The case involves a dispute between Al Jazira FSC and FC Lokomotiv over a transfer agreement for a professional football player, signed on 13 January 2014. The agreement stipulated a total transfer fee of EUR 4,737,000, payable in two installments: EUR 3,158,000 by 25 January 2014 and EUR 1,579,000 by 30 August 2014. Al Jazira paid the first installment on time, minus a 5% solidarity contribution and a minor unexplained shortfall, which Lokomotiv effectively waived. However, Al Jazira failed to pay the second installment by the deadline. Al Jazira claimed it had secured an extension until 5 October 2014, but Lokomotiv disputed this, stating any extension required formal guarantees and acceptance of penalty interest for further delays. No such guarantees were provided, and no payment was made, prompting Lokomotiv to file a claim with FIFA for the unpaid amount, penalty interest at 20% per annum, and procedural costs.
The FIFA Single Judge partially accepted Lokomotiv’s claim, ordering Al Jazira to pay the outstanding EUR 1,579,000 plus 5% annual interest from 31 August 2014, rejecting the higher penalty interest as disproportionate. Al Jazira appealed to the Court of Arbitration for Sport (CAS), arguing the FIFA decision contained legal errors, including the failure to deduct the solidarity contribution and the imposition of interest without formal notice under Swiss law. The CAS panel, led by Sole Arbitrator Nicolas Ulmer, upheld the FIFA decision in principle but corrected certain aspects. It confirmed the 5% solidarity deduction, reducing the principal amount to EUR 1,500,050, and maintained the 5% annual interest, rejecting Al Jazira’s claim that formal notice was required under Swiss law. The panel clarified that the agreed payment date in the Transfer Agreement automatically triggered default upon non-payment, rendering additional notice unnecessary.
The CAS also addressed the penalty interest issue, agreeing with FIFA’s reduction from 20% to 5% as excessive under Swiss law and CAS precedents. The final ruling required Al Jazira to pay the adjusted principal amount plus 5% interest from 31 August 2014 until payment, dismissing all other claims. The case underscores the importance of adhering to contractual obligations while ensuring penalties remain proportionate under applicable law. It also highlights CAS’s role in resolving football disputes by balancing contractual terms with legal principles, reinforcing the enforceability of agreed payment deadlines and the reasonableness of penalty clauses. The decision serves as a reminder that parties must fulfill their contractual duties or face legally justified consequences.