Academic journal article The International Sports Law Journal

The Prize for Freedom of Movement: The Webster Case

Academic journal article The International Sports Law Journal

The Prize for Freedom of Movement: The Webster Case

Article excerpt

Introduction

Eighteen-year-old Andy Webster moved from Arbroath club to Heart of Midlothian PLC (Hearts), both Scottish clubs, for a transfer compensation of 75,000 [euro]. Webster's employment contract was due to run from 31 March 2001 to 30 June 2005. Halfway through this term, he signed a new contract with Hearts on 1 July 2003, to run until 30 June 2007. Webster had developed into an important player in Hearts' first eleven and in the Scottish national team. It was appealing for Hearts to bind the player to it for a longer term. In April 2005, the club made an offer to Webster--with improved terms--to play for the club for two extra seasons. No agreement was reached however. Hearts made several more offers, but they were all rejected by the player one by one. During this period, Hearts did not field Webster in a variety of matches, which led the player to believe that the club was attempting to put pressure on him through tactical considerations, to accede to the club's proposals. The relationship between the club and the player soured still further and reached its nadir following utterances against Webster in the media by the most important shareholder. Incensed at these remarks, Webster approached the Scottish Professional Footballer's Association (SPFA), which advised him to lodge a claim on the basis of clause 18 of his employment contract (1). Webster notified the club in writing that he wished to terminate his employment contract on the basis of "just cause". He argued that the club had defaulted on its obligations towards him, and that a "fundamental breakdown in trust" justified his position. In response, Hearts indicated that they had lodged a case with the Scottish Premier League Board. For Webster, this entailed the danger of a long-running procedure, making it impossible for him to sign a contract with another club for the 2006/2007 season. Webster opted for a different route: dismissal no longer based on "just cause", but dismissal without "just cause" based on art. 17 of the FIFA Regulations for the Status and Transfer of Players 2005 ("Regulations"). (2) In July 2006, Webster's business manager sent a fax to 50 clubs stating that Webster had ended his contract with Hearts, and that this termination meant he would only have to pay 200,000 [euro] compensation to Hearts. On 9 August 2006, Webster signed a three-year contract with the English club Wigan Athletic AFC. The English football association asked the Scottish association to forward the player's international transfer certificate. The Scottish association refused compliance in writing, because Webster was still under contract to Hearts. On 18 August 2006, Wigan approached FIFA and requested that they approve Webster's provisional registration. On 28 August, the Scottish association notified FIFA that they could not comply with the request. On 31 August, the Single Judge of the Player's Status Committee approved the provisional registration with immediate effect. (3)

Hearts submitted the case to the FIFA Dispute Resolution Chamber (DRC) and claimed judgment against Webster to pay 5,027,311 [euro] in compensation, Webster's exclusion from official matches for two months and, finally, payment of compensation by Wigan and a ban against the club registering any new players during one registration period.

What criteria are considered in determining compensation in the case of a unilateral employment contract termination without "just cause"? Art. 17(1) of the Regulations states on this:

"In all cases, the party in breach shall pay compensation. Subject to the provisions of Art. 20 and annex 4 in relation to Training Compensation, and unless otherwise provided for in the contract, compensation for breach shall be calculated with due consideration for the law of the country concerned, the specificity of sport, and any other objective criteria. These criteria shall include, in particular, the remuneration and other benefits due to the player under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years, the fees and expenses paid or incurred by the Former Club (amortised over the term of the contract) and whether the contractual breach falls within a Protected Period." (4)

In the Bosman judgment, the European Court of Justice had established that a player whose contract has been completed in accordance with the contractual provisions is free to sign a contract with another club of his choice in an EU member state. The club employer may not hinder the player's negotiating freedom in any way. Since the Bosman judgment, clubs can no longer demand transfer compensation on completion of the employment contract. (5) Football club managers have attempted to bind valuable players to them for an extended period by signing agreements covering a long term. (6) They were prepared to release a player before the end of a contract's term for substantial transfer fees. With the implementation of the 2001 Regulations, FIFA introduced a maximum term of five years. (7) In the Bosman judgment, it was not established whether the freedom of movement guaranteed in art. 39 of the EC treaty allowed a player to terminate an ongoing employment contract unilaterally and to enter into a contract with another club. The story of Nicolas Anelka is well known: in the summer of 1999, he no longer wished to play for Arsenal although his contract still had four years to run. Anelka wanted to be transferred to Lazio Roma. This transfer did not go ahead because Arsenal was not prepared to let the player go and Lazio was not prepared to pay the exorbitant transfer fee which Arsenal asked. (8) That was in 1999. No rule can currently be found in the Regulations which makes it impossible for a player to unilaterally terminate his contract prematurely. In favour of "contractual stability", or in other words to compel some respect for a contract and prevent clubs being in a constant state of uncertainty about which players are still in their service, FIFA drew up various rules which were intended to make unbridled "contract jumping" unattractive. In the first place, these are the provisions involving the "protected period". (9) Employment contracts for players younger than 28 entail a protected period of three years, and for players older than 28 there is a two-year protected period. (10) Should a player terminate his contract without valid reasons within the protected period, then in terms of art. 17(1) and (3) of the Regulations he is required to pay compensation (a buy-out price) and sporting sanctions can be imposed on him. In terms of art. 17(1), unilateral severance of the contract without valid reasons after the expiry of the period "only" obliges the player to pay compensation. Contract freedom allows the parties to include a "buy-out" clause in their contract. Such a clause can stipulate the amount of compensation a player must pay to the club in the case of a unilateral contract termination. The player is then entitled to end his contract unilaterally upon payment of the stipulated amount in compensation. "With this buy-out clause, the parties agree to give the player the opportunity to cancel the contract at any moment and without a valid reason, i.e. also during the protected period, and as such, no sporting sanction may be imposed on the player as a result of the premature termination". (11) Although such a clause entails some uncertainty for the club as to whether the player is still in service, on the other hand it offers certainty about the amount of compensation. If no prior arrangements have been made about this, on ending the contract there is little certainty about the extent of the compensation based on the Regulations. "There are no real criteria upon which we can determine how the compensation will be calculated, if it is not provided in the contract," according to Drolet. (12) Art. 17(1) of the Regulations of 2005 only provides that the compensation must be calculated with observance of the applicable national law, the specificity of the sport and all objective criteria relevant in casu. A complexity of factors presents itself in calculating the compensation Webster should pay to Hearts. Considering the individual factors could lead to a variety of outcomes. Hearts estimated the compensation at some 5 million [euro] while Webster's calculation came to 200,000 [euro].

The verdict of the Dispute Resolution Chamber

In its decision of 4 April 2007, (13) the DRC concluded that Webster had terminated his employment contract with Hearts unilaterally, outside the "protected period". The DRC set the residual value of the contract at 199,976 [euro]. The DRC then considered that Webster would have earned 10,000 [euro] per week at Wigan. It also noted that Hearts should have paid transfer compensation to the Arbroath club. This amount should have been settled during the term of the employment contract. It was also of significance that Webster still had to serve one more year with Hearts. The five seasons in which Webster had been under contract to Hearts should also have played a role in determining the compensation. Another crucial factor, according to the DRC, was that Hearts had contributed to the player's development to a significant degree. Webster had thus grown into a "high profile footballer" who had aroused interest from leading clubs. The DRC considered that "[S]uch a stance demonstrates the real interest the club had always had in the service of the player". Limiting the compensation to the residual value of the employment contract was not in accordance with the DRC's jurisprudence. Such a limitation, the DRC felt, would undermine the principle of the "maintenance of contractual stability" and reduce it to merely a formula. The DRC believed this would not fulfil the legitimate right of the injured party to receive compensation.

As a general rule, the DRC considers that a player cannot buy his way out of an employment contract at any desired time or under any circumstances, simply by paying the residual value of the contract. In light of all the circumstances advanced and after careful analysis of the submitted documentation, and on the basis of the details of the case, the DRC decided that Webster had to pay Hearts compensation of [euro] 625,000. The DRC arrived at this amount by taking the residual value of Webster's contracted salary in his first year with Wigan, and multiplying this by a coefficient of 1.5. The DRC made Wigan severally and jointly liable for this amount with the player.

The employment contract included a clause involving the unilateral dissolution of the contract. On the basis of this clause, Webster could end his contract after the last match of the Scottish season "on giving fourteen days' written notice to the club". Given that Webster was in default by not having notified Hearts of his decision to end the contract within the required period, he was also prohibited from participation in the two first official matches in the new season.

Neither Hearts, nor Webster or Wigan was satisfied with the foundations on which the DRC had calculated the transfer compensation and, separately from the DRC's judgment, they lodged an appeal with the Court of Arbitration for Sport (CAS). (14) The parties agreed that the same panel would be appointed to decide the three appeals in a single arbitral award.

The verdict of the Court of Arbitration for Sport

Wigan had argued that the DRC had operated in contravention of art. 13, paragraph 4 under f of the Rules Governing the Procedures of the Players' Status Committee and the Dispute Resolution Chamber (DRC) (the Rules) (15) by invoking the criteria of art. 17(1) of the Regulations in an inadequate manner when making its compensation calculation. The CAS also shared this opinion, given its consideration that:

"[...] in the final analysis it is impossible to understand from reading the decision what weight was given to what criteria in determining the quantum, i.e. there is no indication of the method and figures used by the DRC to arrive at the amount of 625,000 [pounds sterling], or in other words what the figure consists of." (16)

The CAS rejected the DRC decision and produced a new decision on the basis of R57 of the CAS Code (17).

The CAS stated first that unilateral termination of a contract must be viewed as a breach of contract, which must be linked to the payment of compensation to the aggrieved party. Based on contract freedom, parties are in principle bound by what is stipulated in the employment contract. Given however that there was no stipulation in the contract about any compensation to be paid on terminating the contract, in determining the extent of the compensation the CAS had to turn to the relevant provisions of art. 17(1) of the Regulations. The core of the case hinged on an interpretation of that article.

In deciding the extent of the compensation on the grounds of art. 17, the CAS believed that the "training compensation" should not be involved, given that the compensation is arranged in detail in another part of the Regulations. In other words: the costs that Hearts had invested in training and developing Webster did not fall under the factors summed up in art. 17(1) and were therefore not to be considered in the first instance.

In determining the extent of the compensation, the CAS had to analyse the three categories in which art. 17(1) distinguishes the factors. These categories are: "the law of the country concerned, the specificity of sport and any other objective criteria".

Art. 17(1) states in the first place that the "compensation for breach shall be calculated with due consideration for the law of the country concerned". Given that the contract was signed in Scotland and was established there for execution, and that the club claiming compensation was based in that country and that the player was resident there at the time of signing and terminating the contract, it designated Scottish law as "the law of the country concerned". However, reference to "the law of the country concerned" did not entail, in the opinion of the CAS, that art. 17(1) involved a law choice clause. It must be observed that the extract only stipulated "that such law is among the different elements to be taken into consideration in assessing the level of compensation". (18) This interpretation leads to the compensation not having to be calculated on the basis of Scottish law. The provisions in Scottish legislation adduced by Hearts involving the settlement of damages, arising from a contract, did not take precedence in any way above the other elements named in art. 17(1), the CAS believed. The CAS rejected Hearts' appeal based on the general rules and principles of Scottish law on the matter of damage through breach of contract. It considered that the rules and principles:

"are neither specific to the termination of employment contracts nor to sport or football, while article 17 of the FIFA Status Regulations was adopted precisely with the goal of finding in particular special solutions for the determination of compensation payable by football players and clubs who unilaterally terminate their contracts without cause. In other words, it is important to bear in mind that it is because employment contracts for football players are atypical, i.e. require that the particularities of the football labour market and the organisation of the sport be accounted for, that article 17 was adopted." (19)

Another factor in art. 17(1), which had to be taken into consideration in determining compensation, was the "specificity of sport". But the problem which occurs with this concept, however, is that no indication regarding its content whatsoever is included in the Regulations. The CAS believed that:

"the specificity of sport is a reference to the goal of finding particular solutions for the football world which enable those applying the provision to strike a reasonable balance between the needs of contractual stability, on the one hand, and the needs of free movement of players, on the other hand, i.e. to find solutions that foster the good of football by reconciling in a fair manner the various and sometimes contradictory interests of clubs and players." (20)

The CAS should take due cognisance of this balance up to the moment that it reached the other objective criteria which art. 17(1) meant to play a role in determining the compensation.

The CAS believed that the need for "contract stability" was sufficiently secured by means of the "protected period" and the provisions in the Regulations with which contract parties could be forced to honour this period. In the last sentence of art. 17(3), a player who terminates his contract unilaterally outside the "protected period" is not only obliged to pay compensation, but can also have sporting sanctions imposed on him, if he was in default in not notifying the club of the decision sufficiently "(i.e. within fifteen days following the last match of the Season)". Introducing this period was intended to introduce stability. Drafters of the Regulations attempted to increase the stability with art. 16. In this article it is in fact stipulated that "[A] contract cannot be unilaterally terminated during the course of a Season." This provision applies to both clubs and players. The CAS believes that after expiry of the "protected period" and depending on the provisions in the employment contract, compensation for the unilateral breach should neither function as punishment nor lead to enrichment. The compensation must be calculated on the basis of criteria which respect the rights of both parties involved. In the interests of the football world, the method by which compensation is calculated must be as predictable as possible.

Hearts believed Webster's value on the transfer market to be 4 [euro] million. The CAS did not consider such amounts as lost profit or money to be claimed as the player's replacement value, within the context of art. 17(1). Such a form of compensation was certainly not established contractually between the parties. Its recognition would enrich the club while at the same time being a punishment to the player. Even if it had been established contractually that the player's market value could be claimable as lost profit in the form of compensation, no moral or judicial justification would be present for this, the CAS believed. A club cannot justify that training and instructing a player would be the only source of the player's success, on the basis of which they would have the right to demand his entire market value. Should it be allowed that a player's market value could be claimed as lost profit on the basis of art. 17, this would then lead to double counting. The compensation which can be claimed on the basis of the costs the club incurs for training and instructing a player is regulated separately in art. 20 of the Regulations. The club must however be able to demonstrate the costs. Training compensation is certainly not based on the player's market value. The CAS also considered that:

"Since a club's possible entitlement to the transfer or market value of players is entirely absent from the criteria of compensation listed in article 17(1) and there is no reference to any such form of compensation in favour of Hearts in the Player's employment contract, to apply such criteria and thereby imply it into the contract would contradict both the principle of fairness and the principle of certainty." (21)

If clubs are given the right to claim the market value of players in the form of compensation, that would partially return the entire system of transfer compensations to the pre-Bosman period. The CAS rejected Hearts' demand for payment of 4 million [euro] in compensation.

The CAS also dismissed Hearts' subsidiary demand for repayment of the 75,000 [euro] it had paid to the Arbroath club. In the opinion of the CAS, this amount should have been settled during the term of its contract with Webster.

The CAS also considered that the remuneration and benefits to which a player is entitled in terms of his new contract, were also not the most suitable criterion a club can invoke in issues involving unilateral termination after expiry of the protected period,

"because rather than focusing on the content of the employment contract which has been breached, it is linked to the Player's future financial situation and is potentially punitive." (22)

Just as in the instance where a club prematurely terminates the contract unilaterally and the player is entitled to receive his salary until the end of his contract term, the club is also justified in receiving an equivalent amount should the player break his contract, according to the CAS. Following on this, the CAS considered that:

"[T]his criterion also has the advantage of indirectly accounting for the value of the Player, since the level of his remuneration will normally bear some correlation to his value as a Player. Thus a Player receiving very high remuneration (and thereby being able to expect high remuneration in case of a change of club) will have a correspondingly high amount of compensation to pay even if he terminates his contract outside the Protected Period, and the earlier such termination occurs the higher will be the total amount of compensation owed." (23)

The CAS believed the most suitable criterion from art. 17(1) for determining the extent of compensation to be the amount of remuneration to which Webster would have been entitled between the time that he broke his contract and the time at which the contract should have ended: the residual value of the contract. In the case under consideration, this was set at 150,000 [euro]. Given that the criteria of art. 17(1) are not cumulative per se, the CAS saw no reason to add any other amount to that amount as an extra item of loss. On the basis of art. 17(2) of the Regulations, the CAS held Wigan severally and jointly liable with Webster for the determined amount of compensation. (24)

Comments:

Terminating a contract with or without "just cause"

In terms of art. 13 of the Regulations 2005, an employment contract between a professional footballer and a club may in principle only be terminated at the end of the agreed duration, or by means of a mutual agreement. The purpose of this principle is that when a player and club opt to enter into an employment relationship, they will respect the contract. Unilateral termination of a contract without a valid reason should be definitively discouraged. Honouring the contract is nevertheless not a principle which cannot be evaded. Although art. 16 provides that "[A] contract cannot be unilaterally terminated during the course of a Season", art. 14 at the same time provides that a contract may be terminated prematurely by one of the parties--without any consequences--if a valid reason, or just cause, can be offered. Art. 14 must be regarded as a lex specialis with respect to art. 16. "It represents the only situation in which either party is entitled to unilaterally terminate the contract at any time, i.e. also during the course of a season", according to the explanation with art. 16.

The SPFA advised Webster to terminate his employment contract for just cause on the grounds of clause 18. Given the deteriorated situation with Hearts, which was caused to a large extent through the agency of Hearts' majority shareholder, Webster had sufficient arguments to take this step. On the basis of art. 14, such a dismissal would not produce any financial or sporting sanctions. At the beginning of May 2006, Webster notified the club in writing of the termination of his contract with the statement that "he believed the club had failed in its duties towards him and that a fundamental breakdown in trust justified his action." Webster was thus able to end his contract unilaterally for just cause within the season, and could seek a new (foreign) employer. Once he had found one, the Single Judge of the Player's Status Committee approved the provisional registration. After Webster's departure, Hearts would have been able to contest the just cause through the DRC and to claim compensation.

It is unclear why the SPFA advised Webster--after Hearts had submitted the case to the Scottish Premier League Board--in consequence of the termination for just cause, to end his contract without just cause on the grounds of art. 17 of the Regulations. In the CAS decision, one reads that Webster, "realising that the appeal procedure triggered by Hearts could result in a protracted dispute that might prevent him from securing a contract with another club in time for the 2006/2007 season", took the decision to follow the alternative route suggested by the SPFA. Webster notified the club of this at the end of May 2006.

Webster left Hearts and joined Wigan in August 2006. In November 2006, Hearts submitted a claim for compensation to the DRC on the grounds of breach of contract. Hearts would also have undertaken this action had Webster ended his contract at the beginning of May 2006 for just cause. In that instance, too, a protracted dispute would not have prevented him from finding another club in time for the next season.

In the worst-case scenario, the DRC would have reached the ultimate conclusion that Webster had ended his contract without just cause and would be obliged to pay compensation. The omens at the start of May 2006 did not hint at this.

In the Regulations system, a player cannot invoke argumentation along the lines of both "with just cause" and "without just cause". The player has to make a choice. This makes the system rigid to a certain extent. In a procedure concentrated on art. 17(1), the DRC has no opportunity to investigate whether there is any possibility of a lack of just cause, although there are many indications towards this. Should a player have ended his contract for just cause, but under the pressure of circumstances he feels obliged to omit the just cause, the case which follows automatically heads in the direction of determining the compensation he must pay. It is argued that the DRC should not be quite so passively constituted and that it should have discretionary authority, should there be sufficient indications for this, to conclude that a player had just cause to end his contract. This would prevent a club which has a debt arising from the departure of a player also obtaining damages.

The role of the Single Judge of the Players' Status Committee

Annex 3 of the Regulations 2005 provides rules applying in the case of a transfer of a player between national associations. The basic assumption is that each national association must be in possession of the International Transfer Certificate (ITC) of each professional footballer who plays for a club falling under the association. Once a player moves from a club in country A, the new club in country B will request its national association to register the player within a registration period. The player is not entitled to play for club B until the ITC has been submitted by association A to association B. Association B requests issuance of the ITC by association A by the final day of the registration period at the latest (the "ITC Request"). Association A will ask both club A and the player to confirm, first, that their employment contract has ended, second that they have agreed a premature termination of the contract or, third, that a dispute about the contract exists. Within seven days, association A must either hand over the ITC or must notify association B that the employment contract has not ended or that there is no mutual agreement about premature termination of the contract. Should association B not have received an answer from association A within 30 days, association B will register the player provisionally. The Player' Status Committee can annul the provisional registration within one year, if association A provides valid reasons why it has not responded to the request from association B. If association A does not respond within a year then the registration becomes definite. Association A will not issue an ITC if there is an employment dispute between the player and club A. In such an instance, parties can approach FIFA in terms of art. 22 of the Regulations 2005. Art. 23(3) states that the Single Judge of the Players' Status Committee is empowered to issue decisions concerning issuing a provisional ITC. All parties must be heard in the procedure before the arbiter. This decision can be appealed through the CAS.

A player who terminates his contract unilaterally in the interim may not simply play for a foreign club. For this it is necessary that the ITC be transferred from the one national association to the other. Should the former association refuse to issue the ITC, because the term of the contract between the player and his old club has not yet lapsed, the intervention of the Single Judge is of considerable significance. In the explanation with art. 2 of Annex 3 of the Regulations it is stated that "[T]he Single Judge will be asked to pronounce on the provisional registration for the new club after having considered whether the provisional registration is useful to protect the player from irreparable harm, the likelihood of success of the player on the merits of the claim and whether the interests of the player outweigh those of the opposite party (so-called balance of convenience of interests). If these conditions are met, the Single Judge will authorise the new association to register the player for the new club provisionally. Should, on the other hand, the conditions not be met or should the evaluation of the Single Judge not yet enable the responsibilities to be ascertained in a provisional manner, the Single Judge will not give provisional authorisation and the DRC will have to pronounce itself first on the substance of the matter."

Webster chose the route of art. 17(1) to avoid the "protracted dispute" which might lie in wait if he ended his contract for just cause. Such a delay would deprive him of the opportunity to join a new employer for the next season. The premature unilateral termination of his contract with Hearts could have been a reason for the Single Judge to refuse provisional registration with his new club. For reasons which are not known, the Single Judge did not take this route. In the DRC decision it is only remarked that "the Single Judge of the Players' Status Committee authorised the [English] Football Association to provisionally register [Webster] with its affiliated club [Wigan] with immediate effect".

Calculating the compensation in accordance with one objective criterion

Webster had to find a new club before the end of the next registration period. To achieve this objective, he adopted the SPFA's suggestion and left Hearts "without just cause". Art. 17(1) of the Regulations 2005 stipulates that a player who breaches a contract must pay compensation. The stipulation then indicates the criteria which must be considered to establish the extent of the compensation. Webster's business manager had calculated the compensation at just 200,000 [pounds sterling]. This was not an amount Hearts had in mind. The club estimated Webster's value together with all the costs they had incurred for the player, at [pounds sterling] 5 million, which is what they wished to have as compensation. The DRC noted that the series of criteria listed in art. 17(1) is not exhaustive. Each request for compensation must be assessed on a case-by-case basis. This presented the DRC with the opportunity, when it arose, to take an ex aequo et bono decision. Not only did the DRC panel members take the criteria listed in art. 17(1) into consideration, but they also involved "their specific knowledge of the world of football, as well as [...] the experience the Chamber itself has gained throughout the years". Based on art. 17(1) of the Regulations, the DRC arrived at a figure of 625,000 [pounds sterling]. In determining this amount, the DRC took into consideration the residual value of the employment contract, a number of "appearance bonuses" the player received and the transfer compensation the club would have had to pay. The number of seasons the player had appeared for the club was also considered, as was the fact that the club had contributed to the player's improvement, and the player's salary with his new club. The DRC declared "that as a general rule, a player cannot, at any time and under any circumstances, 'buy out' an employment contract by simply paying his club the residual value of his contract". The CAS was not interested in any such general rule. The CAS ignored the criteria the DRC had taken into account, and focused solely on the residual value of the employment contract, which it valued at 150,000 [pounds sterling] with interest from the day the contract's termination took effect. (25)

Only one criterion applies to establishing compensation: the residual value of the contract. This is an exceptionally objective criterion; it is also a criterion which lacks any logical substantiation. After all, where is the logic in a club being able to demand double the salary amount if a player departs prematurely, an amount that it no longer needs to pay out? The residual value amount is entirely separate from the nominal loss a club suffers through a player's departure. (26)

Consequences of the CAS decision for the solidarity mechanism

According to art. 21 of the Regulations, clubs which contributed to a player's training and instruction between his 13th and 23rd birthday receive part of the compensation, if the player is transferred before the end of his contract. This mechanism is elaborated further in Annex 5 of the Regulations. The provisions covering the solidarity mechanism only apply in the case of international transfers. Large transfer sums provide clubs, including amateur ones, which have contributed to a player's training and instruction, with significant amounts of extra income. The mechanism kicks in repeatedly during a player's entire career when he is transferred to a foreign club within the term of a contract. "The solidarity contribution has proven to be an efficient means to support grassroots football in particular." (27)

Should compensation be reduced to only the contract's residual value, this would have a major impact on the solidarity mechanism anchored in the Regulations.

The strict liability of the new club

Art. 17(2) of the Regulations stipulates that, when a player has to pay compensation, "his new club shall be jointly and severally liable for its payment". Such a rule can be appreciated if the new club has had a share in the player departing from his old club, but if the new club has had no hand in that departure, as in the Webster case, then the rule is devoid of any logic. (28) In the Commentary, (29) one finds no reasoning for such a situation. It only repeats what the rule stipulates: "The new club will be responsible, together with the player, for paying compensation to the former club, regardless of any involvement or inducement to breach of contract." The CAS agreed with Wigan that the club had had no involvement whatsoever in Webster's decision. Contrary to the interpretation of art. 17(1), the CAS maintained a literal interpretation of the application of art. 17(2). The liability of the new club must be understood as "a form of strict liability". But why? Because such liability "is aimed at avoiding any debate and difficulties of proof regarding the possible involvement of the new club in a player's decision to terminate his former contract." This is not in the least convincing after it had first been confirmed that Wigan had no involvement whatever in Webster's decision to leave Hearts.

In practising sports law, the "strict liability" principle is used to avoid "hassles" about questions of proof. There are any number of examples. Feyenoord was held liable for the conduct of supporters abroad on the grounds of strict liability (30); the sports personality accused of drug use is not given the opportunity to show that he or she is not liable, or is liable to a reduced degree, on the grounds of strict liability (31); a club is not accorded the opportunity to show that it had nothing to do with a player ending his contract on the grounds of strict liability. By using strict liability, the relationship between the parties is brought into imbalance in a dispute. It is high time sports law accepts that guilt and intent must be proved, even if this entails "debate and difficulties". In order to raise sports law to a greater degree of maturity, within the domain of the law one should no longer be able to hide behind the shield of strict liability. The CAS could make a substantial contribution to such maturing.

In conclusion

It is theoretically possible that, in the future, the CAS will reach a different decision in a case where the facts coincide with those in the Webster case. The CAS procedural rules do not recognise any stare decisis, or in other words: each new CAS panel is not bound by decisions of previous panels. In the series of drug-use decisions from the CAS, with regard to strict liability one panel used entirely different reasoning to that of previous panels. (32) It is not excluded that when it comes to determining compensation, a future panel may operate from different starting points than those used by the panel in the Webster case. It is also possible that in the future a judge may force the CAS to select other starting points. Given that the CAS is the highest body in the administration of sporting law, the DRC will however need to abide by the outcomes of the Webster case until any such reversal. Based on the Webster decision, only one criterion applies in determining the extent of compensation in the case of any unilateral termination of a player's employment contract prematurely: the time remaining on the existing contract. The other "objective criteria" in art. 17(1) of the Regulations have been made subordinate by the CAS, if not placed beyond consideration.

Under pressure from the decision in the Webster case, the duration or term of employment contracts will in future be equivalent to protected periods. Longer contracts will not yield the clubs sufficient financial benefits. The clubs will attempt to retain their valuable players for longer terms by tempting them to extend their contracts in the interim. Each time a contract is extended, the duration of the protected period begins anew. The clubs may sell players during the protected period, but players may only end their contracts unilaterally during this period if they pay compensation and put up with a sporting sanction. On this point, the balance between clubs and players is not in equilibrium. It is in the interest of players that they include a buy-out clause in their contracts. Judging by the explanation with art. 17 of the Regulations, after paying the agreed compensation players may terminate their contracts unilaterally during the protected period without any sporting sanction being able to be imposed on them.

(1) The clause reads: "If the Club intentionally fails to fulfil the terms and conditions of this Agreement the Player may, on giving fourteen days" written notice to the Club, terminate this Agreement."

(2) The FIFA Regulations for the Status and Transfer of Players 2008 have not been amended on this point.

(3) See art. 23(3) and Annex 3 of the Regulations 2005. Hearts could have lodged an appeal with the CAS against the decision of the Single Judge, on the grounds of art. 23(3).

(4) "[...] although the RSTP [the Regulations], edition 2005, provide us with the elements that are decisive for determining the amount of compensation, it is still difficult to derive the more specific elements and factors from [...] decisions [of the DRC] to determine the amount of compensation. Regarding the exact amount of compensation, it must be noted that the amount explicitly depends on the merits of the case and its particularities," according to Frans De Weger, "The Jurisprudence of the FIFA Dispute Resolution Chamber", 2008 T.M.C. Asser Press, The Hague, 2008, p. 106. On p. 110 he writes that "[I]t is often presumed by parties that only the so-called "residual value" of the contract is the decisive element in order to determine the exact amount of compensation".

(5) The value of Webster would be reduced to zero one year following the ending of his contract, thus if he would have served out his contract with Hearts, as a result of the Bosman case.

(6) At present the term of an agreement in accordance with Art. 18(1) of the Regulations of 2005 is at least one year and no more than five years.

(7) Art. 4(2) of the Regulations 2001.

(8) According to Andrew Caiger and John O'Leary, "The End of the Affair: the Anelka Doctrine--the Problem of Contract Stability in English professional football", in A. Caiger and S. Gardiner (eds.); professional sport in the EU, Regulation and Re-regulation, T.M.C. Asser Press, The Hague 2000, p. 197 et seq..

(9) "The need to maintain contractual stability in football is defended by the governing bodies with reference to the need to preserve the regularity, proper functioning and competitive balance of competitions, to allow clubs to build squads, to facilitate supporters" identification with teams and to provide employment stability for players", according to Richard Parrish and Samuli Miettinen: "The Sporting Exception in European Law", T.M.C. Asser Press, The Hague 2008, p. 184.

(10) In [section] 7 of the Definitions of the Regulations the "protected period" is defined as "a period of three entire Seasons or three years, whichever comes first, following the entry into force of a contract, if such contract was concluded prior to the 28th birthday of the Professional, or to a period of two entire Seasons or two years, whichever comes first, following the entry into force of a contract, if such contract was concluded after the 28th birthday of the Professional."

(11) According to explanation (3) with art. 17 of the Regulations.

(12) Jean-Christian Drolet: "Extra Time: Are the New FIFA Transfer Rules Doomed?" in: The International Sports Law Journal 2006/1-2, p. 71.

(13) DRC 4 April 2007, no. 47936.

(14) CAS 2007/A/1298 Wigan Athletic FC v. Heart of Midlothian; CAS 2007/A/1299 Heart of Midlothian v. Webster & Wigan Athletic FC; CAS 2007/A/1300 Webster v. Heart of Midlothian.

(15) Article 13--Decisions [...], 4. Written decisions shall contain at least the following: [...] f. the reasons for the findings; [...].

(16) Reason 100.

(17) Code of Sports-related Arbitration, R57: "The Panel shall have full power to review the facts and the law. It may issue a new decision which replaces the decision challenged [...]"

(18) Reason 87.

(19) Reason 128.

(20) Reason 132.

(21) Reason 145.

(22) Reason 150.

(23) Reason 151.

(24) "The decision which CAS took [...] is very damaging for football and a Pyrrhic victory for those players and their agents, who toy with the idea of rescinding contracts before they have been fulfilled. [...] CAS did not properly take into consideration the specificity of sport as required by art. 17 par. 1 [...]", according to FIFA President Blatter in The Times of 1 February 2008. An exaggerated reaction from a sports manager afraid that he would lose control, because "[...] what can be perceived as the right to contract-jump is expressly recognised by the FIFA transfer rules", according to Simon Gardiner and Roger Welch, "The Contractual Dynamics of Team Stability Versus Player Mobility: Who Rules "The Beautiful Game"?, in: ESLJ 2007, Vol. 5, no. 1, p. 4.

(25) This is still a substantial amount if one considers that if the procedure had involved termination on the basis of "just cause", then no compensation whatsoever could have been claimed.

(26) The question is whether in determining the compensation amount, the CAS implicitly considered that the inducement to Webster's departure lay with Hearts and that Webster in essence had "just cause" to end his contract.

(27) According to the explanation with art. 1 of Annex 5 of the Regulations.

(28) According to Janwillem Soek: "Termination of International Employment Agreements and the "Just Cause" Concept in the Case Law of the FIFA Dispute Resolution Chamber", in ISLJ 2007/3-4, p. 45.

(29) Commentary on the Regulations for the Status and Transfer of Players, p. 47, fn. 77.

(30) CAS 2007/A/1217, Feyenoord Rotterdam v. UEFA, reason 11.21: "Due to the strict liability rule [of Article 6 para. 1 of the EUFA Disciplinary Regulations] the Club is responsible for its supporters' behaviour."

(31) According to Janwillem Soek: "The Strict Liability Principle and the Human Rights of Athletes in Doping Cases", T.M.C. Asser Press, The Hague 2006.

(32) CAS 2000/317, Aanes v. FILA.

by Janwillem Soek *

* Dr Janwillem Soek is a senior researcher at the ASSER International Sports Law Centre, The Hague, The Netherlands.

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