ARBITRAL AWARD
ARBITRAL AWARD
(BAT 0828/16)
by the
BASKETBALL ARBITRAL TRIBUNAL (BAT)
Xx. Xxxxxx Xxxx
in the arbitration proceedings between
Xx. Xxxxx Xxxxxxxx Xx Xxxxx
c/o Xx. Xxxxx Xxxxxxx, Xxxx Xxxxx, 366, Apt. 102, 05412-001 Sao Paulo, Brazil
Xx. Xxxxx Xxxxxxx
Xxxx Xxxxx, 366, Apt. 102, 05412-001 Sao Paulo, Brazil
Xx. Xxxxx Xxxxxxxx
1x1 Sports Management, Yildiz Posta caddesi, Xxxxx Xxxxxx sokak, Beyazoglu apt, No. 25/28, 34349 Gayrettepe, Istanbul, Turkey
all represented by Mr. Xxxxx Xxxxxx Xxxx,
10 Carrer del Parnal – (3/3), 700 Escaldes-Engordany, Andorra vs.
Adana Aski Spor Kulubu Dernegi
Kurtuluş Mah. Xxxxxx Xxxxxxxxx Caddesi Ali Xxxx Xxx Apartmanı A Blok Kat:3 Daire:0 Xxxxxx, 00000 Xxxxx, Xxxxxx
- Claimant 1 -
- Claimant 2 -
- Claimant 3 -
- Respondent -
1. The Parties
1.1 The Claimants
1. Xx. Xxxxx Xxxxxxxx Xx Xxxxx (hereinafter the “Player” or “Claimant 1”) is a professional basketball player from Brazil.
2. Xx. Xxxxx Xxxxxxx (hereinafter “Xx. Xxxxxxx” or “Claimant 2”) is a FIBA licensed agent located in Brazil.
3. Xx. Xxxxx Xxxxxxxx (hereinafter “Xx. Xxxxxxxx” or “Claimant 3”) is a FIBA licensed agent located in Turkey.
1.2 The Respondent
4. Adana Aski Spor Kulubu Dernegi (hereinafter the “Club” or “Respondent”) is a professional basketball club located in Turkey.
2. The Arbitrator
5. By letter of 22 April 2016, the President of the Basketball Arbitral Tribunal (hereinafter the "BAT"), Xxxx. Xxxxxxx X. XxXxxxx, appointed Xxxx. Xxxxxx Xxxx as arbitrator (hereinafter the “Arbitrator”) pursuant to Article 8.1 of the Rules of the Basketball Arbitral Tribunal (hereinafter the "BAT Rules"). None of the Parties has raised any objections to the appointment of the Arbitrator or to his declaration of independence.
3. Facts and Proceedings
3.1 Summary of the Dispute
6. On 5 May 2015, all Parties entered into an agreement according to which the Player was engaged as a professional basketball player for the 2015-2016 season (hereinafter the “Employment Contract”). According to clause THIRD of the Employment Contract, the Club agreed to pay a salary in the amount of USD 370,000.00 to the Player. According to clause SEVENTH of the Employment Contract, the Club agreed to pay agency fees in the amount of USD 22,200.00 to Xx. Xxxxxxx and USD 14,800.00 to Xx. Xxxxxxxx.
7. In December 2015, the Club suggested to terminate the Employment Contract. On 25 December 2015, all Parties entered into a termination agreement (hereinafter the “Settlement Agreement”) which, inter alia, stipulated payments to be made by the Club to all three Claimants. According to the Claimants, the Club failed to make any payments agreed under the Settlement Agreement.
8. On 4 January 2016, the Player signed a new contract with the Brazilian team “America Futebol Clube” starting on 16 January 2016 until the end of the 2015/2016 season. The contract provided for a total salary of BRL 60,000.00 (Brazilian reals). When executing the contract, the Player was represented by Xx. Xxxxxxx. America Futebol Clube agreed to pay to Xx. Xxxxxxx an agent fee of BRL 6,000.00. The Player’s first game for her new club took place on 4 February 2016 and her last game on 14 April 2016.
9. On 3 February 2016, the Player signed a further contract with the WNBA team “Chicago Sky” for the WNBA summer season 2016. The Player’s first game for Chicago Sky took place on 14 May 2016.
10. On 5 February 2016, Xx. Xxxxxxxx sent a letter to the Club titled “OFFICIAL NOTICE re. PAST DUE PAYMENT” (hereinafter the “Warning Letter”). In this Warning Letter he listed the outstanding amounts to be paid to all three Claimants as of 15 January 2016, referred to clauses 5 and 6 of the Settlement Agreement with respect to the consequences in case of late payments and announced the filing of a claim with the BAT if payments were not made by 10 February 2016, 6pm (Turkish time). According to the Claimants, the Club did not reply to the Warning Letter.
3.2 The Proceedings before the BAT
11. On 15 March 2015, the BAT received the Claimants’ Request for Arbitration dated 10 March 2016. The non-reimbursable fee of EUR 4,000.00 was received in the BAT bank account on 8 April 2016.
12. By letter of 25 April 2016, the BAT Secretariat acknowledged receipt of the Request for Arbitration and informed the Parties of the appointment of the Arbitrator. It also requested Claimant 1 to provide her residential address details. Furthermore, a time limit was fixed for the Respondent to file its Answer in accordance with Article 11.2 of the BAT Rules (hereinafter the “Answer”) by no later than 19 May 2016. The BAT Secretariat also requested the Parties to pay the following amounts as an Advance on Costs by no later than 5 May 2016:
“Claimant 1 (Xxx. Xx Xxxxx) EUR 3,500.00
Claimant 2 (Xx. Xxxxxxx) EUR 1,000.00
Claimant 3 (Xx. Xxxxxxxx) EUR 1,000.00
Respondent (Adana Aski Spor Kulübü) EUR 5,500.00”
13. By email of 25 April 2016, the Claimants’ counsel informed the BAT that Claimant 1 had elected legal domicile at Xx. Xxxxxxxx’ place of residence and that, therefore, no further address for Claimant 1 could be provided.
14. Also on 25 April 2016, Xx. Xxxxx Xxxxxxxx, attorney at law in Istanbul, Turkey, contacted the BAT by email and informed that the Respondent had sent her documents with regard to the present proceedings (“My client forwarded your e-mail of today regarding the case cited in the subject line.”) but that the Claimants’ Request for Arbitration was missing. She kindly requested to be provided with a copy of the Request for Arbitration.
15. By email of 26 April 2016, the BAT Secretariat replied to Xx. Xxxxxxxx’x email and forwarded the BAT’s email to the Parties of 25 April 2016 containing, inter alia, the Claimants’ Request for Arbitration and the BAT’s letter to the Parties of 25 April 2016. In addition, the BAT Secretariat asked Xx. Xxxxxxxx to provide a Power of Attorney. However, she failed to provide such document and did not get into further contact with the BAT at all.
16. By letter of 20 May 2016, the BAT Secretariat acknowledged receipt of the Claimants’ shares of the Advance on Costs in the total amount of EUR 5,484.00 and informed the Parties that the Respondent had failed to pay its share of the Advance on Costs. Therefore, in accordance with Article 9.3 of the BAT Rules, the BAT invited the Claimants to substitute for the Respondent’s share of the Advance on Costs by no later than 30 May 2016 in order to ensure that the arbitration proceeds. The BAT Secretariat also informed the Parties that the Respondent had failed to submit an Answer. The BAT Secretariat granted the Respondent a final opportunity to file an Answer by no later than 30 May 2016.
17. By letter of 14 July 2016, the BAT Secretariat acknowledged receipt of the full Advance on Costs in the total amount of EUR 10,984.00 fully paid by the Claimants and informed the Parties that the proceedings would continue. It also informed about difficulties to deliver the BAT’s correspondence of 20 May 2016 to the Respondent and therefore the Respondent was granted a final opportunity to file an Answer by no later than 21 July 2016. By the same letter, the Arbitrator invited the Parties to submit further information on specific issues by no later than 28 July 2016.
18. By letter of 1 August 2016, the BAT Secretariat acknowledged receipt of the Claimants’ reply and informed the Parties that the Respondent had failed to submit its Answer to the Request for Arbitration and to reply to the Arbitrator’s invitation for submission of further information. By the same letter, the Arbitrator invited the Respondent to submit its comments on the Claimants’ reply by no later than 10 August 2016.
19. By letter of 17 August 2016, the BAT Secretariat informed the Parties that the Respondent had failed to submit any comments. Furthermore, the letter advised the Parties of the Arbitrator’s decision to declare the exchange of documents complete. The Parties were, therefore, invited to submit a detailed account of their costs by 24 August 2016.
20. By email of 25 August 2016, the BAT Secretariat acknowledged receipt of the Claimants’ account of costs and informed the Parties that the Respondent had failed to submit its account of costs. Moreover, the Respondent was invited to submit its comments, if any, on the Claimants’ account of costs by no later than 31 August 2016.
21. On 31 August 2016, the BAT Secretariat received an email from Respondent (xxxxxxxxxxxxx@xxxxxxx.xxx) indicating a request for an extension of the time limits. On 1 September 2016, in order to clarify the intention of the Respondent’s email, the BAT Secretariat asked the Respondent for further information and made it aware that the exchange of documents had already been closed on 17 August 2016. On
5 September 2016, the BAT Secretariat received a further email from Respondent (xxxxxxxxxxxxx@xxxxxxx.xxx) indicating a request for an extension of the time limits until the end of October 2016.
22. By emails dated 9 September 2016, the BAT Secretariat informed the Parties of the correspondence with the Respondent and requested the Claimants to inform the BAT Secretariat by no later than 13 September 2016 whether they agreed to the Respondent’s request for an extension. By email of the same date, the Claimants’ counsel requested the BAT “to (sic) not deliver any extension to the Respondent”.
23. By letter of 12 September 2016, the BAT Secretariat acknowledged receipt of the Claimants’ reply and informed the Parties of the Arbitrator’s decision to reject the Respondent’s request for an extension of time limits. Moreover, the Parties were informed that the exchange of documents remained closed and that the Arbitrator would issue the final award in due course.
4. The Positions of the Parties
4.1 Claimants’ Position
24. The Claimants submit the following in substance:
• The Club has not made any payments agreed under the Settlement Agreement (USD 75,000.00 to Claimant 1, USD 22,200.00 to Claimant 2 and USD 14,800.00 to Claimant 3), although the Claimants provided all required bank details on 28 December 2015, i.e. before the payments became due on 15 January 2016.
• The consequences in case of non-payment follow from clauses 5 and 6 of the Settlement Agreement. According thereto the Claimants are entitled to additional payments in case of non-compliance (USD 222,500.00 to Claimant 1, USD 22,200.00 to Claimant 2 and USD 14,800.00 to Claimant 3).
• The amounts received by the Player and Xx. Xxxxxxx in relation to the new contract with the Brazilian team “America Futebol Clube” shall not be taken into account in these proceedings. This new contract was signed on 4 January 2016, i.e. after the Settlement Agreement came into force but before the amounts agreed under the Settlement Agreement became due. Therefore, “the Claimant was not in need to consider any other criterion than her own ones (family, friends, weather) and was not obliged to look for better financial option”. If the Arbitrator, ex aequo et xxxx, finds that the Claimants have a duty to mitigate, the Claimants will accept a deduction of the Player’s remuneration (“60,000.00 Reals”, about USD 15,963.00) and of the agency fee (“6,000.00 Reals”, about USD 1,597.00). However, the Turkish Agent was not involved in the new contract and should, therefore, bear no duty to mitigate at all.
• The Player’s further contract with the WNBA team Chicago Sky provides in its clause 1 that the term of contract starts on 1 February 2016 and finishes on 15 May 2017. However, this is just a formal issue since the WNBA season is scheduled from May till September/October only. The Player arrived in Chicago on 26 April 2016 and her first game took place on 14 May 2016. Since all this happened after the contract with the Brazilian team “America Futebol Clube” had expired, the WNBA contract shall have no relevance in the present proceedings, in particular amounts under this further contract shall not be deducted.
• Payment of interest is a customary and necessary compensation for late payment. An interest rate of 5% p.a. is reasonable according to the constant jurisprudence of the BAT. The Claimants request interest only on the two salaries for the Player due
on 25 November and 25 December 2015. Regarding the other amounts claimed by the Claimants, payment of penalties is requested.
• In clause EIGHTH of the Employment Agreement, the Club agreed to “be responsible for any and all legal or arbitral costs, which may be necessary should the Player or her representatives have to obtain the assistance of an attorney or counsel”. Consequently, the Respondent has explicitly accepted to reimburse any and all of the Claimants’ expenses connected with their claim with the BAT.
4.2 Claimants’ Request for Relief
25. In their Request for Arbitration, the Claimants request the following reliefs:
"a) Salaries and compensations owed to Claimant 1
- 75000 usd as payment of her November and December scheduled salaries + 5% interests
- 222500 usd as compensation to breach the settlement agreement
b) Agency fee and compensations owed to Claimant 2
- 22 200 usd as payment of the agency fee
- 22 200 usd as payment of his compensation to breach the settlement agreement
c) Agency fee and compensations owed to Claimant 3
- 14 800 usd as payment of the agency fee
- 14 800 usd as payment of his compensation to breach the settlement agreement
d) Handling fee
- 4000 euros paid by Claimant 2 on behalf of all three claimants
e) Legal fees and expenses
- Will be determined by the Arbitrator later and the Claimants will submit to BAT an Account of Costs as soon as the total of legal fees and expenses is final”
4.3 Respondent's Position and Request for Relief
26. The only submissions filed by or on behalf of the Respondent were the email of 25 April 2016 by Xx. Xxxxx Xxxxxxxx, attorney at law in Istanbul, Turkey (who thereafter failed to provide a Power of Attorney and did not get into further contact with the BAT at all) and the two emails of 31 August and 5 September 2016 by xxxxxxxxxxxxx@xxxxxxx.xxx (requesting an extension of time limits).
27. Therefore, the Respondent failed to submit any request for relief.
5. The Jurisdiction of the BAT
28. As a preliminary matter, the Arbitrator wishes to emphasize that, since the Respondent did not participate in the arbitration except its request for an extension of time limits, he will examine his jurisdiction ex officio, on the basis of the record as it stands.
29. Pursuant to Article 2.1 of the BAT Rules, “[t]he seat of the BAT and of each arbitral proceeding before the Arbitrator shall be Geneva, Switzerland”. Hence, this BAT arbitration is governed by Chapter 12 of the Swiss Act on Private International Law (hereinafter “PILA”).
30. The jurisdiction of the BAT presupposes the arbitrability of the dispute and the existence of a valid arbitration agreement between the parties.
31. The Arbitrator finds that the dispute referred to him is of a financial nature and is thus arbitrable within the meaning of Article 177(1) PILA.
32. The jurisdiction of the BAT with respect to all parties of the present dispute results from the arbitration agreements contained in clause 10 of the Settlement Agreement and clause THIRTEENTH of the Employment Contract, which read as follows:
“10. Any dispute between the Player, the Agents and the Club, arising or related to the present agreement shall be submitted to the Basketball Arbitral Tribunal (BAT) in Geneva, Switzerland and shall be resolved definitely in accordance with the BAT Arbitration Rules by a single arbitrator appointed by the BAT President. The seat of the arbitration shall be Geneva, Switzerland. The arbitration shall be governed by Chapter 12 of the Swiss Act on Private International Law, irrespective of the parties’ domicile. The language of the arbitration shall be English. The parties expressly waive recourse to the Swiss Federal Tribunal against awards of the BAT as provided in Artricle 192 of the Swiss Act on Private International Law. The arbitrator shall decide the dispute ‘ex aequo et xxxx’.”
“THIRTEENTH:
Any dispute between the Player, the Agents and the Club, arising from or related to the present contract shall be submitted to the Basketball Arbitral Tribunal (BAT) in Geneva, Switzerland and shall be resolved definitely in accordance with the BAT Arbitration Rules by a single arbitrator appointed by the BAT President. The seat of the arbitration shall be Geneva, Switzerland. The arbitration shall be governed by Chapter 12 of the Swiss Act on Private International Law, irrespective of the parties’ domicile. The language of the arbitration shall be English. The parties expressly waive recourse to the Swiss Federal Tribunal against awards of the BAT as provided in Article 192 of the Swiss Act on Private International Law. The arbitrator shall decide the dispute ‘ex aequo et xxxx’.
In case of any conflict between local law, a federation rule and any clause of this agreement, the latter will prevail.”
33. The Settlement Agreement and the Employment Contract are in written form and, thus, the arbitration agreements fulfil the formal requirements of Article 178(1) PILA.
34. With respect to substantive validity, the Arbitrator considers that there is no indication in the file that could cast any doubt on the validity of the arbitration agreements under Swiss law (referred to by Article 178(2) PILA). In particular, the wordings “[a]ny dispute between the Player, the Agents and the Club, arising or related to the present agreement” in clause 10 of the Settlement Agreement and “[a]ny dispute between the Player, the Agents and the Club, arising from or related to the present contract” in clause THIRTEENTH of the Employment Contract clearly cover the present dispute. In addition, the Respondent did not object to the jurisdiction of the BAT.
35. For the reasons stated above, the Arbitrator finds that he has jurisdiction to decide the present dispute and to adjudicate the Claimants’ claims.
6. Applicable Law
36. With respect to the law governing the merits of the dispute, Article 187(1) PILA provides that the arbitral tribunal must decide the case according to the rules of law chosen by the parties, or, in the absence of a choice, according to the rules of law with which the case has the closest connection. Article 187(2) PILA adds that the parties may authorize the arbitrators to decide “en équité” instead of choosing the application of rules of law. Article 187(2) PILA reads as follows:
“the parties may authorize the arbitral tribunal to decide ex aequo et xxxx”.
37. Under the heading "Applicable Law", Article 15.1 of the BAT Rules reads as follows:
“Unless the parties have agreed otherwise the Arbitrator shall decide the dispute ex aequo et xxxx, applying general considerations of justice and fairness without reference to any particular national or international law.”
38. In clause 10 of the Settlement Agreement and clause THIRTEENTH of the Employment Contract, the Parties have explicitly empowered the Arbitrator to decide the dispute ex aequo et xxxx. Consequently, the Arbitrator will decide the present matter ex aequo et xxxx.
39. The concept of équité (or ex aequo et xxxx) used in Article 187(2) PILA originates from Article 31(3) of the Concordat intercantonal sur l’arbitrage of 19691 (Concordat),2 under
1 This Swiss statute which governed international and domestic arbitration prior to the enactment of the PILA (governing international arbitration) and the Swiss Code of Civil Procedure (governing domestic arbitration).
which Swiss courts have held that “arbitrage en équité” is fundamentally different from “arbitrage en droit”:
“When deciding ex aequo et xxxx, the arbitrators pursue a conception of justice which is not inspired by the rules of law which are in force and which might even be contrary to those rules.”3
40. This is confirmed by Article 15.1 of the BAT Rules in fine, according to which the Arbitrator applies “general considerations of justice and fairness without reference to any particular national or international law”.
7. Other Procedural Issues
7.1 Respondent’s failure to file an Answer and further submissions
41. By the BAT’s letter of 25 April 2016, the Respondent was invited to file its Answer. Such letter was sent by courier delivery and received by the Respondent on 28 April 2016. The Respondent did not file an Answer.
42. By the BAT’s letter of 14 July 2016, the Respondent was granted a delai de grâce to submit an Answer. Such letter was sent by courier delivery and received by the Respondent on 18 July 2016. Again, the Respondent did not file an Answer.
43. By the BAT’s letter of 1 August 2016, the Respondent was invited to comment on the Claimants’ submission of 25 July 2016. Such letter was sent by courier delivery and
2 XXXXXX, in: Basel Commentary to the PILA, 2nd ed., Basel 2007, Article 187 PILA N 289.
3 JdT (Journal des Tribunaux), III. Droit cantonal, 3/1981, p. 93 (free translation).
received by the Respondent on 3 August 2016. The Respondent did not submit any comments.
44. In accordance with Article 14.2 of the BAT Rules, the Arbitrator decided to proceed with the arbitration.
7.2 Respondent’s request for a time extension
45. By emails of 31 August and 5 September 2016, the Respondent requested an extension of the deadlines until the end of October 2016. The Claimants did not agree.
46. The Respondent based its requests on the “delay of a sponsorship agreement”. However, the justification for an extension remained very generic, i.e. non-specific. Furthermore, the Respondent failed to prove why and how the “delay of a sponsorship agreement” could impact on the present arbitration proceedings. In addition, the Respondent’s emails of 31 August and 5 September 2016 were sent after the exchange of documents had already been closed and after the Respondent’s repeated failure to file its Answer and further submissions, as properly invited by the BAT.
47. Therefore, the Arbitrator decided to reject the Respondent’s request for an extension of time limits.
7.3 No request for a hearing
48. The Parties did not request to hold a hearing. In accordance with Article 13 of the BAT Rules, the Arbitrator renders his decision based on the Parties’ written submissions.
49. In light of the foregoing considerations, the Arbitrator makes the findings below:
8. Findings
50. Claimant 1 (see paragraph 8.1 below) requests payment of salaries plus interest and compensations while both Claimant 2 (see paragraph 8.2 below) and Claimant 3 (see paragraph 8.3 below), request payment of agency fees and compensations.
8.1 Salaries and compensations owed to Claimant 1
51. Claimant 1 claims payment of the total amount of USD 297,500.00 and interest at the rate of 5% p.a. on the amount of USD 75,000.00.
52. According to clause 3 of the Settlement Agreement, all Parties agreed to terminate the Employment Contract as of 4 January 2016. According to clause 4 of the Settlement Agreement, all Parties were “released, from all obligations or liabilities, in perpetuity towards each other […], EXCEPT the Club’s obligation to make the below listed payments as the owed salaries to the Player and agency fees to the Agents”. In the same paragraph, the Club agreed to pay to the Player the amount of USD 75,000.00 on or before 15 January 2016.
53. The Claimants submit that the Club has not yet paid the amount agreed under clause 4 of the Settlement Agreement. The Arbitrator finds that there are no facts on file which could cast doubt on the Claimants’ submission. Thus, Claimant 1 is entitled to the payment of USD 75,000.00.
8.1.1 Penalty
54. The consequences of the Club’s failure to pay the amount of USD 75,000.00 to the Player by 15 January 2016 are stipulated in clause 5 of the Settlement Agreement.
According thereto, the Player has the “right to receive the total salary till the end of the season”. Furthermore, the clause provides that the Club pay to the Player the (further) amount of USD 222,500.00 “as compensation over and above the amounts stipulated in Article-4”. Accordingly, the Player would, in principle, be entitled to a further amount of USD 222,500.00 according to clause 5 of the Settlement Agreement.
55. Clause 5 of the Settlement Agreement is, in essence, a penalty clause, because further payment is triggered in case of non-compliance with the Club’s contractual obligations under the Settlement Agreement. According to standing BAT jurisprudence penalty clauses are subject to judicial review in order to ensure that they are not excessive. For instance, in BAT 0036/09 the arbitrator held:
“In most jurisdictions, contractual penalties are subject to judicial review and can be adjusted if they are excessive. Whether a contractual penalty is excessive is usually left to the discretion of the judge and depends on the individual circumstances. As a general rule, a contractual penalty is considered to be excessive if it is disproportionate to the basic obligation of the debtor.”
56. In the case at hand the Arbitrator finds that the penalty provided for in clause 5 of the Settlement Agreement is not excessive. The Club had breached already the original Employment Contract by not paying the amounts due to the Player. The latter was, thus, entitled to terminate the Employment contract and request all outstanding payments for the remaining term of the Employment Contract. The total value of the Employment Contract was USD 370,000.00. Clause 5 of the Settlement Agreement provides that in case of non-compliance with the Settlement Agreement the “Player shall receive the total salary till the end of the season as described in the [Employment Contract].” By agreeing to the penalty clause in the Settlement Agreement the Player, thus, neither took advantage nor abused the Club. Consequently, the Arbitrator finds that no reduction of the agreed penalty is warranted here.
8.1.2 Mitigation
57. It is questionable whether or not there is a duty of mitigation in the case at hand. The parties are in dispute concerning this question. The Arbitrator finds – in line with BAT jurisprudence (see BAT 826/2016) – that payments promised under a termination and settlement agreement can usually not be qualified as a quid pro quo for services already rendered or to be rendered by the Player. Consequently, the mitigation principles developed by BAT jurisprudence in relation to a Player’s damages claim for a breach of the original player contract cannot be applied in the same manner to such settlement agreements. Rather, the mitigation principles should only be applicable, as a matter of principle, under particular circumstances, e.g.
▪ (1) when the settlement agreement provides for a “resurrection” of the original player contract so that the Player’s claim becomes a damages claim subject to the terms of the original contract; or
▪ (2) when the amounts the Player is to receive under the settlement agreement would result in a significant windfall for the Player, which is disconnected from the quantum of any (mitigated) damages the Player would have received under the original player contract;
▪ (3) or when the Player had very obvious opportunities to mitigate his damages (e.g. by signing a contract with a new club), but unreasonably refused to realize such opportunity.
58. In the case at hand, the Arbitrator finds that (1) and/or (2) are applicable in the case at hand and that, thus, the duty of mitigation applies according to which any amounts which a player earned elsewhere during the remaining term of the terminated contract must be deducted from the player’s claim. However, there is only room for offsetting any advantages against losses incurred due to the damaging event to the extent the runtimes of the original contract and of the new contractual relationship overlap. Only insofar there is any risk of unjust enrichment from the outset.
59. In order to determine the exact amount to be deducted from the USD 297,500.00, the Arbitrator has taken note that the Player signed two employment contracts after leaving the Club’s team, namely with the Brazilian club “America Futebol Clube” on 4 January 2016 and with the WNBA team Chicago Sky on 3 February 2016.
60. The contract with the Brazilian club “America Futebol Clube” was agreed for the rest of the 2015-2016 season and the Player played her first game on 4 February 2016 and her last game on 14 April 2016. The term of the Employment Contract with the Club was agreed to be “valid until the last official game of the Club for the 2015-2016 season” (clause FIRST of the Employment Contract) which took place on 6 April 2016 according the Claimants’ submission of 25 July 2016 and publicly available information. Although the Employment Contract remained terminated after the Club’s failure to pay the Player on time, the “compensation” agreed in clause 5 of the Settlement Agreement refers to “the total salary till the end of the season”. Therefore, deciding ex aequo et xxxx, the Arbitrator finds that the amount received from the Brazilian club “America Futebol Clube” (BRL 60,000.00) was paid for the same time period and therefore has to be deducted from the amount of USD 297,500.00.
61. The Claimants calculated the Player’s earnings in Brazil by considering the BRL-USD exchange rate of 6 May 2016 (according to xxx.xx.xxx), i.e. some days before filing the Request for Arbitration with the BAT. In contrast, the Arbitrator finds that the exchange rates (also according to xxx.xx.xxx) of the due dates of each of the four instalments as stipulated in annex A to the contract with the Brazilian club “America Futebol Clube” of 4 January 2016 (4 x BRL 15,000.00) shall be considered:
Due date | Amount in BRL | Exchange rate | Amount in USD |
10 February 2016 | 15,000.00 | 0.25466 | 3,819.90 |
10 March 2016 | 15,000.00 | 0.27617 | 4,142.55 |
10 April 2016 | 15,000.00 | 0.27859 | 4,178.85 |
10 May 2016 | 15,000.00 | 0.28779 | 4,316.85 |
60,000.00 | 16,458.15 |
62. The contract with the WNBA team Chicago Sky stipulates in its clause 1 the term of contract to be 1 February 2016 to 15 May 2017. However, the Arbitrator takes note that the 2016 WNBA season lasts from May 2016 to 20 October 2016 and that the Player arrived in Chicago end of April 2016 and played her first game on 14 May 2016. Since the Employment Contract with the Club was agreed until 6 April 2016 (the Club’s last official game of its 2015/2016 season), the WNBA contract does not interfere with the time period covered by the Employment Contract and the corresponding Settlement Agreement. Therefore, no deductions will be made in relation to the WNBA contract.
8.1.3 Interest
63. Claimant 1 also claims interest on the amount of USD 75,000.00 as compensation for late payment. However, the consequences of late payment of this amount have already been stipulated in clause 5 of the Settlement Agreement, namely the payment of a further amount. Therefore the Arbitrator finds that Claimant 1 is not entitled to interest.
64. To sum up, the total amount of USD 297,500.00 has to be reduced by the amount of USD 16,458.15. Thus, the Club is obligated to pay the amount of USD 281,041.85 to the Player.
8.2 Agency fee and compensation owed to Claimant 2
65. Claimant 2 claims payment in the total amount of USD 44,400.00.
66. According to clause 4 of the Settlement Agreement, the Club agreed to pay to the Claimant 2 the amount of USD 22,200.00 on or before 15 January 2016. The Claimants submit that the Club has not yet paid that amount agreed under clause 4 of the Settlement Agreement. The Arbitrator finds that there are no facts on file which could cast doubt on the Claimants’ submission.
8.2.1 Penalty
67. The consequences of the Club’s failure to pay the amount of USD 22,200.00 to the Claimant 2 by 15 January 2016 are stipulated in clause 6 of the Settlement Agreement, namely the “right to receive the double of the amounts listed above”. In the same provision, the Club expressly accepted to pay to Claimant 2 the amount of USD 22,200.00 “as compensation over and above the amounts stipulated in Article-4”.
68. The Arbitrator finds that clause 6 of the Settlement Agreement is a penalty clause. The Parties agreed on explicit consequences in case of late payment. According thereto, Claimant 2 is entitled to the double of the amount agreed upon under the initial Employment Contract. In other words, if payment is made on time, the Claimant 2 receives only the principal amount while in case of late payment an additional lump sum not agreed under the Employment Contract became due. It therefore falls to the Arbitrator to determine, ex aequo et xxxx, whether a penalty clause of USD 22,200.00 is fair and appropriate in the circumstances of this case.
69. As opposed to Claimant 1’s claims, which relate to the remaining amounts under the Employment Contract, the penalty here is connected to the principal amount Claimant 2 was supposed to secure. Previous BAT awards have held that a late payment penalty equal to the principal amount may be fair and proportionate. The Arbitrator follows this line of jurisprudence also for the case at hand. The Club was in default of payment under the Employment Contract. Claimant 2, thus, wanted (and needed) to include into the Settlement Agreement a credible deterrent in order to avoid another breach of the Club’s contractual obligations. In light of the above and deciding ex aequo et xxxx, the
Arbitrator finds that a late payment penalty of USD 22,200.00 is within the range of what is still to be considered fair and appropriate.
8.2.2 Mitigation
70. The Arbitrator further notes that the majority of the BAT jurisprudence holds that deductions for mitigation of damages must be made also with respect to an agent’s claim for agency fee. Claimant 2 agreed with the Brazilian club “America Futebol Clube” an agency fee regarding the Player in the amount of BLR 6,000.00 (USD 1,597.00 according to exchange rate used by Claimants in the Request for Arbitration). This amount, thus, must be deducted. According to the Claimants’ submissions, Claimant 2 was not entitled to any agency fee with the transfer of the Player to the WNBA club Chicago Sky. This transfer, consequently, has not influence on the amounts due.
8.2.3 Conclusion
71. Consequently, Claimant 2 is entitled to an amount of USD 42,803.00 from the Club.
8.3 Agency fee and compensation owed to Claimant 3
72. Claimant 3 claims payment of the total amount of USD 29,600.00.
73. According to clause 4 of the Settlement Agreement, the Club agreed to pay to Claimant 3 the amount of USD 14,800.00 on or before 15 January 2016. The Claimants submit that the Club has not yet paid that amount agreed under clause 4 of the Settlement Agreement. The Arbitrator finds that there are no facts on file which could cast doubt on the Claimants’ submission.
74. The consequences of the Club’s failure to pay the amount of USD 14,800.00 to Claimant 3 by 15 January 2016 are stipulated in clause 6 of the Settlement Agreement,
namely the “right to receive the double of the amounts listed above”. In the same provision, the Club expressly accepted to pay to Claimant 3 the amount of USD 14,800.00 “as compensation over and above the amounts stipulated in Article-4”.
75. Again the question arises whether or not the penalty clause provided for in the Settlement Agreement is excessive. In light of the argumentation above, the Arbitrator finds that such penalty is not excessive and that, therefore, Claimant 3 is entitled to a further payment of USD 14,800.00. No issue of mitigation arises here.
76. Consequently, the Arbitrator finds that Respondent must pay the total amount of USD 29,600.00 to Claimant 3.
8.4 Summary
77. The Respondent is obligated to pay to:
• Claimant 1, the amount of USD 281,041.85;
• Claimant 2, the amount of USD 42,803.00; and
• Claimant 3, the amount of USD 29,600.00.
9. Costs
78. Article 17 of the BAT Rules provides that the final amount of the costs of the arbitration shall be determined by the BAT President and that the award shall determine which party shall bear the arbitration costs and in what proportion; and, as a general rule, shall grant the prevailing party a contribution towards its legal fees and expenses incurred in connection with the proceedings.
79. On 3 December 2016 – considering that pursuant to Article 17.2 of the BAT Rules “the BAT President shall determine the final amount of the costs of the arbitration, which shall include the administrative and other costs of BAT and the fees and costs of the BAT President and the Arbitrator”; that “the fees of the Arbitrator shall be calculated on the basis of time spent at a rate to be determined by the BAT President from time to time”, and taking into account all the circumstances of the case, including the time spent by the Arbitrator, the complexity of the case and the procedural questions raised
– the BAT President determined the costs of the arbitration in the present matter to be EUR 10,570.00.
80. Considering the outcome and the circumstances of the present case – inter alia the Respondent’s failure to file an Answer but requesting the extension of time limits after the exchange of documents had already been closed as well as the non-payment of its shares of the Advance on Costs which had to be substituted by the Claimants – the Arbitrator finds it fair that all costs of the arbitration shall be borne by the Respondent. The Arbitrator has not taken into consideration clause EIGHTH of the Employment Contract because the Employment Contract has been superseded by the Settlement Agreement on which the Claimants base their claims but which do not contain any regulation with regard to the costs of legal proceedings. Given that the BAT received advance payments on the costs of the arbitration in the total amount of EUR 10,984.00 from the Claimants, the Arbitrator decides in application of Article 17.3 of the BAT Rules that the Respondent shall pay EUR 10,570.00 to the Claimants. The remaining amount of EUR 414.00 shall be reimbursed to Claimants by the BAT.
81. Furthermore, the Arbitrator takes note of the detailed account of costs submitted by the Claimants while the Respondent did not submit an account of costs. The Claimants list legal fees in relation to their counsel in the total amount of EUR 4,500.00 and the payment of the non-reimbursable handling fee in the amount of EUR 4,000.00. When assessing the reasonable legal fees and expenses incurred by the Parties in connection with these proceedings (Article 17.3 of the BAT Rules), the Arbitrator takes
into consideration the outcome and the circumstances of the present case, inter alia the number and volume of the Parties’ submissions and the Respondent’s procedural request for an “extension of time limits”. Therefore, the Arbitrator considers it adequate, that the Claimants are entitled to a contribution towards their legal fees and expenses in the total amount of EUR 8,500.00, while the Respondent has to bear its own legal fees and expenses. Since the Claimants’ legal fees and expenses were all paid by Claimant 2 and the Claimants have explicitly stated the individual payments in their account of costs, the Respondent shall pay the amount of EUR 8,500.00 directly to the Claimant 2.
10. AWARD
For the reasons set forth above, the Arbitrator decides as follows:
1. Adana Aski Spor Kulubu Dernegi is ordered to pay to Xx. Xxxxx Xxxxxxxx Xx Xxxxx the total amount of USD 281,041.85.
2. Adana Aski Spor Kulubu Dernegi is ordered to pay to Xx. Xxxxx Xxxxxxx the total amount of USD 42,803.00.
3. Adana Aski Spor Kulubu Dernegi is ordered to pay to Xx. Xxxxx Xxxxxxxx the total amount of USD 29,600.00.
4. Adana Aski Spor Kulubu Dernegi is ordered to pay jointly and severally to Xx. Xxxxx Xxxxxxxx Xx Xxxxx, Xx. Xxxxx Xxxxxxx and Xx. Xxxxx Xxxxxxxx the amount of EUR 10,570.00 as a reimbursement for the Advance on Costs.
5. Adana Aski Spor Kulubu Dernegi is ordered to pay to Xx. Xxxxx Xxxxxxx the amount of EUR 8,500.00 as a contribution towards the Claimants’ legal fees and expenses. Adana Aski Spor Kulubu Dernegi shall bear its own legal fees and expenses.
6. Any other or further-reaching claims for relief are dismissed.
Geneva, seat of the arbitration, 20 December 2016
Xxxxxx Xxxx (Arbitrator)