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Analysis on the CAS award TAS 2015/A/3871 Ariosa c. Club Olimpia / TAS 2015/A/3882 Club Olimpia c. Ariosa

Brief of the facts surrounding the dispute:

Sebastian Ariosa is a Uruguayan player who engaged in an employment contract with Club Olimpia, of Paraguay, for the term 17/1/11 to 31/12/15. In May 2013 the player was diagnosed with cancer, and the club allowed him to return to his home country in order to follow the adequate treatment.
In June 2013 the parties celebrated an agreement, where the club acknowledged owing USD 121.000 (eight months salary). In December 2013, while the player was undergoing chemotherapy treatments, the club suspended the contract, ostensibly since the player was unable to perform his obligation to play. After correspondence between the two the player rejected this position and terminated the contract on 8/1/13. Five days later the club rejected the termination and demanded the presence of the player in the club in order to restart training. It also informed the player that two months of salary was deposited with the Paraguayan Federation which required the issuance of an invoice from the player, which the player was unable to do, since he was an employee and not a company. In February 2014 the player lodged a claim before the FIFA DRC.

Overall, what this award applies, besides the relevant regulations, is common sense: something very simple but highly important and seemingly scarce in many cases.

The repeated breach of contract by the club in this case was very clear even before the player got sick based on overdue salaries for many months and no provisions for social security or other insurance. The later suspension of the contract by the club because the player had to undergo chemotherapy to treat his cancer was ‘the straw that broke the camel's back’.

So on 20/8/14, after the player had lodged a claim against the club, the FIFA DRC ruled in favour of the player, accepting that the club had breached the contract without just cause, which gave the player the right to the payment not only of the overdue salaries, but also of compensation for the remaining value of the contract, plus a 5% interest. The DRC understood that the FIFA regulations had to prevail over any national regulation agreed by the parties in order to have a standard set of rules.

The DRC highlighted that an illness is not just cause to stop paying the salaries to a player or even worse, to terminate the contract or suspend its effects. The DRC stated that it is the responsibility of the club to ensure that the player continues receiving his salary, which could also be done through insurance.

However, the DRC rejected the claims for moral damage, specificity of sport and medical expenses, stating that these were not sufficiently proven. It also rejected the bonus participation in the 2013 Copa Libertadores, since the player had not participated in any of the matches, and the request of payment for a thirteenth month, stating it had no contractual basis.

The grounds of the decision were notified to both parties on 16/12/14, and both parties appealed.

The club requested, among other things, the DRC decision to be revoked; the rejection of the player’s claim for being unfair according to Paraguayan law and the compensation to be fixed to no more than $42500, based on art. 25 of law 88/91, with the deduction of the amount spent by Olimpia to replace the player.

The player, on the other hand, requested among other things, the decision to be partially revoked in the parts not accepted, and requested again moral damages, damages for specificity of sport, thirteenth month for the whole contract and bonuses for the 2013 Copa Libertadores.

Findings of CAS

Applicable law:
The CAS Panel concluded multiple laws applied, following the hierarchy indicated by article R 58 of CAS Code: first FIFA regulations, and alternatively Swiss law.
As Swiss law recognises contractual freedom, the law chosen by the parties can be considered. In the case, the parties chose Paraguayan law, and as long as it is not contrary to mandatory Swiss law, this should be applied.

1. FIFA regulations over national law
Olimpia requested the reduction of the granted compensation of the remaining value of the contract to the remaining remuneration of the year of termination. According to Paraguayan law the club’s request would imply that the player would receive two and a half months of salary, as opposed to two full years. The Panel analysed that the Paraguayan law provides for a compensation of the rest value of the contract for the running year, whereas Art. 17 of the FIFA RSTP refers to a compensation of the rest value of the whole contract. As the FIFA regulations should be applied first, due to the hierarchy described in art. R58 of the Code, the compensation of the rest value of the whole contract should be granted. This confirmed the decision of the DRC.

2. Player substitution expenses cannot be deducted
Olimpia requested the deduction of the amount spent in the substitution of the player: $240000 USD that it “had to” pay to substitute for the player. The Panel observed that this petition does not have any legal ground, it only lies in the description of a cost that Olimpia had. The petition has no legal support, and therefore it is rejected.

This is a very important aspect: there is no responsibility of the player for Olimpia’s “need” to contract another player, so it cannot be put on the player’s shoulders.

3. Remunerations granted by mandatory national law apply, even if not included in the contract
The right to the thirteenth month is mandatory in Paraguayan law . Art. 17 FIFA RSTP states that one of the criteria to be considered to determine the amount of compensation is national law.

The DRC had denied this right because it had not been agreed in the contract. However, the CAS understood that, as explained before, the applicable law to this contract was multiple, including national law. Moreover, the contract itself designates law 88/91 as applicable law. So to decide whether the thirteenth month should be granted, the Panel analysed whether the national law was mandatory or not and whether there was any part of the contract that would show the intention of the parties to include the thirteenth month within the agreed remuneration.

The Panel concluded that unless there is an express agreement to the contrary, the rights emerging from local law and the contract are cumulative, not exclusionary. Moreover, this right emerged from mandatory labour law, and could not be understood to have been included or intended to be included in the remuneration set in the contract. Considering all this, the thirteenth month was granted for the whole period of the contract, since it had never been paid.

The player is a worker, so mandatory labour law has to be applied to the footballer as it is applied to any other worker. The law and the contract have to be seen as cumulative in an indubio pro operario interpretation. Why is the national law applied here and not in the request of Olimpia for a reduced compensation according to the same law? Because FIFA does not regulate the thirteenth month, whereas it does regulate compensation for breach of the contract.

4. The content of the clause is essential in order to judge whether bonuses are due
The Panel noted that the condition stated in the contract for the bonuses to be paid was that the contract was still running, and not, as the DRC wrongly considered, the participation of the player in the match. Therefore, as the contract had not yet been terminated when the team participated in the 2013 Copa Libertadores, and even though the player did not participate in any of those games, the bonuses were due.

5. Moral damages: exceptional and severe conduct
The Panel first analysed that even though moral damage is not regulated by FIFA RSTP, Swiss and Paraguayan law do regulate it, and they are applicable due to the agreement of the parties and art. R58 of CAS Code, as explained above.

The Panel reasoned regarding the nature of this damage, that the right to receive a compensation for moral damage does not have a punitive nature, but a compensative one: it is part of the duty to repair the damage caused. However, the Panel alerts of the danger of abusing this figure, and therefore it states that it has to be clear that the conduct of the club was both exceptional (exceed what society should bear) and severe or grave (that a reasonable person considers it unbelievable).

Moral damage was understood in this case as angst and insecurity caused by Olimpia to the player. The Panel stated that it is correct to request evidence in order to prove the damage, but as this is an internal damage, it recognised that its demonstration is more difficult. The Panel wisely stated: “To demand material evidence of an immaterial damage may well be demanding the impossible”, what is known as probatio diabolica. Therefore, the decision maker has the possibility of discernment. That is, the possibility to examine the circumstances and determine if it is valid and probable to infer that moral damage was caused. The moral damage has to be inferred naturally.

The Panel understood that a ruling that does not cost anything to the person committing the illicit act can add insult to the offense. This, not only by leaving the damaged party in the same situation that it would have had if his action had not been accepted, but worse, recognising that there is an illicit act against it, and the Law did not do anything about it .

The conduct of Olimpia was exceptional and severe because of the context and its effects.

As mentioned before, this award is written with common sense and it is humane. As a result, this is how the Panel described the context and effects: “Being that the pathology of the player is frequently deathly, it is not exaggerated to state that the player was living the greatest challenge in his life. Due to the nature and seriousness of the pathology, the Tribunal does not doubt to suppose that the player was in a vulnerable state. The energy and the aim of the player had to be totally focused on combating his illness. Fight for his life. In this context the Panel considers valid to suppose that what Olimpia did not only distracted, but acted as an extra layer of anxiety on the players shoulders that would have been preferable to avoid. This additional anxiety is entirely attributable to Olimpia, as it is an anxiety on top of the one provoked by the pathology itself” (free translation).

The effects – angst and insecurity - were described by three witnesses: the player’s wife, a friend and his oncologist. The Panel acknowledged that the testimonies of the first two could be biased. However, it also considered that only the intimate circle of the player could have known how he was feeling. So although the weight of this evidence was considered intermediate, it was still relevant. The value of the testimony of the oncologist was naturally higher, as he could describe, as a professional, the effect of the player’s mood in the treatment, after he heard that Olimpia had suspended his contract.

The Panel summarised the conduct of Olimpia as breaching almost all its obligations. Moreover, it relapsed as it did not comply prior to and after the signature of the second agreement. And very importantly, the club acted in clear bad faith.

There are two very clear acts of bad faith that the Panel highlights: the deposit of Olimpia of a certain amount owed to the player in the Federation, instead of depositing it as it did with other payments in the previous years of the contract, and requesting that the player send an invoice, which was impossible for the player since he was an employee and did not have invoices. On top of that, the player was in the middle of his treatment in Uruguay and was unable to attend to the Federation in Paraguay to try to solve the matter.

The other clear act of bad faith was the default notice sent to the player stating he had to return to training after the player had terminated the contract. This request was when the player was fighting for his life, going through chemotherapy in Uruguay.

The panel considers that these two particular actions of the club were intended to aggrieve the player.

It is clearly stated that Olimpia is not responsible for the condition of the player, so the problem is not of origin, but of response. The problem is how Olimpia reacted to the sickness of the player; stopping payments, suspending unilaterally the contract and putting the player in default to return to training in the middle of his treatment. This is exceptional and severe, and also illicit.

“A person with a deathly illness is vulnerable, it is a matter of not only decency, but also humanity to extend to them respect and deference” (free translation).

It is considered that a sanction that is not perceived by the person that committed the illicit act can add insult to the offense, not only by leaving the person in the same situation as he/it was before committing the illicit act, but worse, recognising that although there is an illicit act, the Law did not do anything about it. Thus creating the importance of granting such damages.

The Panel chose not to consider the amount requested by the player, but a percentage of the full amount of the contract, considering that it would be more objective. The percentage chosen was 7%, but no reason was expressed for choosing this number and not another one. Understandably, it is very difficult to measure an internal feeling in monetary terms.

It seems to be the first time that CAS has awarded moral damages to a player.

6. Specificity of Sport also applies for players
Another innovative part of the decision is the award of compensation for specificity of sport to the player. The concept and use of specificity of sport has always been controversial, as it has been used by CAS before in the benefit of clubs and working as an extra compensation, which made the termination of a contract by the player practically impossible, due to the enormous amounts that the players were required to pay, such as in the Matuzalem case.

In the award under analysis, the tribunal understands this notion as conduct that is contrary to the values that inspire the sport in question. A sort of “sportive ethics” inherent to football, considering the interests from the stakeholders and the audience.

The reasoning in order to grant this extra compensation is very similar to the one to grant the compensation for moral damage, but this time looking at the player not only as a person, but also as a key stakeholder in football:

“The conduct of Olimpia, due to its exceptionality and severity, is contrary to the needs and spirit of football, where players have a key role. The chronic breach of the contract and the abuse of a player in the most vulnerable moment of his life is contrary to the values that inspire football. Players deserve respect and care – and contracts have to be complied with”.

Again, in order to be more objective, the amount of the contract is considered, and a 10% of the contract is granted as compensation for specificity of sport. Again, there is no extended explanation as to why 10% and not another percentage was used. When used in favour of clubs, it consisted of six monthly salaries. Although this precedent seemed not to have been followed, the 10% in this case equals the average of six monthly salaries.

Some additional thoughts:

It is possible to wonder what this Panel would think of the practice of deducting the income of the player in a new contract from the compensation due to him in case of breach of the contract by the club that ends in the termination of the contract. Applying the same reasoning as the Panel did, we can state that there is no legal ground to deduct the new income to the due compensation. The DRC jurisprudence in this aspect can lead to the absurd situation that if the club breaches the contract and the player finds a better contract, the club does not have to pay anything. Furthermore, if we follow the analysis of the Panel referring to the moral damage and how a sanction that is not perceived by the person that committed the illicit act can add insult to the offense, by leaving the person in the same situation as he/it was before committing the illicit act, we could conclude that this mitigation should not apply. While this compares different situations, the logic applied could be the same.

The clear recognition of attitudes of bad faith by clubs is vital for players, and is a very big step forward. There are many cases where clubs abuse their position and impose sanctions (fines, ban to enter training facilities etc.) or demand actions of players that are impossible for the players to comply with (such as in this case) or send them to train alone, in order to pressure them to do what clubs want, e.g. sign a new contract, a termination agreement, a document waiving rights to request any compensation, or whatever is convenient for a club in the specific circumstances. Clubs have been doing this for too long already, and it was high time something was done about it.

From now on, looking at this award, it is hoped that it becomes very clear that: i) clubs cannot terminate or suspend a contract due to a player’s illness; ii) if clubs behave in bad faith it may come back to them in the shape of moral damages, since the analysis of the evidence of moral damage will be looked at in a less strict way.

This is clearly an award to welcome.

1. This article states that in case of termination of the contract  because of the club, the player has the right to compensation of the remuneration that remains in the contract for the running year.

2. “Applicable law to the merits. 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.”

3. This is also stated in article 66.2 of the FIFA Statutes.

4. Art. 81, law 88/91.

5. Contract was terminated on 8/1/14

6. This is another argument that could be applied to the mitigation of the rest value of the contract, referred to above. If the new income is deducted, and the new income is higher, the breaching club will not be affected at all by its breach of the contract.

7. The FIFA DRC jurisprudence states that the compensation due to the player will be “mitigated” with the income of the player in his new club for the term of the original contract. This, with the idea not to “over-compensate”. However, why would the breaching club benefit from the work/luck of the player to get a new job?