magine a football player refusing to play a crucial UEFA Champions League match because his salary has been outstanding for a couple of weeks, or because his club delayed payment of part of the sign-on fee. Imagine, instead, a club preventing a player or a coach from training and/or playing or suspending the payment of his remuneration because of an unauthorized absence for several days.
Admittedly, withholding the execution of the employment contract can, in some cases, entail very damaging consequences to the other party and severely impair contractual stability.
It is therefore possible, in the context of football employment relationships, for a club, a football player or a coach that might be the victim of a previous breach by the other party, to avoid fulfilling their side of the contract, alleging the exception of “non adimpleti contractusI” (‘exception of non-fulfilled contract’ in English, or “exception d’inexécution” in French)? And if so, what are the limits and conditions to successfully benefit from it.
Put differently, the primary issue is whether a football player or a coach has the right to stop playing or training when the club is in default of salary payments or is in breach of other obligations; and vice-versa, whether a football club can, to protect itself, suspend the employment contract; be that by not paying the salary; be that by preventing access to training facilities or imposing match suspensions.
The legal framework
The FIFA legal bodies and the Court of Arbitration for Sport (CAS) have not hesitated to apply this general tenet of law in their jurisprudence, but whereas the exception moves like fish in water in the context of civil and commercial relationships, its application to labour law disputes presents some legal challenges which have been discussed below.
The challenges are even more evident in football employment law, where clubs, as employers, benefit from multiple disciplinary alternatives against players and coaches. These measures are usually codified in internal or disciplinary regulations, meant to correct the behaviour of employees breaching the contract. Amongst them, the possibility to warn, reprimand, impose financial penalties or even suspend the execution of the contract itself, following a specific disciplinary procedure which includes the right of the employee to be heard and to seek remedy before a court of justice or a legal body of a Federation.
Likewise, from a football player’s perspective, the football regulations in force provide for specific legal instruments implemented to protect them against contractual breaches while preserving contractual stability, as for instance Article 12bis of the FIFA RSTP or, the financial licensing criteria existing in most football national associations and confederations. The case differs for football coaches to which, according to the predominant CAS jurisprudence, the dispositions of the FIFA RSTP do not apply.
With these parameters in mind, the question that arises is what are, if any, the limits to the use of the “exception of non-fulfilled contract” in football employment contracts.
When entering the realm of international football regulations and football employment law one must necessarily consider the incidence of Swiss civil law as being the law to be applied in addition to the FIFA regulations by the Court of Arbitration for Sport (CAS) pursuant to Article 57 par. 2 of the FIFA Statutes. 2 In Swiss Law, the possibility to withhold performance of contract is foreseen in Article 82 3 CO:
“A party to a bilateral contract may not demand performance until he has discharged or offered to discharge his own obligation, unless the terms or nature of the contract allow him to do so at a later date.”
This same institution is found in most civil law jurisdictions and it has a similar regulation. The Swiss Federal Tribunal (SFT) decision no. 4A_68/2010 of 12 October 2010 offers comprehensive guidance on the mechanism of this legal institution:
- Article 82 CO applies to bilateral contracts;
- It corresponds to the debtor to claim the nonperformance of the obligation;
- It targets directly towards reciprocal obligations stemming from one and same contract;
- The obligations to which it applies must be promised in exchange of another, or to those the existence of which depends on their respective performance;
- It offers the debtor invoking it an exception of dilatory nature, known as the “exceptio non adimpleti contractus” allowing the party to hold performance of its obligation until the other party discharges or offers to discharge its counter-obligation;
- The debtor must also have the right to request from his creditor the performance of the counter-obligation;
- Once the debtor invokes Article 82 CO, it will then fall upon the creditor the obligation to prove the execution of his obligation or that he has offered to execute it.
It is important to remark that the exception of a nonperformed contract is of dilatory nature, allowing the debtor to temporarily withhold performance of his obligation. 5 But this dilatory nature necessarily implies that the party pursuing the performance of the contract must also be in a position to offer to discharge his own obligation 6 , and so, that the contract is in force. By way of example, the jurisprudence of the SFT shows that one cannot rely upon the exception of non-performed contract to claim an indemnity for the violation of a contract related to the performance of past obligations if the contract was long terminated. 7 In these very particular circumstances, the party would instead need to resort to the consequences of non-performance of obligations contemplated in Article 97 CO, but not to Article 82 CO.
Furthermore, according to Article 2 of the Swiss Civil Code, the person invoking it will have to act in good faith. The CAS jurisprudence also remarks that the violation invoked must be sufficiently severe when compared to the subject matter of the contract.
From a dogmatic viewpoint, employment contracts are considered to be imperfect bilateral contracts because the performance of the reciprocal obligations is not simultaneous as it is for example, in a standard sell and purchase agreement where the seller delivers the goods when the buyer pays the price. As a general rule, the employee must necessarily perform the work in advance and only after, at the end of each month, will the employer pay the agreed remuneration. Therefore, the work to be performed at the moment the exception is held against the employer is not, strictly speaking, the counter-obligation of the unpaid salaries and thus, technically, these are not obligations promised in exchange of another as required by Article 82 CO. Because of this specificity of employment contracts, the SFT has affirmed that the exceptio non adimpleti contractus does not apply directly to employment relationships, but only by analogy.
Because of this analogy, there is consensus amongst the Swiss jurisprudence and legal doctrine that employees are entitled to refuse the performance of service until the payment of the arrears is made. Likewise, employers can suspend the payment of salaries until the employee resumes duties. The option to temporarily suspend the performance of the contract under Article 82 CO must nevertheless be announced to the other party so to give it the chance to remedy the breach, by discharging or offering to discharge its counter-obligation, it must be exercised in good faith, and it must be proportionate when compared to the contractual breach against which it’s held.
In the case of employees, during the period of suspension, the right to salaries remains untouched, even if the work is not performed.
When transposing these guidelines to football employment relationships, it would result that the exception of a non-fulfilled contract could not be invoked in cases of:
- Obligations arising from different contracts even if they are between the same parties. For example, the breach of an image rights contract by a player would not allow the club to suspend the payment of the remuneration under the employment contract;
- Obligations that are not promised in exchange of another or the existence of which does not depend in one another (there must be necessarily a, rapport d’échange). In employment relationships, the most paradigmatic case of obligations the existence of which depends in one another is the obligation to pay the salary against the obligation to perform the work. The club’s obligation to pay the salary exists because the player must also perform certain duties. Therefore, infringing the obligation to maintain confidentiality over the terms of the employment contract would not qualify as a rapport d’échange and allow the other party to suspend the execution of the contract;
- If the party against whom the exception is invoked is not in a position to discharge his own obligation. Hence, a club could not invoke the exception (ex post) against a player by relying upon unauthorized absences in order to justify the non-payment of salaries, after the player terminated the contract for that same reason. By the same token, a player would be prevented from invoking the exception (ex post) against the club in order to justify unauthorized absences, after the club terminated the contract for that same reason if he never claimed the unpaid salaries during his absence. As seen earlier, in these cases, the potential breach of contract and the consequences deriving therefrom, would need to be addressed through other legal mechanisms;
- Similarly, a club that is banned from playing in official competitions, would not be able to withhold the payment of the salary alleging that the player is not playing;
- The exception would be considered premature if the creditor has not performed or offered to perform his obligation. A club could not invoke the exception against the player to suspend payments if it has not previously at the very least warned the player about the reasons and terms of the suspension;
- The breach of a secondary obligation does not always allow the debtor to withhold performance. For example, in the context of a transfer agreement, the jurisprudence also shows that a club cannot withhold the payment of a transfer fee alleging the lack of invoice if this is not expressly provided in the contract.
The application of the principle in football employment contracts
However, the truth is that beyond the intellectual exercise above, in the context of football employment relationships, we find no regulations regarding how the exception of non-fulfilled contract interplays.
The duty to respect the mutual obligations of a contract (pacta sunt servanda) is a fundamental characteristic of bilateral contracts and this is also enshrined in football employment relationships under Article 13 RSTP that aims at guaranteeing contractual stability in contracts between professionals and clubs. Contractual stability is the bedrock of the entire system that aims at guaranteeing the stability of competitions throughout the season. This fundamental pillar of football law is ultimately counterbalanced by the possibility of parties to terminate the employment contract when there is just cause (cf. Article 14 RSTP). Nevertheless, the effects of termination are so harsh that the well-established jurisprudence of FIFA has repeatedly remarked that it must be seen as an ultima ratio measure after the parties have attempted to resolve every possible divergence in amicable terms.
Arguably, in the wide range of measures leading up to the termination of a contract (which would be the last resort), the exception of non-performed contract is one of the possible instruments available to the parties to protect themselves from contractual violations, but there are others. Indeed, in between the employment contract and the Swiss Code of Obligations (i.e. the additional law to the RSTP), we find a corpus of norms formed by the internal/disciplinary regulations of clubs, possible collective bargaining agreements at a national level, national employment law and of course, the FIFA RSTP which, in my view, operate as lex specialis and responds much better to the challenges posed by football labour relationships than civil law as they offer legal mechanisms to force the other party to remedy possible breaches while at the same time protecting contractual stability.
And so, with that in mind, the question remains as to whether there is or not a hierarchy of norms between the different legal measures meant to address contractual breaches, or if, instead, they can be used alternatively at the sole discretion of the parties, as in the examples mentioned at the beginning of this article.
At the time of writing this article, I could not find the answer to the above question in the existing jurisprudence. The most recent mention to exceptio non adimpleti contractus in a FIFA decision, is to the best of my knowledge, in the DRC Decision of 17 August 2017 where, in the context of a contractual termination at the initiative of the player, the chamber decided that the club was entitled to retain the player’s remuneration during the period in which he had not rendered any services in favor of the club (i.e. June and August 2016). At the same line, previous FIFA DRC decisions have confirmed that, as a general rule, a long-lasting absence of a player from his club without authorization or just cause is a justifying reason for the suspension of the payment of the player’s salaries. Unfortunately, these decisions do not delve into the nature and conditions of the exception of non performed contract and from the reasoning we cannot ascertain whether, or when, the debtor invoked it as a defense against the claimant, or whether it was applied by the Chamber motu proprio in view of the circumstances.
Further to that, in the award CAS 2013/A/3089 FK Senica, A.S. v. Vladimir Vukajlovic & FIFA, award of 30 August 2013, reference is made to the exception of non-performed contract in the context of a dispute revolving around the termination of the employment contract at the initiative of the club, due to an alleged unjustified absence of the player. According to the Sole Arbitrator, the fact that at the moment of termination, the club was in breach of its own obligations for not having paid the player’s salary, impeded it under Article 82 CO, to request the player to return, and so, had no just cause to terminate the contract:
“1. In accordance with the principle exceptio non adimpleti contractus, a party cannot request the fulfilment of the other party’s contractual obligations if it is in breach of its own obligations for not having paid the other party’s salary, and therefore has no just cause to terminate the contract.”
More recently, jn the award CAS 2015/A/4232 AlGharafa SC v. FC Steaua Bucuresti SA & FIFA of 14 June 2016, the Sole Arbitrator referred to Article 82 CO to simply remark that the obligation infringed must not be secondary.
However, looking at the CAS jurisprudence and the consistent decisions of the FIFA legal bodies, one can discern that these recurrently instruct clubs to implement “more lenient measures” to assure the fulfilment of employment contracts before they are terminated unilaterally. In this regard, a warning to the party at fault prior to any other possible measure including the suspension of the contract, unquestionably seems to be a prudent, if not necessary, step to take.
Having said that, going back to the discussion as to the existence of a possible hierarchy of rules, it appears to me that in the context of an employment relationship, the imposition of sanctions of disciplinary nature upon an employee, such as, for instance, a temporary suspension of the salary or work, requires the club to follow specific internal or disciplinary rules or requirements under collective bargaining agreements (CBA). From this perspective, a club that would automatically suspend a player from work and/or salary without previously initiating applicable disciplinary proceedings against him/her would violate the right of the player to be heard as well as other possible rights contained in the regulations. It would therefore appear that disciplinary or internal regulations and other specific rules dealing with certain conducts would reasonably have to take precedence over the exceptio non adimpleti contractus under Article 82 CO under the risk of the club acting abusively.
Thus, if a player is absent from training for a few days with no valid reason, and the internal regulations provide for a fine of EUR 1,000 per missed training session, the club ought to make use of its disciplinary prerogatives and impose a fine in respect of the established proceedings rather than unilaterally refuse to pay the salary of the player or prevent him access to the club’s premises. Using the language of the FIFA legal bodies, this would seem in my opinion to be a “more lenient measure”.
The situation somehow differs for football players. The FIFA RSTP offers different remedies to players, for instance the possibility to request the imposition of sanctions upon clubs that fail to comply with their financial obligations for more than 30 days (Article 12bis “Overdue payables”) or, allowing for the termination of contract in cases where the club unlawfully fails to pay at least two monthly salaries on their due dates, after putting the club in default and granting a deadline of at least 15 days (Article 14bis) during which the contract remains valid in full force for the sake of contractual stability.
However, the above provisions do not seem to go as far as requiring the player to continue working during such period of notice. The regulation of contractual stability in the FIFA RSTP does not suggest that a club can request a player – whose salaries are overdue for more than 30 days – to continue working by relying upon the second limb of Article 82 CO i.e. “the terms or nature of the contract allow him to do so at a later date.” A club could therefore not contend in its defence against a player who decides to temporarily suspend the contract due to the unpaid salaries, that Article 12 bis or 14 of the FIFA RSTP allows him to pay “at a later date”, e.g. after the expiration of the deadline of 10 days. That said, I believe that it would be prudent for a player intending to invoke Article 82 CO in those circumstances, to continue performing his services during the notice period.
In conclusion, in the context of football employment related disputes before the FIFA legal bodies and/ or CAS, it advisable for players and coaches to use the exception of non-performed contract as an alternative mechanism of defence against clubs in order to force them to respect employment contracts before considering terminating them with just cause. However, the use of this legal exception should always follow the guidelines and requirements indicated by the Swiss Federal Tribunal; be preceded by warning to the other party; be invoked in a spirit of contractual good faith; and be proportionate in its effects.