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CAS 2024 A 10571 (CAS)

Why it matters

This case clarifies the distinction between penalty clauses and alternative obligations in football termination agreements under Swiss law. It confirms that parties may agree on an alternative obligation (e.g., a higher sum due upon non-payment) without it being subject to reduction as an excessive penalty, reinforcing freedom of contract in sports arbitration.

Summary

UTA Arad Football Club and player Marko Roganovic terminated their employment contract early by a Termination Agreement. The Club agreed to pay RON 128,000 by 25 January 2024; if it failed, the player would be entitled to the residual value of the original contract (RON 320,000). The Club did not pay on time, and the player filed a claim with FIFA DRC, which awarded RON 320,000 plus interest. The Club paid RON 128,000 on 11 April 2024 and appealed to CAS, arguing the additional RON 192,000 was a penalty clause that should be reduced under Swiss law. The Sole Arbitrator found that Article 5 of the Termination Agreement was not a penalty clause but an alternative obligation: the Club could either pay RON 128,000 by the deadline or, failing that, pay RON 320,000. Since it was an alternative obligation, Swiss penalty reduction rules did not apply. The appeal was dismissed, and the Club was ordered to pay the balance of RON 192,000 plus interest and contribute CHF 3,000 to the player's legal costs.

The detail

Parties: UTA Arad Football Club Association v. Marko Roganovic & FIFA

Case number: CAS 2024 A 10571

Outcome: Appeal dismissed; FIFA DRC decision confirmed; UTA ordered to pay Roganovic RON 192,000 plus interest and CHF 3,000 towards legal fees.

Quantum: RON 192,000 plus interest

Applicable law: FIFA Regulations on the Status and Transfer of Players (RSTP), Swiss Code of Obligations (SCO), CAS Code of Sports-related Arbitration

Issues in play: Whether Article 5 of the Termination Agreement was a penalty clause (subject to reduction under SCO Art. 163) or an alternative obligation. The Sole Arbitrator held it was an alternative obligation, not a penalty, and thus not reducible.

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

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