimant had not been able to prove beyond doubt than an employment contract had validly been concluded between himself and the Respondent, there was no possibility for the Chamber to enter into the question whether or not such alleged employment contract had been breached.

17. Furthermore, and for the sake of completeness, the members of the Chamber highlighted that the Claimant had waited for almost two years before lodging a claim in front of FIFA and that in accordance with the information contained in the TMS, the termination of his contract with Ujpest FC was uploaded as “Proof of last contract end date” in the corresponding transfer instruction with the Estonian club, Nomme JK Kalju, therefore, apparently manifesting, by doing so, his satisfaction with the situation.

18. All the above led the members of the Chamber to conclude that the claim of the Claimant has to be rejected, due to its lack of contractual basis

(…)”.

III. PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

21. On 29 March 2017, the Player submitted a statement of appeal in accordance with Articles R47 and R48 of the Code of Sports-related Arbitration (the “Code”) to the Court of Arbitration for Sport (the “CAS”), challenging the Appealed Decision.

22. With its statement of appeal, the Appellant also requested that his appeal be submitted to a Sole Arbitrator in accordance with Article R50 of the Code.

23. On 5 April 2017, the Appellant filed a request for legal aid, seeking assistance for CAS arbitration costs and for his own costs and those of witnesses in connection with a potential hearing.

24. On 10 April 2017, the Appellant filed his appeal brief making the following prayers for relief:

“The Claimant requests the CAS to accept his claims against Ujpest 1885. The Claimant requests the CAS to order the Respondent to pay the following monetary compensation:

1. Remuneration and bonuses under the Contract in the amount of 126,322 euros;

2. Interest for late payment in the amount of 8,211 euros;

3. Compensation for non-material damage in the amount of 30,000 euros.

The Claimant requests the Chamber to order Ujpest 1885 to pay the costs of the proceedings. The Claimant requests the Chamber to order Ujpest 1885 to reimburse him for his attorney fees. The Claimant will submit the exact amount of the costs of the proceedings during the proceedings”.

25. On 12 April 2017, the International Council of Arbitration for Sport granted the Appellant’s request for legal aid.

26. On 18 April 2017, the CAS Court Office informed the parties that, since the Respondent did not comment on the Appellant’s request that the case be heard by a Sole Arbitrator, it would be for the President of the CAS Appeals Arbitration Division, or her Deputy, to decide on that issue.

27. On 27 April 2017, the Respondent filed its answer in accordance with Article R55 para. 1 of the Code requesting the CAS to:

“1. Dismiss the Appeal of the Appellant.

2. Condemn the Appellant to the payment of the whole CAS administration costs and Panel fees.

3. Fix a sum to be paid by the Appellant to the Respondent in order to cover its legal cost in the p rovisional amount of CHF 15,000”.

28. On 9 May 2017, the Respondent informed the CAS Court Office that it did not wish a hearing to be held in this matter.

29. On 10 May 2017, the Appellant wrote to the CAS Court Office stating that he “leaves the decision whether to hold a hearing on the court’s discretion”. He further stated that, as he had not yet received the Respondent’s answer by courier, he was not able to assess whether there is a need for a hearing. However, he elaborated that “[t]here is most likely no need for a hearing if the court grants in that case the Claimant a chance to rebut the Respondent’s false statements and appoints the Claimant a reasonable deadline to submit additional arguments and exhibits”.

30. On 11 May 2017, the CAS Court Office informed the parties that the case was to be heard by a Sole Arbitrator and that Mr Sofoklis Pilavios, Attorney-at-Law in Athens, Greece, was appointed as such by the Deputy President of the CAS Appeals Arbitration Division.

31. On 19 May 2017, the CAS Court Office informed the parties that the Sole Arbitrator deemed himself sufficiently well-informed to decide this matter based solely on the parties’ submissions, without a hearing, according to Article R57 of the Code. However, on behalf of the Sole Arbitrator, the CAS Court Office invited the Appellant, to the extent that he deemed it necessary, to file a reply (i) to the Respondent’s request for security for costs (item 3 of the prayers for relief included in the Respondent’s answer of 27 April 2017) and (ii) to the answer in general.

32. On 7 June 2017, the Appellant filed his reply, which included a reply to the Respondent’s answer, a request for the production of the minutes of a Hungarian court hearing in the case Z. v. Ujpest 1885 and a request for the dismissal of the Respondent’s request for security for costs.

33. On 23 June 2017, the Respondent filed its rejoinder requesting the dismissal of the appeal and the dismissal of the Appellant’s request for the production of the minutes of the court hearing in the case Z. v. Ujpest 1885. The Respondent further challenged the decision of the Board of the International Council of Arbitration for Sport (“ICAS”) of 12 April 2017, to grant the Appellant’s request for legal aid, by submitting additional evidence to disprove the Appellant’s financial inability to cover the expenses and costs of this arbitration. In this respect, the Respondent also requested that CAS order the Appellant to disclose several documents related to the Appellant’s financial situation.

34. On 7 July 2017, the CAS Court Office also issued an order of procedure, which was signed and returned to the CAS by both parties.

35. On 17 July 2017, the Sole Arbitrator issued an order on the Respondent’s request for security for costs, its operative part providing that:

“1. The Request for Security for Costs filed by Ujpest 1885 Futball Kft. on 27 Ap ril 2017 in the matter CAS 2017/A/5051 Jarmo Ahjupera v. Ujpest 1885 Futball Kft. is dismissed.

2. The costs of the present order shall be determined in the final award or in any other final disposition of this arbitration”.

36. On 8 August 2017, the CAS Court Office informed the parties that their respective requests for disclosure of documents (i.e. the Appellant’s request of 7 June 2017 and the Respondent’s request of 23 June 2017) were dismissed, the reasons of the dismissal to be set out in the final arbitral award.

IV. SUBMISSIONS OF THE PARTIES

37. The following outline of the parties’ positions is illustrative only and does not necessarily comprise every submission advanced by the parties. The Sole Arbitrator has nonetheless carefully considered all the submissions made by the parties, whether or not there is specific reference to them in the following summary.

38. The Appellant’s submissions, in essence, may be summarized as follows:

- On 1 July 2013, Ujpest FC hired the Appellant as a professional football player and the parties concluded an employment contract which was valid until 30 June 2015. The contract provided for a net monthly salary of the Appellant in the amount of EUR 7,000 until 30 June 2014 and EUR 7,500 until 30 June 2015.

- In early 2014 there were rumours on the bad financial situation of the team, which were confirmed by a press conference of the president of Ujpest FC, Mr Duchâtelet on 17 March 2014.

- On 25 March 2014, all the players were called to an emergency meeting, where they were informed by Mr Duchâtelet that the club was facing financial problems and, in order to avoid the disqualification and relegation of the team into a lower category, the solution was to create another legal entity under the name Ujpest 1885 Futball Kft., which was to take over all the activities and assets of Ujpest FC. Mr Duchâtelet also assured all the players that their contracts were to be “transferred” to the new club, meaning that the new club would assume all the responsibilities of Ujpest FC towards them and comply with all the obligations and terms of the employment contracts of the players with Ujpest FC in force at that time.

- As a condition for the implementation of the proposed solution, Mr Duchâtelet asked from the players to sign “some papers”, which were already prepared, including one document to terminate their contracts with Ujpest FC and one document for their contracts to be “re-signed” with Ujpest 1885. According to Mr Duchâtelet, this would be “just a formality” for the players. The Appellant submits that Mr Duchâtelet assured all the players that they will continue playing for the team and he pointed out in particular that all the terms and conditions of the new contract they were asked to sign are identical to the existing one and that the only change is the name of the club. The Appellant further asserts that all the players, including himself, signed the documents terminating their contracts with Ujpest FC and then they signed a new employment contract with Ujpest 1885 (which was identical to the previous one), all at the same time during the meeting of 25 March 2014.

- After that, Mr Duchâtelet informed the players that he would immediately sign all the contracts in his office and that they would all get promptly their contracts back. However, the Appellant claims that he was unable to get a copy of his new contract with Ujpest 1885, neither that day nor in any of the following days, under various pretexts, while at the same time being repeatedly assured that everything was in order and that the contracts were sent to the Hungarian Football Association “for approval”. The Appellant’s impression was confirmed by the fact that his March salary was paid by Ujpest 1885.

- In late April 2014, Mr Duchâtelet informed the Appellant during a telephone conversation that the plans of the team had changed and that there was no longer place for him in the team because of his injury. The Appellant found out that Mr Duchâtelet had refused to return the signed contract to two other teammates of his as well, one of which had taken a photo of the contract he was asked to sign with Ujpest 1885 and has filed a suit before the Hungarian courts.

- The Appellant never wished to leave the club and seek employment elsewhere or to end his career as a professional football player. His wish was to remain in Ujpest 1885 and that is why he accepted the solution offered by Mr Duchâtelet to all the former players

of Ujpest FC. The account of events offered by the Respondent in this regard is false and misleading.

- The scouting position was not offered to the Appellant, as alleged by the Respondent. A contract of scouting services was indeed signed, but the parties thereto were L and E. Moreover, the said contract was signed on 1 July 2014, i.e. more than 3 months after the Appellant signed his new contract with the Respondent.

- Other former players of Ujpest FC were also deceived by the Respondent. Z. has initiated a civil suit against the Respondent in Hungary, which is still pending and the testimonies offered in the course of the said proceedings allegedly confirm the Appellant’s position.

- The Appellant further invokes the provisions of EU Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, regarding safeguarding of employees’ rights in the event of transfer of an undertaking.

- Lastly, the Appellant argues that his claims are confirmed by the Respondent’s own submission before UEFA during the proceedings initiated to grant the Respondent an exception from the three-year-membership rule of the UEFA Club Licensing and Financial Fair Play Regulations.

39. The Respondent’s submissions, in essence, may be summarized as follows:

- The Respondent asserts that the Appellant, being 30 years old and having played only for a limited amount of time during the previous season, was looking for a change of career and that is why he accepted a scouting position with L. The job was proposed to the Appellant only because of Mr Duchâtelet’s efforts who was kind enough and willing to help him.

- The Appellant has signed a termination notice, thereby explicitly and without any reservations expressing his free will to terminate his contract with Ujpest FC and declaring that he had no claims against Ujpest FC.

- Additionally, the Appellant also signed a professional contract as a football player with Nomme JK Kalju, an Estonian football club.

- The witnesses’ statements submitted by the Appellant cannot be relied on, since they are contradicted by testimonies of other club employees submitted by the Respondent. No contract was signed between the Appellant and the Respondent.

- Albeit claiming that he signed a contract with the Respondent, the Appellant provides no proof for such a contract. In accordance with the Appealed Decision, the Appellant’s arguments to that regard are not enough to sustain his claim due to lack of evidence.

- The fact that the Respondent paid the Appellant’s salary for March does not substantiate the Appellant’s allegation that a contract was signed between the parties on 25 March 2014.

- The Appellant is not entitled to any compensation for material or non-material damage as he was the one who terminated his employment relationship with Ujpest FC according to his own free will and he has not signed any subsequent contract with Ujpest 1885. Moreover, the Appellant has waited for almost two years before filing his claim with the FIFA DRC on 24 March 2016. Lastly, according to the Appealed Decision, the information contained in FIFA TMS suggest that the Appellant was satisfied with the situation as he uploaded his termination contract with Ujpest FC in the section “proof of last contract end date”.

- The Respondent never denied that the meeting of 25 March 2014 did take place. It is the Respondent’s position that after the termination of their contracts with Ujpest FC, some of the players decided to be “free status players”.

- The testimony of Mr Duchâtelet given in the course of the civil suit initiated by Z. against the Respondent before the Hungarian courts is irrelevant and cannot influence the outcome of this arbitration.

- The Appellant’s Request for Legal Aid contains false representations concerning the true income of the Appellant, which denotes his lack of credibility as to his statements concerning the merits of this dispute.