Cleiton Ribeiro Xavier v. FC Metalist, Fédération Internationale de Football Association (FIFA), Football Federation of Ukraine (FFU)

II. FACTUAL BACKGROUND — A. Background facts

5. Below is a summary of the relevant facts and allegations based on the Parties’ written submissions, pleadings, and evidence adduced. References to additional facts and allegations found in the Parties’ written submissions, pleadings, and evidence will be made, where relevant, in connection with the legal analysis that follows. While the Sole Arbitrator has considered all the facts, allegations, legal arguments, and evidence submitted by the Parties in the present proceedings, he refers in his award only to the submissions and evidence that he deems is necessary to explain his reasoning.

B. The Proceedings before the FIFA Dispute Resolution Chamber

6. On 1 July 2013, the Player and FC Metalist entered into an employment contract, valid from the date of signature until 30 June 2017 (the “Employment Contract”).

7. On 13 February 2015, the Player lodged a claim before FIFA against FC Metalist for breach of the Employment Contract.

8. On 11 June 2015, the FIFA Dispute Resolution Chamber (the “DRC”) decided the following:

“1. The claim of [the Player] is partially accepted.

2. (…) FC Metalist has to pay to the [Player], within 30 days as from the date of notification of the present decision, outstanding remuneration in the amount of USD 1,166,666.68 plus 5% interest p.a. until the date of effective payment as follows:

a. 5% p.a. as of 2 October 2014 on the amount of USD 500,000; b. 5% p.a. as of 1 November 2014 on the amount of USD 166,666.67; c. 5% p.a. as of 1 December 2014 on the amount of USD 166,666.67; d. 5% p.a. as of 1 January 2015 on the amount of USD 166,666.67; e. 5% p.a. as of 1 February 2015 on the amount of USD 166,666.67.

3. [FC Metalist] has to pay to the [Player], within 30 days as from the date of notification of the present decision, compensation for breach of contract in the amount of USD 3,093,112.40 plus 5% interest p.a. as from 13 February 2015 until the date of effective payment.

4. In the event that the amounts due to the [Player] are not paid by [FC Metalist] within the stated time limit, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

5. Any further claim lodged by the [Player] is rejected”.

9. On 23 June 2015, the findings of the DRC were notified to the Player and to FC Metalist (the “DRC Decision”).

10. On 4 March 2016, and following the request filed timely by FC Metalist, the grounds of the DRC Decision were divulged to the club.

11. It is undisputed that the DRC Decision became final and binding.

12. On 11 May 2016 and in the absence of payments within the 30 days prescribed in the DRC Decision, the Player requested from FIFA to initiate a disciplinary procedure against FC Metalist.

13. On 17 May 2016, the FIFA Players’ Status department advised FC Metalist to immediately comply with the DRC Decision, failing which it would “forward the entire file to the Disciplinary Committee”, which it eventually did on 31 May 2016.

14. On 31 May 2016, 13 September 2016, 18 April 2017 and 9 May 2017, the Player reiterated his request for the opening by FIFA of a disciplinary procedure against FC Metalist.

15. On 9 May 2017, the Deputy Secretary to the FIFA Disciplinary Committee sent the following letter to the FFU:

“We refer to the abovementioned club FC Metalist and, in particular, to the information that we received by letter dated 8 August 2016 according to which the mentioned club is no longer affiliated to the Football Federation of Ukraine.

In this respect, we would be grateful if you could inform us by 16 May 2017 at the latest what the actual Status of the club is, whether the club is still participating in any competitions and if the club has any (legal) successor”.

16. On 15 May 2017, the FFU informed FIFA that FC Metalist was not affiliated to it anymore, and, consequently, would not be taking part in any competition organized by it. In addition, the FFU confirmed that it ignored whether the club had a legal successor.

17. On 17 May 2017, the Deputy Secretary to the FIFA Disciplinary Committee sent the following letter to the Player (the “FIFA Letter of 17 May 2017”):

“Club FC Metalist, Ukraine (…)

Dear Sirs,

We refer to the abovementioned matter and in particular to the correspondence received from the Football Federation of Ukraine dated 8 August 2016 and 15 May 2017, a copy of which we herewith enclose for the perusal of Mr Cleiton Ribeiro Xavier, for his information and any action he may deem appropriate.

In this respect, we were informed by the Football Federation of Ukraine that “despite of the fact that the club still exists as a legal entity, registered under legislation of Ukraine, after losing the membership in the Ukrainian Premier League the FC Metalist Kharkiv lost affiliation with the Football Federation of Ukraine since the club did not enter any other professional or amateur league directly affiliated with the FFU or regional federations”.

On account of the above, we must inform you that, as a general rule, our services and competent decisionmaking bodies cannot deal with cases involving clubs which are not affiliated to their Association any longer. As a consequence, on behalf of the chairman of the FIFA Disciplinary Committee, we regret having to inform you that we do not appear to be in a position to further proceed with the case of the reference in which the club FC Metalist is involved.

Finally, we would like to add that our Statements made above are based on the information we received from the Football Federation of Ukraine only and hence are of a general nature and without prejudice whatsoever”.

18. It is undisputed that, to date, FC Mentalist has not paid to the Player any amount included in the DRC Decision.

III. PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

19. On 7 June 2017, the Player filed a statement of appeal with the Court of Arbitration for Sport (the “CAS”) in accordance with Article R47 et seq. of the Code of Sports-related Arbitration (the “Code”). The Player’s appeal was directed against the FIFA Letter of 17 May 2017. In his statement of appeal, the Player requested that this procedure be referred to a Sole Arbitrator.

20. On 19 June 2017, the FFU accepted the Player’s application for a Sole Arbitrator, whereas, on 20 June 2017, FIFA requested the matter to be referred to a Panel of three arbitrators. FC Metalist failed to provide its position within the prescribed time limit.

21. On 28 June 2017, the CAS Court Office informed the Parties that FC Mentalist was “refusing delivery of all courier attempts and to date, [it has] not acknowledged receipt of any correspondence from the CAS Court Office by facsimile/email”. Under these circumstances, it advised the Parties that it would continue to make delivery attempts to FC Metalist and the club’s eventual refusal would be deemed a tacit acceptance of service.

22. On 3 July 2017, the Player requested a 30-day extension of the deadline to file his appeal brief. In support of his request, the Player stated that he had just learned that bankruptcy proceedings had been initiated in Ukraine against FC Metalist.

23. On 4 July 2017, the CAS Court Office acknowledged receipt of the Player’s application for a 30-day extension of the time to file his appeal brief. It informed the Parties that it found out that FC Metalist was actually “not refusing service but that no one is available at the [communicated] address to accept the deliveries. Therefore, the [Player] is invited to provide the CAS Court Office with working contact details for [FC Metalist] within seven (7) days failing which the CAS will not proceed with this appeal. In the interim, this procedure is temporarily suspended”.

24. On 11 July 2017, the Player provided the CAS Court Office with the contact details of “the competent court for supervising [FC Mentalist’s] bankruptcy proceedings as well as the contact details of FC Mentalist’s current insolvency manager”.

25. On 12 July 2017, the CAS Court Office notified the existence of the present CAS procedure to the Commercial Court of Kharkiv Region and to Mr Vevhen Vitaliovych Yakovlev, in his capacity of insolvency manager of FC Metalist. It invited the addressees to inform it whether they agreed to accept service of documents on behalf of FC Metalist.

26. On 25 July 2017, the CAS Court Office informed the Parties that the Commercial Court of Kharkiv Region and Mr Vevhen Vitaliovych Yakovlev left its notification of 12 July 2017 unanswered. Under these circumstances, it requested from the Player to inform it how to proceed with the appeal procedure.

27. On 3 August 2017, the Player requested the CAS Court Office to make further efforts to contact the Commercial Court of Kharkiv Region and Mr Vevhen Vitaliovych Yakovlev.

28. On 4 August 2017, the CAS Court Office informed the Parties that Mr Vevhen Vitaliovych Yakovlev would be considered as the representative of FC Metalist in this procedure and that “[s]ervice of any documents on behalf of [FC Mentalist] will be deemed achieved upon receipt by Mr. Yakovlev”. It set a 10-day deadline to the Player to file his appeal brief.

29. On 14 August 2017, the Player requested for a 2-day extension of the deadline to file his appeal brief, which was eventually granted.

30. On 16 August 2017, the Player filed his appeal brief in accordance with Article R51 of the Code.

31. On 2 October 2017, the CAS Court Office advised the Parties that the President of the CAS Appeals Arbitration Division appointed Prof. Petros Mavroidis, Professor, Commugny, Switzerland, as Sole Arbitrator.

32. On 19 October 2017, the FFU filed its answer in accordance with Article R55 of the Code.

33. On 26 October 2017, FIFA filed its answer in accordance with Article R55 of the Code.

34. FC Metalist failed to file an answer within the given time limit.

35. On 21 and 22 November 2017, respectively, the Player, FIFA and the FFU signed and returned the Order of Procedure in this appeal procedure. FC Mentalist did not return a signed copy of this document within the prescribed deadline.

36. The hearing was held on 1 December 2017 at the CAS premises in Lausanne. The Sole Arbitrator was present and assisted by Mr José Luís Andrade, Counsel to the CAS/Head of Mediation, and Mr Patrick Grandjean, acting as ad hoc Clerk.

37. The following persons attended the hearing:

- Mr Pedro Fida and Mr Bichara Abidão Neto, counsels for the Player (in person).

- Mr Alexander Jacobs and Mr Julien Deux, in-house counsels for FIFA (in person).

- Mr Ihor Gryshchenko, Head of legal department of the FFU (via Skype). It must be observed that, for some unknown reason, and shortly after his opening statement, Mr Ihor Gryshchenko terminated the call. In spite of the Sole Arbitrator’s efforts, the latter could not be reached again.

38. FC Mentalist was not represented at the hearing.

39. At the outset of the hearing, the attending Parties confirmed that they had no objection as to the appointment of the Sole Arbitrator.

40. After the attending Parties’ final arguments, the Sole Arbitrator closed the hearing, and announced that his award would be rendered in due course. At the conclusion of the hearing, the Player and FIFA confirmed that their right to be heard in the present proceedings had been fully respected.

IV. SUBMISSIONS OF THE PARTIES — A. The appeal

41. In his appeal brief, the Player submitted the following requests for relief:

“[The Player] respectfully requests the CAS:

I. To accept the appeal against the decision adopted by FIFA on 17 May 2017;

II. To annul the decision issued by FIFA on 17 May 2017 and issue an arbitral award establishing that:

(i) FC Metalist shall pay the following amounts to Mr. Cleiton Xavier within 30 (thirty) days as from notification of this Arbitral Award, regarding the salaries due by the Club and pursuant to the Decision issued by the FIFA Dispute Resolution Chamber on 4 March 2016 (ref. nr.

Emo 15-00383):

a) Outstanding salaries in the amount of USD 1,166,666.68 plus 5% interest p.a. until the date of effective payment as follows:

5% p.a. as of 2 October 2014 on the amount of USD 500,000; 5% p.a. as of 1 November 2014 on the amount of USD 166,666.67; 5% p.a. as of 1 December 2014 on the amount of USD 166,666.67; 5% p.a. as of 1 January 2015 on the amount of USD 166,666.67; 5% p.a. as of 1 February 2015 on the amount of USD 166,666.67; and

b) Compensation for breach of employment contract in the amount of USD 3,093,112.40 plus 5% interest p.a. as from 13 February 2015 until the date of effective payment.

(ii) The costs eventually related to the present arbitration shall be borne in its entirety by FIFA and FC Metalist and the Football Federation of Ukraine; and

(iii) FIFA, FC Metalist and the Football Federation of Ukraine shall pay the legal fees and other expenses incurred by Cleiton Xavier Ribeiro in connection with the present arbitration procedure, according to the discretion of the Sole Arbitrator, in an amount not lower than CHF 20’000.00 (twenty thousand Swiss francs)”.

42. The Player’s submissions, in essence, may be summarized as follows:

- The FIFA Letter of 17 May 2017 constitutes a final decision, which can be challenged before the CAS.

- FC Metalist has been put into bankruptcy. The DRC Decision is of no use in such proceedings. The Player needs a formal award issued by the CAS in order to establish his claim against FC Metalist as well as its employment-related nature. “This will allow the Ukrainian Court to recognize the Player as a creditor in Category I, which is the category related to salaries due to employees. Creditors under Category I have priority in receiving the amounts due”.

- The Player is not only a victim of FC Metalist but also of FIFA. On 13 February 2015 and in compliance with FIFA regulations, the Player lodged a claim before the DRC against FC Metalist for breach of the Employment Contract. It took several months for FIFA to finally issue the grounds of the DRC Decision. As soon as the DRC Decision became final and in the absence of any payment by FC Metalist, the Player immediately requested from FIFA to initiate disciplinary proceedings against his former employer in order to enforce his claim. For unexplained reasons, FIFA waited a year before it notified the Player of the fact that it had no jurisdiction over FC Metalist. At the date of receipt of the FIFA Letter of 17 May 2017, more than three years had elapsed since the Player lodged his claim before the DRC. At the end of this lengthy procedure, the Player has obtained nothing more than the DRC Decision, which is of no practical use in bankruptcy proceedings initiated in Ukraine. This situation is unfair and CAS must rectify it by issuing an award confirming the Player’s requests for relief.

- In view of the specific circumstances of the case, FIFA has committed a denial of justice and, therefore, the CAS has jurisdiction to hear the present dispute.

B. The answers

1. FIFA

43. FIFA filed an answer, with the following requests for relief:

“we respectfully request the Sole Arbitrator:

(1) To reject the Appellant’s appeal in its entirety.

(2) To confirm that the letter sent by the Deputy Secretary to the FIFA Disciplinary Committee 17 May 2017 cannot be considered a decision.

(3) To confirm the content of the letter sent by the Deputy Secretary to the FIFA Disciplinary Committee on 17 May 2017 hereby appealed against.

(4) To order the Appellant to bear all costs incurred with the present procedure and to cover all [FIFA’s] expenses relating to the present procedure”.

44. The submissions of FIFA, in essence, may be summarized as follows:

- The FIFA Letter of 17 May 2017 was issued in the context of a disciplinary procedure initiated at the request of the Player. However, the Player is not filing an appeal against this document for disciplinary reasons. The only purpose of the present procedure before the CAS is to obtain “an arbitral award (…) in order to secure [the Player’s] credit and allow him to present a final and enforceable arbitral award before the Ukrainian Court. (…) It is evident that the present proceedings are not the correct forum to request the recognition of an amount that was already ordered to be paid in the DRC decision”.

- The FIFA Letter of 17 May 2017 does not constitute a decision and, therefore, it cannot be challenged before the CAS.

- The FIFA Disciplinary Committee has no jurisdiction over a club such as FC Metalist, which is not a member of an association affiliated with FIFA. Hence, it is not in a position to put the club under any pressure to meet its financial obligations.

- There cannot be any denial of justice on the part of the FIFA Disciplinary Committee, as this body has no longer the authority to pursue the disciplinary procedure initiated against FC Metalist, which lost its affiliation with the FFU.

2. FC Metalist

45. FC Metalist did not file an answer within the prescribed time limit.

3. The FFU

46. The FFU filed an answer, with the following requests for relief:

“Taking into consideration all mentioned above and in accordance with clauses R55, R59 of [the Code] we are asking the Court to exclude FFU as the Third Respondent from this case and accept the justified award”.

47. In substance, the FFU submits that the Player and FC Metalist contractually agreed to bring any dispute arising from their employment relationship before FIFA and, possibly, the CAS. “Thus, it seems that involving the FFU as the Third Respondent is mistaken. Moreover, it will be out of rules to consign any penalties to FFU instead of football club”.