We are pleased to announce that the Court of Arbitration for Sports (CAS) has upheld the appeal of Nikola Djurdjic v. Chengdu Rongcheng against the FIFA DRC Decision. This case involved peculiar contractual negotiations, unusual image rights agreement concluded through a third party, all within specific procedural timeframe.
Following the Club’s termination without just cause, the Player’s request for *employment contract* damage compensation for 2021 was upheld, while the claim for 2022 was rejected by FIFA.
Subsequently, the Player engaged our partner Filip Blagojevic to appeal the decision at CAS. Within the CAS appeal procedure, the Player increased the quantum of his claim (which was accepted by CAS) and introduced – for the first time – the claim arising from the ‘image rights agreement’ (the IRA compensation).
CAS fully granted the Player’s request regarding the employment contract (in gross amounts), while declaring itself incompetent to adjudicate on the IRA compensation due to the lack of an arbitration agreement in favor of CAS.
It is worth noting that CAS Award 8621 addresses the IRA compensation within the jurisdictional section, as opposed to the merits section. The Player did not request his overdue salary for the period prior to the unilateral termination, leaving this issue open.
Below is the case chronology:
–In January 2020, the Parties negotiated the Player’s transfer from Hammarby to Chengdu through a Dutch company. Once the amounts were settled, the Player flew to China to sign the contract;
–However, just the day before the signing, the Player was told that his earnings would be split into two documents: an employment contract and an image rights agreement, with the latter requiring execution through the Dutch company. Given his peculiar position and limited options at the time, the Player reluctantly accepted the arrangement;
–On 23 January 2020, the Player and the Club signed a 2+1 employment contract (2020, 2021 + 2022), with extension to 2022 being subject to, inter alia, the Club’s promotion to the Chinese Super League. One of the alternative grounds for extending the Contract was if the Club opted to keep the Player (in our view, this is a potestative clause). In case of promotion, the Player’s remuneration would double and he would get a flat-fee bonus;
–On the same day, based on the Player’s written authorization, the ‘image rights agreement’ was concluded between the Club and the Dutch company (IRA), entitling the latter to flat fees for every season the Player spends with the Club;
–The value of the foregoing documents was comparable, with the IRA being slightly higher in value than the Employment Contract;
–The IRA content, in our view, indicates that the IRA serves no purpose of its own other than to divide the Player’s salaries and making payments to the Dutch company, which was closely cooperating with and acting on behalf of the Club;
–The Club terminated the contract in July 2021 by filing a claim to FIFA;
–The Player’s then-counsel submitted the counter-claim in August 2021, i.e. prior to the Club’s promotion, requesting the damage compensation [arising from the employment contract] both for 2021 and 2022, as well as the promotion bonus;
–At the time the submission phase was closed at FIFA, no amounts from the IRA for 2021 were due, while the fate of the IRA for 2022 remained unclear. More importantly, the IRA was not a topic of discussion in the FIFA litigation;
–In November 2021, FIFA rejected the Club’s claim and accepted the Player’s counter-claim for 2021, while denying his request regarding the 2022 season. The Player requested the grounds of the decision, after which he engaged our partner Filip Blagojevic;
–In January 2022, FIFA provided grounds, stating that it could not confirm the extension of the employment contract because, at the time, the Club had not secured promotion to the Super League. Therefore, FIFA decided not to take into consideration the extension while assessing the residual value of the employment contract;
–Two days after the grounds had been notified, the Club got promoted to the Superleague;
–Because of the potential res judicata issues and wrong interpretation of the validity of the extension clause, the Player submitted the statement of appeal to CAS, asking for compensation for 2022;
–It is also noteworthy that FIFA rules – as opposed to Swiss law – do not provide for the enforcement of final parts of FIFA decisions while [any part] of the decision is under CAS appeal. Even if a party contests only a minor aspect of the decision, this prevents the initiation of the execution/disciplinary process before FIFA;
–Since the Player only appealed the Decision in part (specifically where his request was denied), while the Club did not appeal, the Player also requested CAS to issue a partial award confirming the uncontested/final part of the FIFA decision. This would entail ordering the Club to make payments as determined in the uncontested and final portion of the decision. However, CAS deemed itself incompetent to adjudicate on this aspect of the decision. This was because the uncontested portion of the decision became final without being contested by either party and was not a matter of dispute before CAS;
–On 30 December 2022, CAS fully granted the Player’s request regarding the employment contract salary and promotion bonus (in gross amounts), while declaring itself incompetent to adjudicate on the IRA compensation.
