This article was first written for and published by LawInSport. Click here to view the original.
The Court of Arbitration for Sport (the “CAS”) in Ariosa v. Club Olympia1 has for the first time introduced into the scope of compensation due to players following a termination without “just cause”2 by their club the concept of “moral damages”. The decision also found that the broad regulatory concept of “specificity of sport”3 can be applied to increase compensation to a player when a club’s conduct has been so serious as to undermine the “sporting ethics” of football.
Although Press headlines4 have focused on Sebastian Ariosa’s appalling treatment by his former club, Club Olympia of Paraguay, whilst undergoing chemotherapy for cancer, it is the widening of the scope of compensation available to players in response to a termination without “just cause” which will be of greatest interest to legal advisers.
This article proposes to look at the facts of the case, the decisions before the FIFA Dispute Resolution Chamber (the “DRC”) and then CAS, before considering to what extent the decision really sets down a precedent for future player contract disputes?
Before doing so, it is the essential theses of this article that:
By way of background framework:
From 17 January 2011 until 31 December 2015, Mr. Ariosa was employed under a player contract governed by Paraguayan Law by Club Olympia.
In 2013 he was diagnosed with cancer. Later that year, in June 2013, the parties agreed that the club owed the player eight months’ salary.
In December 2013, whilst the player was undergoing chemotherapy treatment for cancer, the club suspended his contract ostensibly since he was unable to perform his obligations to play.
After further correspondence between the parties, the player rejected the club’s position and terminated the contract in response to the club’s actions.
The club then, in turn, rejected the player’s termination and demanded he return to the club to start training, despite him still undergoing chemotherapy treatment. The club also informed the player that it had deposited two months’ salary with the Paraguayan FA, which required the player to issue an invoice before it could be released. As an individual rather than a company, the player could not issue such an invoice, so could not access that deposited salary.
In February 2014, the player lodged a claim before the DRC, claiming breach of contract for the non-payment of his salary, termination by the club without “just cause” and sought an award for those non-payments and compensation for the remaining value of his contract as well as “moral damages”, “specificity of sport” and medical expenses.
On 20 August 2014 the DRC ruled in favour of the player, awarding him sums for the non-payments and the remaining value of his contract. However, the DRC rejected the heads of loss sought for “moral damages”, “specificity of sport” and medical expenses since they were not sufficiently proven.
Both parties then appealed the DRC decision to CAS. On the one hand, the club sought to overturn the finding that the player’s contract had been terminated without just cause. On the other hand, the player sought compensation for “moral damages” and “specificity of sport” as well as contractual unpaid bonuses.
CAS rejected the club’s appeal but upheld he player’s appeal.
The bonuses were awarded since under the terms of the player contract the player was entitled to them provided the club played (even if the player did not) in the applicable tournament, the 2013 Copa Libertadores. That contractual condition precedent had been satisfied.
On the seminal issue of “moral damages”, even if art. 17 of the FIFA Regulations on the Status and Transfer of Players (“RSTP”) did not expressly provide for such an award, the CAS Panel found that such a head of loss could be awarded by reason of Paraguayan Law governing the player contract and Swiss law pursuant to R.58 of the CAS Code7. In other words, since the applicable national law and, in any event, Swiss Law permitted such an award, CAS could also award it to the player as a matter of principle.
In terms of the theory lying behind that principle, such damages were not to be punitive but rather were aimed at repairing damage done to the player as a result of the club’s actions. In other words, “moral damages” were compensatory.
As a matter of practice, the CAS Panel found that the club’s conduct had been “exceptional”, meaning exceeding what society should bear, and had also been “severe or grave”, meaning a reasonable person would find it unbelievable, such that an award to reflect “the angst and insecurity” caused to the player should be awarded.
To evidence that “angst and insecurity”, the player adduced evidence from his wife, a friend and his oncologist. Whilst the CAS Panel acknowledged that the first two sources could be biased given their close relationships with the player, it accepted that only his inner-most circle was likely to be privy to his true feelings. The weight given to the views of an expert medical professional was higher due to his relative impartiality.
In assessing this award, and notwithstanding that the purpose of “moral damages” was compensatory rather than punitive, the CAS Panel also took into account that the club’s acts were in “bad faith”; first, the depositing of monies with the Paraguayan FA in a way which prevented the player from withdrawing it and, secondly, the sending of a notice that the player had to return to training even though he was still undergoing chemotherapy.
In terms of amount awarded for “moral damages”, the CAS Panel awarded 7% of the full amount of the contract. No specific reason was given for this figure as opposed to another one.
The CAS Panel also found that the “specificity of sport” applied to awards made to players. That approach has been used previously by CAS for the benefit of clubs in response to termination without justice cause by players, such that it is now generally the case that the player will need to pay to his former club compensation to reflect his market value.8 This head of compensation was there to reflect damages to the player as a stakeholder in the sport rather than damages to him as a person, which would fall under “moral damages”.
Applying that approach to the case, the CAS Panel found that the club’s “exceptional and severe conduct” was contrary to “the needs and spirit of football”, especially given the player’s vulnerable stage of life. It then found it appropriate to award him 10% of the value of the contract for this particular head of loss.
Other than highlighting the player’s appalling treatment by the club and its welcoming of the CAS award in his favour, FIFPro has also suggested9 that the CAS decision could be used to argue that player’s should still be awarded compensation for termination without “just cause” even if they move to a new club at which they are better paid than previously. In other words, usual mitigation principles should not apply since the “specificity of sport” and/or “moral damages” can be used to order an award against a club when the player has not actually suffered any loss of earnings.
That interpretation – whilst understandable for FIFPro’s constituents – is unsustainable for two reasons. First, it would turn basic contractual principles on its head, effectively finding that mitigation rules may not apply in football. The “specificity of sport” does not go that far, albeit a particular award to penalise a club for circumventing contractual stability is perhaps feasible. Secondly, CAS made it quite clear that “moral damages” were to be compensatory not punitive. FIFpro’s suggestion would render such an award obviously punitive.
Although this decision will inevitably reinforce “moral damages” and “specificity of sport” to the armoury of tools that may be deployed by player’s legal advisers in the future, it should not be viewed as opening the flood-gates to such claims.
First, and it is important to emphasise this point, the circumstances of the case were quite exceptional. The CAS Panel was able to identify “bad faith” on behalf of the club on two occasions. The Player was also undergoing life-threatening medical treatment, which, unsurprisingly, left him in a very vulnerable position when dealing with the club’s unacceptable demands.
Secondly, the CAS Panel emphasised that “moral damages” are always compensatory rather than punitive. As a result, mere bad conduct by a club will be an insufficient basis to found such an award. Instead the player will need to satisfy the CAS that the club’s conduct was “exceptional” and “serious and grave” as well adduce credible evidence that he has suffered “angst and insecurity” beyond the norm flowing from a contract termination. In most cases those tests will not be at all easy to demonstrate.
Finally, although the award in relation to “specificity of sport” has also captured the headlines as being ground-breaking10, the position is more nuanced than that. It is a factor expressly listed under Art. 17 of RSTP and has been used previously by CAS to increase an award to a player following the termination of contract without “just cause” by a club. In Raziak v. AEL Limassol11 the CAS Panel increased compensation to reflect the player’s loss of opportunity in obtaining higher wages due to no other club wanting to employ a player who may have acted without “just cause” and, as a result, could have assumed liability for any losses as a result of employing him. However, in this case, CAS used “specificity of sport” in a different way to reflect the appalling conduct of the club. As a result this decision demonstrates that CAS can use the flexible concept of “specificity of sport” to increase (or, for that matter, decrease) compensation depending on the particular circumstances of each case and, in particular, when a club has behaved exceptionally badly towards a player.