The Court of Arbitration for Sport (CAS) issued a ruling on September 28, 2011, in the dispute between Shakhtar Donetsk and Brazilian footballer Ilson Pereira Dias Junior. The case revolved around the validity of a contract extension clause and the consequences of the player's refusal to sign a new contract as stipulated. The contract, signed in 2007, included clause 7.1, which required both parties to sign a new three-season contract under the same conditions if the player was not transferred within the first two seasons. If the player refused, he would owe the club a fine equal to his salary for the fifth season. The player was not transferred, and when the club requested he sign the extension, he refused, arguing the clause was unilateral and unenforceable. The club then withheld part of his salary as liquidated damages.
The CAS panel, composed of José Juan Pintó Sala, Michele Bernasconi, and Rui Botica Santos, ruled that the extension clause was valid because it was not unilateral—both parties could enforce it, and its triggering condition depended on mutual circumstances. The player’s repeated refusal to sign the extension constituted a breach of contract. The panel ordered the player to pay the agreed liquidated damages, adjusted for amounts already withheld by the club and unpaid salary for days he remained with the club, plus 5% annual interest under Swiss law. The panel also addressed the club’s right to set off part of the player’s salary against its claim for damages, finding it lawful under Swiss law since the player’s breach was deliberate.
The dispute escalated when the player terminated the contract in May 2010, citing unpaid salaries as just cause, while the club argued the termination was unjustified. The panel examined whether the club’s salary reduction constituted a breach justifying termination. It concluded that the set-off was lawful under Swiss law, as the club continued to pay part of the salary and bonuses, and the player did not argue the payments were insufficient for his living expenses. The panel found the player’s termination without just cause and upheld the club’s claim for compensation.
Under Article 17 of FIFA’s Regulations on the Status and Transfer of Players (RSTP), the panel calculated compensation based on the player’s remaining contract period, totaling 1 year and 44 days, amounting to €1,932,358.94, plus interest. The final ruling ordered the player to pay €3,572,558.80 plus 5% annual interest from the termination date. The player’s counterclaim was rejected, and all other requests from both parties were dismissed. The panel clarified it could not issue orders affecting third clubs not party to the proceedings, though Shakhtar could pursue sporting sanctions through FIFA. The award, initially confidential, was published per the parties’ agreement.
The decision reinforced the enforceability of contractual terms in football employment agreements under Swiss and FIFA regulations, emphasizing the importance of clear contractual agreements in resolving disputes over premature terminations. The case set a precedent for compensation calculations and breach assessments in similar disputes.