‘JUST CAUSE’: UNDERSTANDING UNILATERAL TERMINATION OF FOOTBALL CONTRACTS UNDER FIFA JURISPRUDENCE
Updated: Jul 9, 2020
The post has been authored by Angad Singh Makkar.
Angad is a final-year student of the BA. LL.B. course at OP Jindal Global University. He is an avid football and basketball supporter and has channelled this passion for sports law research and publications during his time in law school.
Besides the dazzling tricks, smooth passes and powerful shots on the field that mesmerize millions of viewers, the world of football is equally riveting off the field. This is due to the frequency of player movement (from one club to another) and the ever-changing dynamics of the contractual relationships between players and clubs (the employees and the employers respectively).
Though the fundamental tenets of contract law continue to govern contracts between players and clubs, FIFA’s Regulations on the Status and Transfer of Players (“RSTP”) also puts forth certain contractual rules that are unique in their application to these stakeholders in football.
To illuminate, Article 13 of the RSTP states that “a contract between a professional and a club may only be terminated upon expiry of the term of the contract or by mutual agreement.” However, this is followed by Article 14, which acts as an exception to Article 13 insofar as it sanctions either party to unilaterally rescind a contract without consequences (i.e. payment of compensation or imposition of sporting sanctions) where there is a ‘just cause’.
This ensures that parties to a football contract generally respect and observe the terms of such a contract, but at the same time retain the freedom to terminate a contract if a side can prove that it has been subject to severely unjust treatment in one form or another.
WHAT IS ‘JUST CAUSE’?
The RSTP does not provide or specify a comprehensive definition of ‘just cause’, with Article 14 bis (pertaining to ‘just cause for outstanding salaries’) serving as the only explicit indicator as to what could constitute ‘just cause’. Accordingly, the term has been primarily interpreted and understood through the plethora of decisions taken by the FIFA Dispute Resolution Chamber (“DRC”) in respect to issues centred on ‘just cause’. Essentially, what constitutes ‘just cause’ depends upon the facts, circumstances, and merits of a particular case.
Unsurprisingly, both clubs and players embroiled in contractual disputes have exercised the ‘just cause’ provision to unilaterally terminate the contract for a variety of reasons. The most notable of these ‘just causes’ and the circumstances determining their validity or invalidity is detailed below:
‘JUST CAUSE’ FOR CLUBS
Sub-standard quality of players’ on-field performances for their club cannot constitute ‘just cause’ for the unilateral termination of the contract offered by the club to them, as per the long-standing FIFA DRC jurisprudence.[i] This rationale applies irrespectively of the contents of the contract, i.e. even if the contract between the player and club contains a clause permitting unilateral termination by the club in case of underwhelming performances from the player, the DRC would not deem this fit to constitute ‘just cause’ and lineal termination would still be invalidated.[ii] Similarly, in one such decision, the DRC had asserted that a player’s alleged lack of performance, commitment and productivity would be unconsidered a ‘just cause’ for terminating an employment contract.[iii]
In my opinion, the aforesaid position is justifiable insofar as it ensures that players are not exposed to arbitrary action by clubs, which could easily terminate a contract based on subjective (and difficult to prove) allegations of poor performances against a player.
However, a potential loophole exists to this rule, in light of the DRC’s decision dated 4 February 2005.[iv] In here, the DRC deemed a contractual clause that ‘allowed termination of a player’s contract if the player in question has taken part in less than 70% of the combined games played that season’ as valid in law, thereafter permitting the club to terminate the player’s contract in pursuance to this stipulation. Considering that the number of matches that a player takes part in, is directly dependent on the will of the club’s coaching staff, this decision is extremely problematic as it provides a full-fledged opportunity for the clubs to include potestative clauses which could further lead to unilateral termination.
Even though the general position of the DRC vis-à-vis ‘just cause’ and player performance is quite noteworthy, certain contradictory exceptions still exist which could place players’ contractual stability under jeopardy.
Unlike player performance, the absence of a player does constitute ‘just cause’ for a club to unilaterally terminate the contract provided it is a lengthy skiving, without authorization and any other ‘just cause’ on the part of the player. However, the burden of proof in such disputes is placed strictly on the club and is often quite onerous.[v] For instance, the truancy of a few days is generally not deemed to constitute ‘just cause’ to terminate the contract, with the DRC preferring imposition of a fine by the club on the player in these situations.[vi] The general position favoured by the DRC is that a period of two weeks with regular misbehaviour or one month (or more) of unauthorized absence can be considered as valid ‘just cause’ for the club.[vii]
Again, considering premature termination of a contract is an ultima ratio, it is reasonable for the DRC to impose slightly strict requirements on clubs to utilize unauthorized absence as ‘just cause’ for unilateral cessation.
‘JUST CAUSE’ FOR PLAYERS
The persistent failure of a club to offer the salary of a player is generally deemed to be tantamount to ‘just cause’ for the player to terminate his employment contract. Over the past few decades, this has been the most commonly availed ‘just cause’ by players to extricate themselves from their contractual obligations to a club. However, the jurisprudence surrounding this type of ‘just cause’ has been far from straightforward, as contradictory decisions have led to ambiguity and uncertainty in its application. Firstly, a minimum time-period of delayed payment has not been firmly established, though the DRC has put forth a ‘two-month rule’ (‘just cause’ exists where outstanding salaries exist for two months or more.) in several rulings.[viii] This is because certain DRC decisions have entailed a minimum of three months’ outstanding salaries to establish ‘just cause’[ix], while in others, a period of delayed remittance for even one month has been deemed sufficient owing to other mala fide actions by the club.[x] The DRC has even permitted relatively lengthy delays in payment of the salary on the ground that the sport of football is subject to cyclical situations in which clubs sometimes have no choice but to deviate from payment schedules that have been contractually agreed upon.[xi]
Another vague aspect surrounding this type of ‘just cause’ is the DRC’s contrasting findings on whether a prior written warning to the club is a strict prerequisite for termination by the player. The DRC’s decision dated 24 November 2011 affirms this position, whereas its decisions dated 27 February 2013 and 10 December 2009 found ‘just cause’ even in the absence of written warning issued by the player.[xii] Other factors such as whether the player precisely specified the outstanding amount or whether there was any misbehaviour on the player’s part on top play an important role in illustrating bona fide intent on the player’s end, which greatly affects the DRC’s finding of a valid ‘just cause’. As demonstrated, there is a deal of uncertainty on the exact conditions under which ‘just cause’ for outstanding salaries can be exemplified, but one can surmise that cases involving delay in payment for more than three months and a prior written warning by the player before termination will practically warrant a ‘just cause’.
Fortunately, an amendment to the RSTP in 2018 introduced the aforementioned Article 14bis,[xiii] which categorically states that ‘just cause’ arises for a player when a club fails to pay his salary for a period of two months. It also mandates that the player give a 15-day notice to the defaulting club to fully comply with its financial obligations. This provision prima facie resolves the ambiguity surrounding around the ‘two-month rule’ while also codifying the prior notice requirement. However, Article 14bis also states that “alternative provisions in contracts existing at the time of this provision coming into force may be considered” and affords supremacy to the terms of ‘collective bargaining agreements’ (these agreements can deviate from the principles set out in Article 14bis). Nonetheless, despite carving out these intriguing exceptions, Article 14bis has greatly assuaged concerns regarding the exact conditions under which ‘just cause’ for outstanding salaries can be constituted. Cases involving delay in payment for more than two months and a prior written warning by the player before termination will almost assuredly constitute ‘just cause’ now.[xiv] Other factors such as whether the player precisely specified the outstanding amount or whether there was any misbehaviour on the player’s part also play an important role in illustrating bona fide on the player’s end, which greatly affects the DRC’s finding of a valid ‘just cause’.
Contractual relationships in football, as in many other sports, are often not as smooth as one would initially expect. Due to a plethora of external factors, either party to the employment contract can be forced to look for a way out and prematurely terminate the contract. To its credit, the RSTP has taken cognizance of this lingering possibility and aimed to establish a contractual framework in which neither party is forced to abide by the terms of a contract which has been severely breached by the other. The ‘just cause’ provision of the RSTP ensures a fair amount of contractual flexibility in a sport where time is of the essence to both players (who have limited years of maximum earning potential) and clubs (that must strive to compete and win every competition they partake in to appease their fan-bases and earn revenue).
Though ‘just cause’ remains an undefined concept subject to case-by-case interpretation, the aforementioned DRC jurisprudence has provided great insight into where ‘just cause’ validly arises for both players and clubs. Given the novelty of this concept, one can only wait and see as to whether these continuous jurisprudential developments could ultimately pave the way for the incorporation of ‘just cause’ clauses in employment contracts in other sports as well.
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Cite as: Angad S. M., Just Cause: Understanding Unilateral Termination Of Football Contracts Under Fifa Jurisprudence, Extra-Cover, The Sports Law Blog of India (9th Apr 2020), Accessed at https://www.extra-cover.org/post/just-cause-understanding-unilateral-termination-of-football-contracts-under-fifa-jurisprudence [Date of Access].
End-Notes: [i] FRANS DE WEGER, JURISPRUDENCE OF FIFA DRC 209 (Springer 2nd ed. 2016). [ii] DRC 26 November 2004, no. 114534. [iii] DRC 23 June 2005, no. 65657. [iv] DRC 4 February 2005, no. 25247. [v] De Weger, supra note 1, at 224. [vi] DRC 28 July 2005, no. 75368; See Also DRC 12 January 2006, no. 16828. [vii] De Weger, supra note 1, at 228. [viii] DRC 5 December 2008, no. 128557; See Also DRC 19 February 2009, no. 29908. [ix] DRC 9 May 2011, no. 5112513. [x] DRC 26 April 2012, no. 412871. [xi] DRC 5 May 2009, no. 59269. [xii] De Weger, supra note 1, at 252.
[xiii] FIFA Circular no. 1625, 26 April 2018.
[xiv] DRC 11 April 2019, no. 3041672.
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