The current legal framework
Overdue payables constitute one of the most pertinent, global loose ends in the football legal sphere. In a market where huge amounts of money are spent every day, it is inevitable that some debtors eventually breach their contractual obligations, more specifically their obligation to pay pre-stipulated amounts to counter-parties. The phenomenon is rampant: unpaid salaries (in the broad sense of the term including bonuses, sign-on fees etc), transfer fees, agents’ commissions, training compensation and solidarity contribution are owed to players, agents, coaches and clubs. FIFA realised that something had to be done and devoted time to constructing a regulatory system that protects their members, but does it protect them effectively?
Articles 12bis and 14bis FIFA Regulations on the Status and Transfer of Players (RSTP), provide for special mechanisms whereby a club and/or a player can claim for outstanding payments before the adjudicatory bodies of FIFA (DRC or PSC). More specifically, Article 12bis RSTP allows players and clubs to bring a claim before the aforementioned bodies when the clubs-counterparties fall foul of their financial obligations and the relevant sums are not paid for more than 30 days (providing that written notice has been served properly beforehand). When this is the case, Article 12bis entails additional disciplinary sanctions be imposed on the debtor, extending from a simple monetary reprimand to include a deduction of points from the current national league standings.
Article 14bis RSTP justifies the termination of an employment contract by the player if the club fails to provide him/her with the equivalent of two months salaries, (again after the serving of a notice in writing). The fact that outstanding salaries are considered just cause for a player to terminate his/her employment contract is really important in the sense that it triggers Article 17 RSTP and therefore, enables the player to claim the residual value of the contract. If the termination takes place during the protected period, sporting sanctions (usually in the form of a registration ban) may be imposed on the club, depending on the panel’s discretion.
What is evident from these provisions is FIFA’s willingness to facilitate fair monetary regulations with remedies such as sporting sanctions that deter clubs from breaching their contractual obligations. The same rationale applies in the enforcement of FIFA decisions about monetary claims. According to Article 24bis RSTP, every time a FIFA deciding body instructs a party (player or club) to pay a sum to another party (player or club), it shall also decide on the potential consequences in case the debtor fails to abide by the decision in due time, usually providing for registration bans (for clubs) and ineligibility periods (for players).
Problematic in Practice
In practice FIFA’s regulations have not been as efficient as they would have hoped and the number of monetary claims before FIFA and CAS is increasing. The rules do not appear to be able to tackle the problem because their scope is narrower than one would reasonably have expected, both in terms of ratione materiae and ratione personae.
The personal scope of protection is limited as Article 12bis applies only to monetary claims by players and clubs against other clubs. This excludes a huge number of stakeholders in football such as coaches, intermediaries, other employees of a football club, as well as national federations.
One will also encounter comparable limitations, when it comes to the material scope of the respective provisions of FIFA RSTP. For example, it is difficult to understand why only outstanding salaries constitute just cause for the termination of an employment contract by a player, while other amount such as bonuses, tax contributions and sign-on fees are left outside the scope of Article 14bis RSTP. Similarly, Article 12bis obliges football clubs to comply with their obligations undertaken solely through employment contracts or transfer agreement, primarily excluding from its ratione materiae obligations that emerge from the applicable regulations, such as training compensation, or obligations that constitute part of a separate agreement, like image rights royalties.
Another major issue when it comes to legal actions before FIFA bodies, is that of procedural speed. In the majority of cases, the pending time for a decision to be issued by FIFA DRC or PSC can be up to a year, even for the simplest claims. In the meantime, the annual interest rate of 5% seems to work in favour of the debtors, who know that they can stall their creditors by appealing against the first instance decision before CAS and not be obliged to pay any significant additional amount as interest. In that context, a lot of players are “forced” to settle their claims for a lesser amount than they are entitled to, in order to avoid the high expenses of the proceedings, the inherent insecurity regarding the fruition of a legal action and the years lost before the various deciding bodies. One could argue that this time gap nearly amounts to a denial of justice by the adjudicatory bodies of the Federation.
Alternatively, a player can resort to the national Dispute Resolution Chamber (NDRC) of the Federation he is registered at, or the national courts. In the majority of cases, NDRC schemes provide for two instances of adjudication while the appeals decision is further appealable before CAS, which means an equally long “legal journey”. National courts on the other hand, are usually not familiar with the peculiarities of the football industry. Furthermore, in many countries the independence of the legal system is debatable and one must deal each time with the domestic employment law, not to mention the issues that may arise in enforcement.
As of 15 July 2019, the new Article 15 of the FIFA Disciplinary Code enforces ordinary CAS decisions on monetary claims which will hopefully speed up access to justice. This also allows parties to insert arbitration clauses in their contracts referring their disputes directly to CAS and then enforce the award once it became final, though the enforcement mechanism of FIFA. It is yet to be seen how this option will work in practice.
So, what can be done?
The difficulty for FIFA is that they regulate over 200 member associations and a plethora of indirect members, all operating within different legal jurisdictions. However, it is now more than clear than ever that the existing, deterrent approach is not able to deal with the needs of the sector. Perhaps it is time for FIFA to reconsider their strategic approach to deal with monetary claims more fairly and more quickly. Acknowledging the need for quicker access to ‘real’ justice, the new Article 24bis FIFA RSTP provides for a more structured procedure in order to enforce monetary awards, but again, certain lacunae exist such as the time period. Furthermore, FIFA circular letter 1686/8.8.2019  describes the specifics of the enforcement procedure under the aforementioned Article which fails to cover potential disputes between the creditor and the debtor regarding the actual payment of the claim. As we all know, the banking system is not equally efficient around the world. As a result, what will happen if a debtor is able to prove that he deposited the required amount, while the creditor provides contradictory documents? FIFA failed to foresee these kinds of situations are there is no competent body to resolve this issue or procedure that should be followed.To improve the current system FIFA could consider:
- More fast tracking procedures
- Introducing payment orders
- Sanctions for bad faith procedural conduct that stalls legitimate claims
- Artificially inflating interest rates from 5% to 7%
1. FIFA has started to consider the adoption of “fast tracking” procedures in order to resolve simple claims without complex factual or legal issues. FIFA has implemented this kind of procedure in Circular letter 1689/21.8.2019  where training compensation and solidarity contribution claims may be resolved quickly. More specifically, by virtue of Article 13 of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (The Procedural Rules), after receipt of the relevant claims through the TMS system, the Players’ Status Department (PSD), assesses prima facie whether the claim in question contains complex issues. If the issues are simple it will propose the amount owed and give the parties fifteen days to request a formal decision. If the parties fail to respond within the time frame the proposition will be deemed binding. Fast track procedures like this could be introduced for monetary claims that prima facie do not present any factual or legal complexities.
2. It is probably the right time for FIFA to start considering the implementation of payment orders in its legal system, a judicial alternative which is very popular in civil law systems when it comes to monetary claims and is acknowledged by Swiss law under Articles 69 sub of the Federal Act on Debt Recovery and Bankruptcy (The Debt Recovery Act). A slightly modified version for the football industry of the procedure under Swiss law could be the following: As soon as the claim becomes due the creditor files a payment order against the debtor under Article 69 of the Debt Recovery Act, attaching all documents that support the claim. The debtor will then be obliged to submit a legal proposal before the creditor, along with all supporting documents. If the parties are not able to reach an agreement, the dispute will be submitted to the adjudicatory bodies of FIFA, that will decide solely on the basis of the documents that have been previously exchanged between the parties. This process would not require a human factor (e.g. a testimony to verify the existence of just cause for the termination of the employment contract), or any factual assessment that goes beyond what is already proved by virtue of the documents. This would be a quick process automatically final and enforceable decisions.
3. Alternatively FIFA could provide for sanctions in the FIFA Statutes – which are the applicable regulations before CAS – to be imposed on parties in the form of fines for “profoundly ungrounded or inadmissible appeals” that have as a sole purpose to stall creditors’ claims. Article 128.3 of the Swiss Code of Civil Procedure provides for the imposition of a fine up to 2.000 CHF “in the event of bad faith or vexatious conduct” on behalf of the parties or their representatives. An analogous implementation and application of said article, can constitute the basis for the potential impositions of sanctions on parties that bring profoundly unsubstantiated or vexatious appeals before CAS, only to benefit from the automatic suspension of the enforceability of said FIFA decisions.
4. Finally, FIFA may reconsider the applicable interest rate on monetary claims brought before their bodies. Article 73 Swiss Civil Code provides for an interest rate of 5% per annum, where “the interest is not set by contract, law or custom”. Imagine if FIFA introduced an interest rate of 5% per month from the moment the claim becomes due until the filing of the legal action before the competent body and a rate of 7% per month until the rendered decision becomes final. If this were the case debtors would make better efforts to avoid financial inconsistencies.
To conclude, Articles 12bis and 14bis FIFA RSTP have proved inadequate for dealing effectivly with the variety of monetary claims that come before the deciding bodies of FIFA. The current system inadvertently favours the debtor and reduces claimants access to efficient and effective justice. Perhaps it is the right time for FIFA to reassess its approach to monetary claims and – to the extent permitted by the applicable Swiss law – establish a legal landscape that will focus on the efficient resolution and enforcement of financial claims.
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-  FIFA Regulations on the Status and Transfer of Players (https://resources.fifa.com/image/upload/regulations-on-the-status-and-transfer-of-players-2018-2925437.pdf?cloudid=c83ynehmkp62h5vgwg9g) Accessed 11 November 2019
-  FIFA Disciplinary Code https://resources.fifa.com/image/upload/fifa-disciplinary-code-500275.pdf?cloudid=koyeb3cvhxnwy9yz4aa6 Accessed 11 November 2019
-  FIFA Circular no. 1686 (https://resources.fifa.com/image/upload/1686-art-24bis-of-the-regulations-on-the-status-and-transfer-of-players-executio.pdf?cloudid=ayll8gaajfgg22dh4gih) Accessed 11 November 2019
-  FIFA Circular no. 1689 (https://resources.fifa.com/image/upload/1689-art-13-of-the-rules-governing-the-procedures-of-the-players-status-committe.pdf?cloudid=dukimjd77uqrjl0qgxwt) Accessed 11 November 2019
-  See also FIFA Circular Letter 1689
-  It is reminded that if a provision is included in the applicable FIFA regulation, it will apply in CAS proceedings, by virtue of Article R58 CAS Code.
-  Under consistent CAS jurisprudence, a decision issued by a Swiss private organisation is not enforceable while under appeal.