The case involves a contractual dispute between Ittihad FC, a Saudi Arabian football club, and player Aleksander Prijovic, centered around unpaid salaries and unilateral salary reductions during the COVID-19 pandemic. The dispute arose from an employment agreement signed in January 2019, valid until June 2023, which stipulated detailed salary payments and performance-based bonuses. During the pandemic, the club unilaterally reduced the player's salary by 50%, citing financial difficulties, which led to the player filing a claim with FIFA's Dispute Resolution Chamber (DRC) in July 2020. The FIFA DRC ruled in favor of the player in December 2020, ordering the club to pay outstanding remuneration of EUR 1,666,787 plus interest. The club appealed this decision to the Court of Arbitration for Sport (CAS), arguing the reduction was justified under FIFA's COVID-19 Guidelines and Swiss law.
The key legal issues revolved around the applicability of FIFA's COVID-19 Guidelines, which, while not binding, were considered significant due to their industry-wide consensus. The guidelines recommended mutual agreement for salary reductions but allowed unilateral reductions if justified under national law and proven to be reasonable, proportionate, and made in good faith. The CAS panel, led by sole arbitrator Frans de Weger, analyzed the conflict-of-law principles under Swiss law and FIFA regulations, concluding that FIFA's guidelines served as interpretative tools but only applied if no mutual agreement was reached and national law did not provide a solution. The club failed to prove its unilateral reduction complied with Saudi Arabian law or met the criteria of good faith and proportionality.
The CAS panel found the club's actions lacked transparency and concrete evidence of financial distress linked specifically to the pandemic. The club had not engaged in good-faith negotiations with the player before imposing the reduction, and its financial struggles appeared unrelated to COVID-19, as it continued transfer activities during the pandemic. The panel also dismissed the club's reliance on the Swiss legal principle of clausula rebus sic stantibus, which permits contract adjustments for unforeseen circumstances, as the club could not demonstrate a fundamental disruption to the contractual balance.
The arbitrator emphasized the importance of contractual stability in football and the need for clubs to provide legal justification for unilateral changes, especially during exceptional circumstances. The decision upheld the FIFA DRC's ruling, ordering the club to pay the outstanding amount with interest and dismissing the appeal. The case underscores the principle of pacta sunt servanda (agreements must be kept) and sets a precedent for handling similar disputes involving unilateral contract modifications during crises. The outcome reinforces the necessity for clubs to adhere to contractual obligations and engage in good-faith negotiations before implementing salary reductions.