The case involves a dispute between Shanghai Shenhua FC and FIFA, adjudicated by the Court of Arbitration for Sport (CAS) on 14 January 2022. The conflict stemmed from Shanghai Shenhua's failure to comply with a FIFA Players’ Status Committee (PSC) decision dated 27 February 2020, which required the club to pay outstanding amounts to coach Enrique Sánchez Flores, including unpaid remuneration and compensation for breach of contract, plus interest. The PSC's decision mandated payment within 30 days, but Shanghai Shenhua did not comply, prompting FIFA's Disciplinary Committee to impose a CHF 30,000 fine and a final 30-day deadline for payment, with the threat of a transfer ban and potential point deductions or relegation if the debt remained unpaid.
Shanghai Shenhua initially appealed the PSC decision to CAS in May 2020 but withdrew the appeal in January 2021. After the CAS issued an award on costs in March 2021, FIFA initiated disciplinary proceedings due to non-payment. The FIFA Disciplinary Committee found Shanghai Shenhua guilty of failing to comply with the PSC decision and imposed sanctions. The club then appealed to CAS, arguing that the fine was disproportionate and that financial difficulties caused by the COVID-19 pandemic justified the delay in payment.
The CAS Sole Arbitrator, Cesare Gabasio, ruled that appeals to CAS suspend deadlines set by FIFA decisions, but these deadlines resume once the CAS issues its award on costs. The arbitrator emphasized that fines under FIFA's Disciplinary Code serve as a deterrent and must be proportionate to the violation. The outstanding debt was deemed a reasonable basis for assessing proportionality, and the CHF 30,000 fine was upheld as not grossly disproportionate. The arbitrator rejected Shanghai Shenhua's claim that financial hardship due to COVID-19 excused non-payment, noting that clubs remain obligated to comply with financial decisions regardless of economic conditions.
The CAS upheld FIFA's disciplinary decision, confirming the fine and the consequences for non-compliance, including the potential transfer ban. The ruling reinforced FIFA's authority to enforce financial decisions and clarified that economic difficulties, even those linked to the pandemic, do not absolve clubs of their obligations. The case underscores the importance of adhering to contractual and regulatory commitments in professional football, with disciplinary measures serving as a necessary enforcement mechanism.
The disciplinary procedure against Shanghai Shenhua was initiated by FIFA on 26 March 2021 due to the club's failure to comply with the PSC decision, which had ordered payment of EUR 12,500,000 and USD 150,000, plus interest, within 30 days of notification on 28 April 2020. Although Shanghai's appeal to CAS had a suspensive effect, the 30-day deadline resumed on 8 March 2021 when the CAS issued its award. By then, 19 days of the original deadline had passed, meaning the final deadline expired on 19 March 2021. Since Shanghai failed to pay by this date, FIFA correctly initiated disciplinary proceedings for violating Article 15 of the FIFA Disciplinary Code.
Shanghai argued that the disciplinary sanction—a CHF 30,000 fine and a transfer ban—was disproportionate. However, the CAS Sole Arbitrator dismissed this claim, noting that the fine fell within the permissible range under FIFA regulations and was justified given the substantial unpaid debt. The fine amounted to less than 0.3% of the total debt, which the arbitrator deemed reasonable. The club's claim of financial hardship due to COVID-19 was rejected due to lack of evidence, and CAS jurisprudence holds that financial difficulties do not excuse non-payment of debts. The arbitrator also emphasized that the fine served as a deterrent, consistent with the purpose of Article 15 of the FIFA Disciplinary Code.
Ultimately, the CAS upheld FIFA's decision, confirming that the disciplinary procedure was correctly initiated and that the sanctions were proportionate. The appeal was dismissed, and all other requests for relief were rejected. The decision reinforces FIFA's authority to enforce financial obligations and disciplinary measures against clubs failing to comply with its rulings. The case highlights the procedural intricacies of sports arbitration and the importance of timely compliance with financial obligations in football governance.