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CAS 2022 A 9345 (CAS)

Why it matters

This CAS award is significant for clarifying the 'due diligence' standard expected of football creditors when a debtor club enters insolvency or bankruptcy, especially in sporting succession scenarios. It emphasizes that while creditors must generally pursue claims in national proceedings, the specific circumstances, including a liquidator's failure to notify and the creditor's status as a legal layman, can mitigate the diligence requirement. The decision reinforces the principle that a sporting successor can be held liable, but the creditor's conduct and the liquidator's negligence are critical factors in determining sanctions.

Summary

Milos Pavlovic, a Serbian football player, had a contract with Fotbal Club Rapid Bucuresti SA (the 'Original Club'), a Romanian club. When the Original Club entered insolvency in 2012, Pavlovic registered a claim for overdue salaries but reserved his right to claim compensation for breach of contract before FIFA. In 2015, the FIFA Dispute Resolution Chamber (DRC) awarded Pavlovic EUR 460,700 for breach of contract. The Original Club appealed this to the Court of Arbitration for Sport (CAS), but the appeal was terminated in 2016 due to non-payment of costs. Subsequently, bankruptcy proceedings were initiated against the Original Club in 2016. Pavlovic, however, was not officially notified of these bankruptcy proceedings by the liquidator and consequently did not register his claim for the DRC-awarded compensation within the applicable deadline. In 2022, Pavlovic filed a complaint with the FIFA Disciplinary Committee (DC), seeking to hold FC Rapid 1923 SA (the 'First Respondent'), recognized as the sporting successor to the Original Club, liable for the debt and requesting sanctions. The FIFA DC closed the proceedings, concluding that Pavlovic had not shown sufficient 'due diligence' in pursuing his claim through national insolvency procedures. Pavlovic appealed this decision to CAS. The CAS Panel, applying the CAS Code of Sports-related Arbitration, FIFA regulations (particularly Article 15(4) FDC), and Romanian insolvency law, upheld Pavlovic's appeal. The Panel confirmed that FC Rapid 1923 SA is the sporting successor and had failed to comply with the DRC Decision. Crucially, the Panel found that Pavlovic *had* met the required standard of diligence in the bankruptcy proceedings. It reasoned that the Original Club's liquidator had a legal obligation to notify Pavlovic of the bankruptcy, which it failed to do. While Pavlovic had a 15-day window to seek reinstatement of his claim after learning of the bankruptcy, the Panel deemed it excessive to expect a football player, as a legal layman, to immediately seek specialized Romanian insolvency legal advice, especially given the low probability of recovery at that late stage. The Panel concluded that the liquidator's negligence in notification outweighed Pavlovic's failure to seek immediate legal advice. The Panel also rejected the argument that Pavlovic's contract was a 'civil convention' under Romanian law, which would not be automatically registered, instead of an 'employment contract,' noting that previous FIFA and CAS decisions had treated similar contracts as employment contracts for FIFA purposes. As a result, CAS ordered FC Rapid 1923 SA to pay Milos Pavlovic EUR 460,700 plus 5% p.a. interest from 10 May 2014 within 30 days. Failure to comply will result in a ban on registering new players. FC Rapid 1923 SA and FIFA were also ordered to bear the arbitration costs equally and each pay CHF 2,000 towards Pavlovic's legal fees.

The detail

Parties: Milos Pavlovic v. FC Rapid 1923 SA & FIFA

Case number: CAS 2022 A 9345

Outcome: The appeal filed by Milos Pavlovic is upheld, the FIFA Disciplinary Committee's decision is set aside, and FC Rapid 1923 SA is ordered to pay EUR 460,700 plus interest, with a player registration ban imposed if it fails to comply. FC Rapid 1923 SA and FIFA are also ordered to contribute to Pavlovic's legal fees and bear arbitration costs.

Quantum: EUR 460,700 plus 5% p.a. interest from 10 May 2014; CHF 2,000 contribution to legal fees from each respondent.

Applicable law: CAS Code of Sports-related Arbitration (2022 edition), FIFA Regulations (specifically Article 15(4) FDC 2019 edition, FIFA RSTP), Romanian insolvency law, and Swiss law (subsidiary).

Issues in play: The case involved the application of the 'due diligence requirement' in sporting succession cases, examining whether the player (creditor) diligently pursued his claim in national insolvency proceedings. It also required interpreting Romanian insolvency law regarding automatic claim registration for employment contracts versus civil conventions, and assessing the liquidator's notification duties.

Read the full decision at Court of Arbitration for Sport (football, via FIFA) ↗

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