The case involves a dispute between Cruzeiro E.C., a Brazilian football club, and Al Wahda FC, a club from the United Arab Emirates, brought before the Court of Arbitration for Sport (CAS). The conflict stemmed from a 2016 loan agreement under which Cruzeiro agreed to pay Al Wahda a total loan fee of EUR 850,000 in seven instalments for the temporary transfer of a player. The agreement included penalties for late payments, with the English version prevailing in case of discrepancies between the English and Portuguese versions. Al Wahda claimed Cruzeiro failed to meet payment obligations, while Cruzeiro cited a Brazilian bank strike as force majeure and alleged Al Wahda did not provide necessary invoices and bank details.
The FIFA Players’ Status Committee partially upheld Al Wahda’s claim, ordering Cruzeiro to pay the outstanding EUR 850,000 plus 5% annual interest on each instalment from their respective due dates. The Committee rejected Al Wahda’s penalty claim but imposed procedural costs on Cruzeiro. Cruzeiro appealed to CAS, arguing the penalty clause was unenforceable and the bank strike constituted force majeure. The CAS addressed procedural issues, ruling that amendments to relief requests are permissible until the appeal brief is filed and that counterclaims are inadmissible in CAS appeal proceedings.
On the merits, the CAS upheld the FIFA decision, finding Cruzeiro failed to prove force majeure and that the penalty clause was excessive under Swiss law, which governed the agreement. The tribunal maintained Cruzeiro’s obligation to pay the outstanding loan fee with interest but rejected additional penalty claims. The case highlighted the importance of clear contractual terms and the limitations on penalty clauses in international sports disputes.
Separately, the Single Judge of FIFA’s Players’ Status Committee ruled that Cruzeiro owed Al Wahda the EUR 850,000 loan fee, rejecting Cruzeiro’s arguments about the bank strike and Al Wahda’s alleged failure to provide invoices. The judge emphasized the principle of pacta sunt servanda (agreements must be kept) and found Cruzeiro in breach of contract. Al Wahda sought a 10% monthly penalty for late payments, but the judge deemed this excessive, imposing a 5% annual interest rate instead. Cruzeiro appealed to CAS, requesting adjustments to the interest rates and reimbursement of arbitration costs.
The CAS Sole Arbitrator, Prof. Martin Schimke, reviewed the case without a hearing, relying on written submissions. The arbitrator confirmed CAS jurisdiction and the admissibility of Cruzeiro’s appeal, noting that amended relief requests were permissible. The applicable law was determined to be FIFA regulations, with Swiss law as subsidiary. The arbitrator limited the appeal’s scope to the due dates of the fifth and sixth instalments, ruling they should follow the Portuguese version of the agreement, with due dates on 10 November and 10 December 2016, respectively. The decision adjusted the interest calculations accordingly and dismissed all other claims, reinforcing procedural limitations in CAS appeal arbitration.
The case underscores the complexities of contractual disputes in sports, the enforceability of penalty clauses, and the procedural nuances of arbitration. It highlights the need for precise contractual terms and adherence to legal standards in international sports agreements. The final ruling balanced contractual obligations with fairness, ensuring due process while addressing the parties’ negotiated terms and applicable regulations.