Ordinary proceedings were initiated before the Court of Arbitration for Sport by Lombardi Associates on behalf of four assistant coaches against a European club for breach of contract.
In reaching its decision the CAS Panel, composed of three arbitrators, considered, among others, the following circumstances (NB: due to the confidential nature of the CAS Award, in addition to the identity of the parties, other circumstances including the analysis of the applicable law will not be discussed in this brief summary).
Prior to the beginning of the football season, and in the scope of the appointment of its new head coach, the club presented the head coach’s assistants with a single draft contract which included all terms and conditions for all of them, with the club requesting that this was individualised into four copies, each containing one of the coaches’ details, finally requesting that signed copies were returned to the club.
The assistant coaches accepted such terms and conditions by returning, a week later, four signed copies of the draft, without any modification, other than the requested indication of the personal details.
According to a specific clause contained in the contracts, in the event the head coach’s contract were terminated for any reason, the assistant coaches’ contracts would also be terminated with immediate effect.
After receiving signed copies of the assistant coaches’ contracts, the club decided to terminate the head coach’s contract, a mere few days after his appointment.
The club never returned a countersigned copy of the assistant coaches’ contracts.
The head coach was subsequently awarded compensation by CAS as a result of the contractual termination without just cause perpetrated by the club.
In assessing whether the club had also terminated the assistant coaches’ contracts without just cause, the CAS Panel had to first and foremost assess whether the relevant contracts had been validly concluded, despite the fact that the copies of the contracts made available to the Court did not feature the signature of the club. To this end, the Panel found that because the club provided the assistant coaches with one draft contract which contained all essential terms and merely requested that the coaches insert their details, sign and return the contracts; and the assistant coaches duly returned four separate copies of the contract, with their own details and signatures but without any amendment to the terms proposed by the club. CAS held that the club’s proposal was formally accepted by the assistant coaches and therefore the contracts were validly concluded, in spite of the club’s claims to the contrary.
Having so established the validity of the contracts, the Panel went on to consider whether the assistant coaches’ contracts were terminated without just cause by the club. To this end, the Panel found that a specific clause in the contracts was very clear in linking the fate of the head coach’s contract to that of the assistant coaches. The Panel deemed this clause to be a particularly fitting reflection of the fact that the club ultimately hired the head coach and his assistants “as a team”. As the Panel noted, the available evidence disproved all of the club’s claims that the head coach’s position was separate from that of the assistant coaches.
The Panel found that according to the applicable law, limited reasons to terminate a fixed-term employment contract exist. In particular: (1) the expiry of the contract term, (2) the termination by agreement of the parties and (3) the termination with/without just cause by either party.
As to the first potential reason to terminate the contracts, the Panel held that in the case at stake it was not contested that the contracts did not expire.
Furthermore, the Panel noted that pursuant to the contracts concluded between the Parties, the assistant coaches shall agree to immediately terminate the contracts in case the head coach’s contract ends prior to 30 June 2021. In the present case, based on the Parties’ statements and the evidence filed, no such termination agreements were concluded between the club and the assistant coaches. In any case, even if the assistant coaches would have agreed to immediately terminate the contracts, the Panel had serious doubts if such act would be legally binding under the applicable law given that the clause granting the possibility to only one party of the employment contract to terminate a fixed-term employment contract under certain conditions is null and void.
As a result of the above and considering that, based on the circumstances of the case, the Panel found that the contracts were indeed terminated by the club as a result of the club’s early termination of the head coach contract – and taking into account that the club did not submit any other just cause for the termination – the Panel concluded that the termination of the contracts was without just cause by the club.
As to the consequences of such unilateral breach, the Panel referred to a specific clause in the contract, which established that in the event of unilateral termination perpetrated by either party prior to the end of the contract, the party found in breach would pay the other compensation in an amount corresponding to the remaining value of the assistant coaches’ contracts. The Panel confirmed that this provision was tantamount to a liquidated damages clause. As the contracts were breached shortly after their conclusion, the remaining value of the assistant coaches’ contracts corresponds to the entire contractual value. However, having regard to all circumstances of this matter, including the fact that the assistant coaches ultimately found a new employer during the season at the beginning of which their contracts were unilaterally terminated by the club, the Panel concluded that the penalty provided for by the liquidated damages clause was excessive and had to be reduced. In keeping with the jurisprudence of CAS, the amount awarded to the assistant coaches was therefore ultimately lower than the amount claimed.
Finally, the Panel addressed the assistant coaches’ request to be awarded compensation for loss of chance, as they were deprived by the club of the chance to achieve the results for which their contracts provided the payment of bonuses. On this point, the Panel ruled that any such claim was already encompassed in the liquidated damages clause, the application of which prevented the Panel from addressing the loss of chance claim separately.