Another hopeless appeal…

Case information
June 30, 2016
4A_132/2016
Interest to foreign readers: 
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Of some interest
Topics: 
Decisions of Lausanne Court of Arbitration for Sport
Violation of public policy
Original language: 
German
Published: 
35 ASA Bull 623 (2017)

Parties

Appellant: 
Respondent: 

Counsel

Appellant: 
Respondent: 
Introductory note: 

The case involved a French football player who had a dispute over his salary after an injury with a Cyprus club. The FIFA Dispute Resolution Chamber found substantially in the player’s favour, as did a Panel of the Court of Arbitration for Sport [Chairman Lars Hilliger, with arbitrators Didier Poulmaire and Svenja Geissmar].

As his claim for salary and compensation on various other counts was upheld only in part, the player appealed to the Federal Tribunal. Counsel made a gallant attempt to try to argue some violation of public policy, but the case was hopeless. The Federal Tribunal rejected the appeal without even asking for an answer.

The only relatively interesting part of the opinion is at 3.2.3, where the Federal Tribunal emphasizes – once again – that whilst a legal provision of Swiss or other law can be mandatory, this does not mean that it becomes part of substantive public policy as generally defined by the jurisprudence of the Federal Tribunal. The definition is recalled at 3.2.1.

Despina Mavromati                                      Charles Poncet

Translation: 

4A_132/20161

 

 

Judgment of June 30, 2016

 

 

First Civil Law Court

 

Federal Judge Kiss, Presiding

Federal Judge Kolly,

Federal Judge Niquille,

Clerk of the Court: Leemann

 

A.________,

Represented by Dr. Lucien W. Valloni,

Appellant

 

v.

 

1. B.________FC,

Represented by Mr. Lysandros Lysandrou

Respondent

 

 

 

Facts:

 

A.

A.a. A.________ (Claimant, Appellant) is a French football player domiciled in [name of country omitted].

 

B.________FC [Defendant, Respondent) is a football club based in [name of country omitted]. It is a member of the Cyprus Football Association which in its turn is a member of the Fédération Internationale de Football Associations (FIFA).

 

A.b. On June 22, 2011, the parties entered into an employment contract until May 31, 2013. On June 23, 2011, the parties signed an agreement of the same duration in addition to the aforesaid employment contract, which provided additional compensation for the Player. The employment contract of June 22, 2011, includes the following:

 

a) In consideration of the above the EMPLOYER shall pay the following emoluments and fringe benefits to the EMPLOYEE during the course of this employment:

 

-          For the term of this employment for the season 2011/2012, salary amounting to EURO 30 000 (Thirty Thousand EURO) payable in 10 (ten) instalments of EURO 3 000 (Three Thousand EURO) per month and with a grace period of 90 days, as the first instalment to be paid on the 31st of August, 2011 and the last to be paid on 31st of May 2012.

-          For the term of this employment for the season 2012/2013, salary amounting to EURO 40 000 (Forty Thousand EURO) payable in 10 (ten) installments of EURO 4000 ([...] Thousand EURO) per month and with a grace period of 90 days, as the first installment to be paid on the 31st of August, 2012 and the last to be paid on 31st of May 2013.

If the Club undergoes to the second division, this contract is not valid and the Player must terminate his services to the team, having no further demands.

 

b) Any part of the fees payable to the Cyprus Government for the issue of the employment permit will be paid by the EMPLOYER.

 

It is understood between the parties that all money paid will be tax free, meaning that the EMPLOYER is responsible to pay all relevant taxes to the various Government Authorities.2

 

The agreement of June 23, 2011, includes the following:

 

WHEREAS the parties have already signed a Contract of Employment on the day of the 22nd of June, 2011.

 

NOW THE PARTIES AGREE THE FOLLOWING IN ADDITION TO THE SAID CONTRACT OF EMPLOYMENT

 

In exchange of the services the PLAYER will offer to the CLUB, the CLUB has to pay in addition to the said contract:

 

-          For the season 2011/2012 salary amounting of 80 000 EURO (Eighty Thousand EURO) payable in ten (10) installments of 8 000 EURO (Eight Thousand EURO) per month and with a grace period of 90 days, as the first installment to be paid on the 31st of August, 2011 and the last to be paid the 31st of May 2012.

-          For the season 2012/2013 salary amounting of 90 000 EURO (Ninety Thousand EURO) payable in ten (10) installments of 9 000 EURO (Nine Thousand EURO) per month and with a grace period of 90 days, as the first installment to be paid on the 31st of August, 2012 and the last to be paid the 31st of May 2013.

-          The Player shall receive the amount of 30 000 EURO (Thirty Thousand EURO) as signing fees.

-          The Player shall receive also at the end of June, 2012 (30/6/12) the amount of 20 000 EURO (Twenty Thousand EURO) as signing fees for the season 2012/2013.

-          The Player shall also receive from the Club the amount of 6 000 EURO (Six Thousand EURO) for accommodation and the amount of 5 000 EURO (Five Thousand EURO) for air tickets.

-          The Club will provide to the Player a car.3

A.________ began his employment with B.________FC in July 2011 and played regularly at the beginning of the 2011/2012 season. In January 2012, however, he suffered a rupture of the Achilles tendon which prevented him from participating in the other games of the season.

 

Although he was not cured of his injury, the Player resumed training in June 2012 for the 2012/2013 season. However, B.________FC did not permit the Player to participate in the preparation for the new season.

 

In a letter of June 20, 2012, the Player complained to the Club that he was not being adequately medically treated.

 

In July and September 2012, the Player sent a total of four letters to the Club and demanded, in addition to medical treatment, various payments for unpaid salaries, expenses for accommodation, car, and airline tickets for the months of April, May, and August 2012, as well as his signing bonus (“signing-on fee”) for the 2012/2013 season.

 

On September 28, 2012, B.________FC paid the amount of EUR 28’075, for which A.________ issued a receipt (“Full settlement of any amount due until 30/9/12. Salary of August and September, air tickets, rents, car etc.”4). On the same day, the Club paid the signing bonus of EUR 20’000 for the 2012/2013 season. During the period from June 12, 2012, to January 25, 2013, A.________ received 16 successive certificates of exemption from the general manager of B.________FC as he could not train due to his injury.

 

In a letter of January 16, 2013, A.________ complained to B.________FC again that he was being paid late. He demanded among other that his monthly salary, his rental expenses, and his air travel and car costs for October, November and December 2012, were not yet paid. He claimed a total amount of EUR 45’670 and gave B.________FC a time limit of 8 days to pay, threatening in case of failure to pay to introduce a claim with the FIFA Dispute Resolution Chamber.

 

In a letter of January 25, 2013, A.________ took notice that B.________FC was in breach of contract and accordingly considered himself released of all his obligations towards the Club, according to Art. 14 and 17 of the FIFA Regulations for the Status and Transfer of Players.

 

B.

B.a. On February 5, 2013, A.________ claimed a total of EUR 113’670 with interest (including EUR 52’000 of salary for the months of October 2012 until January 2013 and EUR 52’000 as compensation for unpaid salaries for the months of February until May 2013) in the FIFA Dispute Resolution Chamber.

 

In a decision of November 6, 2014, the Dispute Resolution Chamber upheld the claim for the amount of EUR 26’520 with interest.

 

B.b. The Claimant appealed the decision of the FIFA Dispute Resolution Chamber on November 6, 2014, to the Court of Arbitration for Sport (CAS).

 

A hearing took place in Lausanne on September 4, 2015.

 

In an Award of January 14, 2016, the CAS upheld the Claimant’s appeal in part and amended the decision under appeal to the effect that the Defendant was ordered to pay EUR 54’753 with interest at 5% from February 5, 2013.

 

C.

In a civil law appeal to the Federal Tribunal, the Claimant submits that the CAS Award of January 14, 2016, should be annulled and the matter sent back to the arbitral tribunal for a new decision.

 

The Respondent and the CAS waived the right to an answer.

 

 

Reasons:

 

1.

According to Art. 54(1) BGG,5 the judgment of the Federal Tribunal is issued in an official language,6 as a rule in the language of the decision under appeal. When this is in another language, the Federal Tribunal resorts to the official language used by the parties. The decision under appeal is in English. As this is not an official language, the judgment of the Federal Tribunal shall be issued in the language of the appeal brief, in accordance with its practice (here, German).

 

2.

In the field of international arbitration, a civil law appeal is allowed pursuant to the requirements of Art. 190-192 PILA7 (SR 291) (Art. 77(1)(a) BGG).

 

2.1. The seat of the Arbitral Tribunal is in Lausanne in this case. At the determining time, both parties were domiciled outside Switzerland, (Art. 176(1) PILA). As they did not expressly waive the applicability of Chapter 12 PILA, the provisions of this chapter are applicable (Art. 176(2) PILA).

 

2.2. Only the grievances exhaustively listed in Art. 190(2) PILA are admissible (BGE 134 III 1868 at 5, p. 187; 128 III 50 at 1a, p. 53; 127 III 279 at 1a, p. 282). According to Art. 77(3) BGG, the Federal Tribunal reviews only the grievances raised and reasoned in the appeal brief; this corresponds to the duty to provide reasons stated at Art. 106(2) BGG for the violation of constitutional rights and of cantonal and intercantonal law (BGE 134 III 186 at 5, p. 187 with reference). Criticism of an appellate nature is inadmissible (BGE 134 III 5659 at 3.1, p. 567; 119 II 380 at 3b, p. 382).

 

2.3. The Federal Tribunal bases its judgment on the factual findings of the arbitral tribunal (Art. 105(1) BGG). These comprise not only the findings as to the subject matter of the case, which are the basis of the dispute, but also those concerning the progress of the proceedings in the first instance, including the submissions of the parties, their factual allegations, legal arguments, statements in the case, and evidence adduced, the content of a witness statement or an expert report or the findings during an on-site inspection (BGE 140 III 16 at 1.3.1 with references).

 

The Federal Tribunal may not rectify or supplement the factual findings of the arbitral tribunal, even when they are manifestly inaccurate or based on a violation of the law within the meaning of Art. 95 BGG (see Art. 77(2) BGG, ruling out the applicability of Art. 97 BGG and that of Art. 105(2) BGG). However, the Federal Tribunal may review the factual findings of the award under appeal when some admissible grievances within the meaning of Art. 190(2) PILA are raised against such factual findings or when new evidence is exceptionally taken into account (BGE 138 III 2910 at 2.2.1, p. 34; 134 III 56511 at 3.1, p. 567; 133 II 139 at 5, p. 141, each with references). The party looking to claim an exception to the rule that the Federal Tribunal is bound by the factual findings of the arbitral tribunal and seeks to rectify or supplement the facts on this basis must show, with reference to the record, that the corresponding factual allegations had been raised in the arbitral proceedings, in accordance with the procedural rules (see BGE 115 II 484 at 2a, p. 486; 111 II 471 at 1c, p. 473; each with references).

 

2.4. Insofar as the Appellant questions the independence of the CAS, or the impartiality of the Arbitrators (Art. 190(2)(a) PILA), or the validity of the arbitration agreement (Art. 190(2)(b) PILA) before the Federal Tribunal, his arguments shall be disregarded. According to the principle of good faith, such an objection must be raised in the arbitration immediately, failing which the right to rely on the ground for appeal is lost (BGE 129 III 445 at 3.1, p. 449 with references). The Appellant himself appealed to the CAS without raising any corresponding objections in the arbitration proceedings. Nor did he argue in the arbitration that the proceedings were not fair. Under such circumstances, it is incompatible with the principle of good faith to raise these questions for the first time in the framework of the appeal proceedings to the Federal Tribunal.

 

In the same context, the Appellant wrongly demands a broadening of the judicial review, by reference to the right to a fair proceeding and the guarantee of an actual recourse at Art. 6(1) ECHR, insofar as he complains that in the framework of an appeal against an arbitral award according to Art. 190(2) PILA, the Federal Tribunal cannot address the argument that the law was wrongly applied or a blatantly wrong factual finding (see judgments 4A_178/201412 of June 11, 2014, at 2.4; 4A_198/201213 of December 14, 2012, at 3.1; 4A_43/201014 of July 29, 2010, at 3.6.1; 4A_612/200915 of February 10, 2010, at 2.4.1). He disregards that the limited judicial review according to Art. 77(1) BGG in connection with Art. 190(2) PILA applies to all proceedings of international arbitration, therefore also when the dispute concerns the employment relationship of a sportsman.

 

3.

The Appellant argues that the Arbitral Tribunal violated substantive public policy (Art. 190(2)(e) PILA).

 

3.1. The Arbitral Tribunal found that the Appellant unilaterally terminated his employment contract with the Respondent without notice, by his letter of January 25, 2013. It examined whether this termination was lawful, according to Art. 14 of the Regulations for the Status and Transfer of Players. The provision is worded as follows:

 

A contract may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions) where there is just cause.16

 

The Arbitral Tribunal held that the Respondent had not committed any sufficiently serious breach of contract at the time of the Appellant’s termination on January 25, 2013, which would have justified termination without notice. Taking into account the receipt issued by the Appellant and also his subsequent behavior, it then held that the payment of EUR 28’075 made by the Respondent on September 28, 2012, discharged that receipt and no further payments were due for the period until September 30, 2012. Moreover, the employment contract of June 22, 2011, and the agreement of June 23, 2011, respectively, should be interpreted as meaning that the monthly salary payments would come due on the last day of each month, yet that late payment would not be a breach of contract insofar as it took place within the contractually anticipated grace period of 90 days. The failure to pay the salaries for the months of October, November and December 2012, therefore would not yet have constituted a breach of contract at the relevant date, January 25, 2013, which would have justified termination for cause without notice.

 

Moreover, the unpaid compensation for accommodation and car expenses as well as airline tickets for October, November and December 2012, which were marginal, would not justify termination without notice. The Appellant did not submit any additional reasons for termination without notice. Therefore, as the one who terminated the employment relationship without cause, he was not entitled to damages for the salaries paid for the months of February until May 2013. However, the salary payment of EUR 49’483 was due for the period between October 1, 2012, and the termination of January 25, 2013, with reimbursement of expenses of EUR 5’270, which meant that the Appellant was entitled to a total amount of EUR 54’753, with interest.

 

3.2.

3.2.1. The substantive review of an international arbitral award by the Federal Tribunal is limited to the issue of its compatibility with public policy (BGE 121 III 331 at 3a, p. 333). The substantive adjudication of a claim violates public policy when it disregards fundamental legal principles and therefore is, as such, incompatible with the broadly recognized system of values, which according to the dominant opinion in Switzerland, should be the basis of any legal order. Among such principles are the sanctity of contracts (pacta sunt servanda), the prohibition of the abuse of rights, the principle of good faith, the prohibition of expropriation without compensation, the prohibition of discrimination, the protection of incapable people, and the prohibition of excessive attachment (Art. 27(2) ZGB17), when the latter represents an obvious and severe infringement of privacy. The award under appeal is annulled only when its result – and not merely its reasons – is contrary to public policy (BGE 138 III 322 at 4.1 in addition to 4.3.1/4.3.2; 132 III 38918 at 2.2, p. 392 ff.; each with references).

 

3.2.2. The Appellant first fails to understand the concept of substantive public policy according to Art. 190(2)(e) PILA insofar as he claims, with reference to Art. 323(1) OR19 and Art. L.3242-1 of the French Employment Law (Code du travail), that Swiss and French law contain mandatory provisions as to the maturity (due date) of salary payments. The fact that a legal provision is mandatory and that the parties cannot waive it by agreement does not mean that it belongs to public policy within the meaning of Art. 190(2)(e) PILA and that its violation can be examined by the Federal Tribunal with full power of review (132 III 38920 at 2.2.2, p. 394; judgment 4A_510/201521 of March 8, 2016, at 6.2.2; 4A_319/2015 of January 5, 2016, at 4.2.2; 4A_634/201422 of May 21, 2015, at 5.2.2). Moreover, Art. 14 of the FIFA Regulations for the Status and Transfer of Players, raised by the Appellant, states nothing as to the time of maturity of a salary claim or the admissibility of a corresponding understanding of the parties. The commentary quoted, which gives an example for an admissible termination without notice (“Example 1: A player has not been paid his salary for over 3 months. […]”23), goes against the point of view taken in the appeal brief, according to which termination without cause as of January 25, 2013, was permissible, as at that point in time three months (from the due date of October 31, 2012) had not passed. Nor does Art. 12 of the 1949 Convention on the Protection of Wages of the International Labor Organization, raised by the Appellant – which was not ratified by Switzerland – express a view as to the due date of salary payments, let alone the employee’s right to terminate, but provides for “the payment of wages at regular intervals”.

 

With the mere reference to Art. 337 OR in Swiss law, which allows the termination of an employment contract without notice due to repeated delays in payment and may lead to a claim for damages according to Art. 337(d) OR, the Appellant fails to show any fundamental legal principle of public policy, within the meaning of Art. 190(2)(e) PILA, that was disregarded by the Arbitral Tribunal in the case at hand. All of his general submissions as to Art. 27(2) ZGB also do not show to what extent a violation of privacy had taken place in the case at hand, which would be incompatible with public policy.

 

3.2.3. Under the heading “Violation of substantive public policy in the case at hand”, the Appellant quotes several pages of the Employment Contract of June 22, 2011, and the Additional Agreement of June 23, 2011, as well as the reasons of the award under appeal.

 

In so doing, he misjudges the scope of the prohibition of the abuse of rights in the context of the ground for appeal in Art. 190(2)(e) PILA, insofar as he contrasts his own view with the reasons of the Arbitral Tribunal as to the legal meaning of the agreed-upon grace period, according to which, it was prohibited or at least could not lead to a conclusion that termination without notice for delayed payments was proper during that period. The Arbitral Tribunal did not share the Appellant’s legal view that there was a mandatory right to terminate without notice as soon as a due salary payment remained unpaid. There is no disregard of the prohibition of abuse of rights.

 

The Appellant argues an excessive commitment or severe infringement of contractual freedom – which would have exposed him to a situation of forced labor or even slavery – but fails to support this argument with any element in the factual findings of the Arbitral Tribunal. He merely submits that he was dependent on his salary and his compensation for expenses to cover his livelihood. After the salaries and reimbursement were paid up to the month of October to December 2012, at the time of termination, the alleged liquidity problems could only refer to the initial delay in the payments. The Appellant also does not address the fact that he had already been paid his signing bonus of EUR 30’000 for entering into the contract and an additional bonus of EUR 20’000 for the 2012/2013 season, which amounted to nearly 5 months of salary. His further submissions are moreover merely of an appellate nature.

 

Contrary to the view taken in the appeal brief, there is no blatant and severe violation of privacy that would lead to the arbitral award being contrary to public policy (138 III 32224 at 4.3.1 and 4.3.2).

 

4.

The appeal is unfounded and must be rejected insofar as the matter is capable of appeal. In accordance with the outcome of the proceedings, the Appellant must pay costs (Art. 66(1) BGG). The Respondent is not entitled to costs as it did not outlay any expenses for the proceedings before the Federal Tribunal (Art. 68(1) BGG).

 

Therefore, the Federal Tribunal Pronounces:

 

1.

The appeal is rejected to the extent that the matter is capable of appeal.

 

2.

The judicial costs of CHF 3’000 shall be paid by the Appellant.

 

3.

No costs are awarded.

 

4.

This judgment shall be notified in writing to the parties and to the Court of Arbitration for Sport (CAS). 

 

 

Lausanne, June 30, 2016

 

 

In the name of the First Civil Law Court of the Swiss Federal Tribunal

 

 

 

Presiding Judge:                                              Clerk:

 

Kiss (Mrs.)                                                       Leemann