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CAS 2023 A 9512 (CAS)

Why it matters

This award is the first CAS decision to interpret Brazil's SAF Law in the context of FIFA's sporting succession rules. It clarifies that a newly formed SAF can be held liable as sporting successor for debts of the original club, even when the original club is undergoing judicial reorganisation. The ruling also confirms that FIFA's regulatory framework and CAS arbitration take precedence over conflicting national insolvency procedures in international football disputes, setting an important precedent for the many Brazilian clubs converting to SAFs.

Summary

The case concerns an appeal by Cruzeiro Esporte Clube SAF (Cruzeiro SAF) against a FIFA Dispute Resolution Chamber (DRC) decision ordering it to pay outstanding wages to former player Alejandro Ariel Cabral. Cabral had played for Cruzeiro EC, a traditional Brazilian not-for-profit football club, from 2015 to 2022 under two employment contracts and a termination agreement. In 2021, Brazil enacted the SAF Law, allowing football clubs to convert into for-profit corporations (SAFs) to attract investment and restructure debts. Cruzeiro EC incorporated Cruzeiro SAF in December 2021 and transferred its football assets and liabilities to the new entity. Cruzeiro EC then entered judicial reorganisation (insolvency) proceedings in Brazil. Cabral filed a claim with FIFA for unpaid wages, and the DRC found Cruzeiro SAF liable as the sporting successor of Cruzeiro EC, ordering payment of USD 378,959.94 and BRL 2,294,613.26 plus interest, and imposing a reprimand. Cruzeiro SAF appealed to CAS, arguing that the DRC lacked jurisdiction because the second employment contract gave exclusive jurisdiction to the Brazilian National Dispute Resolution Chamber (NDRC), that it was not the sporting successor, and that the DRC's order violated Brazilian insolvency law by preferring one creditor. The CAS panel dismissed the appeal. It held that the DRC had jurisdiction because the termination agreement (which superseded the earlier contracts) contained a FIFA jurisdiction clause, and the Brazilian NDRC did not meet FIFA's independence requirements. On sporting succession, the panel found that Cruzeiro SAF was indeed the sporting successor under FIFA RSTP and CAS jurisprudence, as it had taken over the club's name, colours, stadium, players, and football operations, and had contractually assumed Cruzeiro EC's debts. Regarding the conflict with Brazilian insolvency law, the panel ruled that FIFA's regulatory framework and the CAS arbitration agreement took precedence; the DRC's order did not violate the Brazilian stay because it was a sporting sanction (registration ban) rather than a direct enforcement of payment, and the panel modified the operative part to clarify that payment should be made in accordance with the judicial reorganisation plan. The award thus upholds FIFA's authority to enforce sporting succession and player protection over national insolvency proceedings.

The detail

Parties: Cruzeiro Esporte Clube v. Alejandro Ariel Cabral & FIFA

Case number: CAS 2023 A 9512

Outcome: CAS dismissed the appeal and upheld the FIFA DRC decision that Cruzeiro SAF, as sporting successor of Cruzeiro EC, must pay the player outstanding remuneration of USD 378,959.94 and BRL 2,294,613.26 plus interest.

Quantum: USD 378,959.94 and BRL 2,294,613.26 plus interest

Applicable law: FIFA Regulations on the Status and Transfer of Players (RSTP), Brazilian Federal Law n. 14.193/2021 (SAF Law), Brazilian bankruptcy law, CAS jurisprudence on sporting succession

Issues in play: The collision was between FIFA's sporting succession doctrine (which holds a new entity liable for a predecessor's football debts) and Brazilian insolvency law (which requires equal treatment of creditors in a judicial reorganisation). The panel had to decide whether the SAF Law's transfer of assets and liabilities made Cruzeiro SAF the sporting successor, and whether the FIFA DRC's order conflicted with the Brazilian stay on enforcement.

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

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