The case involves a legal dispute between professional football player M. and Chelsea Football Club Ltd. regarding the termination of the player's employment contract and subsequent claims for compensation. The Court of Arbitration for Sport (CAS) issued an award on 31 July 2009, addressing key legal principles. The CAS Panel emphasized that it is bound by the parties' motions and cannot grant more than what is requested, adhering to the principle of ne ultra petita. Previous CAS decisions between the parties hold res judicata status, meaning they cannot be revisited. The Panel upheld FIFA Regulations' provision for compensation based on unamortized acquisition costs, aligning with CAS jurisprudence and English law, which allows recovery for costs incurred due to a breached contract. The Panel clarified that damages are not too remote if the type of loss was foreseeable, even if the exact extent was not, and noted that the player's lack of involvement in determining transfer fees is irrelevant to compensation calculation. The duty to mitigate damages arises only after contract termination, and the club is not required to attempt transferring the player before termination, as this could imply affirmation of the contract. The Panel acknowledged that if FIFA Regulations were found contrary to EC law, damages would still be assessable under national law, leaving the obligation to pay unaffected.
The dispute originated when the player, transferred from AC Parma to Chelsea in 2003 for €22.5 million, tested positive for cocaine in 2004, leading Chelsea to terminate his contract. The Football Association imposed a seven-month ban, and the player appealed the termination. The parties eventually agreed to refer the dispute to the Football Association Premier League Appeals Committee (FAPLAC), which ruled in 2005 that the player breached the contract without just cause. The player appealed to CAS, which upheld the FAPLAC decision in 2005. Chelsea later sought compensation through FIFA's Dispute Resolution Chamber (DRC), which initially declined jurisdiction, but CAS reversed this in 2007, remanding the case to the DRC. The 2009 CAS award addressed the remaining issues, reinforcing the legal principles governing compensation and contractual breaches in football.
The DRC initially ordered the player to pay €17,173,990, based on unamortized costs, including the transfer fee, sign-on fee, and agent fee. The DRC excluded amounts already paid to the player and the remaining contract value, also disregarding the "specificity of sport" in modifying the damages. The Panel examined whether this quantification aligned with applicable regulations and English law. It affirmed that compensation based on unamortized acquisition costs is consistent with Article 22 of the FIFA Regulations and supported by CAS jurisprudence. Under English law, such compensation is permissible as it covers costs wasted due to the breach, including transfer fees and related expenses. The Panel rejected arguments that the damages were too remote, emphasizing that the loss was foreseeable and that the player was aware of the transfer fee.
However, the Panel disagreed with the DRC's calculation method. The DRC assumed a 60-month contract term, but the actual term was 58.5 months, leading to an incorrect amortization period. The Panel revised the calculations, resulting in total unamortized costs of €19,113,688 and GBP 371,844, exceeding the DRC’s initial award. Since the club sought only the DRC’s amount, the Panel confirmed the compensation at €17,173,990. The player argued that the compensation criteria under FIFA’s regulations violated EC law, claiming discrimination and anti-competitive practices. The panel rejected these arguments, stating that the regulations apply uniformly regardless of nationality and do not restrict competition. The obligation to pay damages aligns with the principle of pacta sunt servanda and is consistent with domestic legal systems.
Ultimately, the appeal was dismissed, and the player was ordered to pay the club €17,173,990 plus interest. The decision underscores the binding nature of employment contracts in sports and the importance of adhering to regulatory frameworks. The case highlights the complexities of contractual disputes in football and the role of sporting regulations in resolving them, balancing the interests of players, clubs, and the broader football community.