A Review of the Emiliano Sala Decision – Olukolade Ehinmosan

Sports Law/ Dispute Resolution

17th February 2020

 

Olukolade Ehinmosan[1]

 

A REVIEW OF THE EMILIANO SALA DECISION

 

Background

 

The January 2019 Summer Transfer Window was an exciting beehive of European football transfer activity. Arguably the most notable transfer of the Window, FC Nantes Centre Forward Emiliano Raul Sala sealed his move to then English Premier League outfit, Cardiff City. Sala expressed elation and even dubbed the transfer a “dream move.”[2]

The atmosphere soon became sour with the tragic demise of Sala in a devastating plane crash while travelling from France to team up with his new club, Cardiff City FC. Within a few days of the incident, searches and investigations ensued, including an investigation by the Air Accidents Investigations Branch (AAIB), as the plane had gone missing.

On its part, FC Nantes lodged a complaint against Cardiff City before the FIFA Bureau of the Players’ Status Committee (PSC). The complaint ripened into a full-blown dispute which we have endeavoured to review below.

FC Nantes, France vs. Cardiff City FC, Wales

The Bureau comprising a four-man panel sat and passed a decision in Zurich, Switzerland on 25 September 2019.[3]

Summary of the Facts

The claim involved a contractual dispute between the two football clubs (Nantes and Cardiff

City) on the transfer of the late Emiliano Raul Sala. On 19th January 2019, both clubs signed a transfer agreement on Sala’s transfer from Nantes to Cardiff. Seventeen million Euros (€17,000,000) was agreed as the transfer fee which was to be paid in three (3) instalments in the ratio 6:6:5. As part of the transfer agreement, Cardiff undertook to pay Nantes a ‘promotion bonus’ of 2 million Euros (€2,000,000) spread across three instalments. The promotion bonus was due even though the player had “not been registered with Cardiff City FC during the season which Cardiff City FC participates and retains its Premier League Status”.

On 21st January 2019, the Fédération Française de Football (FFF) delivered the International Transfer Certificate (ITC) for the player to the Football Association of Wales (FAW) which accordingly registered the player with Cardiff. Subsequently, the FAW registered the player with Cardiff in the International Transfer Matching System (ITMS). Fate struck on the night between 21st and 22nd January 2019 when Sala passed away in a plane crash across the English Channel.

Pleadings of Parties

On 26th January 2019, Nantes lodged a claim with FIFA against Cardiff for payment to Nantes of the first instalment of the agreed transfer fee to the tune of six million Euros (€6,000,000). In addition, Nantes claimed interest accruing on the first instalment as of 27th January 2019. Nantes also sought orders penalizing/sanctioning Cardiff for breach of contract as well as the second and third instalments, just in case they became due in the course of the proceedings.

Relevant Legislations

The Bureau of the PSC considered the following rules and regulations:

  1. FIFA Statutes.
  2. FIFA Regulation on the Status and Transfer of Players (“the RSTP”).
  3. FIFA Rules Governing the Procedures of the Players’ Status Committee (PSC) and the Dispute Resolution Chamber (DRC).

Arguments

In response to Nantes’ Claim, Cardiff raised a two-pronged preliminary objection to the

determination of the Claim.

Preliminary Arguments

First, Cardiff challenged the competence of FIFA to entertain the claim based on the position of the law in relation to Clause 8.2 of the Player Transfer Agreement. In this regard, Cardiff contended that since Clause 8.2 wrongly stipulated that the instant dispute should be submitted to the FIFA Dispute Resolution Chamber (DRC) rather than the Players’ Status Committee (PSC)[4], that Clause must be deemed “invalid, null and void/or inoperative and/or impossible to perform.” Cardiff submitted that FIFA lacked requisite jurisdiction and that instead, the Court of Arbitration on Sports (CAS) was the competent body to adjudicate the matter.

Second, and by way of an alternative argument, Cardiff sought an order staying proceedings pending the completion of the following situations:

  1. Publication of the final report of the AAIB on the plane crash of 21 January 2019;
  2. The conclusion of all criminal investigations and prosecutions (including those which may be pursued by the Police and Civil Aviation Authority in the UK) in connection with the plane crash; and
  3. The conclusion of any civil claim pursued by Cardiff against Nantes in either England or Wales or France against Nantes in relation to the organization of the flight operated by Willie McKay and the company called “”

On its second preliminary issue, Cardiff contended that on a balance of probability, the damages associated with FIFA making a premature decision without first allowing the conclusion of appropriate criminal and public authority investigations by far outweighed any possible prejudice that Nantes could suffer as a result of the Bureau granting a stay of proceedings. Cardiff considered the circumstances surrounding the death of Sala as “directly relevant and central as to the context and meaning of the Transfer Agreement and also any liability for losses that may arise from the same contract.”[5]

Still on this second preliminary objection, Cardiff further argued that a refusal of a stay of proceedings would not only constitute prejudice on the AAIB investigation, ongoing criminal investigations, future public inquiry or potential criminal trials but may also occasion a clash in the eventual decisions of FIFA on one hand, and the investigating authorities on the other hand, thereby casting serious aspersions on the credibility of FIFA.

 

Arguments on Substantive Issues

On the substantive issues before the Bureau, Cardiff canvassed arguments on two major standpoints:

  1. Whether the Player Transfer Agreement was valid? and
  2. Whether Nantes is both responsible and liable in relation to the tragic demise of Emiliano Raul Sala?

On the first standpoint, Cardiff referred the Bureau, to the following clauses which are sub-stratified under clause 2.1 of the agreement providing for the conditions upon which the transfer agreement was to be deemed as valid:

2.1.4    “The LFP and the FAW [i.e. the Football Association of Wales] have confirmed to Cardiff City FC and FC Nantes that the Player has been registered as a Cardiff City FC player and that the Player’s International Transfer Certificate has been released.

2.2       …both parties shall use all reasonable endeavours to ensure that the conditions are satisfied no later than 22 January 2019. If the conditions are not fulfilled within this period then this Transfer Agreement shall be null and void. In such event:

2.2.1    This Transfer Agreement shall cease to have legal effect;

2.2.2    No payment shall be due from Cardiff City FC to FC Nantes;

2.2.3    Neither party shall have any ongoing obligations or liability in relation to this Transfer Agreement.”

On these clauses, Cardiff contended that the conditions stated in the clauses had not been fulfilled and thus, the agreement had ceased to have legal effect. It pleaded facts purportedly showing that its membership of the English Premier League (EPL) was a fundamental term of the transfer agreement; as Nantes “was only prepared to sell the player to a Premier League club”. It also relied on the evidence before the Bureau that shows that the EPL had deemed the employment contract invalid and that since no other employment contract had been signed or uploaded in the Transfer Matching System (TMS), an ITC could not be issued. According to Cardiff, the nullity of the agreement was the inevitable result. Cardiff further contended that since the Ligue de Football Professionnel (LFP)[6] and the Football Association of Wales (FAW) neither confirmed the release of the ITC nor the player’s registration to the parties, clause 2.1.4 of the contract was not fulfilled, thereby making the contract null and void with no payment whatsoever due to Nantes.

On the second standpoint, Cardiff inferred the following facts:

  1. The player’s flight had been wrongfully organized by the player’s agent, one Willie McKay, and his (McKay’s) company acting under Nantes’ mandate occasioning civil liability on the French outfit for the legal consequences resulting from the accident as if Nantes had organized it itself;
  2. That the said agent, Mr. Willie McKay had been declared ineligible to be a registered football agent due to bankruptcy but had gone ahead to form a company “Mercato” to operate as a football agency company and that the company was merely in furtherance of a course, the subject of which McKay had been declared ineligible to tread;
  3. Nantes hired an unlicensed aircraft and contracted Mercato with an unlicensed pilot for the deceased player’s flight of 19 January 2019. In connection with the plane crash, a preliminary report of the AAIB identified two breaches of duty of care ultimately attributable to Nantes:
    1. The necessary authorization to operate the aircraft for commercial purpose had not been obtained; and
    2. The pilot, David Ibbotson, held a private pilot license and not the one required for commercial flights.

In relation to these inferences, Cardiff argued that by virtue of Article 1242 paragraph 5 of the French Civil Code, Nantes is complicit and liable for any of its agent’s (McKay and Mercato) faults. Cardiff summed its argument on this issue by stating that “…in the unlikely event that [it] considered that the transfer has been completed and that Emiliano Sala has become a [Cardiff] player,” FIFA should hold that Nantes is liable for the damages caused to it by the player’s demise.

Cardiff concluded its argument on the principle of full reparation;[7] should the Bureau consider the transfer fee due, it should deduct the relevant amount from the damages suffered by Cardiff and be compensated by Nantes for its civil liability for the acts of its agents.

In response to Cardiff, Nantes contested Cardiff’s preliminary argument and argued that Swiss law is subsidiary in application in the instant claim. Nantes contended that any issue arising in relation to the compatibility of the employment contract with the internal body rules of the EPL could not determine the invalidity or have any impact on the valid issuance of the player’s ITC. It submitted that the contract’s non-conformity with the EPL rules would only prevent the player from playing in the Premier League’s Championship rather than invalidate the contract.

Nantes further submitted that any resolution of the eventual responsibilities connected to the player’s flight and his tragic demise as well as the legal consequences deriving therefrom would not be material to the outcome of the present dispute which only deals with the fulfillment of a contractual obligation.

Considerations/Decision of the Bureau

The Bureau regretted that the instant dispute could not be settled by the parties amicably in view of its sorrowful background. The Bureau clarified that a member, Geoff Thompson recused himself from deliberations in the case, leaving the remaining four (4) members with the authority to determine the claim.

The Bureau found that the 2018 edition of the Procedural Rules[8] are applicable to the matter, in view of the fact that the present matter was submitted to FIFA on 26 February 2019.[9] The Bureau also resolved that the 2018 edition of the RSTP was applicable to the instant dispute for the same reason.

On the Preliminary Issue of Jurisdiction

The Bureau considered that by the combined effect of Article 3 paragraphs 1 & 2 of the Procedural Rules, and Article 22 (f) & Article 23 (1) & (4) of the RSTP, it was competent to hear the matter since it pertains to a dispute between two clubs affiliated to different national associations. Although, the Bureau recognized the arguments of the Respondent,[10] it held that regardless of any clerical error or inaccuracy in the drafting of the clause which is the subject of the instant conflict, the true and correct intention of the parties to the agreement can still be gleaned, i.e., the parties intended to refer any dispute arising from the agreement to FIFA.

Furthermore, the Bureau held that in any event, the PSC still reserves the jurisdiction to determine the instant matter on the basis that the Regulations (RSTP) which governs the dispute expressly confers jurisdiction on the PSC.[11]

The Bureau recalled Cardiff’s call for the suspension of the instant matter pending the outcome of ongoing investigations into the late player’s fatal accident. It ruled that the instant dispute relates to a completely different legal realm, pertaining only to a contractual dispute between the parties and as such, would have no bearing on the outcome of investigations. As a result, all Cardiff City’s preliminary arguments were discountenanced.

On the Substantive Issues for Determination

The Bureau noted that Cardiff’s arguments were in two facets:

  • That the Agreement between the parties was invalid or contained invalid portions which are substantial; and
  • Nantes alleged civil and criminal liability for the damage suffered as a consequence of the tragic demise of the player.

The Bureau treated the second argument first. On this second argument, the Bureau held that Cardiff had not been able to discharge its burden of proving that the outcome of the local proceedings (proceedings of the competent local courts on the potential civil and/or criminal liability of Nantes) would be relevant to the outcome of the instant dispute, especially since the issue is purely contractual in nature, i.e. whether the transfer fee and other appurtenant payments are due from Cardiff to Nantes.

It also held that it does not have the competence to take into account, any argument canvassed by any of the parties in relation to civil or criminal liability with respect to the tragic passing away of the player.

On the first argument, the Bureau recalled the conditions-precedent to the validity of the contract as contained in clause 2 of the Agreement. The Bureau noted that the fulfillment of clause 2.1.1 – the player having successfully completed the medical examinations with Cardiff – had remained undisputed between the parties and reiterated the trite principle of law that uncontroverted facts need not be proved.

On Clause 2.1.2, Cardiff had argued that the employment relationship between the player and Nantes was not validly terminated because clause 2.1.2 involved two conditions precedent which were not fulfilled, namely: the definitive transfer of the player to Cardiff; and the issuance of the player’s ITC to the FA. The Bureau disagreed with Cardiff’s contention and held that by the very act of signing a termination agreement, Nantes and the player had agreed on all the terms contained therein, regardless of whether the conditions precedent set out in the termination were, at a later stage, complied with or not.

Clause 2.1.3 involved the argument that the mutual termination of the employment contract between Nantes and the player had to be registered with the LFP. The Bureau decided that a proper interpretation of this clause would involve gleaning the real intention of the parties. The Bureau presumed that the intention of the parties in including such clause to the transfer agreement was:

  • To safeguard Cardiff City against the risk of being involved in a claim for breach of contract that Nantes might lodge against the player; and
  • To secure Cardiff City from the consequences in terms of possible inducement in the player’s breach of contract at a later stage in case a dispute would arise between Nantes and the player, however remote such possibility might be.

The Bureau thus found that Nantes produced a copy of the Termination Agreement dated 19th January 2019 bearing the stamp of the LFP “Homologue le 21/01/2019” i.e. Ratified 21/01/2019.

Clause 2.1.4 involved the LFP and FAW confirming to Cardiff and Nantes that the player had been registered as a Cardiff player and that the player’s International Transfer Certificate (ITC) had been released. The Bureau made the following observations:

  1. The clause at stake did not require the player’s employment contract to be registered with the EPL as a condition precedent;
  2. It was clear that it was always the intention of Cardiff to register the player with the EPL and that the only reason why the contract was not approved was an omission of Cardiff itself;
  3. The registration of an employment contract with the EPL is not only an internal matter between Cardiff and the EPL/FAW but also a formal requirement over which Nantes has no influence.

The Bureau thus concluded that whether or not Cardiff and the agents representing the player had carried out the required due diligence in drafting an employment contract that was in conformity with the Premier League’s specific rules or not, can in no way affect the validity of the transfer agreement concluded between Nantes and Cardiff.

On the question of whether the transfer of the player had been completed on the TMS, the Bureau found that the transfer of the player was concluded in the system on January 21st 2019 at 17:30 Welsh local time – when the FAW successfully entered all the necessary requirements in the system.

Grant of the Claim

The Bureau resolved that by the principle of pacta sunt servanda,[12] Cardiff had to pay Nantes the outstanding amount of EUR 6,000,000 which is the first instalment of the transfer agreement. Also, the Bureau acceded to Nantes’ request and applied an interest rate of 5% on the outstanding amount of EUR 6,000,000 as of the day following the relevant due date (27th January 2019).

On the payment of the 2nd and 3rd instalments, the Bureau noted that the agreement makes the payment due on 1st January 2020 and 1st January 2021 respectively. The Bureau held that at the material time of this decision, it was not in a position to render a decision on this part of Nantes’ claim.

Finally, the Bureau referred to Article 25 paragraph 2[13] and Article 18[14] which both empower it to levy costs (of proceedings) in consideration of the success of a party in the proceedings; and Annex A of the Procedural Rules which assesses the costs based on the amount in dispute. In view of the fact that the amount in dispute exceeds the maximum stipulation in the Procedural Rules (CHF 200,000), the Bureau awarded costs of CHF 25,000 against Cardiff.

The Bureau unanimously decided not to impose any procedural compensation.[15]

Consequential Orders made by the Bureau

In line with Article 24bis of the RSTP,[16] the Bureau is duty-bound to rule on the consequences deriving from the failure of the concerned party to pay the relevant amounts of outstanding remuneration and/or compensation in due time. Consequently, it was held that in the event that Cardiff fails to pay the amount due to Nantes within 45 days,[17] a ban from registering new players, either nationally or internationally, for the maximum duration of three (3) entire and consecutive registration periods shall be imposed on Cardiff.

The Bureau noted that the ban would be lifted immediately and prior to its complete serving, upon payment of the due amount.[18]

Comments

From the viewpoint of a football fan, the instant dispute may be most unfortunate and unnecessary due to the tragic circumstances underlying the dispute. However, the necessary foresight of a football and deal advisory legal practitioner should transcend such a limited viewpoint, as the outcome of the dispute here was one based on a strict adherence to the terms of the contract vis-à-vis the provisions of relevant football laws.

Indeed, the immortal words of the learned jurist, Lord Denning comes to the fore in this dispute – “Not only must justice be done; it must also be seen to be done.”[19] Despite the often nebulous appearance of “justice” as a concept, it is mostly more effectively defined in terms of perception than verbal description.

It is in this sense that the decision Bureau of the PSC on this dispute attracts commendation. As the blindfold on the effigy of Justice suggests, the PSC diverted its vision and any accompanying sentiment away from the tragic scenes and emotions behind the claim and preferred to focus on the substance of the matter. Little surprise that the Bureau was eager to underline that:

“…despite the tragic passing of the player as well as the criminal and civil liability developments it may possibly trigger, the dispute lodged before FIFA by Nantes remains of a purely contractual nature.”

Sanctity of contracts is a firmly established principle under Customary International Law.[20] The Court of Arbitration for Sports (CAS) has also held in diverse scenarios that agreements between parties must be respected and given effect.[21]

Nonetheless, taking a step backward to revisit the tragic background behind this dispute does not also seem out of place. Without prejudice to facts bordering on this dispute before the claim was submitted to the Bureau of the PSC, this writer expected a purely non-litigious resolution of the contractual dispute. Rather than submit a claim before the PSC, either or both Nantes FC and Cardiff City FC ought to have reached out to one another to discuss and negotiate terms of settlement. It is important that Legal Practitioners consider the adoption of Alternative Dispute Resolution (ADR) mechanisms as a fundamental part of their professional services to respective clients.

Moreover, flowing from legal practitioners properly advising their respective clients on the need to explore ADR mechanisms, the unifying factor intrinsic in the game of football would be better maintained. The spirit of sportsmanship and healthy competition suggests that disputes, which are certainly indispensable, be resolved amicably rather than by litigious means. Resolution of disputes through litigation should be a mechanism of final resort. With the huge fan base of European football club sides, disputes of this nature are likely to birth unhealthy generational conflicts which would last for a very long time.

In addition, judicial and quasi-judicial bodies of the global football sector are subject to FIFA statutes and regulations. As a result, respect for the sanctity of contracts is non-negotiable.[22] In view of this seemingly rigid stance of the law, parties to transfer contracts must take the crucial step of engaging a competent football and sports legal practitioner as well as a deal advisor. These are professionals whose jobs involve the exercise of specialized training and expertise in representing their footballing clients. In addition, lawyers engaged in such advisory work must develop and maintain “large shields” of foresight and professionalism in discharging their functions.

 

 

For further information on this article and area of law, please contact

Olukolade Ehinmosan at: S. P. A. Ajibade & Co., Lagos by telephone (+234 1 472 9890),

fax (+234 1 4605092) Mobile: +234.810.370.8623 or Email: oehinmosan@spaajibade.com

www.spaajibade.com

 

[1]       Olukolade Ehinmosan, Associate Dispute Resolution Department, SPA Ajibade & Co., Lagos, NIGERIA.

[2]     See <https://www.sportbible.com/football/news-sala-was-just-about-to-fulfill-his-dream-of-playing-in-the-prem-20190123> accessed February 11, 2020 at 9:28 am.

[3]     See <https://resources.fifa.com/image/upload/player-emiliano-sala.pdf?cloudid=zz1mucunt6ydvrzqrqdw> accessed February 11, 2020 at 9:28 am.

[4]     See the Decision of the Bureau of the Players’ Status Committee passed in Zurich, Switzerland on 25 September 2019: <https://resources.fifa.com/image/upload/player-emiliano-sala.pdf?cloudid=zz1mucunt6ydvrzqrqdw> accessed on February 11, 2020 at 9:42 am.

[5]     Infra note 3, page 5, paragraph 21.

[6]     The French Professional Football League.

[7]     Article 34 of the ILC Articles on State Responsibility for Internationally Wrongful Acts, entitled ‘Forms of reparation’, states: ‘Full reparation for the injury caused by the internationally wrongful act shall take the form of restitution, compensation and satisfaction, either singly or in combination.’

[8]     FIFA Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (Procedural Rules).

[9]     Note that the 2018 edition is the immediate-past edition, to the 2019 amendment that took effect November 1 2019.

[10]    Anchored on the fact that the agreement between the parties wrongly conferred jurisdiction on the DRC (rather than the PSC) and ipso facto, makes the clause invalid and making the matter subject to the jurisdiction of the Court of Arbitration for Sports (CAS).

[11]    Article 22(f) of the RSTP.

[12]    CAS 2016/A/4547 Nikola Mikic v. Manisaspor KD; Arbitral award in Sapphire vs. National Iranian Oil Company, 1963, I.L.R 1967, 136 at 181 (delivered on March 15, 1967), culled from “JURISDICTION AND THE CONTRACTUAL FREEDOM OF PARTIES – Does Expropriatory Contracts really expropriate?” by Dr. Joseph Nwobike, Joseph Nwobike, SAN & Co. (Lagos & Abuja), available at < https://www.jnclawfirm.com/articles/JURISDICTION%20AND%20THE%20CONTRACTUAL%20FREEDOM%20OF%20PARTIES.pdf>, accessed December 5 2019 at 10:50 am. See also A.G. Nasarawa State v. A.G Plateau State (2012) LPELR-SC.214/2007.

[13]    FIFA RSTP.

[14]    The Rules.

[15]    Rule 18 paragraph 4 of the Rules. Cost of Proceedings is awarded in favour of the winning party to the dispute as against Procedural Costs which are independently assessed by the Court, levied on either or both parties, and remitted to FIFA.

[16]    Paragraphs 1 & 2.

[17] 45 days from the moment Nantes, following the communication of the instant decision, communicates the relevant bank details to Cardiff.

[18]    Article 24bis paragraph 3 of the RSTP.

[19]    R v Sussex Justices, ex parte McCarthy [1924] 1 KB 256.

[20]    Malcom M. Shaw, International Law, (6th ed., Cambridge University Press 2008) 29.

[21]    Arbitration CAS 2013/A/3278 – Maritimo de Madeira-Futebol SAD v. Desportivo Brasil Participacoes LTDA, award of June 2 2014, <http://jurisprudence.tas-cas.org/Shared%20Documents/3278.pdf> accessed February 14 2020, at 10:00 am.

[22]    See Articles 13 and 17 of the FIFA RSTP.

 

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