The CAS ruling that should Benefit Clubs and Reduce Player Power

Two recent cases heard by The Court of Arbitration for Sport (CAS) will have significant importance to all parties subject to the FIFA Statutes and Regulations – players, clubs and agents. In FC Sion v Essam El-Hadary and Fenerbahce v Appiah the CAS have outlined their approach to the assessment of damages payable to clubs by players that unlawfully terminate their contracts of employment. Appiah quit the Turkish club in August 2008 following an argument over treatment he received on an injury to his knee that had confined him to the treatment table for nine months up to that point. The injury also prevented him from appearing at the African Cup of Nations in his home country earlier that year. The issue ended up in court when Appiah appealed against a ruling to pay Fenerbahce compensation. El Hadary's left Al-Ahly suddenly in the middle of 2008 to join FC Sion with Al-Ahly claiming that the Egyptian goal-keeper had breached his contract. FIFA found in favour of Al-Ahly but the decision of football's world governing body was appealed. Both cases were then heard by the FIFA Dispute Resolution Chamber (DRC) who found in favour of the clubs. The compensation payable was assessed under article 17 of the FIFA regulations – the article that dictates the consequences of terminating a contract without just cause. Upon appeal of both cases the CAS adjusted the method used to assess damages and sought to apply the principle of ‘positive interest’ – the Swiss Law concept that aims to put the injured party in the position they would have been in had the contract been properly fulfilled. This approach provides for the actual loss suffered by the club and is closer to the English common law approach to calculating fiscal damage suffered. The adopted approach should account for the wide range of losses that a club may suffer as well as the fact that the club will inevitably want to replace the player in breach. Quantum will no doubt still be disputed between parties but the approach to assessment to be used has been clarified In both cases, the DRC found that the players had unilaterally terminated their contracts without just cause. Appiah had been order to pay €2.3m to his club, Fenerbahce under the Article 17 assessment adopted by the DRC and El-Hadary ordered to pay €900,000. In El-Hadary’s case the transferee club, FC Sion was found to have induced the player to breach his contract and were therefore held jointly liable. El-Hadary has been sanctioned with a four month playing ban and FC Sion have been barred from signing any players for two consecutive transfer windows. Both cases were appealed to the CAS. The rulings were upheld in terms of liability but the award of damages was considerably reduced under the positive interest principle. In FC Sion the CAS reduced the compensation payable from €900,000 to €796,500. The focus in the calculation was on what it would cost Al-Ahly to replace the player with one of similar standing. The hearing revealed that FC Sion had been willing to offer €600,000 for El-Hadary and were willing to pay the player €488,500 until his contract with Al-Ahly had expired. To be put into a position as if the contract had been properly fulfilled Al-Ahly would have faced a total outlay of €1,088,500 to replace the player with a player of comparable value. The CAS then deducted the saving Al-Ahly would make from not having fulfil their remuneration obligations of €292,000 to the player. The net figure payable to Al-Ahly was therefore €796,500. In Appiah’s case the CAS reduced the compensation payment to nil. The CAS in this case applied the same logic as that adopted in FC Sion. However the court bowed to the argument advanced by Appiah’s representatives that the amount saved by Fenerbahce through not having to pay the players wages was at the least equal to the saving Feneerbahce enjoyed. Appiah had suffered an injury immediately prior to his unlawful termination, only recovering after the expiration of his contract. The court considerd that the loss suffered by Fenerbahce was far outweighed with the saving of €2.6m made by not having to pay the wages of an injured player. Replacement costs were considered irrelevant as a club would need to replace an injured player anyway. The CAS cemented the familiar principle that unilateral options are unlawful and have no contractual significance. The CAS decision to base damages payable by players to clubs on the full spectrum of losses suffered is encouraging. ‘Player power’ is a long established problem that many in football wish to push towards distinction. Although both cases in question saw the CAS significantly reduce the compensation payable to clubs, the approach adopted should act as a deterrent to players from breaching their employment contracts.

Published July 16, 2010

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