William Lanes de Lima v. Fédération Internationale de Football Association (FIFA), Real Betis Balompié SAD

I. THE PARTIES

1. William Lanes de Lima (the “Appellant” or the “Player”), is an Italian professional football player born on February 10, 1985. After spending three seasons in Brazil playing for Atlético Mineiro, he signed a five-year contract with the Spanish club Real Betis Balompié in 2007.

2. The Fédération Internationale de Football Association (FIFA) (the “First Respondent”) is the global governing body of football. It exercises regulatory, supervisory and disciplinary functions over national associations, clubs, officials and players around the world. FIFA is an association established under Swiss law with headquarters in Zurich, Switzerland.

3. Real Betis Balompié (the “Second Respondent” or the “Club”) is a professional football club based in Sevilla, Spain, and registered with the Royal Spanish Federation of Football, which in turn is affiliated to FIFA. FIFA and the Club are together referred to as the “Respondents”, and the Appellant and the Respondents are together referred to as the “Parties”.

V. ADMMISSIBILITY, JURISDICTION AND APPLICABLE LAW — A. ADMISSIBILITY

22. Referring to Article R47 of the Code and Article 63 of the FIFA Statutes, which both provide that an appeal can only be lodged against final decisions, FIFA claims that the appeal is inadmissible because the FIFA Letter is not a decision. According to FIFA, its intention when sending such letters is only to inform all parties involved of the fact that a party is in bankruptcy proceedings and of the related consequences.

23. FIFA also explains in such letters that it can no longer intervene in the matter, and refers the parties to the appropriate forum. However, the FIFA Letter does not deal with the contents of the Appellant’s original request, and states that it is without prejudice, which according to FIFA should be read that a decision can still be taken at a later stage. Finally, the letter is signed by members of the FIFA Administration of the Player’s Status Committee, and not by the appropriate legal bodies that can take formal decisions.

24. FIFA concluded: “Should the Appellant have wished to obtain a formal and binding decision of said FIFA's deciding body, he was at liberty to request such a decision in writing and that, on the other hand, should the relevant deciding body have been called to pass a decision with regard to the Appellant's claim, such decision would have been limited to competence-related considerations only”.

25. The Appellant points out that FIFA elsewhere in its response notes that it has used such letters to close at least 70 procedures in which one of the parties had become subject to bankruptcy proceedings at least since 2004. According to the Appellant, this in itself evidences that FIFA uses these letters to formally close proceedings.

26. The Appellant also refers to CAS 2011/A/2343, for which, as explained above, the current proceedings were suspended because according to FIFA it concerned “the exact same situation” and “the exact same core issues”. While the parties in that case – including FIFA – agreed to keep the award confidential, FIFA did refer to it in its Additional Submission, explaining that “the situation at hand was not identical to the present one since the letter challenged before CAS had been issued by FIFA via its Disciplinary and Governance body, and not the FIFA Administration related to the Dispute Resolution Chamber”.

27. The Swiss Federal Tribunal has defined a “decision” as follows: “the decision is an act of individual sovereignty to an individual, by which a relation of concrete administrative law, forming or stating a legal situation, is resolved in an obligatory and constraining manner. The effects must be directly binding both with respect to the authority as to the party who receives the decision (cf. ATF 101 Ia 73)”.

28. The FIFA Letter explains in unequivocal terms that FIFA can no longer intervene in the procedure between the Appellant and the Second Respondent. While signed by the FIFA Administration of the Player’s Status Committee, the FIFA Letter is sent on behalf of FIFA’s “service and decision-making bodies”, and explicitly states that the FIFA DRC “cannot deal with cases of clubs which are in a bankruptcy proceeding”. The FIFA Letter does not refer to any internal remedies (for example, the possibility to ask for a “formal” decision on the same subject), but refers the Appellant to the Spanish Football Association to receive instructions on “the competent authorities”.

29. FIFA’s statements that it “appears to be” not in a situation to intervene and that this position is “without prejudice” merely make the FIFA Letter conditional upon the Second Respondent actually being in bankruptcy proceedings (which was never contested by either the Appellant or FIFA itself). Contrary to what FIFA argues, the Panel does not read these statements as an invitation for the Appellant to ask for a “formal” decision. Rather, it makes clear that FIFA would only reconsider its position not to intervene if it somehow turned out that the Club

was not in bankruptcy proceedings. Elsewhere in its Response, FIFA itself even argues that “with regard to the closure of procedures in particular relating to contractual disputes in which one of the parties was put under administration or declared bankrupt” its “long-standing practice is legally binding”.

30. On the basis of the foregoing, the Panel concludes that the FIFA Letter was a legally binding decision. As there were no internal remedies available, and since the Appellant filed his Statement of Appeal within the prescribed deadline, the Appeal is admissible.

B. JURISDICTION

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

32. Articles 63 of the 2011 FIFA Statutes provide that final decisions by FIFA’s legal bodies may be appealed to CAS. Taking into account that the Panel has found the FIFA Letter to be a final decision by FIFA, the Panel concludes that it has jurisdiction to hear the dispute.

C. APPLICABLE LAW

33. Article R58 of the Code provides as follows: “This Panel shall decide the dispute according to the applicable regulations and 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 application of which the Panel deems appropriate. In the latter case, the Panel shall give reasons for its decision”.

34. Article 62(2) of the 2011 FIFA Statutes provide as follows: “CAS shall primarily apply the various regulations of FIFA and, additionally, Swiss law”.

35. There is no dispute as to the applicability of FIFA regulations and Swiss law.

VI. PROCEDURAL ISSUES

36. In its Additional Submission, FIFA claimed that its right to be heard had been violated because it was not consulted on the second round of submissions.

37. FIFA had informed the CAS Court Office that it did not find it necessary for a hearing to be held. The Appellant, however, requested a hearing unless it was not given the possibility for a second round of submission.

38. For reasons of procedural efficiency, the Panel decided to consider the Appellant’s request and asked him to provide reasons why he wished a further round of submissions. The Appellant responded that he had introduced an expert in Spanish law in his Appeal Brief to be cross-examined during the hearing, and that he still wanted to “supply the Panel with important data about Spanish law”, in particular to demonstrate that FIFA did not need to decline jurisdiction in the current case.

39. As mentioned above, after careful deliberation, the Panel decided, pursuant to Article R56 of the Code and taking into account the particularities of the case (involving, inter alia, an understanding of the legal context in Spain), to grant a second round of submissions.

40. In doing so, the Panel took care to allow FIFA to make a submission and have the last word on the subject, thereby respecting equal treatment and FIFA’s right to be heard, while taking into account the fact that FIFA did not think a hearing was necessary, and the Appellant agreed to waive the hearing if the Panel allowed additional submissions. FIFA confirmed that its right to be heard has been respected by signing the order of procedure on August 27, 2012.

VII. THE MERITS

41. The following refers to the substance of the Parties’ allegations and arguments without listing them exhaustively in detail. In its discussion of the case and its findings on the merits, the Panel has nevertheless examined and taken into account all of the Parties’ allegations, arguments and evidence on record, whether or not expressly referred to.

42. The Appellant’s requests can essentially be captured in two groups: First, the Appellant challenges the fact that the FIFA Letter – in which FIFA declined jurisdiction – was sent by an administrative body of FIFA, which does not have the authority to decide on the jurisdiction of the Players’ Status Committee or FIFA DCR. Second, the Appellant requests the CAS to confirm that FIFA had jurisdiction, despite the fact that the Club was in bankruptcy proceedings.

A. PROCEDURE BEFORE FIFA

43. Referring to various FIFA regulations, including Articles 22 and 24 of the FIFA Regulations on the Status and Transfer of Players and Articles 3 and 14 of the FIFA Rules governing the procedures of the Players’ Status and the Dispute Resolution Chamber, the Appellant claims that the FIFA Players’ Status general secretariat does not have the competence to decide on the jurisdiction of the FIFA DRC.

44. The Appellant also refers to the award in CAS 2007/A/1251, in which the Panel concluded that “FIFA has a clear system whereby its general secretariat has no authority to decide on issues of competence but must dispatch the claims to the DRC and the PSC according to their respective scope of jurisdiction under the rules and regulations”. Moreover, in CAS 2007/A/1298, 1299 & 1300, the Panel already found that the FIFA rules provide that decisions of the FIFA DRC must contain reasons, and that

FIFA must correctly apply its own regulations by meeting the formal requirements contained therein.

45. FIFA argues that its approach is both correct and necessary. Relying on the principle of the autonomy of associations, FIFA explains that it has followed the practice to close cases by means of a simple later mainly for practical reasons. For example, FIFA received over 1889 claims in 2011, and therefore needs to deal with these cases efficiently and effectively. Moreover, these claims originate from many countries across the globe, each with its own legal structure, which means that FIFA needs to apply a uniform practice that it can use globally. Also, FIFA says it sends the letter because this would be faster, and, given the financial considerations at stake, “the time factor can be of utmost importance”.

46. The Panel is of the opinion that a decision with such important consequences for the parties involved in the proceedings must be taken by the authorized and competent judicial body rather than by the secretariat. To ensure a fair procedure, a party that is subject to jurisdiction of FIFA has the right to be given the opportunity to bring his full arguments and pleadings to the appropriate judicial body before a final decision is taken.

47. As noted before, the Panel does not accept FIFA’s argument that the Appellant could still resort to the ordinary procedure before the FIFA DRC. The FIFA Letter unequivocally states that FIFA cannot take any further action, and that the Appellant should consult with the Spanish Football Association to learn about alternative remedies.

48. Particularly relevant in this respect – and this may distinguish the current case from similar cases – is the Appellant’s undisputed claim that, under Spanish labor law, employment disputes should be filed within one year. Since FIFA only declined jurisdiction in September 2011, i.e., almost two years after the Appellant lodged its complaint (without any explanation for this long delay), the Appellant could no longer file his claim in an ordinary court. FIFA’s decision to close the file without a proper trial could, therefore, lead to a denial of justice. At the very least, the FIFA Letter could have mentioned that it was only an administrative notice, and refer the Parties to the appropriate FIFA dispute resolution bodies for a formal trial and decision.

49. To conclude, the Panel agrees with the Appellant that an administrative body of FIFA such as the FIFA Players’ Status general secretariat is not competent to decide on the question of jurisdiction of the Players’ Status Committee or the FIFA DRC, and that the FIFA Letter does not comply with the principles of the FIFA Statutes and Regulations which ensure that all parties involved are granted a fair procedure. The Appellant’s requests for relief in this respect are therefore upheld, and the Panel orders FIFA to take a new decision on the matter.

B. JURISDICTION OF FIFA

50. As noted by the First Respondent in its submission of June 8, 2012, it is uncontested that the Club was in bankruptcy proceedings at the time the FIFA Letter was communicated to the Player (although it is noteworthy that for a period of over one year after the Appellant filed its claim with the FIFA DRC on 14 November 2009 the Club was not yet in bankruptcy

proceedings – since the latter filed for bankruptcy on 14 January 2011 - and there is no submission or explanation by FIFA regarding why its decision could not have been made and communicated to the Appellant within that year).

51. The Appellant argues that FIFA cannot deny jurisdiction on the basis of the Club being in bankruptcy proceedings simply because there is nothing in FIFA’s statutes to this effect. Moreover, with reference to CAS 2008/A/1622, 1623 & 1624, the Appellant argues that FIFA should be held liable for this loophole because it failed to clarify or codify the issue.

52. According to FIFA, the practice to close proceedings when one of the parties becomes subject to bankruptcy proceedings has acquired the status of customary association law (“Vereinsübing”). FIFA refers to the award in CAS 2008/A/1622, 1623 & 1624, in which the Panel found that, under specific circumstances, customary law can indeed represent a valid set of rules under Swiss association law. FIFA argues that the criteria for establishing that its decision-making practice has become customary law are met, because (i) its regulations contain a loophole, since they do not deal with the situation in which a party is in a bankruptcy procedure, (ii) it has constantly and consistently applied its practice at least since 2004 (inveterata consuetudo), and (iii) its members are convinced that this practice is legally binding since no one has contested the practice until one instance in 2011 (opinio necessitatis).

53. FIFA also claims that in cases in which one of the parties is in bankruptcy proceedings, national law often prevents it from taking a decision on the merits of an issue. In Spain, for example, Article 8 of the Bankruptcy Act provides that the judge presiding over the proceedings is exclusively competent. The Second Respondent claims that Spanish law prevents labor disputes from being arbitrated. It also refers to Articles 51 and 52 of the Bankruptcy Act, which would grant exclusive competence to the judge presiding over the bankruptcy proceedings.

54. The Appellant counters these arguments by saying that both the Player and the Club have willingly subjected themselves to the jurisdiction of FIFA, that the FIFA regulations shall always prevail over Spanish law, and, therefore, that Spanish law should be set aside. The Appellant furthermore refers to Article 517 of the Ley de Enjuiciamiento and to the New York Convention on Arbitration, according to which an award by CAS would be fully enforceable in Spain. FIFA maintains, however, that FIFA remains subject to Swiss law, and FIFA’s members (including the Club) remain subject to certain obligations under national legislation in the country in which they are registered.

55. In keeping with Article R57 of the Code and given the importance of the competent body of FIFA deciding in the first instance on its own jurisdiction, the Panel shall not admit the Appellant’s prayer for relief relating to the jurisdiction of FIFA but shall instead refer the case back to the appropriate FIFA dispute resolution body to decide – at least in first instance – whether FIFA’s allegedly valid practice of closing cases because clubs are subject to bankruptcy proceedings is in compliance with its own Statues, rules and regulations and may be applied in the circumstances of this case.

56. In making that decision, the competent FIFA dispute resolution body will need to carefully examine, inter alia, Swiss law on sports associations in order to determine if and to what extent the present FIFA Regulations, which ignore the situation, contain a lacuna, or otherwise, whether it is an implicit norm indicating that there was no intention of FIFA to close the proceedings in such cases (comparing to this effect the wording of article 107(b) of the FIFA Disciplinary Code where it is clearly stated that the FIFA Disciplinary Committee may close the proceedings in such cases). Furthermore, if the competent FIFA dispute resolution body will be of the opinion that indeed the silence of the regulations is a lacuna, to what extent and under what conditions any lacuna in its rules and regulations may be filled by a long-standing practice of one of its competent bodies.

57. Additionally, the FIFA DRC is expected to consider whether also other factors, such as the difference between national laws on bankruptcies, as well as the specific circumstances of a club entering into bankruptcy proceedings should be taken into account. In doing so, and in respect of this specific case, it should take into account the fact that in this case the Appellant may have been time-barred from joining the bankruptcy proceedings during the long period (over one year) between the time when the Appellant filed its claim with the FIFA DRC and the Club filed for bankruptcy, without the Appellant having benefitted in the meantime from a decision by the FIFA DRC.

58. To conclude, while the Panel understands the Appellant’s frustration for the jurisdictional limbo in which he ended up, the Panel finds that the Appellant’s requests for relief relating to the jurisdiction of FIFA must be decided in the first instance by the relevant FIFA dispute resolution body.