The case involves a dispute between Panathinaikos Football Club and a player, S., regarding the validity of a unilateral option clause in their employment contract signed in 2001. The contract initially ran for two years but included options allowing Panathinaikos to extend it for an additional two years and then one more year, totaling five years. The player, who was 22 at the time, accepted the terms, including salary and bonuses. The contract was registered with the Hellenic Football Federation and governed by Greek law. The player later joined the Greek national team and was loaned to Rangers FC in 2005, with an option for Rangers to acquire him permanently. However, Rangers sought to reduce the agreed transfer fee due to the player's injury, which Panathinaikos refused. Panathinaikos then exercised its unilateral option to extend the contract, but the player refused to return, claiming the option was invalid. The Scottish FA withheld the player's International Transfer Certificate (ITC) due to the dispute, prompting Panathinaikos to seek FIFA's intervention.
FIFA's Players’ Status Committee initially ruled in favor of the player, declaring the unilateral extension option unfair and terminating the contract as of June 2005. Panathinaikos appealed this decision to the Court of Arbitration for Sport (CAS). The CAS ruled that unilateral option clauses are not inherently void but must be evaluated case by case. The panel found the five-year contract duration reasonable, as the player had knowingly accepted it, and the terms complied with sporting regulations. The unilateral extension was balanced by a predetermined salary increase, and no additional conditions could be imposed. The panel emphasized the principle of pacta sunt servanda (agreements must be kept), criticizing the player for initially accepting the option clause but later attempting to nullify it for personal gain.
The CAS also addressed jurisdictional issues, confirming FIFA's authority over international transfers and contractual disputes, despite Panathinaikos' argument that Greek courts had exclusive jurisdiction. The panel applied the FIFA Regulations from 1997, as the contract was signed in 2001, and Greek law governed the contract itself, with Swiss law applying subsidiarily. The panel upheld the validity of the unilateral options, noting that Greek Sports Law explicitly permits such clauses and that the player's remuneration was fair, with significant salary increases for each extension. The comparison to higher salaries offered by Rangers FC was deemed irrelevant, as richer markets naturally offer better pay, and this should not invalidate the agreed contractual terms.
The CAS concluded that Panathinaikos had validly exercised its unilateral option, and the player was obligated to return. The player's refusal to comply was deemed a breach of contract. The ruling reinforced the enforceability of unilateral options when fairly structured and highlighted the importance of honoring contractual commitments in sports. The decision also clarified that such clauses must be scrutinized for fairness, particularly regarding remuneration and duration, to ensure they are not exploitative. The case underscores the balance between contractual freedom and protecting players' rights in professional football. The Panel referred the matter back to FIFA to assess damages for the player's breach, overturning the initial FIFA decision and ruling in favor of Panathinaikos.