The case revolves around a dispute between Stichting Heracles Almelo (Heracles) and FC Flora Tallinn (FC Flora) concerning the transfer of footballer Ragnar Klavan. The agreement, signed on 1 July 2005, included a sell-on clause stipulating that FC Flora would receive 15% of any transfer fee exceeding €200,000 if Heracles sold Klavan to another club. In January 2009, Klavan was loaned to AZ Alkmaar (AZ) under a "secondment agreement," with AZ paying Heracles €380,000. When Klavan signed a permanent contract with AZ in July 2009, FC Flora claimed Heracles owed them 15% of the transfer fee, arguing the secondment was effectively a transfer. Heracles maintained it was a loan, thus no sell-on fee was due.
FIFA's Players' Status Committee ruled in favor of FC Flora, ordering Heracles to pay €27,000 (15% of €380,000 minus €200,000) plus interest and costs. Heracles appealed to the Court of Arbitration for Sport (CAS), arguing the FIFA decision should be overturned or the compensation reduced by deducting salary payments made during the loan. FC Flora sought to uphold the FIFA ruling and requested Heracles cover all legal and administrative costs.
The CAS Sole Arbitrator, Mark Hovell, examined whether the secondment agreement constituted a loan or a definitive transfer. Key factors included Heracles' ability to recall Klavan, who paid his wages, and who bore insurance and medical costs. The arbitrator noted that if both parties had equal bargaining power, the contra proferentem principle (interpreting ambiguous terms against the drafter) would not apply. The arbitrator emphasized the substance of the transaction over its label.
Heracles argued the agreement was a loan, citing their continued payment of Klavan's salary and the absence of a pre-contract with AZ. FC Flora countered that the transaction was a disguised transfer, pointing to the substantial fee paid by AZ and public statements by an AZ director confirming Klavan's pre-contract. The arbitrator found some evidence supported a loan, such as the agreement's title and Heracles' wage payments, but other factors, like the lack of recall mechanisms and the fee's alignment with a transfer, suggested otherwise.
Ultimately, the CAS partially accepted Heracles' appeal, ruling the net fee (after deducting wages and expenses) should be subject to the 15% share. The arbitrator modified the FIFA decision, ordering Heracles to pay FC Flora €16,199.12 (15% of the net fee) plus 5% interest from 14 December 2011. The CAS emphasized that while the terms "loan" and "transfer" differ literally, the financial outcome under Swiss law justified treating the transaction as equivalent to a definitive transfer. The case clarified the distinction between loan and transfer agreements in football, highlighting the importance of examining all circumstances to determine the parties' true intentions.