The case before the Court of Arbitration for Sport (CAS) involved a dispute between Maritimo da Madeira Futebol SAD (the Appellant) and Al-Ahli Sports Club (the Respondent) regarding a player transfer agreement dated 11 July 2013. The agreement stipulated that the Respondent would pay the Appellant €2,750,000 in three installments: €1,500,000 by 20 July 2013, €750,000 by 30 December 2013, and €500,000 by 30 June 2014. A penalty clause of €10,000 per day was included for late payments, with no upper limit. The Respondent paid the first two installments, albeit the second one late, but failed to pay the third installment in full, leaving €350,000 outstanding. The Appellant issued reminders and later filed a complaint with FIFA on 6 August 2014, demanding the unpaid amount plus the daily penalty from 30 June 2014.
FIFA's Single Judge partially accepted the claim, ordering the Respondent to pay the remaining €350,000 within 30 days with 5% annual interest if unpaid, but rejected the penalty claim, citing the Appellant's failure to issue a separate invoice for the third installment. Dissatisfied, the Appellant appealed to CAS on 4 May 2015. The CAS panel, composed of Prof. Petros Mavroidis, Mr. Olivier Carrard, and Mr. Jalal El Ahdab, emphasized its authority under Article R57 of the CAS Code to conduct a full de novo review, independently assessing facts and law without deference to FIFA's decision.
The key legal issues centered on the interpretation of the penalty clause under Swiss law, which governed the agreement. The panel examined whether the clause was "exclusive" (requiring a choice between performance or penalty) or "cumulative" (allowing both performance and penalty). It determined the clause was cumulative based on its wording. The Respondent argued the penalty was excessive and should be reduced, as the Appellant suffered no actual damage. The panel acknowledged the penalty was disproportionate, noting it amounted to 1.55 times the total transfer fee and 8.55 times the last installment, with annual interest exceeding 700%. While the Appellant argued such clauses were standard, the panel found the penalty excessive under Article 163 of the Swiss Code of Obligations (CO), which permits courts to reduce penalties deemed unreasonable.
The panel reduced the penalty to €500 per day, totaling €214,000 by the hearing date, balancing the Appellant's interests, the breach's severity, and the Respondent's conduct. It also awarded the Appellant 5% annual interest on the outstanding €350,000 from 1 July 2014 until payment, though it could not award interest on the full €500,000 for the period before the partial payment due to the ultra petita principle, which limits rulings to the relief requested. The panel dismissed all other claims, including the Respondent's argument about withholding 5% for solidarity contributions, due to lack of evidence.
The CAS award, issued on 30 November 2015, partially upheld the appeal, modifying FIFA's decision by enforcing the reduced penalty and interest. The ruling underscored the balance between contractual freedom and judicial oversight, ensuring penalties remain fair and proportionate. It highlighted the importance of clear contractual terms and the consequences of non-compliance in sports-related financial disputes, while reaffirming CAS's role in independently resolving such conflicts. The case concluded with the Respondent ordered to pay the outstanding amount, reduced penalty, and interest, with all other relief requests rejected.