Yeni Malatyaspor FK v. Club Atlético Talleres de Cordoba

At a glance

Parties

Yeni Malatyaspor FK (Turkey) v. Club Atlético Talleres de Córdoba (Argentina)

Case no.

CAS 2021/A/8340

Forum and rules

Court of Arbitration for Sport, appeal procedure under the CAS Code; FIFA regulations, with Swiss law applying subsidiarily

Treaty

None. CAS jurisdiction rests on the FIFA Statutes and the FIFA Regulations on the Status and Transfer of Players (RSTP)

Tribunal

Patrick Lafranchi (Sole Arbitrator)

Sector

Football; player loan transfer

Outcome

Appeal dismissed (16 September 2022). The decision of the Single Judge of the FIFA Players' Status Committee of 10 August 2021 was confirmed.

Amount

FIFA awarded USD 135,000: two instalments of USD 55,000, each with 5% interest a year, plus a contractual penalty of USD 25,000. CAS confirmed this. The appellant asked for the penalty to be reduced (to USD 10,000 or USD 15,000; the award states both figures).

The dispute

On 24 August 2020 Talleres loaned a player to Yeni Malatyaspor for a fixed fee of USD 530,000. Yeni Malatyaspor paid USD 200,000 and then fell behind on the next instalment. On 19 December 2020 the clubs signed a Termination Agreement. It reduced the outstanding USD 330,000 to USD 110,000, payable in two instalments of USD 55,000. Clause 2.1 added a penalty of USD 25,000 for each instalment still unpaid ten days after written notice. Yeni Malatyaspor paid neither instalment. The FIFA Players' Status Committee awarded USD 110,000 plus one penalty of USD 25,000, because Talleres had sent a default notice for the first instalment only. On appeal, Yeni Malatyaspor accepted that it owed the USD 110,000 and challenged only the penalty as excessive and disproportionate. Talleres argued that the penalty had been freely agreed and asked for the FIFA decision to be confirmed.

Key holdings

1. CAS has jurisdiction under the FIFA Statutes and Article 24(2) of the FIFA RSTP, and the parties confirmed it by signing the Order of Procedure. The appeal was filed in time and is admissible. ¶¶ 46–52
2. Contractual penalties may be agreed in sporting contracts. Under Swiss law (Articles 160 and 163(1) of the Code of Obligations) the parties are free to set the amount. ¶ 59
3. Under Article 163(3) of the Code of Obligations, a judge must reduce an excessive penalty, but only as far as needed to make it no longer excessive. A reduction is justified mainly where the penalty is grossly disproportionate to the creditor's interest at the time of the breach, judged on all the concrete circumstances. The judge must respect freedom of contract, which prevails in case of doubt. ¶¶ 60–63
4. The debtor bears the burden of proving that a penalty is excessive. Yeni Malatyaspor did not explain how the penalty was disproportionate and offered no evidence or case law. ¶¶ 58, 64
5. The USD 25,000 penalty is not excessive. The Termination Agreement was already a settlement in which Talleres cut USD 330,000 to USD 110,000, knowing of Yeni Malatyaspor's financial difficulties, and agreed to payment in instalments. It was understandable that Talleres wanted security in the form of a penalty. The FIFA award of USD 135,000 plus interest is confirmed. ¶¶ 65–66

Procedural history

1. 24 August 2020The clubs conclude the Loan Agreement (fee of USD 530,000; penalty of USD 100,000 for each late instalment).
2. 15 December 2020Talleres files a claim with FIFA for USD 430,000 plus interest.
3. 19 December 2020The clubs sign the Termination Agreement, reducing the outstanding amount to USD 110,000.
4. 21 January 2021Talleres serves a default notice for the first instalment of USD 55,000.
5. 10 August 2021The Single Judge of the FIFA Players' Status Committee awards Talleres USD 135,000 plus interest. The grounds are notified on 3 September 2021.
6. 23 September 2021Yeni Malatyaspor files its Statement of Appeal with CAS, followed by its Appeal Brief on 1 October 2021.
7. 9 December 2021The parties are told that Patrick Lafranchi has been appointed Sole Arbitrator.
8. 18 February 2022Hearing by video conference. The parties then try to settle, without result.
9. 16 September 2022Award: the appeal is dismissed and the FIFA decision confirmed.

Tribunal, counsel and experts

Decided by

• Patrick Lafranchi Sole arbitrator, Court of Arbitration for Sport — appointed by the institution (appointed by the President of the CAS Appeals Arbitration Division)

For the claimant

Nihat Güman

For the respondent

Martin Francia Coscia

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Keywords

• contractual penalty
• penalty clause
• excessive penalty reduction
• Article 163 Swiss Code of Obligations
• Konventionalstrafe
• freedom of contract
• burden of proof
• loan transfer
• termination agreement
• FIFA Players' Status Committee
• FIFA RSTP
• football
• Yeni Malatyaspor
• Talleres
• pacta sunt servanda
• sole arbitrator

Summary generated with AI from the published documents — refer to the award for the authoritative text.