The case involves a legal dispute between Dalian Professional Football Club (the Club) and David Cortés Caballero (the Coach), with FIFA as a secondary respondent, adjudicated by the Court of Arbitration for Sport (CAS). The dispute arose from the Club's termination of the Coach's employment contract without just cause, leading to arbitration proceedings. The CAS panel, composed of three arbitrators, addressed several key issues in its award of 17 September 2021. The employment contract, initially valid from March 20, 2018, to December 31, 2018, included automatic extensions based on the team's performance in the Chinese Super League (CSL). The team finished 11th in the 2018 season, triggering a two-season extension until December 31, 2020. However, the Club terminated the contract in December 2018, arguing the extension was invalid due to alleged breaches by the Coach, including unauthorized leave and failure to submit reports. The Coach contested this, claiming wrongful termination and unpaid compensation.
The CAS panel first examined procedural issues, including the admissibility of new evidence submitted after the closure of written submissions under Article R56 of the CAS Code. It ruled that such evidence is only permissible if parties agree or exceptional circumstances exist, which must be strictly interpreted. The Club's inability to anticipate a legal expert report from the other party did not justify late submission of rebuttal evidence. The panel also assessed whether the Club had just cause to terminate the contract under Swiss law, which governs the agreement. Just cause exists when circumstances make the continuation of the employment relationship unconscionable, typically due to a material breach. The panel concluded the Club failed to demonstrate such a breach, rendering the termination unjustified.
The panel analyzed the validity of contractual penalty clauses, clarifying that Swiss law does not require such clauses to be reciprocal to be valid. It emphasized that the overall contract must be reviewed for fairness, not just isolated clauses. The disparity in compensation amounts for breach did not automatically invalidate the clauses if they reflected the parties' true intent. The panel also addressed the Club's request for a tax certificate confirming payment of taxes related to the Coach's remuneration. It noted FIFA's deciding bodies generally lack jurisdiction over tax disputes unless contractually grounded. Since the tax claim was tied to the employment relationship, the panel deemed it within FIFA's competence.
The panel upheld the Coach's entitlement to compensation for the remaining contract value, calculated based on his net fixed remuneration for the 2019 season, plus 5% annual interest. It rejected the Club's argument that the Coach failed to mitigate damages by not seeking new employment, finding no evidence to support this claim. The panel also dismissed the Club's request for reimbursement of procedural costs from earlier proceedings, stating CAS lacks authority to revisit such decisions. The case was one of five related appeals filed by the Club against its coaching team, each adjudicated separately. The panel's decision reinforced principles of contractual autonomy, strict interpretation of procedural rules, and the necessity of just cause for termination. The Club's appeal was largely dismissed, affirming the importance of adhering to contractual and procedural obligations in employment disputes. The CAS ruling corrected the earlier FIFA decision to reflect these findings, concluding the matter with a partial upholding of the Club's appeal regarding the quantum of compensation.