Ever since UEFA started imposing disciplinary measures to football clubs for not complying with Financial Fair Play’s break-even requirement in 2014, it remained a mystery how UEFA’s disciplinary bodies were enforcing the Club Licensing and Financial Fair Play (“FFP”) regulations, what measures it was imposing, and what the justifications were for the imposition of these measures. For over a year, the general public could only take note of the 23 settlement agreements between Europe’s footballing body and the clubs. The evidential obstacle for a proper analysis was that the actual settlements remained confidential, as was stressed in several of our previous Blogs.[1] The information provided by the press releases lacked the necessary information to answer the abovementioned questions.

On 24 April 2015, the UEFA Club Financial Control Body lifted part of the veil by referring FC Dynamo Moscow to the Adjudicatory Body. Finally, the Adjudicatory Body had the opportunity to decide on a “FFP case. The anxiously-awaited Decision was reached by the Adjudicatory Chamber on 19 June and published not long after. Now that the Decision has been made public, a new stage of the debate regarding UEFA’s FFP policy can start.

This blog will firstly outline the facts of the FC Dynamo case and describe how and to what extent FC Dynamo breached the FFP rules. Secondly, the argumentation and the disciplinary measures imposed by the Adjudicatory Chamber will be scrutinized and compared to the measures imposed on other football clubs who, unlike FC Dynamo, were capable of reaching a settlement with UEFA.

The build-up to the Decision

After the CFCB Investigatory Chamber met to assess FC Dynamo’s monitoring documentation in August 2014, it quickly became apparent that FC Dynamo had a break-even deficit. The deficit amounted to €13,231,000 for 2012 and €23,593,000 for 2013, giving an aggregate total of €36,824,000.[2] What was more important for the assessment, however, was the close relationship the Russian football club had (and still has) with JSC VTB Bank (“VTB”). VTB is both the main shareholder in FC Dynamo (holding 74% of the shares in the club) and the club’s principal sponsor.[3] In accordance with Article 58(1) of the FFP regulations, the relevant income under the regulations includes the revenue derived from sponsorship and advertising. Furthermore, as is stipulated in paragraph 4 of that same Article, relevant income from related parties (such as sponsors) must be adjusted to reflect the fair value of any such transactions. Thus, the CFCB Chief Investigator requested a copy of the sponsorship agreement between FC Dynamo and VTB in order to assess whether it was in conformity with the “fair value” requirement.[4] The documentation that FC Dynamo provided was based on a separate valuation report by the firm ‘Repucom’.

The results of the calculations made by the Investigatory Chamber are staggering. Where the break-even deficit without taking into account the sponsorship agreement amounted to €36,824,000 for 2012 and 2013, the final number, after “fair value” adjustment of the sponsorship agreement, amounts to a whopping €192,557,000. These results are shown in the following table, which is taken from the Decision.

Table 1[5]

Given that the investigations of the Investigatory Chamber were taking place towards the end of the monitoring period 2014, the Chamber asked the Russian football federation to send updated monitoring information covering the year 2014.[6] In order to calculate the updated break-even result, it included a second valuation report done by PWC, in addition to the Repucom report. The final break-even result for the monitoring years 2012-2014 is €302,268,000, as can be seen in the second table below.

Table 2[7]

In accordance with Article 61 (2) of the FFP Regulations, the acceptable deviation from the break-even requirement is €45,000,000 for the monitoring period assessed in the seasons 2013/14 and 2014/15. Therefore, in order to determine the aggregate total of FC Dynamo’s break-even deficit is €302,268,000 - €45,000,000 = €257,268,000 (see table 3).

Table 3[8]

An aggregate break-even deficit of €257,268,000 is incredibly high. Especially if one takes into account that the break-even deficit for the years 2012 and 2013 without the sponsorship agreement amounted to “only” €36,824,000. Even though both the fair value of the VTB sponsorship agreement declared by FC Dynamo and the fair value adjustment according to the Investigatory Chamber have been censored[9] in the Decision, one can safely assume that the adjusted value of the sponsorship agreement was roughly €200,000,000 less than what FC Dynamo was receiving from VTB over a period of three years.

In March 2015, the Chief Investigator informed FC Dynamo that UEFA would withold the revenue obtained by the club in European competition.[10] Not long after this decision, on 27 March a meeting was held between the Investigatory Chamber and FC Dynamo. Though the details of the meeting remain unknown, evidently no settlement between the club and the Investigatory Chamber was reached, thereby making FC Dynamo the first club failing to do so. As a consequence of the parties’ failure of reaching a settlement agreement, the Chief Investigator referred the case to the Adjudicatory Chamber. Moreover, in addition to the referal of the case in accordance with Article 14(1) of the Procedural Rules governing the UEFA Financial Control Body to the Adjudicatory Chamber, the Chief Investigator suggested that FC Dynamo were to be excluded from at least one UEFA club competition for which FC Dynamo would qualify in the future, and advocated a fine of at least €1,000,000.[11]

Pursuant to Articles 20(1) and 23(1) of the Procedural rules, the Adjudicatory Chamber asked FC Dynamo to submit its observations and convened an oral hearing with the club on 16 June 2015.[12] Having received all the information it required, the Adjudicatory Chamber proceeded to formulate its final Decision in accordance with Article 27 of the Procedural Rules.[13]

The Adjudicatory Chamber’s Decision

The Adjudicatory Chamber agreed with the Investigatory Chamber that the key issue in the FC Dynamo case is the valuation of the sponsorship agreement with VTB. The Chamber accepted that this value had to be adjusted to a fair value and that the Expert Reports (Repucom and PWC) were an appropriate basis to do so.[14] Mostly, the Chamber based its final decision on the Investigatory Chamber’s findings. In the end, it concluded that, “no matter which Expert Report valuations are used, the Club has failed to fulfil the break-even requirement because it had an aggregate break-even deficit within the range set out in Paragraph 58” of the FFP Regulations.[15]

FC Dynamo was granted the opportunity to explain and justify why it had failed to meet the break-even requirement. The club’s arguments can be summarized as follows:

1.            The Russian television market generates less revenues than the television market in other European States, thereby creating an economic disadvantage for the Russian clubs.[16]

2.            The Russian league imposes restrictions on foreign players.[17]

3.            The Russian clubs have suffered economically from the fluctuating exchange rates.[18]

The Adjudicatory Chamber counter argued as follows:

1.            Other European States also generate less revenue from television. However, their clubs comply with FFP rules.[19]

2.            A vast majority of European leagues are subject to limitations regarding the use of foreign players. Russia is not “special” in that regard.[20]

3.            Changes in exchange rates may have had an adverse impact on FC Dynamo’s liability under a loan denominated in Euros. However, this did not result in an adverse impact on the Club’s break-even result. Furthermore, it must be remembered that the impact of such fluctuations can be reasonably considered negligible in the context of FC Dynamo’s overwhelming failure to comply with the break-even Requirement.[21]

FC Dynamo’s financial projections and the Compliance Plan

In the observations submitted by FC Dynamo to the Adjudicatory Chamber, the club also presented plans that will allow it to fulfil the break-even requirement in the future. First of all, FC Dynamo’s plans for a new stadium will allow it to generate more revenue.[22] Secondly, the club indicated that it was seeking new investment in the club by means of selling shares and that it will enjoy increased revenues from new sponsorship and retail opportunities. [23] In addition to the financial projections, FC Dynamo also held that it had introduced new internal guidelines to govern its transfer activities (including a salary cap) and has suggested that an emphasis will be placed on more youth players being promoted to the first team.[24]

Again the Chamber was not convinced. FC Dynamo’s proposals were deemed “vague in substance and its projections appear overly optimistic. Whilst the Club’s good faith throughout the proceedings and acknowledgement that it must adjust its business model is welcomed, its proposed route to compliance with the Break-even Requirement is far from certain.”[25] As regards the stadium, since it will not be owned by FC Dynamo itself[26], the Chamber argued that it remains unclear whether it will generate more revenue. And even if it does, this will not happen before 2018. It also remains uncertain whether FC Dynamo will attract new investment. The Chamber is aware of VTB’s plans to sell its shares, but is uncertain if any sale can be effected in the near future. The potential buyer of these shares, Dynamo Sports Society, and VTB have only signed a non-committal intention clause regarding the transfer.[27] Further, the Chamber deems it unlikely that FC Dynamo will comply with the break-even requirement through increased sponsorship revenue. As FC Dynamo itself pointed out in its observations, “unfavourable economic conditions” may make it difficult to attract new investment.[28] More importantly, “having regard to the scale of the Club’s failure to fulfil the Break-even Requirement, even a strong increase in revenues from commercial activities and player sales would be unlikely to bring about FC Dynamo’s sustained and consistent compliance with the Break-even Requirement, for so long as the related party issues surrounding VTB’s involvement with the Club persist”.[29] Lastly, the Chamber welcomes the club’s ambition to reform its transfer activities and place more emphasis on youth players, but similarly held that there is no guarantee that FC Dynamo will actually comply with such policies.[30]

Disciplinary Measures

According to the Chamber, FC Dynamo failed to justify the break-even deficit convincingly and, consequently, faced disciplinary measures. By form of reminder, the Chamber stressed that the objectives of the FFP Regulations included the encouragement of clubs to operate on the basis of their own revenues and, thus, the protection of the long-term viability and sustainability of European football. Furthermore, the principle that all clubs competing in UEFA’s club competitions must be treated equally underpins the Regulations. Since not meeting the break-even requirement may directly affect the competitive position of a club, to the detriment of clubs who comply with the FFP Regulations, this principle has even greater force.[31]

The main, and extreme, disciplinary measure imposed by the Chamber upon FC Dynamo, consists of an exclusion from the next UEFA club competition for which the club would otherwise qualify in the next four seasons (i.e. the 2015/16, 2016/17, 2017/18 and 2018/19 seasons).  Given the scale of the club’s failure to comply with the break-even requirement, the measure is regarded by the Chamber as the “only appropriate measure to deal with the circumstances of this case”.[32] As for FC Dynamo, under Article 34(2) of the Procedural Rules, it had 10 days to appeal the Decision in writing in front of the CAS.  

Concluding remarks

First and foremost, the exclusion from European competitions as a disciplinary measure has, so far, only been imposed on FC Dynamo. None of the club with whom the Investigatory Chamber had reached settlement agreements have been excluded from European competitions for breaching the break-even requirement.[33] The Adjudicatory Chamber had stated numerous times in its Decision that the key factor in the FC Dynamo’s case was the scale of the club’s failure to comply with the break-even requirement. From an objective point of view, a break-even deficit of €257,268,000 is very high indeed. In the view of the Chamber, it justified such a far going disciplinary measure. The question remains, however, what the break-even deficit was for those clubs who managed to reach settlement agreements. Was the break-even deficit for clubs like Manchester City and PSG lower or higher than 257 million? If it was equal or higher than this amount, how did these clubs manage to settle where FC Dynamo failed? Would the measures imposed on FC Dynamo be considered proportionate if other clubs had the same or higher break-even deficit?

On a different note, the FC Dynamo case does allow us to understand better the rationale behind the Adjudicatory Chamber’s decision to impose certain disciplinary measures. It is interesting to see how much weight it places on sponsorship agreements that, according to the Chamber, do not represent a fair market value. This is not only useful information for football clubs, but also to third parties who might be interested in sponsoring a football club. On a downside, we will probably never know exactly what the value of the sponsorship agreement was according to the club, and how it was adjusted by the two Chambers. Even though FC Dynamo had the right to keep certain information confidential, knowing the two figures would have helped us to better understand the reasoning used by the Chambers in reaching their decisions and choosing to exclude FC Dynamo from UEFA competitions.

Finally, these are still crucial times as regards the functioning and the legality of UEFA’s FFP rules. The rules are being challenged in front of both the French and Belgium courts as we speak and there is always the possibility (though remote, see our blog) of the European Courts having to judge on the matter. A challenge in front of the CAS could be seen as a welcome contribution to test the legality, the functioning and the proportionality of the rules. Though it is currently unknown whether FC Dynamo has made use of the opportunity to appeal the case to the CAS.

[1] See e.g.: Luis Torres, “Financial Fair Play: Lessons from the 2014 and 2015 settlement practice of UEFA” (8 June 2015); and Oskar van Maren, “The Nine FFP Settlement Agreements: UEFA did not go the full nine yards” (19 May 2014).

[2] Decision in Case AC-02/2015 CJSC Football Club Dynamo Moscow of 19 June 2015, para. 5.

[3] Ibid, para. 56.

[4] Ibid, paras. 7-10.

[5] Ibid, para. 11.

[6] Ibid, para. 8.

[7] Ibid, para. 15.

[8] Ibid, para. 24.

[9] Under Article 33(3) of the Procedural Rules Governing the UEFA Financial Control Body, “the adjudicatory chamber may, following a reasoned request from the defendant made within two days from the date of communication of the decision, redact the decision to protect confidential information or personal data”.

[10] Decision in Case AC-02/2015, para. 17.

[11] Ibid, para. 25.

[12] Ibid, paras. 28-31.

[13] Under Article 27 of the Procedural Rules, the adjudicatory chamber may take the following final decisions:

a) to dismiss the case; or

b) to accept or reject the club’s admission to the UEFA club competition in question; or

c) to impose disciplinary measures in accordance with the present rules; or

d) to uphold, reject, or modify a decision of the CFCB chief investigator.

[14] Decision in Case AC-02/2015, para. 56.

[15] Ibid, para. 60.

[16] Ibid, para. 67.

[17] Ibid, para. 70.

[18] Ibid, para. 72.

[19] Ibid, paras. 68 and 69.

[20] Ibid, para. 71.

[21] Ibid, paras. 73-75.

[22] Ibid, para. 84.

[23] Ibid, paras. 89 and 94

[24] Ibid, para. 97.

[25] Ibid, para. 83.

[26] According to para. 85, the stadium will be owned and operated by a separate legal entity named ‘Assets Management Company Dynamo’.

[27] Ibid, paras. 89-90

[28] Ibid, para. 91.

[29] Ibid, para. 96.

[30] Ibid, para. 97.

[31] Ibid, paras. 77-80

[32] Ibid, paras. 101-102

[33] For more information on the settlements agreements, see our blog from 9 June 2015.

Editor's Note: Frans M. de Weger is legal counsel for the Federation of Dutch Professional Football Clubs (FBO) and CAS arbitrator. De Weger is author of the book “The Jurisprudence of the FIFA Dispute Resolution Chamber”, 2^nd edition, published by T.M.C. Asser Press in 2016. Frank John Vrolijk specialises in Sports, Labour and Company Law and is a former legal trainee of FBO and DRC Database.

In this first blog, we will try to answer some questions raised in relation to the Article 12bis procedure on overdue payables based on the jurisprudence of the DRC and the PSC during the last two years: from 1 April 2015 until 1 April 2017. [1] The awards of the Court of Arbitration for Sport (hereinafter: “the CAS”) in relation to Article 12bis that are published on CAS’s website will also be brought to the reader’s attention. In the second blog, we will focus specifically on the sanctions applied by FIFA under Article 12bis. In addition, explanatory guidelines will be offered covering the sanctions imposed during the period surveyed. A more extensive version of both blogs is pending for publication with the International Sports Law Journal (ISLJ). If necessary, and for a more detailed and extensive analysis at certain points, we will make reference to this more extensive article in the ISLJ.

In 2015, FIFA announced a very significant addition to the Regulations on the Status and Transfer of Players (hereinafter: “the RSTP”): the inclusion of a new provision on overdue payables by defaulting clubs towards players and other clubs. On 1 April 2015, the 2015 edition of the RSTP gave birth to a fast-track procedure to deal with overdue payables enshrined in Article 12bis (hereinafter: “the 12bis procedure”). In its Circular letter no. 1468, FIFA also strongly urged all of its member associations to make sure that their affiliated clubs were informed of this new provision immediately.

From Article 12bis, which is also laid down in the 2016 edition of the RSTP, it follows that clubs are required to comply with their financial obligations towards players and other clubs as per the terms stipulated in the contracts signed with their professional players and in the transfer agreements signed with other clubs. In accordance with Article 12bis FIFA is entitled to sanction clubs that have delayed a due payment for more than 30 days without a prima facie contractual basis.

It was a real thorn in the side of FIFA that too many clubs, on a worldwide level, did not comply with their financial contractual obligations without legitimate reasons.[2] With the introduction of this provision, it was not only FIFA’s aim to continue its process to further speed up its proceedings, but also to establish a stronger system regarding overdue payables towards players and clubs. FIFA stressed that it wanted to further improve efficiency and provide clear regulatory steps to deal with overdue payables from clubs to players and from clubs to other clubs.

As from 1 April 2015, the Dispute Resolution Chamber (hereinafter: “the DRC”) and the Players’ Status Committee (hereinafter: “the PSC”) are FIFA’s competent authorities to deal with claims on overdue payables in relation to Article 12bis. Both FIFA committees were given a wide scope of discretion to impose sanctions on defaulting clubs, such as fines and transfer bans. In fact, the possibility to impose sanctions is critical to support a stronger and more efficient dispute resolution system regarding overdue payables, as we will see in the second blog.

The introduction of FIFA’s 12bis procedure also gave rise to many (legal) questions. For example, are only clubs and players entitled to lodge a claim before respectively the PSC and the DRC? Or are other parties, such as coaches and national associations, also entitled to raise their claims under 12bis? Do claims for training compensation and solidarity contribution fall under 12bis? Can the 12bis procedures be considered as a real fast-track procedure? Under what circumstances can an offence be considered a repeated offence? And also, since the imposition of sanctions is key to the efficacy of the 12bis procedure, under what conditions will these sanctions be imposed? These are only a small sample of the questions that arose after the introduction of the 12bis procedure. In this first blog, we will try to answer the most important questions raised based on the jurisprudence of the DRC, PSC and CAS.

General preliminary observations

As a starting point, it must be noted that exactly 137 decisions by the DRC and the PSC regarding Article 12bis have been published by FIFA on its website between 1 April 2015 and 1 April 2017.[3] Of these 137 decisions, 99 decisions have been dealt with by the DRC, including 58 decisions issued by the DRC Single Judge. Additionally, 32 decisions were passed by a Chamber of three judges, whereas 24 of these decisions were passed by circulars and eight were passed by a decision of a sitting Chamber in Zürich, Switzerland. Only nine FIFA decisions were passed by a Chamber of five judges.   

From the 38 decisions of the PSC, 37 were issued by its Single Judge and only one[4] was issued by a Chamber of three judges via a circular. It can be noticed that in most “renouncement of right cases” (in which defaulting clubs have not replied to the claim of the claimant party), a Single Judge has dealt with the case.

Analysing the decisions, it is striking that all claimants in the 137 decisions won their cases. In other words, in none of the decisions of the DRC and the PSC it was found that a “prima facie contractual basis” existed for the respondent party, which would justify non-compliance with the original contract. A sanction was imposed in all decisions.

It can further be observed that in the great majority of the decisions, the respondent party did not reply to the claim. As we will see, the absence of a reply will generally result in more severe 12bis sanctions for the defaulting club.

The jurisprudence of FIFA also illustrates that the 12bis procedure are a step towards swifter proceedings. In the last years we have already noted a positive development with regard to the length of ‘regular’ proceedings before FIFA (not including the 12bis procedures). With regard to the 12bis procedure, FIFA stressed that it has shortened the timeframe for decisions taken on overdue payables, with decisions now being taken within eight weeks and claimants being notified of a decision within nine weeks of lodging their complete claim. After analysing the 12bis decisions of the DRC and the PSC, it is clear that FIFA actually lived up to these expectations. The average duration of a 12bis procedure is two months. It is only exceptionally that a 12bis decision lasted longer (four or ultimately five months) or even took less time (one or one and a half months).[5] As illustrated in Figure 1, approximately 67% of the PSC and the DRC procedures were concluded within eight weeks. Approximately 80% of both FIFA decisions were dealt with within 10 weeks.

Figure 1

The scope of Article 12bis

The two years of jurisprudence show that the personal scope of Article 12bis must be interpreted strictly. As follows from the text of Article 12bis(3), only players and clubs are entitled to lodge a claim before FIFA. Put another way, coaches, national associations and intermediaries do not have standing to sue in the 12bis procedure. This textual interpretation of the provision is confirmed by the jurisprudence of the DRC and the PSC. In fact, none of the reviewed decisions of the DRC or the PSC involved a party who was not a club or a player.

Additionally, it can be concluded that claims for training compensation or related to solidarity mechanism are also excluded from the scope of Article 12bis, as this opportunity is not provided in the provision. Moreover, the current jurisprudence does not leave room for any other interpretation. With regard to training compensation and solidarity mechanism, this means that FIFA gives to “overdue payables” a different meaning than the UEFA Club Licensing and Financial Fair Play Regulations, since outstanding amounts for training compensation and solidarity mechanism are considered by UEFA as overdue payables. The same is true for outstanding payments due by clubs to other (than player) club employees and debts by clubs to social/tax authorities; such outstanding amounts will not be considered by FIFA as ‘overdue’ under Article 12bis.

Generally, the DRC deals mainly with contracts signed by clubs with professional players. These include employment contracts but it is to be expected that separate agreements could also fall under the scope of Article 12bis as long as specific elements of that separate agreement suggest that it was in fact meant to be part of the actual employment relationship, as the DRC decided in many other cases (not being 12bis procedures). This is for example the DRC’s position with regard to image right contracts.^[6] Based on the jurisprudence reviewed, it follows that termination agreements fall under the scope of Article 12bis.[7] The PSC will only deal with transfer agreements, including both transfers on a definite[8] as well as on a temporary basis[9]. It is to be expected that agreements between clubs that do not concern the status of players, their eligibility to participate in organised football, and their transfer between clubs belonging to different associations, will most likely not fall under Article 12bis.[10]

Finally, it also follows from Article 12bis(3) that the creditor (player or club) must have put the debtor club in default in writing, granting a deadline of at least 10 days to comply with its financial obligations. Regarding this 10-days deadline, FIFA follows a strict interpretation, as we will see in the following paragraph.

The existence of an ‘overdue payable’ 

As follows from the wording of Article 12bis and the corresponding jurisprudence, two prerequisites must be met to establish that an overdue payable exists under Article 12bis. First, the club must have delayed a due payment for more than 30 days without a “prima facie contractual basis”. Second, the creditor (which is the player or club) must have put the debtor club in default in writing, granting a deadline of at least 10 days to comply with its financial obligations. In all the published decisions the FIFA committees verified that a 10-days deadline had been granted. We can therefore assume that this 10-days deadline is a prerequisite for the DRC and the PSC to proceed with the claim. Although Article 12bis is not entirely clear as regards the start of the “10-days deadline”, the jurisprudence shows that it runs as soon as the 30 days have elapsed.[11]

Disputes can arise with regard to the fulfilment of the “10-days deadline”. For example, in the CAS award of 9 May 2016, the player had filed a statement of claim before the DRC on 25 March 2015 and then sent a letter to the club on 30 March 2015 (i.e. five days after filing a claim at the DRC) putting the club in default for the overdue payment. The club however argued that this was a violation of Article 12bis(3) of the RSTP, edition 2015, as it did not make any legal sense whatsoever to address a default notice to a party after lodging a claim at FIFA. The CAS however stated that it was clear that the player had already given the club ample opportunity (the player stated that it had already provided three separate notices of default) to fulfil its obligations in conformity with Article 12bis.[12] The CAS therefore found it curious that the FIFA administration still requested the player to issue yet another default notice in such a situation when it was clear that the player had already given the club many opportunities to fulfil its obligations. This part of the award is interesting. On the one hand it shows that (the) FIFA (administration) obliges creditors to send a “10-days deadline” default letter under all circumstances, while on the other hand it is to be expected that the CAS might show more flexibility. Interestingly, in a case before the PSC, the claimant club put the respondent club in default of payment, starting the 10-days deadline on the exact same date of the submission. This practice was accepted by the PSC.[13] In other words, in order to gain time, claimants might be able to lodge a claim in front of FIFA before the “10-days deadline” of Article 12bis has passed.  

To establish whether “overdue payables” exist, it is decisive that the “overdue payables” existed after 1 April 2015 (the date on which Article 12bis came into force). This is also confirmed by the CAS. In its CAS award of 17 June 2016, the Italian club Pescara referred to the fact that the agreement between Pescara and the Belgian club Standard Liège was entered into on 10 July 2012, while Article 12bis did not take effect until 1 April 2015. Pescara stated that it had no means to know that Article 12bis would be enacted nearly three years later. The Sole Arbitrator however found it decisive and stressed that the claim made by Standard Liège was made after 1 April 2015 and that Standard Liège referred clearly to the overdue payables from Pescara. At the end, all that matters, according to the CAS, was the existence of overdue payables at the assessment date and that the assessment date was after 1 April 2015.[14]

For the sake of clarity, the fact that the DRC and the PSC have decided in 12bis procedures that a defaulting club must pay to the claimant overdue payables does not touch upon the question whether the contract has been terminated with just cause. To put it bluntly, a decision in a 12bis procedure does not justify a unilateral termination based on Article 14 of the RSTP; no legal connection exists in this regard. The jurisprudence of the DRC in relation to its ‘regular’ proceedings (not being 12bis procedures) generally shows that a valid ground for unilateral termination exists only in case there is outstanding remuneration for a period of three (or sometimes two) months.[15] This means the existence of an overdue payable under Article 12bis does not automatically give the claimant the legal right to unilaterally terminate the contract with the defaulting club. It should also be noted in this regard that it follows from Article 12bis(9) that the terms of Article 12bis are without prejudice to the application of further measures derived from Article 17 RSTP in case of a unilateral termination of the contractual relationship.

In the second blog we will focus specifically on the sanctions available to FIFA under Article 12bis and will provide explanatory guidelines covering the sanctions imposed during the period surveyed.

[1] This contribution discusses the jurisprudence of the FIFA Dispute Resolution Chamber (DRC) and the Players’ Status Committee (PSC) as published on FIFA’s website in the period between 1 April 2015 and 1 April 2017. Decisions published after the date of 1 April 2017 (even if issued before this date) will fall outside the scope of this contribution. The awards of the CAS in  relation to Article 12bis will also be discussed in this contribution. However, only the awards as published on the website of CAS before 1 April 2017 will be discussed in this contribution. As far as we know, several cases regarding art. 12bis are currently also pending before CAS.

[2] As was also introduced in FIFA Circular no. 1468, dated 23 January 2015, the new Art. 12bis is added to the list of provisions that are binding at national level and must be included in the association’s regulations (cf. Art. 1(3)(a) of the RSTP.

[3] Dispute Resolution Chamber: http://www.fifa.com/governance/disciplinary/dispute-resolution-system.html. Accessed 1 April 2017. Players’ Status Committee: http://www.fifa.com/governance/disciplinary/dispute-resolution-system.html. Accessed 1 April 2017.

[4] PSC 20 June 2016, no. op0616676.

[5] See for the shorter procedures: inter alia DRC 18 May 2016, no. op0516646, DRC 29 February 2016, no. op0216229, DRC 15 July 2016, no. op0916308 and DRC 30 November 2015, no. 11151578. See for the longer procedures: inter alia DRC 3 June 2016, no. op0616046, DRC 7 April 2016, no. op04161633, DRC 15 October 2015, no. op1015914 and DRC 1 October 2015, no. 1015648.

[6] DRC 13 December 2013, no. 12131045 and DRC 17 January 2014, no. 114396. See also DRC 30 August 2013, no. 08133402, DRC 10 February 2015, no. 02151030 and DRC 28 March 2014, no. 03141211. See also CAS 2014/A/3579 Anorthosis Famagusta FC v. Emanuel Perrone, award of 11 May 2015.

[7] See inter alia DRC 26 November 2015, no. op11151356.

[8] See inter alia PSC 13 September 2016, no. op09161090.

[9] See inter alia PSC 11 June 2015, no. op0615618 and PSC 20 February 2017, no. op02172015.

[10] Art. 1(1) RSTP, edition 2016.

[11] Moreover, parties should be aware that the 30 days deadline will start to run only after the so-called “grace periods” has passed, which also explicitly follows from the applicable jurisprudence of FIFA. A grace period can be considered as the period immediately after the deadline for an obligation during which the amount due, or other action that would have been taken as a result of failing to meet the deadline, is waived provided that the obligation is satisfied during the grace period. See DRC 14 November 2016, no. 11161545-E. Also in “regular” DRC cases so-called “grace periods” are accepted. See inter alia DRC 6 November 2014, no. 11141064.

[12] See CAS 2015/A/4153 Al-Gharafa SC v. Nicolas Fedor & FIFA, award of 9 May 2016. From this award it follows that FIFA applied the incorrect version of the RSTP in its decision of 22 June 2015 as a result of which Art. 12bis was not applicable.

[13] PSC 30 November 2015, no. 10151052.

[14] Also in its award of 17 June 2016, another Sole Arbitrator stressed that as Art. 12bis has been implemented within the 2015 edition of the RSTP, FIFA has the power to impose a sanction listed in Art. 12bis(4) RSTP in that specific case. See CAS 2015/A/4310 Al Hilal Saudi Club v. Abdou Kader Mangane, award of 17 June 2016.

[15] See inter alia DRC 7 September 2011, no. 9111901 (two months) and DRC 11 May 2011, no. 129795 (three months). See also DRC 17 December 2015, no. 12151368. Please note that CAS will hold on to a period of three months in order to establish that a just cause exists; See inter alia CAS 2015/A/4158 Qingdao Zhongneng Football Club v. Blaz Sliskovic, award of 28 April 2016.