The FIFA guidelines on Covid-19
Preamble
The outbreak of Covid-19/the coronavirus has forced the vast majority of the world’s football organisations and associations to suspend football activities to one extent or another. At present, all international competitions and most domestic competitions are suspended, whilst most countries have applied strict restrictions to avoid crowds, which strongly affect the possibility to organise team trainings. As a result of the challenges football faces due to Covid-19/the coronavirus, 7th April FIFA issued guidelines that address the legal consequences of Covid-19. The FIFA guidelines address several issues, such as transfer windows, release of players to association teams, loans, and enforcement of decisions from FIFAs disciplinary bodies. However, this article will examine the guidelines regarding the contractual relationship between clubs and players, more specifically to what extent the guidelines can and will affect the clubs’ and players’ rights and obligations according to the player contracts.
The extent of FIFA’s decision of force majeure
The guidelines describes the process leading up to the publishing of the guidelines, which, in short, were made by the Bureau of the FIFA Council and a working group that was given a mandate to examine the need for amendments to Regulations on Status and Transfer of Players (RSTP) as a consequence of the Covid-19/coronavirus pandemic. The guidelines state that “The Bureau [of the FIFA Concil] recognised that the disruption to football caused by COVID-19 was a case of force majeure. Article 27 of the RSTP states that cases of force majeure shall be decided by the FIFA Council, whose decisions are final. The COVID-19 situation is, per se, a case of force majeure for FIFA and football.”
FIFA’s decision that the Covid-19 situation is a case of force majeure, is based on RSTP art. 27:
“27 Matters not provided for
Any matters not provided for in these regulations and cases of force majeure shall be decided by the FIFA Council whose decisions are final.”
Force majeure as a legal concept refers to a higher force and covers extraordinary circumstances, which are not under human control and cannot be avoided. Examples of such extraordinary events include wars, riots, natural disasters, etc. The Covid-19 situation can be such a force. The consequence of FIFA’s decision that the disruption to football caused by Covid-19 is a case of force majeure is that RSTP could be amended as a response to the Covid-19 situation. For example, FIFA could amend RSTP with regards to the regulation of transfer windows and release of players to association teams. With regards to the contractual relationship between clubs and players however, FIFA’s decision will have no direct consequence. Whether the Covid-19 situation should be considered as force majeure in the relationship between a club and a player can only be considered on a case-to-case basis, considering the specific circumstances of that relationship, regardless of FIFA’s decision. Only if force majeure can be established in the particular case, this could have consequences for the parties’ rights and obligations.
FIFA’s recommendations regarding contractual matters
In the guidelines FIFA addresses two matters related to the contractual relationship between clubs and players that can be affected by the Covid-19 situation; expiring and new agreements, and agreements that cannot be performed as the parties originally anticipated. FIFA provides guidelines regarding these matters, and stresses that these guidelines are to be considered as general and non-binding.
Expiring agreements and new agreements
The first issue addressed by FIFA is the challenge with expiring agreements, i.e. agreements that are due to terminate at the end of the current season, and new agreements, i.e. agreements that have already been signed and that are due to begin at the start of the next season. Typically, a player’s contract will expire at the end of a season, e.g. 30th June, whilst new player’s contract can be signed during the season, but commence at the start of a new season, e.g. 1st July. Although some competitions have been cancelled following the Covid-19 situation, such as the Belgian top division, most domestic and international club competitions are postponed, and will, hopefully, be played later. However, it is unlikely that club competitions can be completed before the end of the originally scheduled season, or before the start of what would normally be the next season. To tackle these challenges, FIFA recommends that, within the framework of national law and contractual autonomy, agreements that are due to expire at the original end date of a season, should be extended until the new end date of the season, and that agreements that are due to commence at the original start date of a new season, should be delayed until the new start date of a new season.
Agreements that cannot be performed as the parties originally participated
Secondly, FIFA addresses the challenge with situations where agreements cannot be performed as the parties originally anticipated due to the Covid-19 situation, typically where players and coaches will be unable to work, and clubs will be unable to provide work. In the guidelines FIFA present four solutions to this challenge. The four proposed solutions are somewhat confusing, as they to some extent conflict with each other.
Firstly, FIFA strongly encourage clubs and employees (players and coaches) “to work together to find appropriate collective agreements on a club or league basis regarding employment conditions for any period where the competition is suspended due to the COVID-19 outbreak”. The guidelines point out that these agreements should address amongst other things remuneration, which probably is the most challenging issue to resolve.
Secondly, the guidelines state that unilateral decisions that vary terms and conditions of contracts only will be recognised where they are in accordance with national law or permissible within collective bargaining agreements.
However, as a third recommendation, the guidelines state that a unilateral decision to vary terms and conditions could be recognised if the parties cannot reach an agreement and national law does not regulate the situation, as long as the decision is made in good faith in addition to being reasonable and proportionate. When assessing whether a decision to vary terms and conditions of a contract is reasonable, the guidelines state that FIFA’s Dispute Resolution Chamber (DRC) or Players’ Status Committee (PSC) may consider, without limitation:
a) whether the club had attempted to reach a mutual agreement with its employee(s);
b) the economic situation of the club;
c) the proportionality of any contract amendment;
d) the net income of the employee after contract amendment;
e) whether the decision applied to the entire squad or only specific employees.
As a fourth option, FIFA opens for the possibility to suspend all agreements between clubs and employees during the suspension of competitions, if proper insurance cover is maintained.
The parties’ positions if the club unilaterally amends the contract
The first and fourth options are unlikely to lead to any disputes, as the parties are free to agree on changing the terms of the contracts. If the club has an insurance that secures the players an income that equals their salary, the club will be considered to have fulfilled its obligations. Club decisions that unilaterally vary the terms and conditions of contracts are more likely to lead to disputes, and the guidelines offers little guidance as to how these disputes should be solved. If the situation is regulated by national law, it is possible that the decision will be considered valid. However, even if a dispute is regulated by national law, the standard contract and the domestic transfer regulations should be based on the same principles of RSTP, which should be taken into consideration. The extent to which the national associations are obliged to comply with RSTP in its own legislation is regulated in RSTP art. 1-3 a and b):
“3. a) The following provisions are binding at national level and must be included without modification in the association’s regulations: articles 2-8, 10, 11, 12bis, 18, 18bis, 18ter, 19 and 19bis.
b) Each association shall include in its regulations appropriate means to protect contractual stability, paying due respect to mandatory national law and collective bargaining agreements. In particular, the following principles must be considered:
– article 13: the principle that contracts must be respected;
– article 14: the principle that contracts may be terminated by either partywithout consequences where there is just cause;”
In other words, the national football associations are obliged to implement rules that ensure stability in the contractual relationship. This obligation must be seen in light of how FIFA defines stability in the contractual relationship. Furthermore, the national football associations are obliged to consider implementing provisions securing the principle that the contract can only be terminated unilaterally where there is just cause. In other words there is no direct obligation to include FIFA's wording or model in its own regulations, but it must be understood as a strong recommendation that this is implemented. As long as the national football association has included in the regulations rules that ensure stability of the contractual relationship, there is thus a certain degree of freedom of choice with regard to how this is implemented.
Further, unless a number of conditions are fulfilled[1] FIFA is competent to hear disputes of an international dimension, i.e. disputes between clubs and foreign players, whilst disputes that do not have an international dimension, i.e. disputes between clubs and players of the same nationality as the club, will have their disputes dealt with by national courts or arbitration institutions. This is regulated in RSTP art. 22:
”Without prejudice to the right of any player or club to seek redress before a civil court for employment-related disputes, FIFA is competent to hear:
b) employment-related disputes between a club and a player of an international dimension, unless an independent arbitration tribunal guaranteeing fair proceedings and respecting the principle of equal representation of players and clubs has been established at national level within the framework of the association and/or a collective bargaining agreement”
Jurisprudence from DRC indicates that DRC primarily considers disputes according to RSTP, and to a smaller extent based on national law. In his book ‘The Jurisprudence of the FIFA Dispute Resolution Chamber’ (2016), Frans de Weger analyses a number of DRC decisions where RSTP is in conflict with national law and national collective bargaining agreements, and concludes that “[a]nalysing the DRC decisions lead to the conclusion that national laws will not be taken into account, especially when it conflicts with the well-established conclusions”.
Unlike DRC, whose decisions are mainly assessed based on RSTP, and to a smaller extent based on national regulations, domestic courts and arbitration institutions, are more likely to base their decisions on national law and collective bargaining agreements. In other words, the rights and obligations for foreign players according to their players’ contracts, could differ from the rights and obligations of their teammates that have the same nationality as the club. In light of the Covid-19 situation, there are already examples of obvious conflicts between national labour law and RSTP. In Australia, several clubs have used their right according to national labour law to stand down players, and a similar approach has been taken by a number of Norwegian clubs. Whilst the standing down of players could be in accordance with national labour law, it could be in conflict with RSTP, as the stand down of players normally would lead to reduced or non-payment of salaries.
Reduced or non-payment of salaries will constitute a violation of the club’s contractual obligations based on RSTP. Whether this breach is enough for a player to be able to terminate the contract with just cause needs to be considered on a case-to-case basis. A party’s behaviour that is in violation of the terms of the player’s contract does not necessarily justify the termination of a contract for just cause. However, should the violation be considered material, persist for a long time or seen in relation with other violations, then the breach of the player’s contract might well have reached such a level that the party suffering the breach is entitled to terminate the contract unilaterally. If player terminates his contract with just cause, due to the club’s unilateral decision to reduce or not pay salaries, the player will be free to sign for another club and his former club will be liable to pay him compensation. In such a situation, the club will, in addition to being liable to pay compensation, risk sporting sanctions. However, if the player terminates his contract without just cause, although the club has violated its contractual obligations, the player is liable to pay compensation to the club, and also risk sporting sanctions. For sporting sanctions to be imposed one must be within the protected period of three / two years. In practice, the player risks suspension whilst the club may be excluded from one or more transfer windows.
To what extent late or reduced salary payments constitute a just cause for a player to terminate his contract has been assessed by DRC and CAS on a number of occasions. However, in 2018 FIFA adopted a new provision, art 14bis, in RSTP. The first paragraph of the provision states in brief that if a club is more than two months late with salary payments, then the player will be able to terminate the contract with just cause, provided he gives the club 15 days to pay outstanding wages. The provision in the context of reduced or late payments related to the Covid-19 situation implies that if a player has had his wages reduced for more than two months and has given the club a 15 day period to pay, the player will be able to terminate the contract with just cause. In the situation with the Australian and Norwegian clubs’ decisions to stand down players, the club would claim that their decisions were in accordance to national labour law, and therefore valid, whilst the players would claim that the reduced/non-payment for more than two months gives the players the right to lawfully terminate the contract with just cause. As foreign players would have their cases dealt with by DRC, PSC or CAS, they will have a better chance of winning than players with the same nationality of the club, who will have their cases heard by national courts or arbitrational institutions.
Final Remarks
The most important aspect of the FIFA guidelines on Covid-19 is that they strongly encourage clubs and players to collaborate to find appropriate solutions to the challenges football faces as a consequence of Covid-19. From the players point of view, the guidelines are a handy tool to force the clubs to negotiate in order to come to agreements, which is a better alternative for both parties than if the clubs make the decisions without involving the players. From a legal perspective however, the guidelines offer little guidance. In the likely wave of disputes between clubs and players following the clubs’ unilaterally decisions to vary players’ contracts, it is still in the open whether national law or RSTP will prevail when in conflict. The nationality of the players concerned could well be the decisive factor for the outcome of the disputes, as foreign players to a larger extent will have their cases decided based on RSTP than their non-foreign teammates, that will have their cases based on national law.
[1] For further reading, se https://www.morgansl.com/fr/latest/competency-national-dispute-resolution-chambers
