The case involves a complex legal dispute between RCD Espanyol de Barcelona SAD (Espanyol) and Club Atlético Velez Sarsfield (Velez) over the transfer and contractual rights of a football player, referred to as Player P. The dispute was adjudicated by the Court of Arbitration for Sport (CAS), which examined various legal and procedural issues under FIFA regulations and Swiss law. The origins of the case trace back to a 1998 agreement where Velez transferred 50% of Player P's economic and federative rights to Espanyol for $4.5 million, with provisions for future negotiations and potential transfers. The player consented to the deal and signed a five-year employment contract with Espanyol, while international transfer certificates were issued by the Argentine Football Federation (AFA).
The CAS panel, composed of Prof. Massimo Coccia, Mr. José Juan Pintó, and Mr. Hugo Mario Pasos, addressed several key legal principles, including the distinction between substantive and procedural aspects of contracts under the tempus regit actum principle. This principle dictates that substantive aspects are governed by the law in force at the time of contract signing, while procedural aspects follow the rules in effect at the time of the claim. The panel also emphasized the duty of sports federations to ensure procedural fairness, including clarity in time limits and proper notification requirements. The case involved multiple procedural missteps, such as FIFA's failure to directly notify Espanyol of a contested decision, which the panel deemed a violation of procedural fairness.
A central issue was the enforceability of the 1998 contract, particularly the sharing of Player P's economic rights. The panel distinguished between "registration" (a club's exclusive right to field the player) and "economic rights" (contractual entitlements that can be shared with other clubs with the player's consent). The panel rejected the notion of "federative rights," which would bind players without their explicit consent, as these violate labor law principles. The contract was upheld as a legitimate pre-contractual arrangement, requiring mutual consent for any employment or transfer decisions. The panel found that Espanyol breached the contract by unilaterally employing the player after the 2000/01 season without Velez's consent, effectively appropriating 100% of the economic rights.
The panel determined that the contract had a five-year duration, expiring on 30 June 2003, in line with FIFA regulations limiting contracts to five years. Espanyol's breach occurred during the 2001/02 and 2002/03 seasons, during which it failed to compensate Velez for the loan of 50% of the player's economic rights. Based on prior agreements, the panel ordered Espanyol to pay Velez $500,000 ($250,000 per season for two seasons) as compensation. The panel also dismissed Espanyol's arguments regarding res judicata and lis pendens, noting that earlier decisions had not ruled on the contractual and compensation claims, leaving the matter open for adjudication.
The CAS decision underscores the importance of clear and consistent regulations in sports governance, procedural fairness, and adherence to contractual obligations. It also highlights the distinction between administrative registrations and economic rights, while upholding players' autonomy in contractual matters. The ruling serves as a precedent for resolving similar disputes in football transfers, emphasizing the need for mutual consent and compliance with FIFA regulations. The panel's final decision replaced all previous FIFA rulings, providing a definitive resolution to the long-standing dispute.