The case revolves around a dispute between Club Sekondi Hasaacas FC (the Appellant) and Club Borussia Mönchengladbach (the Respondent) concerning a sell-on clause in a 1999 transfer agreement for the player L. The clause stipulated that if the player was later transferred to another club, the Appellant would receive 15% of the net transfer fee. The conflict arose when the player was loaned to 1. FC Nürnberg in 2004 under an agreement that included an option for Nürnberg to extend the player’s contract for an additional fee. The Appellant argued this arrangement effectively constituted a final transfer, triggering the sell-on clause, while the Respondent maintained it was merely a temporary loan.
Initially, FIFA’s Single Judge ruled in favor of the Respondent, stating the sell-on clause did not apply to loans. The Appellant appealed to the Court of Arbitration for Sport (CAS), where the Sole Arbitrator, Michele Bernasconi, reviewed the case under Swiss law, as the transfer agreement lacked a specified governing law. The Arbitrator focused on interpreting the parties' intent, applying principles of good faith and reasonable understanding. While sell-on clauses typically cover permanent transfers, the Arbitrator noted the parties could have explicitly excluded loans if that was their intention. The language of the clause, which referred broadly to a "transfer to another club," did not clearly exclude loans.
The Arbitrator emphasized the economic and practical realities of the transfer, which resembled a final transfer: Borussia Mönchengladbach received a substantial fee, the player’s contract with them was effectively terminated, and the agreement with Nürnberg was labeled a "transfer agreement." Additionally, the Respondent had drafted the original agreement, and under Swiss law, ambiguities are interpreted against the drafter. The Arbitrator also dismissed concerns about the Appellant claiming multiple fees from repeated loans, as the circumstances of this case were unique and aligned with a de facto permanent transfer.
Ultimately, the Arbitrator ruled in favor of the Appellant, concluding the sell-on clause applied to the loan transfer. The Respondent was ordered to pay the Appellant 15% of the €200,000 fee received from Nürnberg, amounting to €30,000, plus 5% annual interest from 11 June 2005, the date of formal notice to pay. The decision underscored the importance of contractual clarity and the principle that ambiguous terms should be construed against the drafting party. It also highlighted the need to consider the substance of a transfer, rather than its formal classification, when determining financial obligations like sell-on fees. The CAS partially upheld the appeal, annulling FIFA’s earlier decision and dismissing all other claims. The ruling clarified that loan agreements functioning as final transfers can trigger sell-on clauses unless explicitly excluded by the parties.