The case involves a dispute between two Czech football clubs, FK Baník Sokolov and FC Hradec Králové, concerning a contractual penalty clause in a loan agreement for player Martin Čupr. The agreement, signed in July 2008, included a clause prohibiting FK Baník Sokolov from nominating Čupr for matches against FC Hradec Králové during the 2008/2009 season, with a penalty of 500,000 CZK for breach. When Čupr was nominated and played in a match against FC Hradec Králové in October 2008, the latter invoiced the penalty, which FK Baník Sokolov refused to pay, arguing the clause violated fair play and equal opportunity principles. The dispute was brought before the Czech-Moravian Football Association (CMFA), which ruled in favor of FC Hradec Králové, prompting FK Baník Sokolov to appeal to the Court of Arbitration for Sport (CAS).
The CAS, presided over by a sole arbitrator, addressed several key issues. First, it clarified that reopening proceedings is an extraordinary measure, not a standard appeal method, and thus does not qualify as an internal legal remedy under the CAS Code. Second, it confirmed that Czech law governed the contractual relationship between the parties. Third, it upheld the validity of the contractual penalty under Czech law, emphasizing that such penalties are enforceable even without proven damage, provided they are in writing and specify the amount. The arbitrator rejected FK Baník Sokolov’s argument that the clause violated fair play, stating that fair play applies to both parties and that agreeing to unenforceable terms would itself be unfair. The arbitrator also decided the case without a hearing, as the parties had not requested one and the issues were purely legal.
The CAS dismissed the appeal, ruling the contractual penalty was valid and enforceable. It noted that FK Baník Sokolov had agreed to the clause without objection and failed to exhaust internal remedies within the CMFA before appealing to the CAS. The arbitrator found no grounds to invalidate the penalty, concluding that the breach warranted the penalty payment. The award upheld the CMFA’s decision, obliging FK Baník Sokolov to pay the 500,000 CZK penalty and arbitration fees.
The document further examines jurisdictional and procedural aspects, including the CMFA’s two-instance decision-making framework and the exhaustion of internal remedies. The CAS affirmed its jurisdiction under Article 23 of the CMFA Statutes, which includes an arbitration clause favoring CAS, and Article 61 of the FIFA Statutes, allowing appeals against final decisions within 21 days. The Sole Arbitrator’s authority under Article R57 of the CAS Code included a full review of facts and law, with the power to issue new decisions or refer cases back.
Applicable law was determined by Article R58 of the CAS Code, prioritizing the parties’ chosen law or the law of the country where the challenged decision was issued—in this case, Czech law. The merits of the appeal focused on the validity of the contractual penalty under Czech law, which the Sole Arbitrator confirmed, noting it was properly agreed upon and signed without coercion. The respondent’s argument that the penalty was justified due to the reduced loan payment for the player was accepted, while the appellant’s "fair play" claim was dismissed as irrelevant to the commercial nature of the dispute. The CAS upheld the original decision, dismissing the appeal and affirming the penalty’s enforceability.