Decision to reduce a contractual penalty in a football-related dispute and right to be heard
A football employment-related dispute between a football club (the Club) and a football player (the Player) was brought before the CAS: the employment contract provided for a salary of USD 4’000 and a signing on fee of USD 50’000, whereas the parties also agreed on a USD 2’000’000 compensation in case of unilateral contractual breach. The Club unilaterally terminated the contract with the Player in February 2021 and the Player filed a successful claim before the FIFA DRC; following an appeal to the CAS by the Club, the Panel partially upheld the appeal and reduced the awarded compensation (from USD 2’000’000 to UDS 500’000).
The Club subsequently filed a motion to the SFT invoking, primarily, a violation of its right to be heard (Article 190 para. 2 d PILA). More specifically, the Club held that the CAS had not justified its assessment of the compensation nor had it substantiated how it reached its decision. The CAS Panel had found that the compensation foreseen in the contract was a contractual penalty that was validly negotiated between the parties. As such, the Panel went on to reduce it amount to the extent that this was found to be excessive (under Article 163 para. 1 SCO), also considering the Player’s salary.
In its judgment, the SFT was not convinced that there was a procedural irregularity to the extent that the Panel had considered the arguments raised. The SFT reiterated that the arbitral tribunal is not obliged to answer explicitly to every and single argument raised in the appeal.
The Club’s argument, that the CAS should have reduced the contractual penalty to the equivalent of six salaries (i.e. USD 24’000) was swiftly dismissed by the SFT, rightly considering that this was an inadmissible plea of appellatory nature. In its conclusion that shows the (high) threshold of a procedural violation under Article 190 para. 2 d PILA, the SFT referred to well-established federal case law according to which the right to be heard does not entitle the parties to a materially correct decision but rather safeguards their right to participate in the decision-making process.
