The case involves a dispute between Sport Club Internacional and Bayer 04 Leverkusen over a "sell-on clause" in a player transfer agreement. On December 12, 2000, Internacional transferred the player L. to Bayer 04 for USD 9,200,000. Article 3 of the agreement stipulated that if Bayer 04 sold the player within the term of his initial employment contract (minimum three years), Internacional would receive 25% of the difference between the new transfer fee and the original fee. The player initially signed a contract until June 30, 2005, but this was terminated on June 30, 2003, due to Bayer 04's risk of relegation, which would have violated the player's terms. A new contract was signed on May 2, 2003, valid until June 30, 2007. The player was later transferred to FC Bayern Munich on May 25, 2004, for EUR 12,000,000.
Internacional claimed entitlement to 25% of the transfer fee difference, arguing the sell-on clause remained valid regardless of the new contract. Bayer 04 countered that the clause only applied during the initial contract period. The dispute was brought before FIFA's Players' Status Committee, which ruled in favor of Bayer 04 on February 15, 2005, stating the clause was tied to the initial contract and the transfer occurred under the second contract. The Committee found the second contract was signed for legitimate sporting reasons, not to evade obligations.
Internacional appealed to the Court of Arbitration for Sport (CAS), which held a hearing on October 13, 2005. The Panel examined Article 3, which required the transfer to occur during the initial contract term. It concluded the transfer to Bayern Munich happened under the second contract, thus not triggering the payment obligation. The CAS upheld FIFA's decision on February 23, 2006, rejecting Internacional's appeal.
However, in a subsequent ruling, the Panel revisited the interpretation of Article 3, determining the second contract was an amendment to the original, not a new agreement. It ruled the employment relationship was continuous, and the sell-on clause applied regardless of amendments. The Panel emphasized that limiting the clause to the initial contract would allow Bayer 04 to circumvent obligations by renewing contracts. It calculated the payable amount as 25% of the difference between EUR 12,000,000 and USD 9,200,000, converted to USD 14,589,600, resulting in a difference of USD 5,389,600. Bayer 04 was ordered to pay USD 1,347,400 plus 5% annual interest from July 1, 2004, the transfer date.
The case underscores the importance of precise contractual language in football transfers and the role of arbitration in resolving disputes. It highlights the enforceability of sell-on clauses and the need to interpret terms in line with the parties' original intentions. The final ruling reversed FIFA's initial decision, ensuring Internacional received its share of the transfer profit.