The case involves a legal dispute between Club Atlético Boca Juniors (Boca) and Sport Club Corinthians Paulista (Corinthians) regarding the termination of a player's employment contract and the alleged avoidance of financial obligations under a sell-on clause. The original transfer agreement, signed in 2004, included Clause 7, which stipulated that Boca would receive 20% of any transfer fee exceeding USD 35 million if Corinthians sold the player to another club. However, in 2006, Corinthians terminated the player's contract by mutual consent, allowing him to join West Ham United without a transfer fee, thereby preventing the sell-on clause from being triggered. Boca argued that this termination was done in bad faith to avoid paying the agreed compensation, while Corinthians maintained that the termination was a legitimate exercise of contractual rights.
Boca filed a claim with FIFA in 2007, seeking USD 4 million in compensation, but FIFA rejected the claim in 2012. Boca then appealed to the Court of Arbitration for Sport (CAS), alleging that Corinthians and a third-party company, X. Ltd, acted deceitfully to circumvent their contractual obligations. The CAS panel, composed of arbitrators from Mexico, Argentina, and Portugal, examined the case and concluded that the early termination of an employment contract by mutual consent is legally permissible and not inherently wrongful. The panel found no evidence of deception or bad faith, ruling that Corinthians had not violated the principle of good faith. The panel upheld FIFA's decision, dismissing Boca's claim and ordering Boca to bear the costs of the proceedings.
The case hinged on several key issues, including the interpretation of Clause 7, the role of X. Ltd in managing the player's economic rights, and the player's market value at the time of termination. Boca argued that the player's market value was between USD 40 million and USD 58 million in 2006, citing witness statements and subsequent transfers, such as his move to Manchester City in 2009 for USD 76.5 million. Corinthians countered that the termination was a legitimate business decision and that Boca's valuation was inflated. The panel emphasized that mutual termination of employment contracts is lawful under Brazilian and Swiss law, provided there is no evidence of fraudulent intent. The panel also noted that Boca failed to prove that Corinthians acted in bad faith or colluded with X. Ltd to avoid contractual obligations.
Ultimately, the CAS panel ruled in favor of Corinthians, finding no breach of contract or violation of good faith. The decision reinforced the autonomy of contractual parties in labor relationships and underscored the need for clear evidence of bad faith to invalidate such terminations. The panel dismissed Boca's claims for compensation and upheld the FIFA decision, concluding that the termination of the player's contract did not unlawfully obstruct the fulfillment of Clause 7. The case highlights the complexities of contractual obligations in football transfers and the legal principles governing good faith and mutual consent in employment contracts.