4th Bucerius Mediation Competition 2018

PROBLEM 3
Dispute for Goals
By Pedro Fida

GENERAL INFORMATION
The 29-year-old Brazilian soccer player Francesco is a worldwide star, having won several titles
nationally and internationally, including the “World Best Footballer” award four years ago, due to his
excellent performance on the pitch as a striker. Nowadays, Francesco plays for the renowned Premier
League English football club Bromworth FC (the “Club”) to which he was transferred two years ago.

Following Francesco’s transfer, an employment contract (the "Contract") was signed between
Francesco and the Club for the duration of five soccer seasons, ending 18 months from today.

According to the Contract, it was agreed:

1. The Club would pay a net salary of £2.5 million per soccer season free from any taxes.
2. The Club would pay remuneration of £500,000 per soccer season for the Club to have the right
to exploit Francesco’s image.
3. The Club would be responsible for paying all taxes related to the employment of Francesco —
to the English and Brazilian authorities — and his transfer to England.
4. The Club would provide Francesco with full and qualified medical assistance and would pay all
his medical costs.
5. The Club assured Francesco of his participation in the soccer seasons and pre-season trainings
and matches with the first team of the Club only.
6. Any failure to respect such conditions would be considered a breach of contract.

During his first season, the Club paid Francesco a salary of only £1.6 million instead of £2.5 million, and
none of the £500,000 related to his image rights. Furthermore, the Club did not pay the amounts
totalling £255,000 due by Francesco to the Brazilian tax authorities. Francesco requested payment of
the remaining amounts in writing at the end of the season.

Despite several notifications sent by Francesco, the Club did not pay the remaining amounts. However,
following Francesco's fourth notification, the Club eventually paid a further amount (£400,000) for
salary, not being all that was due. For this reason, Francesco sent to the Club two further notifications
(regarding unpaid salary of £500,000, image rights amounting to £500,000 and taxes amounting to
£255,000 - £1,255,000 in total).

© Pedro Fida.
All rights reserved. This work was especially prepared for the ICC International Commercial Mediation Competition (“Competition”)
organized and hosted by the International Chamber of Commerce (ICC) in Paris, France. The Competition is the only international
commercial mediation moot worldwide and attracts each year student teams from business and law schools from all parts of the
world, as well as many of the world’s leading commercial mediators. More information about the Competition can be found on
http://www.iccwbo.org/training-and-events/competitions-andawards/mediation-week/.
The Club eventually agreed to settle with Francesco the outstanding amounts, recognizing its debt
amounting to £1.255,000 and agreeing to a payment schedule of seven equal monthly instalments.
This was recorded in a settlement agreement.

One year before signing with Bromworth FC, Francesco had an operation on his right knee. By the time
he joined the Club he had fully recovered and had been medically certified fit to play. However, half
way into his second season, he suffered a new injury to the same knee, which affected his play, and he
was not fielded at all during the several weeks that took him to recover, during which time he paid his
own medical costs.

Following the Club’s short recess Francesco returned from a holiday in Brazil and remained several
weeks without playing. After recovering from his injury, he played a Premier League game in which he
was shown a red card and sent off. Subsequently, the Club fined Francesco for this incident the amount
of £100,000, payable within 30 days, after a decision rendered by the Club's executive committee,
headed by the Club's President Mou. After that incident, the Club's manager did not field Francesco
again before his second season at the club ended and Francesco did not pay the fine.

In the meantime, Francesco sent other notifications to the Club claiming the monthly instalment
amounts due from his first season — previously agreed to be settled but still unpaid. The Club,
however, never answered the notifications nor paid the amounts due.

When the Club’s manager announced the composition of its first team bound for the next pre-season
training camp during the summer recess, Francesco was not included in this list. On the day the team
departed to the USA, Francesco was left in London with only one other player of the first team squad,
an assistant coach (a member of the second team coaches) and the warehouse keeper of the Club. Not
even a translator was provided to Francesco, who still had difficulties communicating in English. The
assistant coach suggested that Francesco train with the Club’s second team, but Francesco refused. No
medical staff was left in London.

When the first team returned from the USA, Mou informed Francesco that he was not included in the
Club's main tactical scheme for next season, being Francesco’s third at the Club, and instructed
Francesco to train separately from the other first team players during part of the team’s daily training
sessions. This decision came as a surprise to Francesco, who also learned from the media that the Club
had acquired another player to play in Francesco’s usual position. Despite Mou’s decision Francesco
played five games for the first team during the first weeks of his third season, and eventually trained
with the first team.

During the second and third seasons Francesco was fielded in total in less than 25% of the games with
the first team and the Club paid only 50% of Francesco’s salary on a monthly basis, less £100,000 set
off by the Club during the third season with respect to the unpaid fine, i.e. a total of £2.4 million for
two seasons. In addition, although the Club paid the total amount in connection with image rights and
taxes, the entire Settlement amount concerning the first season remained unpaid.

Francesco sent a final notification to the Club, this time claiming:

© Pedro Fida.
All rights reserved. This work was especially prepared for the ICC International Commercial Mediation Competition (“Competition”)
organized and hosted by the International Chamber of Commerce (ICC) in Paris, France. The Competition is the only international
commercial mediation moot worldwide and attracts each year student teams from business and law schools from all parts of the
world, as well as many of the world’s leading commercial mediators. More information about the Competition can be found on
http://www.iccwbo.org/training-and-events/competitions-andawards/mediation-week/.
 1. the outstanding settlement amount of £1,255,000
2. £1,250,000 in relation to 50% of Francesco’s salary during his second season
3. £250,000 in relation to 50% of Francesco's salary during his third season
4. £180,000 in relation to the interest due for 1, 2, and 3
5. £1 million in moral damages for injury to reputation — due to the humiliation and adverse
media exposure he was suffering
6. reimbursement of all medical costs he incurred by himself while recovering from his recurrent
knee injury, amounting to £50,000.

Two days after receiving Francesco’s notification, the Club notified Francesco that it intended to
terminate the contract for just cause upon the expiration of the following 30 days, due to Francesco's
bad performance in the games he played since his start at the Club; the fact that he played less than
25% of the Premier League matches since his arrival at the Club; as well as his knee injury, which had
not completely healed and impeded his play. In light of these circumstances, the Club considered itself
(i) not liable to pay any further amounts to Francesco and (ii) not liable to retain him for the remaining
months of the contract, i.e. two seasons. The settlement amount of £1,255,000 remains unpaid and,
on its face, the contract term is not due to expire until after five seasons.

It is also important to consider the Financial Fair Play Regulations issued by the Union of European
Football Associations (UEFA), which stipulate, among other principles, that a club must comply with its
financial obligations, especially those related to its employees, i.e. players' salary, in order to be able
to compete on a European level in certain competitions such as the UEFA Champions League, which
guarantees significant revenues and potential sponsors to the participating clubs.

The contract and the settlement agreement each contain a dispute resolution clause which provides
that all disputes arising out of, or in connection with, either of the documents shall be firstly settled
through mediation and in accordance with ICC Mediation Rules. Should the mediation be unsuccessful
the parties may start arbitration proceedings.

The parties have agreed that Francesco's Agent, on behalf of Francesco, and Mou, on behalf of the
Club, will meet in a neutral place in order to discuss their understanding of the situation and, hopefully,
reach an agreement. Francesco’s Agent and Mou, with their lawyers, will both attend the mediation
with authority to settle. Francesco's agent is the Requesting Party.

© Pedro Fida.
All rights reserved. This work was especially prepared for the ICC International Commercial Mediation Competition (“Competition”)
organized and hosted by the International Chamber of Commerce (ICC) in Paris, France. The Competition is the only international
commercial mediation moot worldwide and attracts each year student teams from business and law schools from all parts of the
world, as well as many of the world’s leading commercial mediators. More information about the Competition can be found on
http://www.iccwbo.org/training-and-events/competitions-andawards/mediation-week/.