The case involves a dispute between Newell’s Old Boys, an Argentine football club, and Al Ain FC, a UAE football club, over contractual penalties related to a loan and subsequent transfer agreement for a player. The dispute arose from Newell’s failure to make timely payments under the agreements, leading to penalties imposed by Al Ain. The loan agreement, signed in July 2012, required Newell’s to pay Al Ain $500,000 in installments, with a $50,000 penalty for each late payment. Newell’s delayed the first installment, citing new Argentine regulations complicating international fund transfers. Al Ain demanded the overdue payment plus the penalty, which Newell’s paid but refused the penalty, arguing the delay was beyond their control. Al Ain later claimed additional penalties for subsequent late payments, which Newell’s contested, citing external factors like regulatory changes and delayed invoices.
The case was brought before the Court of Arbitration for Sport (CAS), where the sole arbitrator addressed key legal issues. The arbitrator ruled that Al Ain’s claim was admissible despite a 30-day delay in filing, as it fell within the two-year limitation under FIFA regulations. Newell’s argument of force majeure under Swiss law was rejected, as financial difficulties and regulatory hurdles did not absolve them of contractual obligations, and they could have taken steps to mitigate delays. The arbitrator also found no grounds to reduce the penalties, deeming them enforceable.
In a related transfer agreement signed in July 2013, Newell’s agreed to pay Al Ain €1.8 million plus €115,000 for late fees from the loan agreement, totaling €1.915 million, due by August 12, 2013. Newell’s delayed payment due to insolvency proceedings in Argentina, which required judicial authorization, and transferred the funds on September 10, 2013. Al Ain claimed a €1 million penalty for the late payment, which FIFA’s Players’ Status Committee reduced to €200,000. Newell’s appealed to CAS, arguing the penalty was excessive and the delay was caused by uncontrollable circumstances, including insolvency and banking restrictions. They also invoked promissory estoppel, claiming Al Ain accepted the late payment without reservation. Al Ain countered that the penalty was fair and the delay resulted from Newell’s poor financial planning.
The sole arbitrator upheld the €200,000 penalty, finding Newell’s had not demonstrated sufficient efforts to mitigate delays or negotiate better terms. The arbitrator dismissed Newell’s appeal, affirming the FIFA decision and rejecting all additional claims. The ruling emphasized the importance of contractual obligations and the limited applicability of force majeure in financial disputes under football transfer agreements. The case highlights the challenges of international sports arbitration and the enforcement of contractual penalties in the face of external financial and regulatory constraints. The final award was issued on April 26, 2016, concluding the dispute.