Termination of football employment contracts without just cause: A review of Hakan Çalhanoglu v Trabzonspor FC

Published 17 February 2017 By: Lloyd Thomas

Image of Hakan Çalhanoğlu by Steindy (https://commons.wikimedia.org/wiki/User:Steindy)

On 2 February 2017, the Court of Arbitration for Sport (“CAS”) issued a media release[1] in which it confirmed that it had upheld a decision of FIFA by which the football player, Hakan Çalhanoğlu[2] (the “Player”), was banned from playing for four months after breaching the terms of an employment contract that he had entered into with Trabzonspor FC.

While the CAS’s reasoned decision has yet to be released, the decision as set out in the media release is a useful case-study regarding the application of the FIFA Regulations on the Status and Transfer of Players (the “FIFA Regulations”) in respect of the termination of employment contracts without just cause.  This article reviews the case, looking at:

  • The factual background;
  • The proceedings before the FIFA Dispute Resolution Chamber;
  • The proceedings before the CAS; and
  • The consequences of the decision.

 

Factual background

Born in Germany in 1994 to Turkish parents, the Player is a Turkish footballer who presently plays for Bayer 04 Leverkusen.  He began his youth career with the German club Karlsruher SC in 2010.

In 2011, while still registered with Karlsruher SC, the Player entered into an employment contract with the Turkish club Trabzonspor under which he was reportedly paid €100,000[3] for his agreement to join Trabzonspor upon the expiry of his contract with Karlsruher SC (the “Trabzonspor Contract”).  The terms of the contract reportedly required the Player to repay the sum of €100,000 in circumstances where he did not join Trabzonspor.

Speaking about the entry into the Trabzonspor Contract, the Player was reported to have said that[4]:

I was 17 and played at Karlsruher.  A friend tipped me off that my father met with Trabzonspor representatives in a restaurant in Darmstadt. 

When my father returned, he told me: ‘Hakan, you need to sign that contract.’  In our culture, fathers have the last word, and it’s out of place not to show them respect.

I was 17, and not aware of the implications.  I only had fooball on my mind.

Despite the fact that the Player had entered into the Trabzonspor Contract, he decided not to make the move to Trabzonspor.  Instead, he first extended his existing contract with Karlsruher SC, before moving to Hamburger SV in the summer of 2012[5].  Hamburger SV then loaned the Player back to Karlsruher SC for the 2012/2013 season[6].  Thereafter, the Player returned to Hamburger SV for the 2013/2014 season, before signing for his current club, Bayer 04 Leverkusen, ahead of the 2014/2015 season.

 

The FIFA Regulations

As the proposed transfer of the Player to Trabzonspor would have been an international transfer (i.e. from Germany to Turkey), any dispute arising out of it fell to be dealt with by the FIFA Regulations (see Article 22(b)). 

Article 16 of the FIFA Regulations states that[7]:

A contract cannot be unilaterally terminated during the course of a season.

Article 17 of the FIFA Regulations sets out[8] the consequences where a contract is terminated without just cause.  In short, those consequences for a player are as follows:

  • A player who has terminated a contract without just cause shall in all cases pay compensation to the club.  Subject to the rules on training compensation and unless otherwise provided for in the relevant contract, compensation for the breach shall be calculated by reference to the law of the country concerned, the specificity of sport and other objective criteria including the remuneration and other benefits due to the player under the existing contract and/or new contract, the time remaining on the existing contract, the fees and expenses paid or incurred by the former club and whether the contractual breach falls within the protected period[9].

 

  • Sporting sanctions shall be imposed upon any player found to have terminated their contract without just cause during the “protected period”.  The “protected period” is defined in Annexe 6, Article 10(10) of the FIFA Regulations as a period of three entire seasons or three years, whichever comes first, following the entry into force of a contract, where such contract is concluded prior to the 28th birthday of the player, or two entire seasons or two years, whichever comes first, following the entry into force of a contract, where such contract is concluded after the 28th birthday of the player.  The sanction that shall be imposed is a four-month restriction on playing, unless there exist aggravated circumstances, in which case the ban may last six months[10].

 

Proceedings before the FIFA Dispute Resolution Chamber

In April 2013, Trabzonspor lodged a claim before the FIFA Dispute Resolution Chamber (the “DRC”).  It argued that the Player had breached the terms of the Trabzonspor Contract without just cause by signing a further employment contract with Karlsruher SC, rather than joining Trabzonspor, as agreed. Trabzonspor argued that this constituted a breach of an employment contract[11] and therefore represented a breach of the FIFA Regulations.

In January 2016, the DRC issued its decision in relation to the dispute.  It found that the Player had terminated the Trabzonspor Contract without just cause within the protected period[12] (the “DRC Decision”).  As a result, a four month period of ineligibility[13] was imposed upon him.

Upon receiving the grounds of the DRC Decision in March 2016, both the Player and Trabzonspor filed appeals to the CAS. 

The Player sought the annulment of the DRC Decision. His appeal was also accompanied by a request to stay the execution of his four-month ban, pending the outcome of the CAS proceedings.  That request was granted[14]

Conversely, Trabzonspor sought the return of the €100,000 advance it had paid to the Player under the terms of the Trabzonspor Contract, as well as the payment of additional compensation totalling €1 million[15].

 

Proceedings before CAS

 

The two appeals were consolidated and treated as one procedure by a CAS Panel of three arbitrators.  The hearing was held on 5 October 2016 and, in reaching its decision, the Panel determined that[16]:

  • The Player had contravened the FIFA Regulations by breaching the Trabzonspor Contract without just cause.
  • Trabzonspor did not “comply with due diligence requirements in this matter.
  • The Player’s appeal was dismissed.
  • Trabzonspor’s appeal was only partially upheld.  The Player was required to pay €100,000 to Trabzonspor as reduced compensation for his breach of the Trabzonspor Contract.

 

Consequences

In the case of Player, the breach of the Trabzonspor Contract was found to have taken place during the “protected period[17]”.  As such, CAS upheld the four month ban in accordance with the criteria set out in Article 17(3) of the FIFA Regulations.  It also imposed a €100,000 fine on the Player, in accordance with the criteria specified in Article 17(1).  Pending the publication of the CAS’s reasoned decision in this case, it is not clear how CAS calculated this sum, though it might well represent repayment of the sum that was paid to the Player by Trabzonspor under the Trabzonspor Contract.

The effects of this decision have not been felt by the Player alone.  Bayer 04 Leverkusen, the Player’s current club, must now contend without one of its most up-and-coming players.  Cruelly for Bayer, the CAS decision was issued on 2 February 2017, only two days after the closure of the winter transfer window.  Had the decision been received a week or two sooner, Bayer would have had the opportunity to seek out a replacement for the following four months.  As it stands, it is a player down for the remainder of the season, due to no fault of its own.

These sentiments were echoed by Rudi Voeller, the Sports Director of Bayer 04 Leverkusen, who has been reported to have stated[18]:

Although Bayer Leverkusen had nothing to do with this it is also punished. Now we will miss an important player during a key part of the season.

As the Player’s ban covers all “official matches”, he will miss not only Bayer 04 Leverkusen’s league and cup matches (including its last 16 match in the UEFA Champions League against Atletico Madrid) but also Turkey’s World Cup qualifying match against Finland on 24 March 2017[19].

As a result, the Player has reportedly[20] agreed to waive his salary for the course of the ban:

Bayer had nothing to do with the incident.

The club have, however, been affected by the resulting punishment in a sporting and economical sense.

That’s why, for me, it makes complete sense that I should not further harm the club and will therefore forego my salary during the time of my exclusion.

The case shows the seriousness with which contractual breaches can be treated under the FIFA Regulations.  While such cases are not uncommon, it is interesting to note that Articles 16 and 17 apply to minors (the Player was 17 but already playing for Karlsruher SC and was therefore deemed to be a professional) and to employment contracts that take effect in the future. 

There is an interesting distinction to be drawn between such a contract and an option agreement under which a player agrees to join a club at some point in the future, usually with a degree of conditionality built in.  CAS has traditionally taken a restrictive approach[21] to upholding such option clauses[22] and the question of whether it would be willing to apply the force of Article 17 to the breach of an option agreement as strictly understood remains to be seen. The finer details of this case will no doubt be teased out upon the publication of CAS’s reasoned decision.

In the meantime, the salutary lesson for young players is to ensure that they read their contracts and to understand the obligations imposed upon them.  The failure to do so can have serious effects on their playing careers and their pockets.

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Author

Lloyd Thomas

Lloyd Thomas

Lloyd Thomas is an associate in Squire Patton Boggs’ Litigation department and is part of the Sports Law team based in its London office.

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