The case involves a dispute between Professional Football Club Levski (the Club) and Dustley Roman Mulder (the Player) concerning a termination agreement of an employment contract. The Club appealed a decision by the FIFA Dispute Resolution Chamber (DRC) which ruled in favor of the Player, ordering the Club to pay a penalty for delayed payments. The case was brought before the Court of Arbitration for Sport (CAS), with a sole arbitrator appointed to resolve the matter. The key issues revolved around the applicability of the penalty clause in the termination agreement, the alleged abuse of law, and the proportionality of the penalty amount. The employment contract between the Club and the Player was initially signed in 2010 and extended until 2015. On July 2, 2014, the parties terminated the contract early, agreeing that the Club would pay the Player a total of EUR 43,029.39 in three installments. The termination agreement included a penalty clause stating that if the Club delayed any payment, it would owe the Player an additional EUR 39,000, equivalent to three months of the Player's salary for the 2014/2015 season. While the Club paid the first installment on time, the remaining two were delayed until April 2015. The Player subsequently demanded payment of the penalty, which the Club refused, arguing the clause was an unenforceable penalty and constituted an abuse of law. The Club also claimed a verbal agreement existed to postpone payments due to UEFA-imposed financial restrictions, though this was disputed by the Player.
The DRC ruled in favor of the Player, finding the penalty clause enforceable and proportionate. The Club appealed to CAS, contesting the DRC's decision. The CAS arbitrator examined the case under Article R58 of the CAS Code, which prioritizes applicable regulations over the parties' choice of law. The arbitrator rejected the Club's claim that filing the claim on the last possible day constituted an abuse of law. Regarding the penalty, the arbitrator considered whether the amount was excessive, taking into account factors such as the nature of the contract, the degree of fault, and the economic situation of the parties. The arbitrator concluded that while the penalty was high, it was not disproportionate given the circumstances, including the Club's repeated delays and the Player's legitimate interest in timely payment. The CAS upheld the DRC's decision, ordering the Club to pay the penalty amount plus interest. The ruling emphasized that contractual penalties must be evaluated based on the specific circumstances of each case, and the agreed amount was deemed reasonable in this context.
The Club argued that the penalty clause was invalid under Swiss law, claiming it was excessive and that the Player had accepted late payments without reservation. The Player countered that the clause was a valid obligation, reflecting negotiated terms to ensure timely payment, and was reasonable and proportionate. The sole arbitrator found that the Club was estopped from challenging the clause's validity, as it had negotiated the terms. The arbitrator also noted that the Player had not waived the penalty by accepting late payments, as there was no evidence of an active waiver. The penalty amount was deemed not excessive under Swiss law, as it was a pre-negotiated sum tied to the Player's foregone salary and did not offend the sense of justice and equity. The CAS dismissed the Club's appeal, upholding the DRC's decision and confirming the penalty clause's enforceability. The case underscores the importance of adhering to contractual obligations in professional sports and the role of arbitration in resolving such disputes.