The case revolves around a dispute between professional footballer Ronaldo Guiaro and the Turkish football club Beşiktaş Jimnastik Kulübü concerning the termination of an employment contract. The parties initially signed an employment agreement in October 2003, valid from July 2004 to June 2006. In July 2005, they entered into a termination agreement, stipulating that the club would pay Guiaro USD 800,000 in installments: USD 500,000 within three days of signing and three subsequent payments of USD 100,000 each on specified dates. The agreement included a clause stating that if the club failed to make any payment on time, the original employment contract would become effective again. The club paid the initial USD 500,000 and the first two USD 100,000 installments, albeit with delays that Guiaro accepted. However, the third payment was not made, leading Guiaro to file a complaint with FIFA's Dispute Resolution Chamber (DRC). The DRC ruled in his favor but only awarded USD 100,000 plus interest, prompting Guiaro to appeal to the Court of Arbitration for Sport (CAS).
Guiaro argued that the termination agreement contained a penalty clause entitling him to USD 1,200,000 (the remaining value of the original contract) due to the club's default. The club countered that the termination agreement did not explicitly state such a penalty and that the claimed amount was disproportionate. They also contended that Guiaro had accepted late payments previously and failed to mitigate his losses. The CAS panel, applying Swiss law as no governing law was agreed upon, focused on interpreting the termination agreement to determine whether it included an enforceable penalty clause. The panel emphasized the need to ascertain the parties' real and common intention, considering all surrounding circumstances. It noted that the agreement did not explicitly quantify damages for non-payment, leaving unclear whether the parties intended the original contract to revive fully or partially.
The CAS panel upheld the DRC's decision, ruling that Guiaro was only entitled to the unpaid USD 100,000 plus interest, not the full amount claimed under the original contract. The panel found no clear evidence that the parties intended the termination agreement to function as a penalty clause entitling Guiaro to the full remaining contract value. The decision highlights the importance of precise contractual language and the need to establish the parties' true intentions when interpreting agreements.
In a subsequent ruling, the CAS panel revisited the case, concluding that the termination agreement was designed to protect Guiaro financially in case of default, not to revive the entire original contract. The panel determined that the club's failure to make the third payment made it liable for the higher monetary obligations under the original employment agreement, amounting to USD 1,200,000. However, since the club had already paid USD 800,000, including the third installment after the DRC decision, the panel awarded Guiaro the remaining balance of USD 400,000 plus 5% interest from the date of the award notification. The ruling underscored that the termination agreement was meant to definitively end the employment agreement, with financial safeguards for Guiaro, rather than reinstating the original contract. The CAS partially upheld the appeal, setting aside the FIFA DRC's decision and dismissing all other claims from both parties. The case illustrates the complexities of contract interpretation and the necessity of clear, unambiguous terms to avoid disputes.