The case involves a legal dispute between Hammarby Fotboll AB, a Swedish football club, and Besiktas Futbol Yatirimlari Sanayi ve Ticaret A.S., a Turkish football club, over a penalty clause in a player transfer agreement. The dispute arose from a 2009 loan agreement that included an option for a permanent transfer. The transfer fee was initially set at EUR 400,000 but was later negotiated down to EUR 300,000, payable in two instalments. The agreement stipulated that if the second instalment of EUR 150,000 was not paid by 12 October 2009, Besiktas would incur a penalty fee of EUR 100,000. Despite Besiktas requesting a grace period, Hammarby rejected the modification, and the agreement was finalized without changes. When Besiktas failed to pay the second instalment on time, Hammarby filed a claim with FIFA, which was later appealed to the Court of Arbitration for Sport (CAS).
The legal considerations revolved around Swiss law, particularly Article 163(3) of the Swiss Code of Obligations, which allows for the reduction of a penalty if it is deemed excessive and grossly unfair. The CAS panel examined factors such as the creditor's interest in compliance, the severity of the breach, the debtor's intent, the parties' business experience, and the debtor's financial situation. The panel emphasized the principle of contractual freedom, stating that parties are generally bound by their agreements and that penalty reductions are reserved for exceptional cases where the penalty is unreasonable or flagrantly unjust. The panel upheld the penalty clause, finding no grounds for reduction, as the clause was mutually agreed upon and not grossly unfair.
The case highlights the importance of clear contractual terms and the limited scope for judicial intervention in penalty clauses under Swiss law. The CAS decision reinforced the binding nature of agreed terms, particularly in commercial transactions between experienced football clubs. Besiktas argued that the penalty was excessive and unenforceable, but the panel rejected this, noting that Besiktas had failed to provide evidence of financial hardship and had received significant funds from UEFA. The panel concluded that the penalty was justified, given Hammarby's financial need to replace the transferred player and Besiktas's intentional breach of the agreement.
Ultimately, the CAS ruled in favor of Hammarby, ordering Besiktas to pay the remaining penalty amount of EUR 92,288 plus 5% interest. The decision underscores the enforceability of penalty clauses in football transfers and the importance of honoring contractual commitments. It also sets a precedent for the limited grounds under which penalty clauses can be adjusted, prioritizing the creditor's interests and the severity of the breach. The case serves as a reminder of the balance between contractual freedom and equitable considerations, with the panel ultimately upholding the sanctity of agreements under Swiss law.