CAS 2020 A 7054
CAS · Football (FIFA / CAS) · Switzerland · 21 Feb 2022
Why it matters
This case is a landmark in football contract law because it addressed the limits of liquidated damages clauses, confirming that tribunals can reduce disproportionate penalties even when freely negotiated. It also clarified the joint liability of a player's new club under FIFA RSTP Article 17.2, and the application of res judicata from a prior FIFA DRC decision. The ruling reinforces the principle that contractual freedom does not override fundamental fairness and proportionality.
Summary
The case arose from the termination of the employment contract between Sporting Clube de Portugal and its player Rafael Leao. After an attack by violent supporters at Sporting's training ground on 15 May 2018, and following public criticism by Sporting's president, Leao terminated his contract on 14 June 2018 claiming just cause. The Portuguese sports arbitration tribunal (TAD) found that Sporting had harassed the player and violated safety rules, but held that Leao's termination was without just cause because the relationship could have continued. TAD ordered Leao to pay EUR 16,500,000 in compensation, reducing the contractual penalty of EUR 45 million as manifestly excessive. Sporting appealed to CAS, arguing that the full penalty should apply and that LOSC (Leao's new club) should be solely liable for the difference. The CAS Panel dismissed Sporting's appeal, upholding the TAD's reduction of compensation and confirming that LOSC was jointly and severally liable for the EUR 16,500,000 based on res judicata from a prior FIFA DRC decision. The Panel applied Swiss law (SCO Article 163) to assess the penalty clause, finding it disproportionate and reducing it to reflect the actual damages. The decision underscores the power of sports tribunals to moderate contractual penalties and the importance of protecting players from abusive clauses.
The detail
Parties: Sporting Clube de Portugal v. Rafael Alexandre de Conceiçao Leao & LOSC Lille & FIFA
Case number: CAS 2020 A 7054
Outcome: The CAS Panel dismissed Sporting's appeal, confirming the TAD decision that the Player terminated without just cause but reducing compensation to EUR 16,500,000, and held LOSC jointly liable for that amount.
Quantum: EUR 16,500,000
Applicable law: FIFA Regulations on the Status and Transfer of Players (RSTP), Swiss Code of Obligations (SCO), Portuguese Labour Code, and the Employment Contract between Sporting and the Player.
Issues in play: The case involved a conflict between the contractual liquidated damages clause (EUR 45 million) and the principle of proportionality under Swiss and Portuguese law, which allowed the tribunal to reduce the compensation to avoid 'contractual incarceration'.
Read the full decision at Court of Arbitration for Sport (football, via FIFA) ↗
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