The case revolves around a dispute between Club Atlético River Plate (River) and US Città di Palermo (Palermo) concerning the transfer of a football player, E., from River to FC Porto. The conflict stems from a 2005 transfer agreement between River and Palermo, which stipulated that Palermo retained 50% of the player's economic rights. According to the agreement, if River transferred the player to a third club before January 31, 2008, Palermo would be entitled to a portion of the transfer fee. The agreement also required River to inform Palermo of any transfer offers and grant Palermo seven days to match or improve the offer.
In December 2006, Palermo initiated proceedings against River before FIFA for non-payment of certain instalments under the transfer agreement. In July 2007, River informed Palermo of an offer from FC Porto to acquire the player for €3.4 million. Palermo did not respond within the stipulated seven-day period, and the transfer proceeded. However, a dispute arose over whether River had fully disclosed the transfer terms, particularly regarding additional benefits like a friendly match, which Palermo argued should have been included in the transfer fee valuation.
FIFA's Single Judge ruled in favor of Palermo, ordering River to pay €1,316,500 plus interest. River appealed to the Court of Arbitration for Sport (CAS), arguing that the transfer terms were properly disclosed and that Palermo had forfeited its right to match the offer by not responding. The CAS panel examined the case, emphasizing River's duty to fully inform Palermo of all relevant terms, given their shared economic rights. The panel also highlighted the importance of interpreting contracts in good faith, considering the context, negotiations, and subsequent conduct of the parties.
The CAS upheld FIFA's decision, ruling that River had failed to adequately disclose all aspects of the transfer, including the friendly match, which could have influenced Palermo’s decision. The panel concluded that River’s actions did not meet the standard of good faith required in such transactions, reinforcing the principle that clubs sharing economic rights must ensure full transparency in transfer dealings. The award affirmed the payment obligation imposed on River, underscoring the importance of clear communication and fair dealing in football transfers.
The dispute also involved disagreements over the calculation of the sell-on fee. Palermo argued it should be based on the total transfer value, including taxes and costs (€4,233,000), while River contended it should only consider the net transfer fee (€3,400,000). The CAS panel ultimately ruled that the sell-on fee should be calculated as 50% of the transfer compensation (€1,700,000), minus payments already made by River (€900,000), leaving a balance of €800,000 to be paid with 5% annual interest. The panel dismissed River’s request to reallocate half of the FIFA proceedings costs to Palermo, stating it lacked jurisdiction over such matters.
The case highlights the complexities of football transfers, contractual obligations, and dispute resolution in international sports. It underscores the necessity of clear contractual language, full transparency, and good faith in interpreting agreements. The CAS decision serves as a precedent for similar disputes, emphasizing the importance of mutual intent and subsequent conduct in resolving ambiguities in transfer agreements. The ruling ultimately clarified the financial obligations between the parties, ensuring compliance with the terms of their agreement.