0181 Skordilis vs. Aris BC

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ARBITRAL AWARD
(BAT 0181/11)

by the
BASKETBALL ARBITRAL TRIBUNAL (BAT)
Mr Quentin Byrne-Sutton

in the arbitration proceedings between
Mr. Gkay-Daios Skordilis

Represented by Mr. Nikolaos Petratos-Livieratos. Attorney at Law, 433 Agiou Nektariou St., 16561 Glyfada, Greece

-Claimant

vs.

Aris B.S.A. Basketball Club, 2 Grigoriou Lambraki St., 54636 Thessaloniki, Greece

-Respondent

According to the Player, at the end of the first season, the Club owed him an amount of EUR 30,000 in salary and bonuses, which remains outstanding, and all except two of the payments received were made late.

The Player contends that at the end of the second season, the Club owed him an additional amount of EUR 36,000 in salaries and that all the salary installments received were paid late.

The Player further alleges that during the second season the Club was delayed in paying the salaries of a number of players “… in March 2011 some colleagues of mine were paid 2-3 installments of their salaries, I was paid only one” and that as a result “Both me and my agent, as well, protested repeatedly to the Respondent’s managing Director for their aforementioned contract-violating behaviour. In vain. They did not comply at all”.

As evidence of the foregoing, the Player has filed the copy of a so-called “extra-judicial protest” (the “protest letter”) he served on the Club on 4 April 2011, wherein he (i) gave notice to the Club that he was terminating the Contract for cause; (ii) claimed outstanding remuneration due for the first season (EUR 30,000) and the second season (EUR 36,000); (iii) claimed the salary contractually due for rest of the second season (EUR 24,000); and (iv) claimed the salary contractually due for the entire third/forthcoming season (EUR 110,000); making it a notice for payment of a total amount of EUR 200,000.

The protest letter concluded with the statement that if the Club failed to pay the requested amount of EUR 200,000 “… I hereby declare that I will file a recourse before FAT of FIBA as provided in article 4 of our contract and you will be burdened with the huge judicial expenses provide thereof”.

The Player also contends that after receiving the foregoing protest letter, the Club’s President and Managing Director invited him to return to the team and to sign a new contract but that the Player refused because the Club only proposed to pay him an

amount of EUR 10,000 out of the total sum of EUR 66,000 owed to him by that point.
As a result, the Player filed with the BAT a claim for the total amount of EUR 200,000, as he had warned the Club he would do.

The Club was invited to file an Answer in keeping with the BAT Rules but refrained from doing so.

On 18 July 2011, during the proceedings in front of the BAT, the Player was requested by the Arbitrator to answer several questions regarding his basketball activity after terminating the Contract on 4 April 2011 and concerning his intentions for the 20112012 season.

When answering the Arbitrator’s questions, the Player declared among other things that “After terminating my contract with ARIS, I did not play with any other Greek Club for the rest of season 2010/11, because, according to Greek law and Leagues’ Regulations, I am not allowed to …” and that “For season 2011-12, myself do want to play basketball, if possible in Greece, because of a family problem, which keeps me inside the country. After the end of Greek Championship 2010-2011, I was training with PANIONIOS, in order to keep in shape. No official proposition was made to me yet. My manager estimates that, because of the general financial crisis in Greece, they would not propose me over 30.000 euros …”.

Despite being invited to submit observations on the Player’s foregoing answers to the Arbitrator’s questions, the Club chose not to.

Consequently, none of the Player’s above allegations or the evidence he adduced have been contested.

3.2. The Proceedings before the BAT

On 26 April 2011, the Player filed a Request for Arbitration in accordance with the BAT Rules, after having paid to the BAT the non-reimbursable handling fee of EUR 3,000.

On 11 May 2011, the BAT informed the parties that Mr. Quentin Byrne-Sutton had been appointed as the Arbitrator in this matter and fixed the advance on costs to be paid by the Parties as follows:

“Claimant (Mr. Skordilis) EUR 5,000 Respondent (Aris B.S.A. BC) EUR 5,000”

On 24 May 2011, the Player paid his share of the advance on costs in an amount of EUR 5,000.

By procedural order of 8 June 2011, the BAT informed the Player that the Club had failed to pay its advance on costs and that under Article 9.3 of the BAT Rules he was required to substitute for the Club for the proceedings to continue.

On 17 June 2011, the Player made the substitute payment in an amount of EUR 5,000.

By Procedural Order of 18 July 2011, the Player was requested to answer several questions put by the Arbitrator.

On 26 July 2011, the Player filed his reply.

By letter of 2 August 2011, the Club was given the opportunity to file observations on the Player’s reply.

The Club failed to submit any comments on the Player’s reply.

On 2 September 2011, the proceedings were closed and the Parties were invited to submit their accounts of costs.

On 5 September 2011, the Player submitted his account of costs in a total amount of

EUR 12,390 (EUR 12,300 for attorneys’ fees and EUR 90 for translations). The Club failed to submit its account of costs.
On 12 September 2011, the Club was given leave to comment on the Player’s statement of costs. The Club, however, did not submit any comments.

4. The Positions of the Parties
4.1. The Player’s Position

The Player submits in substance that because he had a fully guaranteed contract for three season, and that that contract was subsequently breached by the Club, he is entitled to be paid all the amounts outstanding under the Contract, amounting to a total of EUR 200,000.

He also submits that because both parties to the Contract are Greek, he is entitled to receive interest on the amounts owed at an annual rate of 8.75%, and that it is fair that the interest run on the total principal amount from two days after the protest letter was served on the Club, i.e. from 6 April 2011 onwards.

Finally, the Player contends that Greek regulations prevent him from signing with a new Club, the result of which is his having to either wait for a decision in these proceedings or negotiate a solution with the Club.

In his Request for arbitration, the Claimant made the following prayers for relief:

“On the basis of the contentions above, Claimant requests that the FAT:

a) Establishes its arbitrational jurisdiction on this dispute and the admissibility

of this request. b) Accepts the claim of Claimant in its entirety. c) Establishes and confirms that Respondent did not fulfill its obligations of the

Contract concluded on May 10, 2009 but, on the contrary, breached it repeatedly, by delaying most of agreed payments more that 30 days and, finally, denying to pay the most part of the agreed salaries in general. Therefore, Claimant justly terminated his contract with the Respondent, due to the exclusive fault of the latter.

d) Orders Respondent, as the party in breach, to pay to the Claimant the amount of two hundred thousand (200.000,00) euros, net of all Greek taxes, from which 66,000 euros as per the overdue salary of their Contract up to April 4, 2011 and 134,000 euros as damages for the breach of contract and its early termination on Respondent’s fault.

e) Orders the payment of the amount assessed with an interest rate of 8,75% or, in the alternative, with the interest rate decided by BAT Arbitrator ex aequo et bono, starting from April 6, 2011, i.e. 2 days after the last notification of the Respondent to pay, until the entire payment.

f) Orders the Respondent to pay all fees, costs and legal expenses incurred by the Claimant in connection with the proceedings before the BAT.”
4.2. The Club’s Position

34. The Club did not submit an Answer in these proceedings, despite having been invited to, nor did it respond to the arbitrator’s requests to file any other form of submission or evidence.

5. Jurisdiction of BAT and other Procedural Issues
5.1. Review ex officio

As a preliminary matter, the Arbitrator wishes to emphasize that, since the Club did not participate in the arbitration, he will examine his jurisdiction ex officio, on the basis of

the record as it stands.1
Pursuant to Article 2.1 of the BAT Rules, “[t]he seat of the BAT and of each arbitral proceeding before the Arbitrator shall be Geneva, Switzerland”. Hence, this BAT arbitration is governed by Chapter 12 of the Swiss Act on Private International Law (PILA).

The jurisdiction of the BAT presupposes the arbitrability of the dispute as well as the existence of a valid arbitration agreement between the parties.

5.1.1 Arbitrability

38. The Arbitrator finds that the dispute referred to him is of a financial nature and is thus arbitrable within the meaning of Article 177(1) PILA2.
5.1.2 Formal and substantive validity of the arbitration agreement

39. The existence of a valid arbitration agreement will be examined in light of Article 178 PILA, which reads as follows:

“1 The arbitration agreement must be concluded in writing, by telegram, telex, telefax or any other means of communication which allow proof of the agreement by text.

2 Furthermore, the arbitration agreement shall be valid if it conforms to the law chosen by the parties, to the law governing the dispute, in particular the principal contract, or to Swiss law.”

40. The dispute between the Parties arises out of the Contract of 10 May 2009, which under article 4 contains the following arbitration clause in favour of the BAT:

1 ATF 120 II 155, 162.

2 Decision of the Federal Tribunal 4P.230/2000 of 7 February 2001 reported in ASA Bulletin 2001, p. 523.

“Any dispute arising from or related to the present contract shall be submitted to the FIBA Arbitral Tribunal (FAT) in Geneva, Switzerland and shall be re-solved in accordance with the FAT Arbitration Rules by a single arbitrator ap-pointed by the FAT President.

The seat of the arbitration shall be Geneva, Switzerland. The arbitration shall be governed by Chapter 12 of the Swiss Act on Private International Law (PIL), irrespective of the parties’ domicile. The language of the arbitration shall be English. Awards of the FAT can be appealed to the Court of Arbitration for Sport (CAS), Lausanne, Switzerland. The parties expressly waive recourse to the Swiss Federal Tribunal against awards of the FAT and against decisions of the Court of Arbitration for Sport (CAS) upon appeal, as provided in Article 192 of the Swiss Act on Private International Law. The arbitrator and CAS upon appeal shall decide the dispute ex aequo et bono.”

The Agreement is in written form and thus the arbitration agreement fulfills the formal requirements of Article 178(1) PILA.

With respect to substantive validity, the Arbitrator considers that there is no evidence on record that casts any doubt on the validity of the arbitration agreement under Swiss law (referred to by Article 178(2) PILA).

Furthermore, the Club has not contested the Arbitrator’s jurisdiction, despite having been given the opportunity to submit an answer brief in conformity with the BAT Rules.

For the above motives, the Arbitrator deems he has jurisdiction to adjudicate the Player’s claim.

5.2. Other Procedural Issues

45. Article 14.2 of the BAT Rules, which the Parties have declared to be applicable in the Agreement, specifies that “the Arbitrator may nevertheless proceed with the arbitration and deliver an award” if “the Respondent fails to submit an Answer”. The Arbitrator’s authority to proceed with the arbitration in case of default of one of the parties is in accordance with Swiss arbitration law3 and the practice of the BAT.4 However, the

Decision of the Swiss Federal Tribunal dated 26 November 1980, in: Semaine Judiciaire (SJ) 1982, S. 613 et seq., p. 621; KAUFMANN-KOHLER/RIGOZZI, Arbitrage international. Droit et pratique à la lumière de la

Arbitrator must make every effort to allow the defaulting party to assert its rights.

46. This requirement is met in the current case. The Club was informed of the initiation of the proceedings and of the appointment of the Arbitrator in line with the relevant rules. It was also given ample opportunity to respond to the Player’s Request for Arbitration and further submissions as well as to the Procedural Orders issued by the Arbitrator. However, the Club has chosen not to respond within the time limits set by BAT according to the BAT Rules.
6. Discussion
6.1. Applicable Law – ex aequo et bono

47. With respect to the law governing the merits of the dispute, Article 187(1) PILA provides that the arbitral tribunal must decide the case according to the rules of law chosen by the parties or, in the absence of a choice, according to the rules of law with which the case has the closest connection. Article 187(2) PILA adds that the parties may authorize the Arbitrators to decide “en équité” instead of choosing the application of rules of law. Article 187(2) PILA is generally translated into English as follows:

“the parties may authorize the arbitral tribunal to decide ex aequo et bono”.

48. Under the heading “Applicable Law”, Article 15.1 of the BAT Rules reads as follows:

LDIP, 2nd ed., Bern 2010, N 483; LALIVE/POUDRET/REYMOND: Le droit de l’arbitrage interne et international en Suisse, Lausanne 1989, Art. 182 PILA N 8; RIGOZZI: L’Arbitrage international en matière de sport, Basel 2005, N 898; SCHNEIDER, in: Basel commentary to the PILA, 2nd ed., Basel 2007, Art. 182 PILA N 87; VISCHER, in: Zurich Commentary to the PILA, 2nd ed., Zurich/Basel/Geneva 2004, Art. 182 IPRG N 29.

See for instance BAT Decision 0001/07 dated 16 August 2007, Ostojic and Raznatovic vs. PAOK KAE; BAT Decision 0018/08 dated 10 February 2009, Nicevic vs. Beşiktaş; BAT Decision 0020/08 dated 19 March 2009, Dimitropoulos vs. Athlitiki Enosis Konstantinoupoleos; BAT Decision dated 11 May 2009, Sakellariou and Dimitropoulos vs. S.S. Felice Scandone Spa.; BAT Decision 0010/08 dated 16 June 2009, Grgurevic vs. AEP Olympias Patras; BAT Decision 0043/09 dated 13 October 2009, Gomis vs. Women’s Basketball Club Fenerbahçe.

“Unless the parties have agreed otherwise the Arbitrator shall decide the dispute ex aequo et bono, applying general considerations of justice and fairness without reference to any particular national or international law.”

Clause 4 of the Contract stipulates that: “The arbitrator and CAS upon appeal shall decide the dispute ex aequo et bono”.

Consequently, the Arbitrator shall decide ex aequo et bono the issues submitted to him in this proceeding.

The concept of “équité” (or ex aequo et bono) used in Article 187(2) PILA originates from Article 31(3) of the Concordat intercantonal sur l’arbitrage5 (Concordat)6, under which Swiss courts have held that arbitration “en équité” is fundamentally different from arbitration “en droit”:

“When deciding ex aequo et bono, the Arbitrators pursue a conception of justice which is not inspired by the rules of law which are in force and which might even be contrary to those rules.”7

This is confirmed by Article 15.1 of the BAT Rules in fine, according to which the Arbitrator applies “general considerations of justice and fairness without reference to any particular national or international law”.

In light of the foregoing considerations, the Arbitrator makes the findings below.

6.2. Findings

54. The Arbitrator finds that the combination of the Contract and of the protest letter

5 That is the Swiss statute that governed international and domestic arbitration before the enactment of the PILA.

Today, the Concordat governs exclusively domestic arbitration.

6 P.A. Karrer, Basler Kommentar, No. 289 ad Art. 187 PILA.

7 JdT 1981 III, p. 93 (free translation).

adduced by the Player constitute good evidence of the facts that (i) the Club was in breach of contract for late payments that justified the termination of the Contract by the Player and therefore (ii) the Club has the responsibility of fully paying the Player the contractually-stipulated sums which were due for the first two seasons covered by the Contract (2009/2010 and 2010/2011).

Furthermore, the quantum of the amounts owed by the Club for those reasons derives with sufficient certainty from the terms of the Contract and the evidence adduced by the Player of the sums unpaid, while at the same time the Club has failed to contest the Player’s claim in this arbitration despite having been given the opportunity to do so. The Arbitrator’s conclusion rests on the record as it stands and not on the mere fact that Respondent has defaulted. Under these circumstances, the Arbitrator does not deem it necessary to call for further evidence.

Consequently, the Arbitrator finds that it is fair and in keeping with both considerations of justice and the principle “pacta sunt servanda” that the Club be required to pay the contractually outstanding remuneration being claimed by the Player for the 2009/2010 and 2010/2011 seasons combined, i.e. a total amount of EUR 90,000.

Concerning the amount being claimed for the 2011/2012 season, the situation is different, since, although a salary of EUR 110,000 is contractually stipulated for that season, the amount of damage the Player actually suffers depends on what his salary for that same season is going to be with a new club; bearing in mind that it would be unfair and against principles of justice for the Player to end up being enriched due to receiving his entire salary from the Club plus a salary from a new club.

In the present case, the Player submits that he intends to seek a new club for the 20112012 season and that for family reasons he is making the voluntary choice of not looking for a new club abroad and playing instead for a club in Greece, where he estimates his “market value” for the next season to be around EUR 30,000 given the current poor state of the Greek economy.

Given the Player’s foregoing submissions, the Arbitrator finds that for reasons of causality it would not be fair to allow the Player to currently claim any loss of salary pertaining to the 2011/2012 season.

Indeed, if it is the Player’s own choice to privilege his family commitments over his salary expectations on the international market, the Club’s breach of contract and the resulting termination of the Contract cannot be deemed causal with respect to any risk of not finding a new club abroad willing to pay him at least the same salary for the 2011/2012 season as the one he would have enjoyed with the Club. In other words, any loss of salary caused by the choice of remaining in Greece is self-induced.

For the above reasons, the Arbitrator finds that, in the circumstances of this case and as the facts and evidence stand today, it would be unfair and unjust to award the Player any part of the amount of EUR 110,000 in damages he is claiming for the 2011/2012 season.

Consequently, that part of the claim will be denied.

With respect to the portion of the Player’s claimed compensation the Arbitrator has decided to grant, i.e. an amount of EUR 90,000 – representing the total unpaid remuneration owed for the 2009/2010 and 2010/2011 seasons –, it remains to be decided whether interest should be awarded and, if so, in what amount.

Although the Contract does not regulate interest for late payments, it is a generally recognized principle embodied in most legal systems, which is underpinned by motives of equity, that late payments give rise to interest – in order that the creditor be placed in the financial position she/he would have been in had payments been made on time.

Therefore and despite the Contract not specifying an interest rate, it is normal and fair that interest is due on the late payments.

In the circumstances of this case, the Arbitrator finds it fair and reasonable to award

interest at a rate of 5% per annum as is customary in BAT arbitrations when the interest rate is contractually unspecified, rather than the higher rate being claimed by the Player for which no particular justification has been provided beyond the fact that both parties are Greek.
It is an established principle that interest usually runs from the day after the date on which the principal amounts are due.

However, since in this case the Player is only asking for the interest to run from a later date, i.e. from 6 April 2011, the Club shall be requested to pay the Player the principal amount of EUR 90,000 with interest at 5% from 6 April 2011 onwards.

7. Costs

Article 17 of the BAT Rules provides that the final amount of the costs of the arbitration shall be determined by the BAT President and that the award shall determine which party shall bear the arbitration costs and in what proportion; and, as a general rule, shall grant the prevailing party a contribution towards its legal fees and expenses incurred in connection with the proceedings.

On 5 October 2011 – considering that pursuant to Article 17.2 of the BAT Rules “the BAT President shall determine the final amount of the costs of the arbitration which shall include the administrative and other costs of BAT and the fees and costs of the BAT President and the Arbitrator”, and that “the fees of the Arbitrator shall be calculated on the basis of time spent at a rate to be determined by the BAT President from time to time”, taking into account all the circumstances of the case, including the time spent by the Arbitrator, the complexity of the case and the procedural questions raised – the BAT President determined the arbitration costs in the present matter to be EUR 7,250.00

Considering the Player prevailed to an important degree in his claim, the Arbitrator considers it fair that the fees and costs of the arbitration be borne by the Club and that it be required to cover its own legal fees and expenses as well as to contribute to those of the Player.

Given that the Player paid advances on costs of EUR 10,000.00 as well as a nonreimbursable handling fee of EUR 3,000.00 (which will be taken into account when calculating the Player’s legal fees and expenses), while the Club paid none, the Arbitrator decides that in application of article 17.3 of the FAT Rules:

BAT shall reimburse EUR 2,750.00 to the Player, being the difference between the costs advanced by him and the arbitration costs fixed by the BAT President;

The Club shall pay EUR 7,250.00 to the Player, being the difference between the costs advanced by him and the amount he is going to receive in reimbursement from the BAT;

(iii) The Club shall pay to the Player EUR 8,000.00 (EUR 3,000 + EUR 5,000) representing a contribution to his legal fees and other expenses.
8. AWARD

For the reasons set forth above, the Arbitrator decides as follows:

Aris B.S.A. Basketball Club shall pay Mr. Gkay-Daios Skordilis an amount of EUR 90,000.00, net of taxes, as compensation for unpaid salaries and bonus owed under the Contract of 10 May 2009, plus interest at a rate of 5% per annum starting from 6 April 2011.

Aris B.S.A. Basketball Club shall pay Mr. Gkay-Daios Skordilis an amount of EUR 7,250.00 as reimbursement for his arbitration costs.

Aris B.S.A. Basketball Club shall pay Mr. Gkay-Daios Skordilis an amount of EUR 8,000.00 as a contribution to his legal fees and expenses.

Any other or further requests for relief are dismissed.

Geneva, seat of the arbitration, 10 October 2011

Quentin Byrne-Sutton (Arbitrator)