It is now one full year since the tragic accident that took away the life of the prolific young footballer Emiliano Sala. But there has been little peace since his death between his former club FC Nantes (“Nantes”) and Cardiff City FC (“Cardiff”) where the player was headed. On 25 September 2019, the legal dispute between these clubs was settled by the Bureau of the FIFA Players’ Status Committee (“PSC”). Let us look at the exact issue which created such uproar with the transfer of the late footballer, Mr. Sala.
The Facts
Nantes claimed payment of the consideration money along with the interest due from the engaging club, Cardiff as per the transfer agreement between them; on the principle of pacta sunt servanda (agreements must be kept). The validity of the transfer agreement of Mr. Sala was conditional on four requirements or “Conditions Precedent”:
- “2.1.1. the player completing a successful medical examination with Cardiff City FC;
- 2.1.2. FC Nantes and the Player agreeing all the terms of a mutual termination of FC Nantes contract of employment with the Player;
- 2.1.3. the mutual termination of FC Nantes contract of employment with the Player is registered by the LFP [i.e. the French Ligue de Football Professionnel];
- 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 (ITC) has been released.”
Nantes argued that all four events had taken place, so it could be concluded that the transfer was valid and thus they claimed the monies were due from Cardiff.
Therefore, Nantes claimed all the three installments, the first of which fell due within five days of the registration of the player with Cardiff and the remaining two installments due on 1st January 2020 and 1st January 2021. Further, they claimed that they were entitled to the promotion bonuses as and when they fell due, depending upon the ensuing three seasons and the position of the engaging club in the Premier League.
Arguments
The buying club countered that errors in the process meant the key events had not taken place, and the transfer agreement was invalid; particularly that on the fourth point, the ITC was not released and therefore the player could not be registered. Cardiff also advanced the argument that Nantes could be liable for the tragic mishap as they had not ensured the safe conveyance of the player. They asked that the proceedings be suspended until publication of the final report of the Air Accidents Investigations Branch and the conclusion of all the criminal investigations and prosecutions relating to the air crash. They further asked that “FIFA should not make any findings that could clash with the determination and findings of those public authorities.”
Nantes’ view was that the findings of this dispute would not in any way affect the pending inquiry as it was a purely contractual dispute. They said that the non-registration of the player was due to the faulty drafting of the employment agreement by Cardiff and they could not take advantage of their own misdeeds. Regarding their alleged liability for the fatal accident, Nantes consistently disclaimed responsibility and said they had never entered into any agreement with the person who owned the carrier aircraft.
An error in the drafting of the transfer agreement wrongly referred any dispute to the jurisdiction of the FIFA Dispute Resolution Chamber (DRC) rather than FIFA’s Players’ Status Committee (PSC), so Cardiff held that the dispute resolution clause should be held null and void and the case referred straight to CAS. Whilst on the one hand arguing that FIFA should not hear the case at all, Cardiff also argued that the PSC should not limit itself to the contractual dispute and that it should also consider itself competent to consider the civil liability of Nantes. As a result, according to Cardiff, in the event that FIFA considered that the transfer fee established in the transfer agreement were due, it should deduct from it in full the damages Cardiff had allegedly suffered as a result of Nantes’ actions.
Decision
With regards to jurisdiction, the PSC pointed out that, under the Regulations (Articles 22 and 23) FIFA was competent to hear a claim lodged by a club against another club affiliated to a different association. Further it was clear that the intention of the parties had been to refer any dispute to FIFA. The PSC noted that the dispute before them was purely contractual thus neatly dealing with both the question of delaying proceedings until the results of the investigation, and the question of jurisdiction in civil liability. As they put it “the present dispute operates in a completely different legal realm from that pertaining to criminal and civil liability to which the mentioned investigations relate.”
The decision of the PSC partially admitted the claim of Nantes and directed the respondent club to pay the first installment of the transfer fees, i.e. EUR 6,000,000 along with the interest on the same from 26 January 2019, until the date of the payment. The remaining claims were rejected on the basis that they are not yet due and that the PSC is therefore not in a position to render a decision on them.
Analysis
With the aforesaid decision at hand, let us look at the conditions precedent for the successful completion of the agreement.
Clause 2.1.1 Successful Medical Examination: Since this condition was not disputed, the PSC did not pass any opinion on it.
Clause 2.1.2 Mutual Termination of the Employment Agreement – which required for Nantes and the player to agree on “all the terms of a mutual termination” of the employment contract they had in place at the time. The PSC rebuffed Cardiff’s position, that the definitive transfer of the player to Cardiff and the issuance of the player’s ITC to the FA had not been concluded by finding that the very act of the signing of the termination agreement between Mr. Sala and Nantes was enough in itself to constitute a valid termination of the previous employment agreement.
It is important to appreciate here that both Sala’s termination agreement with Nantes, and the subsequent transfer agreement with Cardiff contained different “Conditions Precedent”. In Cardiff’s view these were like missiles pointing at each other; the termination required the definitive transfer to Cardiff; the transfer required the definitive termination from Nantes.
Cardiff relied on the importance of the conditions precedent in the valid termination of employment but the PSC were prepared to overlook them holding that “the player had agreed on all of the terms enshrined therein, regardless of whether the conditions precedent set out in that termination were, at a later stage, complied with or not”. This raised a potential inconsistency in the stance of the PSC. The four conditions precedent of the transfer agreement were looked into individually by the PSC in arriving at their decision. But when the termination agreement was examined, the mere act of signing it was construed to be the manifestation of the intention of both the parties. It is a commonplace proposition of law that the Court should look into the intention of the parties to an agreement and not the plain title of the instrument. The PSC laid down its opinion vis-a-vis the intent of the parties, but there was no evidence adduced in order to elicit the actual intention of the parties.
The PSC stated that apparent errors in drafting would not precede the intention of the parties or the correct regulatory, technical procedures. However no evidence was sought that the conditions for the valid termination were only formal in nature and were not to be considered obligatory for a valid termination. At the same time, each of the conditions precedent of the transfer agreement were analysed in depth by the PSC. Hence, its stand seems inconsistent apropos its stance on the transfer agreement between Nantes and Cardiff.
2.1.3 Registration of the Mutual Termination of the Employment Contract with Ligue de Football Professionnel (“LFP“). This was the third condition precedent and the PSC ruled that it had been duly satisfied when Nantes produced the stamped termination agreement. It observed that this unusual condition was presumably a safeguard with “the sole purpose of securing Cardiff 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 have been.”
It is interesting to note here, that the PSC made these findings on the basis of its assumption of the real intent of the parties involved. Nowhere has there been the slightest whisper regarding the process of arriving at this inference. Be it through evidence, or any averments of either of the parties, there is nothing on record to explain how the PSC attributed this intention to the parties. Further, it was noted that since Nantes produced the termination agreement with the mark ‘ratified’, it was proof enough of due compliance with the registration of the same. There was no representation from LFP in this regard nor was there anything in the document.
On these matters the PSC did not shy away from ascribing motives to the parties; however the basis of these assumptions is not substantiated in the order. Finally the PSC moved to discussion of the fourth and final condition precedent in the transfer agreement, which contained the meat of the dispute between the parties.
2.1.4 Registration of the Player in the Football Association of Wales (“FAW”) and Release of the ITC. Here Cardiff’s case was that the employment contract concluded with the player on 18 January 2019 and that they themselves had drafted had been considered invalid by the Premier League and, as a result, the player could not be registered with it. An email from the Premier league stated that “after reviewing the Contract we would require the signing-on fee to be amended. It is currently not being payable in equal instalments as there appears to be no instalment payable in the player’s final contract year” A new contract that met these terms was presumably to have been prepared, but was not signed before Sala’s death.
The PSC observed that registration with the Premier League (as opposed to the FAW) was not one of the conditions precedent. Registration of the employment contract is a matter between the buying club and their respective FA. Since the selling club had no say in this, the non-compliance of the contract did not affect the validity of the transfer agreement.
In this regard, it must be kept in mind that the agreement strictly mentioned this clause as one of the condition precedents for the valid transfer. Nevertheless, it was completely an internal issue between Cardiff and the FAW. Therefore, the noncompliance of the said condition was a failure on the part of the buying club. And the PSC did not allow Cardiff to take advantage of its own error.
With regard to the release of the ITC, it was noted that once the FAW had entered the details in the Transfer Matching System (TMS), the transfer was held to be validly complete. Therefore, there remained no doubt regarding the issuance of ITC. Without the same, the uploading of the details could not have been completed by the receiving association. Hence, that being done, there was no embargo for the PSC in declaring compliance with this condition precedent.
Doctrine of Frustration- Did the Death of Mr. Sala Put an End to the Future Claims of Nantes?
The doctrine of frustration is a limitation to the principles of pacta sunt servanda. It was explained by Lord Loreburn in F.A. Tamplin Steamship Co. Ltd. v. Anglo-Mexican Petroleum Products Co. Ltd as the ‘theory of implied term’. It was understood that a court should examine any contract and the circumstances under which it was made, in order to understand that the parties entered into the agreement based on the premise that a particular thing would continue to exist in its present state. The situation herein is quite similar as was foreseen vide this principle. Here, the subject matter of the agreement, Mr. Sala had tragically ceased to exist and thus the condition under which the transfer agreement was entered into, was altered. The claims of the selling club, regarding the promotion bonuses, were based on the understanding that Mr. Sala would be still playing for Cardiff and in a way would contribute towards the success or failure of the club. Since that was not the case anymore, the claims of Nantes were not sustainable.
The PSC had held that the transfer was complete as the obligations from both ends were met and therefore Nantes’ claims were upheld. But, under the current set of tragic circumstances, the claims of the promotion bonuses could not be sustained. One reason was that the same were not due yet.
As long as the selling club abides by their obligations, they have the right to seek full payment of the decided transfer fee. But Nantes went a bit far in their claims to seek for promotion bonuses when it was evident that Mr. Sala would not be playing any role in the performance of Cardiff. Therefore, irrespective of the position of the club at the end of the stipulated seasons, the author of this work is of the opinion that Nantes was not fair to press for such a claim.
A new clause in transfer agreements?
This episode was indeed an eye-opener in the way transfer agreements are drafted in the football world. Such a state of affairs could have been averted with a little bit of ingenious drafting in the otherwise standard forms of transfer agreements. It would be wise for the contracting clubs to insert a clause in the agreement whereby any such Act of God would have consequences that would not in any way jeopardise either of the clubs. Be it through compensation or waivers, in such situations, both the clubs should look for avenues to protect the goodwill and integrity of the beautiful game.
Download the Decision of the Bureau of the Players’ Status Committee here.
Lex Sportiva 