FIFA - Decisión disputa Preciado Villareal 15112023

REF. FPSD-11598

Decision of the Dispute Resolution Chamber passed on 15 November 2023 regarding an employment-related dispute concerning the player Harold Fabian Preciado Villareal

COMPOSITION:

Lívia SILVA KÄGI (Brazil & Switzerland), Deputy Chairwoman Dana MOHAMED AL-NOAIMI (Qatar), member Stefano SARTORI (Italy), member

CLAIMANT: Harold Fabian Preciado Villareal, Colombia Represented by ESQUAD abogados S.L.P.

RESPONDENT:

Shenzhen FC, China PR pg. 2

REF. FPSD-11598

I. Facts of the case

1. On 15 July 2019, the Colombian player, Harold Fabian Preciado Villareal (hereinafter: the Claimant or the Player) and Chinese club, Shenzhen FC (hereinafter: the Respondent or the Club) concluded an employment contract valid as from 1 January 2022 until 31 December 2022 (hereinafter: the contract).

2. On 31 March 2021, the Player and the Club (hereinafter jointly referred to as the parties) concluded a settlement agreement (hereinafter: the settlement agreement).

3. In accordance with the settlement agreement, the Club undertook to pay the Player EUR 4,166,666 net of taxes in the following instalments: - EUR 888,333 net, payable on 30 April 2021. - EUR 3,333,333 net, payable in 10 instalments of EUR 333,333 each from April 2021 to January 2022 respectively on the 15th day of each month.

4. Clause 2 of the settlement agreement reads as follows: “The Parties confirm that application for subsidies of a fiscal year will be accepted in the next fiscal year, that is, the tax authorities shall grant Subsidies in 2021 ("2021

Subsidies") for individual income taxes paid by [the Respondent] on behalf of [the Claimant] in the fiscal year 2020 and another Subsidies in 2022 for individual income taxes paid by [the Respondent] on behalf of [the Claimant] in the fiscal year 2021 ("2022 Subsidies"). Therefore, besides the Settlement Amount mentioned above, both Party will be share (sic) the 2021 Subsidies and 2022 Subsidies as follows: 2. 1 The 2021 Subsidies amounting to around EUR 2,600,000 fully belongs to the Player, this amount will be paid by the relevant governmental authorities before the ends of January 2022; 2. 2 Besides Clause 2.1, the Club will pay the Player EUR 400 ,000 net of tax before the ends of January 2022. 2. 3 The 2022 Subsidies will be transferred by the Player to the Club provided that in the previous year the figure stipulated in the previous point has been reached, if not the remaining difference in accordance with the terms and conditions established below.”

5. On 11 July 2022, the Claimant put the Respondent in default and requested payment of EUR 2,900,000 net in accordance with the settlement agreement; setting a 10 days’ time limit in order to remedy the default. pg. 3

REF. FPSD-11598

6. On 14 March 2023, the Claimant informed the Chinese Football Association (CFA) that the Club failed to pay various amounts in accordance with the settlement agreement and requested it to intervene in this matter and ensure that the Club paid the amounts due.

7. On 16 March 2023, the CFA acknowledged receipt of the Player’s correspondence of 14

March 2023.

8. On 21 March 2023, the parties concluded a debt acknowledgement agreement

(hereinafter: the debt acknowledgement).

9. Clause 1 of the debt acknowledgement reads as follows (quoted verbatim): “Both parties hereby acknowledge and agrees: The remaining overdue amount of the Settlement Amount is FIVE MILLION FIVE

HUNDRED THOUSAND EUROS NET (5,500,000,-€ net).

[The Respondent] shall pay the Settlement Amount as bellow: 1.1. "the Settlement Amount paid to the player’s agent"; FIVE HUNDRED THOUSAND EUROS NET (500.000.-€ net) shall be paid to the player’s agent (Javier Piquen Lopez) on or before 30th April 2024. The player and player’s agent (Javier Piquen Lopez) shall cooperate with Shenzhen to sign relevant contract for the payment. The player hereby voluntarily acknowledge and agrees Shenzhen to pay FIVE HUNDRED THOUSAND EUROS NET (500,000,-€ net) from his due Settlement Amount to his agent and provides his signature as follows: Mr. Harold Fabian Preciado Villarreal: Signature: [signature] 1.2. "the Settlement Amount paid to the player"; FIVE MILLION EUROS NET (5,000,000,-€ net) paid to the player in the following instalments: 1.2.1. One million euros net (EUR 1,000,000 net) on or before 31st May 2023; 1.2.2. One million euros net (EUR 1,000,000 net) on or before 31st September 2023; 1.2.3. Two million euros net (EUR 2,000,000 net) on or before 31st December 2023; 1.2.4. One million euros net (EUR 1,000,000 net) on or before 31st April 2024; pg. 4

REF. FPSD-11598

The Club undertakes to pay the Instalments due under Clause 1, on the above referenced dates to the Player and his agent. Consequently, should the Club fails to

comply (for any reason) with the financial obligations set out herein, it will be considered, for all purposes, as a material breach of the acknowledgement, in which case provisions under Clause 3 - "Default and Penalty Clause" - will then be fully enforceable. Both parties expressly declare and recognize that, provided that they have agreed net sums as Settlement Payment, the Club will be responsible of carrying out the appropriate tax deductions, if any, that may correspond according to the Chinese legislation in force, so that the Player receives the agreed Settlement Payment in NET terms. For the avoidance of doubt, should the Club does not make the deductions and withholdings that may be applicable in accordance with the Chinese legislation in force, both parties agree that should the Chinese tax authorities request the Player to pay any such amounts, [the Respondent] will have to pay such amounts on behalf of the Player and if the Player pays such amounts, he shall have the right to claim such amounts from the Club and the Club shall be obliged to pay the amount claimed to the Player, for the purpose of the player receiving the total Settlement Payment agreed in NET terms.”

10. Clause 3 of the debt acknowledgement reads as follows: “The Club declares, acknowledges and undertakes to respect and comply with the payment of the Settlement Payment and the agreed Instalments, in accordance with the terms and conditions set out in Clause 1 of the Debt Acknowledgement.

Consequently, if (for whatever reason) the Settlement Payment and/or the Instalments, are not paid to the Player in accordance with the provisions established in the Debt Acknowledgement, then the Club agrees and recognizes that such due payments shall be an uncontested contractual debt of the Club to the Player. Both Parties agree that, in case of the Club’s failure to comply with its financial obligations pursuant to clause 1 of this Debt Acknowledgement, the Player (the creditor), after the expiry of an agreed grace period of ten (10) days from the stipulated date of each payment, shall put the Club (the debtor club) in default in writing,

granting a deadline of ten (10) extra days for the Club in default to remedy such breach, i.e. to comply with Its financial obligations due. In addition, if the Club does not comply with its financial obligations within the additional time limit of ten (10) days that will be granted In writing for the remedy of pg. 5 REF. FPSD-11598 the breach, it will be considered as a material breach of the Debt Acknowledgement, thus the following cumulative consequences will be of application: 1) All Instalments unpaid pursuant to this Debt Acknowledgement will become due and immediately payable since the material breach of the Debt Acknowledgement by the Club would have taken place. 2) Therefore, the remaining amount of clause 1. will be automatically overdue by the Club, thus the Club expressly acknowledge, recognize and declare that the Player will be entitled to claim the said remaining amount before the FIFA Jurisdictional bodies, in accordance to the procedure foreseen in article 12 BIS of FIFA RSTP. 3) Likewise, the interests accrued since each due date, until the effective date of payment of the outstanding settlement amounts by the Club, calculated at the rate of ten per cent (10%) per annum, will be also due. Both Parties expressly and irrevocably declare and agree that the present Clause 3 is configured as an essential and decisive condition of the present Debt Acknowledgment and without it the Parties, and especially the Player, would not have signed the present Debt Acknowledgment.”

11. On 17 July 2023, the Claimant put the Respondent in default and requested payment of EUR 1,000,000 net corresponding to the first instalment of the debt acknowledgement; setting a 10 days’ time limit in order to remedy the default. The Claimant further added that failure to pay this amount would entail the consequences set out in clause 3 of the debt acknowledgement.

II. Proceedings before FIFA

12. On 31 August 2023, the Claimant filed the claim at hand before FIFA. A brief summary of

the position of the parties is detailed in continuation. a. Position of the Claimant

13. The Claimant lodged a claim against the Respondent for overdue payables and requested payment of EUR 5,500,000 net in accordance with the debt acknowledgement. In his claim, the Player argued that the Club had not paid the first instalment of the debt acknowledgement and that, therefore, in accordance with clauses 3.2 and 3.3 of the debt acknowledgement, the acceleration and interest of 10% per annum clauses had been triggered.

14. In view of the foregoing, the Claimant requested the following relief: pg. 6

REF. FPSD-11598 - To condemn the Club to pay EUR 5,500,000 net corresponding to the total amount of the debt acknowledgement. - To apply 10 % interest p.a. as from 31 May 2023 until the day of effective payment. - To impose sporting sanctions on the Club. - To condemn the Club to pay all the legal costs of this case. b. Position of the Respondent

15. The Respondent failed to provide its position within the timeframe stipulated by FIFA general secretariat. pg. 7

REF. FPSD-11598

III. Considerations of the Dispute Resolution Chamber

a. Competence and applicable legal framework

16. First of all, the Dispute Resolution Chamber (hereinafter also referred to as Chamber or DRC) analysed whether it was competent to deal with the case at hand. In this respect, it took note that the present matter was presented to FIFA on 31 August 2023 and submitted for decision on 15 November 2023. Taking into account the wording of art. 34 of the March 2023 edition of the Procedural Rules Governing the Football Tribunal (hereinafter: the Procedural Rules), the aforementioned edition of the Procedural Rules is applicable to the matter at hand.

17. Subsequently, the members of the Chamber referred to art. 2 par. 1 of the Procedural Rules

and observed that in accordance with art. 23 par. 1 in combination with art. 22 par.1 lit. b) of the Regulations on the Status and Transfer of Players (May 2023 edition), the Dispute Resolution Chamber is competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a Colombian player and a Chinese club.

18. Subsequently, the Chamber analysed which regulations should be applicable as to the substance of the matter. In this respect, it confirmed that, in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (May 2023 edition), and considering that the present claim was lodged on 31 August 2023, the May 2023 edition of said regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

b. Burden of proof

19. The Chamber recalled the basic principle of burden of proof, as stipulated in art. 13 par. 5 of the Procedural Rules, according to which a party claiming a right on the basis of an alleged fact shall carry the respective burden of proof. Likewise, the Chamber stressed the wording of art. 13 par. 4 of the Procedural Rules, pursuant to which it may consider evidence not filed by the parties, including without limitation the evidence generated by or within the Transfer Matching System (TMS).

c. Merits of the dispute

20. Its competence and the applicable regulations having been established; the Chamber entered into the merits of the dispute. In this respect, the Chamber started by acknowledging all the above-mentioned facts as well as the arguments and the documentation on file. However, the Chamber emphasised that in the following considerations it will refer only to the facts, arguments, and documentary evidence, which it considered pertinent for the assessment of the matter at hand. pg. 8

REF. FPSD-11598

1. Main legal discussion and considerations

21. The foregoing having been established, the Chamber moved to the substance of the matter, and took note of the fact that the Player lodged the claim at hand against the Club seeking payment of the EUR 5,500,000 net, accrued by the relevant interest, in accordance with the debt acknowledgement.

22. In continuation, the Chamber referred to clause 1 of the debt acknowledgement and noted that the total amount owed by the club was EUR 5,500,000 net, but that EUR 500,000 net was to be paid to the Player’s agent. In addition, the Chamber noted that the amount of EUR 5,000,000 net was to be paid in four instalments.

23. In this context, the Chamber acknowledged that its task was to determine (i) whether the Player has standing to sue as to the amount of EUR 500,000 net and (ii) whether the Player is entitled to EUR 5,000,000 net. In doing so, the Chamber underlined that the Respondent failed to present its reply to the claim of the Claimant, and therefore its decision would be made on the basis of the documentation on file, that is, the argumentation and evidence filed by the Claimant, in line with article 14 par. 1 of the Procedural Rules.

24. The Chamber accordingly proceeded to examine these questions in turn.

25. With regard to the Player’s standing to sue for EUR 500,000 to be paid to the Player’s agent, the Chamber deemed it appropriate to underline that, as a general rule, a party has standing to sue if it has in fact suffered an injury of its legal rights, deriving from a specific and traceable conduct of the contractual counterparty, and which can be claimed through and redressed by a favourable legal decision.

26. In this respect, the Chamber recalled the wording of clause 1 of the debt acknowledgment: “Both parties hereby acknowledge and agrees: The remaining overdue amount of the Settlement Amount is FIVE MILLION FIVE

HUNDRED THOUSAND EUROS NET (5,500,000,-€ net).

[The Respondent] shall pay the Settlement Amount as bellow: 1.1."the Settlement Amount paid to the player’s agent"; FIVE HUNDRED THOUSAND EUROS NET (500.000.-€ net) shall be paid to the player’s agent (Javier Piquen Lopez) on or before 30th April 2024. The player and player’s agent (Javier Piquen Lopez) shall cooperate with [the club] to sign relevant contract for the payment. pg. 9

REF. FPSD-11598

The player hereby voluntarily acknowledge and agrees [the club] to pay FIVE HUNDRED THOUSAND EUROS NET (500,000,-€ net) from his due Settlement Amount to his agent and provides his signature as follows: Mr. Harold Fabian Preciado Villarreal: Signature: [signature] […]” (emphasis added)

27. In view of the foregoing, the Chamber noted that the debt acknowledgement clearly established that the amount of EUR 500,000 was to be paid to the agent and that the Player had specifically agreed to the Club paying the agent directly, which entails that such amount belongs to the agent and not the Player as ultimate beneficiary. Based on the foregoing, the Chamber concluded that the Player does not have standing to sue as to that amount. The claim of the Player in this respect was rejected accordingly.

28. In continuation, the Chamber continued to analyse whether the Player is entitled to EUR 5,000,000 net. In doing so, the Chamber recalled clause 3 of the debt acknowledgement which stated: “[…] Both Parties agree that, in case of the Club’s failure to comply with its financial obligations pursuant to clause 1 of this Debt Acknowledgement, the Player (the creditor), after the expiry of an agreed grace period of ten (10) days from the stipulated date of each payment, shall put the Club (the debtor club) in default

in writing, granting a deadline of ten (10) extra days for the Club in default to remedy such breach, i.e. to comply with Its financial obligations due. In addition, if the Club does not comply with its financial obligations within the additional time limit of ten (10) days that will be granted in writing for the remedy of the breach, it will be considered as a material breach of the Debt Acknowledgement, thus the following cumulative consequences will be of application 1) All Instalments unpaid pursuant to this Debt Acknowledgement will become due and immediately payable since the material breach of the Debt Acknowledgement by the Club would have taken place. 2) Therefore, the remaining amount of clause 1. will be automatically overdue by the Club, thus the Club expressly acknowledge, recognize and declare that the Player will be entitled to claim the said remaining amount before the FIFA Jurisdictional bodies, in accordance to the procedure foreseen in article 12 BIS of FIFA RSTP. 3) Likewise, the interests accrued since each due date, until the effective date of payment of the outstanding settlement amounts by the Club, calculated at the rate of ten per cent (10%) per annum, will be also due.” (Emphasis added). pg. 10

REF. FPSD-11598

29. Accordingly, the Chamber noted that the following conditions were to be met in order to trigger the acceleration and interest clauses: an instalment would have to remain unpaid after the ten-day grace period and, following this default, the Player had to issue a formal notice giving the Respondent another ten days to remedy the default. If by then the amount was still unpaid, then the clauses in question were triggered.

30. In continuation, the DRC highlighted that the conditions established in clause 3 of the debt acknowledgement were in fact triggered: following a ten-day grace period after the original due date, a default notice was sent by the Claimant to the Respondent on 17 July 2023 including a 10 days’ time limit in order for the Club to fulfil with its obligations. Yet, the

amount was not paid.

31. As a consequence, the Chamber decided that the acceleration and interest of 10% p.a. included in the debt acknowledgement were in fact triggered and shall be enforced in line with the general legal principle of pacta sunt servanda. Accordingly, the Player shall be entitled to EUR 5,000,000 net (i.e., the four instalments of the debt acknowledgement).

32. Lastly, taking into consideration the Player’s request, the debt acknowledgement and the constant practice of the Chamber in this regard, the latter decided to award the Player interest at the rate of 10% p.a. on the following amounts: - On the amount of EUR 1,000,000 net as of 1 June 2023 until the date of effective payment; and - On the amount of EUR 4,000,000 net as of 28 July 2023 until the date of effective payment. ii. Art. 12 bis of the Regulations

33. In continuation, the Chamber referred to art. 12bis par. 2 of the Regulations, which stipulates that any club found to have delayed a due payment for more than 30 days without a prima facie contractual basis may be sanctioned in accordance with art. 12bis par. 4 of the Regulations.

34. To this end, the Chamber confirmed that the Player put the Club in default of payment of the amounts sought, which had fallen due more than 30 days before, and granted the Club a 10-day deadline to cure such breach of contract.

35. Accordingly, the Chamber confirmed that the Club had delayed a due payment without a prima facia contractual basis. It followed that the criteria enshrined in art. 12bis of the Regulations was met in the case at hand. pg. 11

REF. FPSD-11598

36. The Chamber further established that by virtue of art. 12bis par. 4 of the Regulations it has competence to impose sanctions on the Club. On account of the above and bearing in mind

that this is the third offense by the Club within the last two years (i.e., previous one being under case ref. FPSD-5949 and FPSD-6737), the Chamber decided to impose a fine of USD 30,000 on the Club in accordance with art. 12bis par. 4 lit. c) of the Regulations.

37. In this connection, the Chamber highlighted that a repeated offence will be considered as an aggravating circumstance and lead to a more severe penalty in accordance with art. 12bis par. 6 of the Regulations. iii. Compliance with monetary decisions

38. Finally, taking into account the applicable Regulations, the Chamber referred to art. 24 par. 1 and 2 of the Regulations, which stipulate that, with its decision, the pertinent FIFA deciding body shall also rule on the consequences deriving from the failure of the concerned party to pay the relevant amounts of outstanding remuneration and/or compensation in due time.

39. In this regard, the DRC highlighted that, against clubs, the consequence of the failure to pay the relevant amounts in due time shall consist of a ban from registering any new players, either nationally or internationally, up until the due amounts are paid. The overall maximum duration of the registration ban shall be of up to three entire and consecutive registration periods.

40. Therefore, bearing in mind the above, the DRC decided that the Respondent must pay the full amount due (including all applicable interest) to the Claimant within 45 days of notification of the decision, failing which, at the request of the Claimant, a ban from registering any new players, either nationally or internationally, for the maximum duration of three entire and consecutive registration periods shall become immediately effective on the Respondent in accordance with art. 24 par. 2, 4, and 7 of the Regulations.

41. The Respondent shall make full payment (including all applicable interest) to the bank account provided by the Claimant in the Bank Account Registration Form, which is attached to the present decision.

42. The DRC recalled that the above-mentioned ban will be lifted immediately and prior to its

complete serving upon payment of the due amounts, in accordance with art. 24 par. 8 of the Regulations. d. Costs

43. The Chamber referred to art. 25 par. 1 of the Procedural Rules, according to which “Procedures are free of charge where at least one of the parties is a player, coach, football agent, pg. 12

REF. FPSD-11598 or match agent”. Accordingly, the Chamber decided that no procedural costs were to be imposed on the parties.

44. Likewise, and for the sake of completeness, the Chamber recalled the contents of art. 25 par. 8 of the Procedural Rules and decided that no procedural compensation shall be awarded in these proceedings.

45. Lastly, the DRC concluded its deliberations by rejecting any other requests for relief made by any of the parties. pg. 13

REF. FPSD-11598

IV. Decision of the Dispute Resolution Chamber

1. The claim of the Claimant, Harold Fabian Preciado Villareal, is partially accepted.

2. The Respondent, Shenzhen FC, must pay to the Claimant the following amount(s): - EUR 1,000,000 net as outstanding remuneration plus 10% interest p.a. as from 1 June 2023 until the date of effective payment; and - EUR 4,000,000 net as outstanding remuneration plus 10% interest p.a. as from 28 July 2023 until the date of effective payment.

3. Any further claims of the Claimant are rejected.

4. Full payment (including all applicable interest) shall be made to the bank account indicated in the enclosed Bank Account Registration Form.

5. Pursuant to art. 24 of the Regulations on the Status and Transfer of Players, if full payment

(including all applicable interest) is not made within 45 days of notification of this decision, the following consequences shall apply:

1. The Respondent shall be banned from registering any new players, either nationally or

internationally, up until the due amount is paid. The maximum duration of the ban shall be of up to three entire and consecutive registration periods.

2. The present matter shall be submitted, upon request, to the FIFA Disciplinary Committee in the event that full payment (including all applicable interest) is still not made by the end of the three entire and consecutive registration periods.

6. The consequences shall only be enforced at the request of the Claimant in accordance with art. 24 par. 7 and 8 and art. 25 of the Regulations on the Status and Transfer of Players.

7. A fine in the amount of USD 30,000 is imposed on the Respondent, which must be paid to FIFA within 30 days of notification of this decision. Such fine must be paid to the following bank account with a clear reference to the case FPSD-11598: UBS Zurich Account number 230-366677.61N (FIFA Players’ Status) Clearing number 230

IBAN: CH12 0023 0230 3666 7761 N SWIFT: UBSWCHZH80A pg. 14

REF. FPSD-11598

8. This decision is rendered without costs.

For the Football Tribunal: Emilio García Silvero Chief Legal & Compliance Officer pg. 15

REF. FPSD-11598

NOTE RELATED TO THE APPEAL PROCEDURE: According to article 57 par. 1 of the FIFA Statutes, this decision may be appealed against before the Court of Arbitration for Sport (CAS) within 21 days of receipt of the notification of this decision.

NOTE RELATED TO THE PUBLICATION: FIFA may publish this decision. For reasons of confidentiality, FIFA may decide, at the request of a party within five days of the notification of the motivated decision, to publish an anonymised or a redacted version (cf. article 17 of the Procedural Rules Governing the Football

Tribunal).

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