Terminating a contract for “just cause”: how bad do things have to be? A review of CAS’s decision in Salkic

Published 14 September 2015 By: Lydia Banerjee, Grahame Anderson

Erik_Salkic

Relationship breakdown usually involves lots of finger pointing and blaming the other party. The relationship between a professional footballer and his or her club is no different and the blame game can be central to the question of who has the right to end a contract before the end of its fixed term. Players who feel they are being denied the chance to play or even train in the first team often want to escape the rest of their fixed term to protect their limited playing careers.

In an attempt to free themselves to move on, players may seek to exercise their right to end their contract for ‘just cause’ (i.e. a valid reason).1 Clubs naturally dislike their internal selection and disciplinary decisions being scrutinised and argue that they have the right to decide how players train and when they play (i.e. what is valid). So when can a player rely on the club’s decisions to end their contract? How bad do things have to be? Exactly what is ‘just cause’?

A Court of Arbitration for Sport (CAS) Panel led by Mark Hovell recently considered the issue in a dispute between Erik Salkic and the Football Union of Russia and the Professional Football Club Arsenal (no, not that Arsenal) (“the Club”).2 The article examines and analyses the decision.

 

FACTS

Mr Salkic is a Slovenian football player who signed an employment contract with the Club on 22 July 2013. The contract was for a fixed term of two years and described Mr Salkic as a “professional football player”. The club played in the second division of football in Russia known as 1 Division Championship. Under the terms of the contract Mr Salkic could be “assigned to the backup team of the Club’s football team for the performance in football matches of lower sporting level without affecting the substantial terms and conditions of his contract”.3 [9]

At the start of the 2013/2014 season, Mr Salkic played for the Club’s first team in seven matches for a total of 194 minutes. Between 4 and 18 January 2014, Mr Salkic attended training in Turkey with the first team. On 21 January Mr Salkic and his agent met with the President and General Director of the Club. The parties disputed exactly what was said during the meeting, but the panel found that the Club told Mr Salkic that he had the ‘opportunity’ to leave but no compensation would be offered.

The day after the meeting, the Director General of the Club issued a statement saying that Mr Salkic was temporarily assigned to the club’s “backup” team for the period 22 January to 5 March 2014. The first team departed for Turkey on 22 January for further training and Mr Salkic remained in Russia training with the backup team.

Mr Salkic complained that the order was in breach of his contract. He emailed the club setting out this complaint on both 22 and 27 January, each time requesting that the Club remedy the breach. Having received no response to his complaints, Mr Salkic filed a statement of termination with the club on 29 January requesting that he be discharged on 30 January. He did not attend training on 29 January or thereafter.

Mr Salkic then commenced proceedings against the Club seeking to establish that there had been discrimination against him, a material breach of contract and that he had just cause to terminate the contract. He also sought compensation for the breach.

For their part, the Club sent telegrams to Mr Salkic on both 31 January and 3 February asking him to explain his absence from training. On 12 February, the Club gave Mr Salkic two days to remedy his breach and when they received no response, they sent Mr Salkic a contract termination notification relying on his long absence. The Club then brought a counterclaim against Mr Salkic seeking to establish that he was in material breach of contract, that he ought to pay compensation for his breach and a finding that he be banned from playing for four months for terminating the contract without just cause during the protected period.

 

ISSUES

When the proceedings reached CAS, Mr Salkic had failed both in front of the Russian Dispute Resolution Chamber and the Russian Players’ Status Committee. CAS determined that the relevant questions were:

  1. Can the assignment of a player to a club’s back up team and to be prevented from training with the first team amount to a violation of the player’s rights?
  2. If so, and on the facts of this case, did the Club violate the Player’s rights and/or discriminate against him?
  3. Was the Contract terminated with or without just cause?
  4. Is any party entitled to compensation and how much?4 [105]

 

DECISION

The Panel’s first question gives rise to the tension between a club’s right to select players and direct their training as they believe to be in the best interests of the club, and on the other hand the recognised right of a player to ply his trade and perform his craft. This is referred to throughout the award (and in the cases) as a player’s “performance rights” or, more cryptically, “personality rights”.

In answering it in the affirmative the Panel recognised the role of the coach in selection and training decisions as well as the potential for abuse of this role to the detriment of players. Case law, which was reviewed extensively by the Panel, confirms that players can have a right to play in the first team, and that this right can be protected. This right may be found expressly in the contract where a player is described as a ‘first team player’ or similar such term. In most situations, however, the right is an implied one.

The Panel referred in particular to CAS’s award in an arbitration involving FIFA, FC Nantes, Al Nasr Sports Club and Ismaël Bangoura in 2013.5 Analysing the substance of the relevant rights, CAS said that "[f]or athletes, personality rights encompass in particular the development and fulfilment of personality through sporting activity, professional freedom and economic freedom [Citation]. Under this definition, personality rights protect the right of movement, which comprises in particular the right to practice [sic] a sports activity at a level that accords with the abilities of the athletes…This freedom is particularly important in the area of sport since the period during which the athlete is able to build his professional career and earn his living through his sporting activity is short."6 [224] (Emphasis added by the author)

The focus of the jurisprudence, then, is on the potential for atrophy where a player’s skills are not being utilised, and on the severity of that atrophy in the sporting context. In the FC Nantes case, it was acknowledged that "decisions relating to selection, qualification and suspension, as well as licensing refusals, may constitute an infringement of the personality rights of the athlete from the standpoint of his economic freedom."7 [227].

The Panel noted that there are no specific provisions of the applicable league regulations that describe player rights in such terms. Nevertheless, there are similar applicable provisions in Russian employment law. In the Panel’s words, "these give further comfort to the Panel that a player has certain rights, be it personality rights, or the right to train long-term in the correct environment or the right to expect to perform his trade, that of a football player."8 [111]

From reviewing the case law, the Panel listed the following key factors to be considered when assessing whether assignment to the reserve team amounted to a breach of the player’s performance/personality rights:

  1. Why was the player dropped to the reserve team?
  2. Was the player still being paid his full wage?
  3. Was it a permanent or temporary measure?
  4. Were there adequate training facilities for the players with the reserve team?
  5. Was there an express right in the contract for the club to drop the player to the reserve team?
  6. Was the player training alone or with a team?

Despite the pains to which the Panel put itself to examine the applicable case law in the context of performance/personality rights, it is striking that the Panel, in the event, concluded that these questions were not determinative in the award. Nevertheless, it is perhaps instructive to set out the Panel’s findings in respect of the factors it thought relevant to the assessment of breach of performance/personality rights:

  • Given their other findings, the Panel stated that it did not need to decide the reason for Mr Salkic’s assignment to the backup team. However it concluded that, under the terms of Mr Salkic’s contract, he could be instructed to train with the reserves but that such instruction must be reasonable and would not be taken lightly; it was only if the specific circumstances of the case justified it.
  • Mr Salkic did not suffer financially as he received his full pay and there were no matches during the period of the assignment, so no match bonus potential was lost.
  • The duration was for only 43 days during the winter training break and was therefore only temporary.
  • On the facts of the case, the Panel did not need to conclude whether or not the assignment to the back up team was a breach of Mr Salkic’s contract because, even if it had been, it was not sufficiently severe to justify the unilateral termination of the contract after only seven days. The Panel noted that Swiss case law on ‘good cause’ requires a situation “where the party terminated cannot in good faith be expected to continue the employment relationship”. [131]. This is an objective assessment and requires sufficient severity of breach.
  • The evidence provided suggested that facilities provided for the backup team were worse than those provided for the first team but the Panel concluded that they remained adequate.
  • The Panel were satisfied that the player did not have an express contractual right to play in the first team. His description as a ‘professional player’ did not exclude him from playing with the backup team. Although the backup team played in a predominately amateur division of Russian football the team did include other professional players as well as amateur players. The Panel noted a distinction between being asked to play for a reserve or backup team and being asked to train with them. Mr Salkic’s contract expressly provided that he could be assigned to play matches for the backup team but did not refer to training with the backup team. A prohibition on a player training with the first team is potentially harsher than a decision to select the player to play for the second team while training with the first team. The reasons for such a decision would need to be explored on a case by case basis.
  • Mr Salkic remained training with a team. This contrasted with Strelkov v FC Krylia9 where the player was made to train alone. That, as CAS held in its award, was a breach of a player’s rights. That was common ground between the parties in Salkic.10

Drawing all of these matters together, the temporary assignment of Mr Salkic to train with the second team with no loss of contractual benefits could have amounted to a breach of his contract, but after only seven days it did not provide sufficient grounds for Mr Salkic to terminate the contract with just cause.

Mr Salkic was therefore unsuccessful on his appeal; however, the Panel overturned the award of compensation to the Club made by the Dispute Resolution Chamber of the Russian Football Union and upheld by the Players’ Status Committee. They concluded that the Club attached no value to Mr Salkic since they had been prepared to let him go without compensation during the meeting on 21 January. It was therefore appropriate that they received the value that they attached to him: nil.

 

COMMENT

It is clear that the Panel in Salkic went to great lengths to examine in detail the breadth of relevant jurisprudence and academic commentary, from which it extracted a player’s “fundamental” “personality” or “performance” rights, noting, however "that a coach and the club also have the right, in certain sporting circumstances, to move players between the first team and other teams. These rights may conflict and when they do, a review of the above points and of the facts of each case needs to be undertaken" [113].

The approach taken by the Panel will not be too unfamiliar to UK employment lawyers. The essential question was whether or not the club’s conduct was so bad as to justify the player terminating the contract. That is, in the parlance of employment law, a constructive dismissal. In the parlance of contract law, it is a repudiatory breach. What the club was alleged to have breached in these circumstances was not an express term of the contract, but rather an implied right derived from the broader sporting context.

The Panel referred to De Nghe v Etogan,11 which referred in turn to art. 337(2) of the Swiss Code des Obligations which it translated as follows: "any circumstance, the presence of which means that the party terminated cannot in good faith to be expected to continue the employment relationship, is deemed to be good cause." One would not have to delve far into an employment law textbook to find that principle paraphrased in English law.

Salkic is a helpful reminder of the difficulties facing a player who seeks to end his contract early relying on the training or selection decisions of the club. Before a player can terminate the relationship with their club they will need conduct that is severe enough that those looking on would say that they could not be expected to continue the relationship. The little cracks that might appear at the beginning of a relationship breakdown are unlikely to be enough when they have only recently appeared.

 

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Author

Lydia Banerjee

Lydia Banerjee

Lydia is an active member of the Littleton Chambers Sports law group. In line with the broader chambers specialisms Lydia’s core areas of practice are commercial law and employment law.  Lydia’s commercial practice encompasses disputes including contractual interpretation, professional negligence and directors’ duties.  Lydia’s employment work has a particular focus on disability discrimination but also incorporates all areas of tribunal disputes and high court action in relation to bonuses and restrictive covenants.

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Grahame Anderson

Grahame Anderson

Grahame is a barrister at Littleton Chambers and a member of Littleton’s Sports Law Group.  In addition to sports law, he specialises in employment and commercial work.

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