The case involves a complex legal dispute between Borussia VfL 1900 Mönchengladbach GmbH (Borussia) and Club Atlético Boca Juniors (Boca), adjudicated by the Court of Arbitration for Sport (CAS), with FIFA as the second respondent. The dispute stemmed from two agreements signed in 2006: a Transfer Agreement and a Cooperation Agreement. The Transfer Agreement involved the transfer of a player from Boca to Borussia for USD 3.5 million, with a clause entitling Boca to 15% of any future transfer fee if Borussia sold the player. The Cooperation Agreement outlined a partnership focused on youth development, training exchanges, and other collaborative efforts between the clubs.
Under Swiss law, the legal nature of hybrid agreements is determined by their predominant elements, with general rules on obligations and contracts applying alongside specific provisions relevant to the contractual type. The dispute centered on the termination of the Cooperation Agreement and its consequences. Borussia argued that the agreement was lawfully terminated due to Boca’s failure to fulfill obligations, while Boca contended that the termination caused damages and sought compensation. The CAS panel examined the nature of the agreement, its termination, and the resulting obligations under Swiss law, considering the parties' submissions, the agreements' terms, and the legal framework.
The Cooperation Agreement required Boca to host Borussia’s delegation, provide training sessions, organize friendly matches, and ensure medical care, while Borussia was to submit player details, provide an interpreter, arrange insurance, and comply with entry regulations. Borussia also had the option to integrate qualified Boca players over 18 into its team, with specific terms for permanent acquisition and transfer fees. Borussia committed to paying Boca USD 1,315,000 in installments to support Boca’s soccer school development.
By May 2007, Borussia expressed dissatisfaction with Boca’s lack of progress, citing unmet promises and poor communication. Despite Borussia’s warnings, Boca failed to address these issues, leading Borussia to terminate the agreement in October 2007 and demand reimbursement of USD 765,000. Boca filed a claim with FIFA for USD 655,500 (15% of a subsequent transfer fee), while Borussia counterclaimed for breach of contract. In January 2011, FIFA ruled in favor of Boca, ordering Borussia to pay the claimed amount plus interest and dismissing Borussia’s counterclaim as inadmissible.
Borussia appealed to CAS, which confirmed its jurisdiction and proceeded to rule on the merits. The panel classified the Cooperation Agreement as a hybrid contract under Swiss law, predominantly involving services. It found that Borussia had just cause to terminate the agreement due to Boca’s inadequate performance. The termination’s financial implications were calculated based on the agreement’s duration and payments made. Borussia had paid USD 765,000 for 16 months of a 48-month agreement, resulting in an excess payment of USD 326,666.72, which Boca was ordered to refund with interest. The panel upheld FIFA’s decision regarding the USD 655,500 debt but adjusted the financial obligations to reflect the termination’s consequences.
The case highlights the complexities of international sports contracts, jurisdictional disputes, and the application of Swiss law in arbitration. It underscores the importance of contractual clarity and adherence, as well as the legal consequences of termination. The CAS panel’s decision balanced the parties' claims, ensuring fairness while respecting contractual and legal principles. The final ruling partially upheld Borussia’s appeal, modifying FIFA’s decision to account for the termination’s financial impact and dismissing additional relief sought by both parties.