The Court of Arbitration for Sport (CAS) issued a ruling on 31 January 2007 in the dispute between FC Metallurg Donetsk and Leo Lerinc, concerning the termination of an employment contract. The case originated from a decision by FIFA’s Dispute Resolution Chamber (DRC), which had ordered the club to pay Lerinc $48,266.66. FC Metallurg Donetsk appealed this decision to CAS, arguing that the DRC had erred in its judgment. The CAS panel, composed of Hans Nater, Prof. Ulrich Haas, and Peter Leaver QC, examined several legal issues, including the validity of the employment contract, the applicable substantive law, and whether the club had just cause for terminating the agreement. The panel determined that the parties’ submission to FIFA’s dispute-resolution mechanism implied an implicit choice for the dispute to be governed by FIFA’s statutes and regulations, supplemented by Swiss law in the absence of any contrary agreement.
The panel assessed the validity of the employment contract under Swiss law, specifically Article 319 of the Swiss Code of Obligations (CO), which requires four essential elements for an employment contract: duration, subordination, personal performance, and wages. The panel concluded that the agreement between Lerinc and the club met these criteria and was valid, despite not being registered by a sports authority. A contentious clause in the contract stipulated that the agreement would remain valid only if the player participated in 80% of the calendar games. The panel found this clause excessively one-sided, as it unfairly bound the player without guaranteeing remuneration, violating Article 27(2) of the Swiss Civil Code (CC). The clause was deemed void under Article 20 CO, though the rest of the contract remained enforceable.
The club argued that a medical certificate justified the termination, but the panel dismissed this claim, noting that the certificate was issued after the club failed to register the player and did not conclusively state that Lerinc was permanently unfit to play. FC Metallurg Donetsk also contended that the DRC had overlooked key evidence, including the medical certificate and the unfulfilled participation clause, and sought moral damages. Lerinc countered that the agreement was legally binding and that the club’s failure to register him prevented his participation. The panel upheld the FIFA decision, rejecting the club’s appeal and confirming that the termination lacked just cause.
The CAS also addressed jurisdictional issues, confirming its authority under Article R47 of the Code of Sports-related Arbitration and Article 60 of the FIFA Statutes, as the appeal was filed within the stipulated deadline. The panel accepted jurisdiction over Lerinc’s counterclaim, filed within the required timeframe under Article R55 of the Code. The applicable law was determined based on Article R58 of the Code and the Swiss Private International Law Act (PILA), with the panel emphasizing that the parties’ implicit choice of FIFA regulations and Swiss law governed the dispute. The panel rejected the application of Ukrainian law, as neither party had argued for its use during proceedings.
Ultimately, the CAS dismissed FC Metallurg Donetsk’s appeal and granted Lerinc’s counterclaim, ordering the club to pay him $99,800 in total compensation, comprising six months’ salary ($49,800) and a signing-on fee ($50,000). The ruling underscored the importance of fair contractual terms in employment agreements and the enforceability of FIFA’s dispute-resolution mechanisms. It also highlighted the CAS’s role in resolving sports-related disputes within the framework of international arbitration principles and regulatory compliance. The decision reinforced the legal consequences of unilateral contract breaches without just cause, particularly in the context of sports contracts governed by specific regulations and national law.