The case involves a dispute between Genoa Cricket and Football Club S.p.A. (Genoa) and Gelsenkirchen-Schalke 04 e.V. (Schalke) concerning a transfer agreement for a Brazilian football player. The original Transfer Agreement, signed in August 2010, required Genoa to pay Schalke a transfer fee of EUR 7,000,000 in installments, governed by German law and subject to dispute resolution through FIFA or the Court of Arbitration for Sport (CAS). Due to Genoa's failure to pay the second installment on time, the parties entered into an Amendment Agreement in March 2011, which deferred payment and imposed a 15% annual default interest rate for breaches. Genoa partially complied but issued six cheques instead of the agreed two, leading to further disputes.
The CAS panel addressed several legal issues, confirming that parties may amend relief sought in appeals and change the applicable law by mutual agreement. In this case, the parties effectively replaced German law with Swiss law and FIFA regulations. The panel referenced Swiss law, which caps the maximum effective annual interest rate at 15%, and examined whether the contractual interest rate was enforceable. The dispute centered on Schalke's withdrawal from the Amendment Agreement due to Genoa's failure to pay the third installment. Schalke argued that the breach triggered immediate payment of the outstanding balance plus interest, while Genoa contested the withdrawal, claiming the conditions were not met.
The FIFA Players’ Status Committee ruled in favor of Schalke, ordering Genoa to pay the remaining balance of EUR 3,250,000 plus interest and procedural costs. Genoa appealed to CAS, which upheld the FIFA decision. The CAS panel rejected Genoa's argument that Schalke's withdrawal required a bounced cheque, ruling instead that late payments alone justified the withdrawal under the Amendment Agreement. The panel emphasized the principles of good faith and reasonable interpretation under Swiss law, concluding that Schalke's withdrawal was valid and the outstanding amounts were immediately due with 15% interest. The panel dismissed Genoa's appeal, affirming the FIFA decision and rejecting all additional motions.
The case underscores the importance of contractual clarity, adherence to payment terms, and the flexibility of legal frameworks in international arbitration. It highlights the role of CAS in resolving football-related disputes while respecting contractual agreements and applicable laws. The final ruling reinforced the enforceability of contractual obligations and the consequences of breaching payment terms in player transfer agreements.