the end of December 2015, the CAS decided on a very public contractual
dispute between Sporting Clube de Portugal Futebol SAD (Sporting) and
Doyen Sports Investments Limited (Doyen). The club was claiming that
Doyen’s Economic Rights Participation Agreement
(ERPA) was invalid and refused to pay Doyen’s due share on the transfer
of Marcos Rojo to Manchester United. The dispute made a lot of noise
(see the excellent coverage by Tariq Panja from Bloomberg here, here and here)
as it was the first TPO case heard by the CAS after FIFA’s ban. Yet,
and it has to be clear from the outset, the case does not affect the
legality of FIFA’s TPO ban; it concerned only the compatibility of
Doyen’s ERPA with Swiss civil law. The hearing took place in June 2015,
but the case was put under a new light by the football leaks revelations unveiled at the end of 2015 (see our blog from December 2015). Despite these revelations, the CAS award favoured Doyen, and was luckily for us quickly made available on the old football leaks website.
This blog will provide a commentary of the CAS decision. It will be
followed in the coming days by a commentary by Shervine Nafissi on the
judgment, on appeal, by the Swiss Federal Tribunal.
I. The facts
the summer of 2012, Sporting Clube de Portugal Futebol SAD (‘Sporting’)
signed two professional football players: (i) Zakaria Labyad, a
Dutch-Moroccan international from PSV Eindhoven for a transfer fee of
€900,000; and (ii) Faustino Marcos Alberto Rojo (Marcos Rojo), an
Argentinean international from Spartak Moscow for a transfer fee of €4
Against this background, negotiations took place between
Sporting and Doyen Sports Investments Limited (‘Doyen’), a private
investment company known for its engagement in the acquisition of
professional football players' economic rights. On 23 August 2012,
Sporting and Doyen concluded a series of agreements which were aimed at
providing a financial aid to Sporting in exchange for the acquisition of
a proportionate share of Labyad's and Rojo's economic rights.
to the Economic Rights Participation Agreement related to Labyad (‘ERPA
1’), Sporting accepted to transfer 35 % of Labyad's economic rights to
Doyen against the payment of €1.5 million. The other Economic Rights
Participation Agreement related to Rojo (‘ERPA 2’) obliged Sporting to
transfer 75 % of Rojo's economic rights to Doyen for the price of €3
million. These agreements also provided Doyen with the unilateral
so-called 'Put Option' to sell back to Sporting for a predetermined
price its share of the players' economic rights in case Sporting should
not have transferred the players on or before 1 July 2015.
March 2013, Sporting appointed a new Board of Directors. In order to
ameliorate the club's financial situation, Sporting subsequently decided
to put Rojo on a transfer list. At the same time, Sporting requested
Doyen to find a solution for. Rojo. One of the main representatives of
Doyen allegedly agreed on the transfer of Rojo to Calcio Catania, a then
top-tier Italian club. Nonetheless, shortly thereafter, Sporting
indicated that its new-appointed coach had decided to keep Rojo and
asked Doyen to revoke the deal.
In the meantime, an agreement was
signed between Sporting, the Dutch club SBV Vitesse Arnhem (‘Vitesse’)
and Labyad, whereby the latter was loaned to Vitesse from 8 January 2014
until 30 July 2015. The loan was made without compensation. It was
agreed that during the loan period that Vitesse would pay for the
player's wages and secure the necessary insurance policies. This
contract did not contain any purchase option.
unexpectedly great performances in the Argentinean national shirt during
the 2014 FIFA World Cup in Brazil, Rojo attracted many prominent clubs
in Europe. Initially, Rojo was not willing to leave Sporting, but he
switched this position in August 2014.
After a round of
unsuccessful negotiations with Southampton F.C., Manchester United F.C.
placed its offer for Mr. Rojo's services amounting €20 million.
Eventually, on 19 August 2014, Sporting contractually agreed to transfer
Mr. Rojo to Manchester for the sum of €20 million net, plus 20% of the
capital gain of any future transfer above the amount of €23 million. On
the same day, Manchester also accepted to transfer the Portuguese
international Nani to Sporting on a temporary loan basis for one year.
that time, relations between Sporting and Doyen deteriorated,
particularly due their opposing views with respect to the applicability
of the ERPAs to the case at hand. As a result thereof, Sporting notified
Doyen of its intention to terminate both ERPAs. In its response, Doyen
objected to the termination of these agreements and attached to its
communication an invoice of €15 million to be paid in two instalments.
On 28 August 2014, Sporting reimbursed to Doyen the value of its
investment made under the ERPAs (i.e. the amount of €4.5 million).
16 October 2014, Sporting filed with the CAS a combined request for
arbitration and statement of claim against Doyen in accordance with
Article R38 et seq. of the Code of Sports-related Arbitration.
On 21 October 2014, Doyen filed its request for arbitration against
Sporting. Later that month, the parties agreed to consolidation of the
both procedures. The hearing before the CAS was held on 16, 17 and 18
June 2015. Finally, on 21 December 2015, the CAS rendered its arbitral
II. The reasoning of the CAS
CAS award is structured around Sporting’s various claims against the
validity of the ERPA, as well as its contention of lawfulness of its
breach. To do so, the CAS examined closely the compatibility of the ERPA
with Swiss Law and EU Law.
1. Is the ERPA legal?
In a preamble, the CAS reminds that the “principle of party autonomy is the backbone of Swiss contract law”.
However, “Articles 19 and 20 CO [Swiss Code of obligations], prohibit
contracts which are impossible, unlawful, immoral and/or contravene
public policy or personality rights.” In particular, the Sporting claimed that the performance of the contract is unlawful and immoral.
- Is the performance of the ERPAs unlawful under Swiss law?
pointed out by the Panel, under Swiss contract law, an unlawful
contract is null and void. According to the Swiss Federal Tribunal,
“contract is unlawful when its content violates Swiss law (federal
The question was consequently whether Sporting could demonstrate such a
violation. In this regard, the club argued first that the ERPAs
contradicted Swiss labour law. The Panel, however, quickly rejected this
argument, as the players were not parties to the ERPAs. The second, and
more serious, potential violation of Swiss law pointed out by Sporting
concerned Article 157 CPS (Swiss Penal Code). The provision condemns profiteering and overlaps with article 21 CO (Swiss Code of Obligations) respective to unfair advantage.
Any claim stemming from article 21 CO must be raised within the first
year after the conclusion of the contract, thus Sporting was
time-barred. Regarding Article 157 CPS, the panel considered it “cannot
be deemed violated in this case, since the acts invoked as being
criminal by Sporting all fall outside the territorial scope of
application of the CPS, bearing in mind that the contracts were signed
outside Switzerland by non-Swiss individual/entities without any of the
Parties’ acts or their effects occurring in Switzerland”.
Such reasoning would basically immunize from nullity any contract
signed and enforced exclusively outside of Switzerland, even if found
contrary to Swiss criminal law. In any case, the Panel went on to assess
substantively whether the ERP violates Article 157 CPS. Following the
jurisprudence of the SFT, profiteering is constituted “when business
good practice requirements are grossly violated and the limits of what
seems normal and usual in light of all the circumstances, are
significantly exceeded (ATF 92 IV 132, consid.1)”.
Moreover, “the offender must know that the other party is in a weak
position and must be aware of the fact that a) there is a disparity
between the respective considerations and b) the victim accepts this
unbalanced deal because of its weakened state (ATF 130 IV 106
consid.7.2)”. Based on the following elements:
- Sporting was not inexperienced in sharing its players’ economic rights with investment funds.
- Sporting entered into contact with Doyen and asked for its financial assistance.
needed Doyen’s support to finance the transfer of two players; one of
them (Rojo) was also the “target” of another club, SL Benfica.
- The ERPAs were negotiated for a month, each party being assisted by lawyers and experts.
- The signatories confirmed that they freely chose to sign the ERPAs.
- Sporting’s new management was aware of the scope of the ERPAs but never contested their validity before August 2014.
- There is no evidence that the signature of the ERPAs has deteriorated Sporting’s financial situation.
Panel, hence, found “that at the moment of entering into the ERPAs,
Sporting was not in a state of “need, dependence, inexperience, or
weakness of mind or character”, which was exploited by Doyen”. 
Moreover, “Sporting was not forced to sign these players and the
acquisition of their services was certainly not a “matter of life and
death” for the club”.  Henceforth, the CAS arbitrators concluded that “the material conditions for Article 157 CPS to apply are not met”.
Panel quickly brushed aside the claim that the ERPAs would contradict
FIFA regulations as those are not mandatory provisions of Swiss law in
the sense of Article 20 CO.
- Is the performance of the ERPAs immoral under Swiss law?
second strand of arguments of Swiss law raised by Sporting concerns the
immorality of Doyen’s ERPAs. As recalled by the CAS, immoral contracts
under Swiss law are those that:
- fall under a dominant moral disapproval; or
- contravene the general sense of what is right and what is wrong; or
- go against the ethical principles and values of the legal system as a whole.
on immorality, “Swiss case law is very restrictive and is mainly linked
to sex-related cases, unfair competition and bribery”.
Thus, the fact “that there is a big disparity between the respective
considerations is not in itself immoral”, as “the Swiss legal order do
not forbid a difference in value between the contractually agreed
performance”.  Thus, the CAS set out a very challenging legal framework for Sporting to demonstrate the immorality of the ERPAs.
CAS Panel considered that a “global evaluation of the two ERPAs shows
that both the club and Doyen entered into a standard business oriented
deal, where the amount of the loan granted was not necessarily in
relation with the percentage of the assigned economic rights”.
It also held that “[s]uch a profit sharing is quite usual in the
football industry, where the transferee clubs often undertake to share a
percentage of the future transfer with the player’s former club”.  Thus, it “finds that the object of the ERPAs is not legally immoral”.
In the proceedings before the CAS, Sporting had insisted on the huge return on investment earned by Doyen on the Rojo
ERPA, to highlight the discrepancy between the two sides of the
contract. But the CAS Panel recalled “that the fact that there might be a
disparity between the respective considerations is not immoral”.
Moreover, it pointed out that “a discrepancy in possible profits (one
party making more profit than the other) is quite different from the
scenario where only one party stands to gain and the other to lose”. 
Hence, it concluded “that there was no “economical unbalance” as
defined by Swiss law between Doyen and Sporting’s respective
Furthermore, as Sporting was in financial difficulties at the time of
the conclusion of the ERPAs, the CAS Panel “disagrees with Sporting when
it claims that Doyen’s investment was risk free”.
It did insist that even if the “Put Option” and the “Minimum Interest
Fee” were considered immoral, they would not come in play in the present
case as they were not triggered.
Finally, the Panel assessed
Sporting’s claim that the ERPAs would constitute an excessive
restriction of Sporting’s economic freedom under Article 27(2) CC (Swiss
The CAS arbitrators refer to the SFT’s view that “a contractual
limitation of economic freedom is disproportionate within the meaning of
Article 27 para. 2 CC only when the obligee submits to someone else’s
arbitrariness, gives up his economic freedom or restricts it in such a
way that the foundation of his economic existence is jeopardized”.
In this regard the Panel concluded that “among all the creditors of
Sporting (representing a consolidated debt of €500 million), Doyen was
certainly not in a position to prevent Sporting from continuing its
economic and other activities”.
Indeed, would Sporting “have failed to meet its commitments, it would
not have been subjected for that reason alone to Doyen’s arbitrariness
or threatened in its economic freedom in such a serious manner that the
foundations of its economic existence would be jeopardized”.
Furthermore, responding to Sporting’s claim that its freedom to act was
drastically curtailed by the ERPAs, the Panel held that the facts of
the case demonstrate “that on important occasions, Sporting was free to
act as it wished”.
In short, Sporting failed to demonstrate with concrete evidence that
Doyen’s ERPAs were used to forced the club to take key economic
- Are the ERPAs contrary to EU law?
claims of Sporting against the ERPAs based on EU law or the ECHR failed
due to the lack of evidence presented by the club to support them. The
incompatibility of an ERPA with EU competition law seems very difficult
to demonstrate in the abstract. It is true that UEFA and FIFPro have
submitted a joint competition law complaint
to the European Commission against TPO contracts. Yet, it remains
difficult to envisage the specific competitive restrictions or abuses of
dominant position that could be argued against Doyen’s ERPAs.
Additionally, regarding the potential infringement of the free movement
rights of the player, the Panel rejected Sporting’s right to raise the
argument in the name of the players.
In any case, this is a tricky argument for a club to make, because if
ERPAs have the potential to affect the players’ freedom to work, it is
only through the club’s willingness to punish the player for not
accepting a transfer requested by a third party.
In conclusion, the CAS deemed Doyen’s ERPAs compatible with Swiss and EU law
2. Has Sporting unlawfully terminated the ERPA?
next question was whether Sporting terminated the ERPAs with just
cause. In this part of the award, the validity of the ERPAs is not
anymore at play. Instead, it is the conformity of Doyen’s actions with
the contractual duties stemming from the ERPAs which was scrutinized by
the Panel. In this regard, the main argument of Sporting was that Doyen
has violated the non-interference duties enshrined in Articles 6.2 and 14 of Rojo’s ERPA. The assessment of this claim is highly dependent on factual elements brought forward by Sporting and Doyen.
With regard to Article 6.2 of the Rojo
ERPA, the Panel found “that Sporting has not established in a
convincing manner that it expressly and unequivocally asked Doyen to
stop looking for transfer offers for Mr Rojo”. 
In particular, “the fact that the President and Vice-President of the
club admitted that they would “keep the door open” to any sufficiently
Additionally, the Panel held “that given the very long period of time
during which Sporting expressly requested and/or implicitly accepted
that Doyen seek offers on its behalf, it would have taken particularly
clear written instruction for the latter to be led to believe in good
faith that it must cease all activity”.  Hence, “in the absence of a clear revocation, Doyen was entitled to continue looking for better transfer conditions”. The arbitrators concluded that Doyen had not breached Article 6.2 of the ERPA.
As regards Article 14 of the Rojo
ERPA, and whether Doyen exercised pressure on Sporting’s
transfer-related policy, the Panel’s holdings are less favourable to
Doyen, even though Sporting’s claims are rejected in the end. In light
of the evidence presented, the arbitrators refused to consider that
Sporting had demonstrated that Doyen exercised undue or unusual pressure
to impose the transfer of Rojo. They insisted on a number of
circumstances that played in favour of Doyen:
- Doyen was only
“relying on a contractual right” when drawing attention to the fact that
it would claim the €15 million if Sporting refused to transfer Rojo;
- Doyen was willing to consider ways of improving (compared to the ERPA) the benefit Sporting would get from the transfer;
- Sporting never seemed impressed by Doyen’s messages and refused numerous proposals in the past;
- Doyen’s intervention led to a substantial increase of the transfer fee from €12.5 million to €20 million;
- Doyen tried desperately to get a meeting with Sporting’s President;
- Sporting went on to transfer Rojo to Manchester United by itself.
the award, the Panel did acknowledge that Nelio Lucas was “putting some
pressure on Sporting but essentially in an attempt to obtain a meeting
with Mr Bruno de Carvalho”.
Moreover, the Panel also noted “Doyen and Sporting had been in a
business relationship on a long-term basis and were used to discussing
openly and regularly”. 
This part of the award illustrates the structural ambiguity and
incoherence of the ERPAs. On the one side, as indicated under Article
6.2 and 14 of the ERPA, Doyen commits to not influencing a club’s
policies, while, on the other, through Article 9, 10.4 and 15 of the
ERPA, it can undoubtedly strongly influence the transfer policies of a
club through economic pressure. The Panel decided to resolve this
contradiction in favour of Doyen and refused to consider that it had
breached its contractual duties enshrined in Article 14. This led the
CAS to conclude that “Sporting cannot, in good faith, claim that it had a
just cause to unilaterally terminate its contractual relationship with
Doyen”. Henceforth, the club was sanctioned to pay to Doyen a considerable sum of money approximating €12 million.
Conclusion: Is FIFA’s TPO ban at risk?
first concluding point is related to the legality of TPO under Swiss
law. I think by now everybody should be aware of the liberalism of Swiss
contract law. To be deemed unlawful and/or immoral a contract has to
reach a high bar, which, for the CAS at least, Doyen’s ERPAs do not
pass. This is great news for Doyen, because if they did all its ERPAs would
have been unlawful under Swiss law. Paradoxically, this liberalism is
also why FIFA’s TPO ban, a contractual regulation by a Swiss
association, is unlikely to be found contrary to Swiss law either. In
any event, the CAS rightly points out the general hypocrisy underlying
this dispute, TPO contracts are just a spin off of traditional
contractual practices in football, and, indeed, clubs, which are
speculating on the transfer market constantly (as Sporting was), are
extremely badly placed to challenge the morality of TPO.
leads me to my second point, and, paradoxically again, to a conclusion
that I think reinforces the legitimacy of FIFA’s TPO ban. The rejection
of Sporting’s claim that Doyen breached the ERPAs provisions highlights
the shadowy nature of a transfer market ripe with conflicts of
interests. The CAS Panel might very well conclude that Doyen did not
force Sporting into transferring Rojo, but based on the facts of the
case and what we know since then (on the dirty business tricks of Doyen revealed
by the football leaks see here),
it is easy to understand how Doyen can be suspected of influencing and
controlling the transfer policies of any club with which it had signed
an ERPA. The CAS felt that Sporting was playing a similar double game,
and this might be true in practice, but the set-up of the contractual
situation is such that it necessarily incentivizes speculation and
abuses to the detriment of the stability of the clubs’ squads (which, as
a reminder, is the main legitimate rationale recognized by the EU Commission to support the legality of the FIFA transfer system as a whole vis-à-vis EU competition law).
this award a blow to the legality of FIFA’s TPO ban? Personally, I
doubt it (in this regard I differ slightly from Shervine’s conclusion in
his case note on the Swiss Federal Tribunal decision to be published on
this blog in the coming days). The award recognizes that under Swiss
law this type of contractual practices (as many other controversial
ones) is legal, but in turn this does not mean that FIFA (or any other
State for that matter) is not legitimate in regulating or banning it.
Instead, I believe the case highlights very well the many reasons why a
TPO ban might be needed. Sporting’s dire financial fate puts a
dim light on the incentives of club management to burden their clubs
with huge financial risk for short-term sporting benefits. These risks
are enhanced by the easy availability of TPO funding and the possibility to
speculate on the players’ transfer value. Moreover, clubs tend to be too
popular to fail, and investors are very much in a moral hazard
position, knowing that municipalities prefer to bail out their local
clubs rather than let them fail (see our blog
on the rise and fall of FC Twente as a case in point). Finally, TPO
enhances the complexity of the (already complex) contractual networks
underlying player transfers. The practice makes it way harder (as
highlighted by the CAS’s discussion of the steps leading to Rojo’s
transfer) to disentangle the various contractual responsibilities, as
well as the potential conflicts of interest that might in the end affect
the field of play (through indirect financial pressure exercised on
players, agents, managers or executives). This opaque complexity is a
threat to the integrity of the game and an open door to financial
speculation and abuses (as those highlighted by the recent football leaks).
 CAS 2014/O/3781 & 3782, Sporting Clube de Portugal
Futebol SAD v. Doyen Sports Investment Limited, Award of 21 December
2015, para. 184.
 Ibid., para. 190.
 Ibid., para. 195.
Article 157 (1) CPS reads as follows: Any person who for his own or
another's financial gain or the promise of such gain, exploits the
position of need, the dependence, the weakness of mind or character, the
inexperience, or the foolishness of another person to obtain a payment
or service which is clearly disproportionate to the consideration given
in return, any person who acquires a debt originating from an act
of profiteering and sells or enforces the same, is liable to a custodial
sentence not exceeding five years or to a monetary penalty.
 Article 21 CO reads as follows:
there is a clear discrepancy between performance and consideration
under a contract concluded as a result of one party’s exploitation of
the other’s straitened circumstances, inexperience or thoughtlessness,
the injured party may declare within one year that he will not honour
the contract and demand restitution of any performance already made.
2. The one-year period commences on conclusion of the contract.
 CAS 2014/O/3781 & 3782, para. 211.
 Ibid., para. 212.
 Ibid., para. 213.
 Ibid., para. 220.
 Ibid., para. 221.
 Ibid., para. 222.
 Ibid., para. 227.
 Ibid., para. 231.
 Ibid., para. 232.
 Ibid., para. 234.
 Ibid., para. 236.
 Ibid., para. 237.
 Ibid., para. 239.
 Ibid., paras. 240-249.
 Ibid., para. 242.
 Ibid., para. 246.
 Ibid., para. 248
 Ibid., para. 260.
Article 6.2 of the Rojo ERPA states that: “The FUND [Doyen] shall not
share the Transfer Information with third parties other than its own
advisers while such information remains out of the public domain, and
shall be strictly prohibited from contacting or interfering in any way
whatsoever, either directly or indirectly, with any of the parties
(other than the Club) which is directly or indirectly involved in the
negotiations of the potential Transfer, except with the written
permission of the Club.”
Article 14 of the Rojo ERPA states that: “The FUND recognizes that the
Club is an independent entity in so far as the Club’s employment and
transfer-related matters are concerned and the FUND shall not, either
through this Agreement or otherwise, seek to exert influence over these
matters or the Club’s policies or the performance of its teams.”
 CAS 2014/O/3781 & 3782, para. 279
 Ibid., para. 280.
 Ibid., para. 287.
 Ibid., para. 289.
 Ibid., para. 290.
 Ibid., para. 296