BASKETBALL ARBITRAL TRIBUNAL (BAT)
Mr. Raj Parker
in the arbitration proceedings between
Mr. Steven Smith
– Claimant –
represented by Mr. Dejan Vidicki, Court Side, Parkwijklaan 229,
1326 JT Almere, the Netherlands
Virtus Pallacanestro Bologna S.p.A.
Via dell’Arcoveggio, 49/2, 40129 Bologna, Italy
– Respondent –
represented by Mr. Florenzo Storelli, attorney at law, Viale Cadorna, 50 – 55100 Lucca, Italy
1. The Parties
1.1 The Claimant
1. Mr. Steven Smith (hereinafter the “Claimant”) is a professional basketball player from the USA.
2. In these proceedings, the Claimant is represented by Mr. Dejan Vidicki of Court Side basketball agency, in the Netherlands.
1.2 The Respondent
3. Virtus Pallacanestro Bologna S.p.A. (hereinafter the “Respondent”) is a professional basketball club in Italy.
4. In these proceedings, the Respondent is represented by Mr. Florenzo Storelli, attorney at law, of Studio legale Avv. Florenzo Storelli in Italy.
2. The Arbitrator
5. On 30 July 2013, Prof. Richard H. McLaren, the President of the Basketball Arbitral Tribunal (hereinafter the “BAT”) appointed Mr. Raj Parker as arbitrator (hereinafter the “Arbitrator”) pursuant to Article 8.1 of the Rules of the Basketball Arbitral Tribunal (hereinafter the “BAT Rules”).
6. Neither of the Parties have raised objections to the appointment of the Arbitrator or to his declaration of independence.
3. Facts and Proceedings
3.1 Background Facts
7. On 7 August 2012, the Claimant and the Respondent entered into a contract in relation to the 2012-2013 season (hereinafter the “Employment Contract”).
8. The Employment Contract contains, among others, the following provisions:
Any dispute arising out of, or in connection with, this Agreement shall be submitted to the FIBA Basketball Arbitral Tribunal (BAT) in Geneva, Switzerland and shall be resolved definitively in accordance with the BAT Arbitration Rules. The arbitrator shall decide the dispute ex aequo et bono. Awards of the BAT can be appealed to the Court of Arbitration for Sport (CAS) in Lausanne, Switzerland. To the extent legally possible under Swiss law recourse to the Swiss Federal Tribunal against awards of the BAT and against decisions of the Court of Arbitration for Sport (CAS) upon appeal shall be excluded.
1. The club hereby employs the player as a skilled basketball player for the
2012/2013 season. […]
3. The club agrees to pay the player for rendering services described herein the following net payments: USD 320,000 (three hundred twenty thousand and 00/100ths) for the 2012/2013 season paid as follows:
Season 2012/2013 – USD 320.000
|1. These lump sums:||2. In addition:|
|Immediately after medical USD 10.000
September 10th, 2012 USD 10.000
September 30th, 2012 USD 40.000
November 30th, 2012 USD 50.000
January 30th, 2013 USD 50.000
March 30th, 2013 USD 50.000
May 30th, 2013 USD 50.000
|From October 10th 2012
until July 10th 2013: USD
6.000 on every 10th of the month equaling: USD
4. The club agrees to provide the following for the player: […]
d) An automatic car big enough to fit the player and his family. The club will pay all costs involved (e.g.: rent, insurance, maintenance), with the exception of the fuel, personal risk accident payments, and traffic fines, which shall be paid by the player.
14. This contract contains the entire agreement between the parties and no other agreement, oral or otherwise, regarding the subject matter of this contract, shall be deemed to exist or bind any of the parties hereto.”
9. On 1 September 2012, Pantheon Services Limited (hereinafter “Pantheon”) and Magellanica Consulting Srl (hereinafter “Magellanica”) entered into a contract in relation to the Claimant’s image rights (hereinafter the “Image Rights Contract”).
10. The Image Rights Contract contains, among others, the following provisions:
“Mr. Steven Smith, born on April 12th, 1983 in Philadelphia – USA -, (hereinafter referred to the Player) is a well-known athlete, active in the filed of basketball;
The player has assigned to Pantheon Services Limited representation and economic rights to his promotion;
The Company wishes to obtain the right to use the name, likeness, and endorsement of the Player in connection with the advertisement and promotion of certain of the Company’s products and the Player has agreed to grant such rights on the terms and conditions of this Agreement.
THEREFORE, THEY AGREE AS FOLLOWS DEFINITIONS
In this Agreement, the following words shall have the following meanings:
a) “Contract Period” shall mean that period of time commencing on
1st September 2012 and concluding on 30th June 2013 or on such earlier date as this Agreement may be terminated under clause 7;
b) “Contract Territory” shall mean any country or territory in the world;
c) “Player Identification” shall mean any words, and/or symbols, and/or photographic, and/or graphic representations, which identify the Player and/or his name and likeness;
GRANT OF ENDORSEMENT RIGHTS
Pantheon Services Limited grants to the Company, subject to and on the terms of this Agreement the exclusive right and licence to use the Player Identification throughout.
The Contract Territory during the Contract Period in connection with the advertisement and promotion of the Products, and expressly agrees that the right to use the Player Identification will not be granted to anyone other than the Company and/or its affiliates and/or subsidiaries for use within the contract Territory during the Contract Period in connection with the advertisement and promotion of the Products.
As compensation for any rights granted by Pantheon Services Limited to the Company and any obligations of the player under the provisions of this agreement, the Company shall pay USD284,620 – (fees included) per contract period, payable as follows:
U$ 68,620, – on September 30, 2012
U$ 50,000, – on November 30, 2012
U$ 66,000, – on January 30, 2013
U$ 50,000, – on March 30, 2013
U$ 50,000, – on May 15, 2013 […]
GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by the laws of Italy and both parties expressly agree to submit to the exclusive jurisdiction of the Courts of Bologna (Italia) with regard to any claims relating to or in connection with this Agreement. However, in [sic] any questions arises as to the interpretation of any of the provisions of this Agreement or if there is any matter not provided for in this Agreement which needs to be determined, the parties to this Agreement shall engage in good faith discussions and endeavour to resolve or interpret the question or matter amicably.
11. On 25 September 2012, the Claimant and the Respondent entered into a second contract in relation to the 2012-2013 season (hereinafter the “League Contract”).
12. The League Contract contains, among others, the following provisions:
“1) The Player undertakes to perform his sports activity as professional basketball player, continuously and bound to subordination, in favour and under the direction of the Club, taking part in all the official games of the Italian [sic] Series A Championship, in the Italy Cup and the international competitions for which the Club has enrolled or in which it participates, in the All Star Game, Supercoppa, and in all non-official games programmed and played by the Club, for the following sports season/s;
2) The Club undertakes to pay the Player the following amounts to be intended before tax:
Year 12 / 13
euro SEVENTY NINE THOUSAND
6) All disputes regarding the interpretation and execution of the collective agreement and of the present individual labour contract, including those relating to disciplinary measures, are deferred to the Permanent Board of Conciliation and Arbitration ruled by article 29 and following of the “Professional Players 2003” collective Labour Agreement. The Arbitration Board is located in Bologna at the Italian Basketball League premises and is composed of three members: the President, invariable, designated by common consent from the League and the Giba every two years, one member chosen each time by the members suggested by the League in a special list; and a member chosen each time by the members suggested by the League in a special list. ”
13. The Claimant played for the Respondent for the duration of the 2012-2013 season. The Claimant was not paid the full amount of the salary prescribed under the Employment Contract.
3.2 The Proceedings before the BAT
14. On 2 May 2013, the Claimant filed a Request for Arbitration in accordance with the BAT Rules. On 6 May 2013, the BAT received the non-reimbursable handling fee of EUR 2,000.00 from the Claimant.
15. By letter dated 31 July 2013, the BAT Secretariat fixed a time limit until 21 August 2013 for the Respondent to file its Answer to the Request for Arbitration. By the same letter, and with a time limit for payment of 12 August 2013, the following amounts were fixed as the Advance on Costs:
“Claimant (Mr Steven Smith) EUR 4,500
Respondent (Virtus Pallacanestro Bologna S.p.A.) EUR 4,500”
16. The Claimant paid his share of the Advance on Costs on 13 August 2013. The Respondent failed to pay its share of the Advance on Costs and failed to submit an Answer. On 13 September and 16 September 2013, the Claimant made two payments to the BAT, which constituted the Respondent’s share of the Advance on Costs.
17. On 25 September 2013, the Arbitrator issued a Procedural Order (hereinafter the “First Procedural Order”) in which he requested further information from the Claimant and invited the Respondent to provide any submissions in relation to the Claimant’s claim that it considered appropriate.
18. The Claimant and the Respondent submitted their responses to the First Procedural
Order on 3 and 4 October 2013 respectively.
19. On 24 October 2013, the Arbitrator issued another Procedural Order (hereinafter the “Second Procedural Order”) in which he requested further information from the Claimant. The Claimant submitted his response to the Second Procedural Order on 7
20. By Procedural Order dated 12 November 2013, the Arbitrator declared the exchange of documents complete, and requested that the Parties submit detailed accounts of their costs by 19 November 2013.
21. On 15 November 2013, the Respondent submitted the following account of costs:
“Specification of Respondent’s Costs:
1) Lawyer’s handling fee:
– N.1 of statement of defence: Euro 4.000,00
– Examination and study acts: Euro 2.000,00
– Communication between parts [sic] and arbitrator:Euro 2.000,00
Total: Euro 8.000,00”
22. By email dated 23 November 2013, the BAT Secretariat sent the Respondent’s account of costs to the Claimant and requested that the Claimant submit any comments on the Respondent’s account of costs by no later than 29 November 2013. The Claimant did not submit any such comments.
23. On 26 November 2013, the Claimant submitted the following account of costs:
“Please find below the costs of the Claimant: EUR 2,000 Non-reimbursable BAT handling fee EUR 4,500 Claimant’s share of the advanced costs
EUR 4,500 Respondent’s share of the advanced costs (paid by Claimant) EUR 5,135 Legal expenses
EUR 16,135 in TOTAL”
24. By email dated 26 November 2013, the BAT Secretariat sent the Claimant’s account of costs to the Respondent and requested that the Respondent submit any comments on the Claimants’ account of costs by no later than 3 December. The Respondent did not
submit any such comments.
25. Since none of the Parties filed an application for a hearing, the Arbitrator decided, in accordance with Article 13.1 of the BAT Rules, not to hold a hearing and to deliver the award on the basis of the written submissions of the Parties.
4. The Parties’ Submissions
4.1 The Claimant’s Request for Arbitration
26. The Claimant’s Request for Arbitration is very short. Under the sectioned headed
“Facts and Legal Arguments” it simply states:
“Claimant and Respondent have an agreement in which Respondent promises to pay a season salary of $320,000.
To this date Respondent has only paid $196,000 and is overdue with the reminaing
$124,000. Despite numerous emails and phone calls to pay the amount due, Claimant has not done so.”
27. The Claimant submitted only the Employment Contract as evidence to support his claim.
28. The Claimant’s request for relief states:
$124,000 in salary
1% interest per month
Reimbursement of the non-handling BAT fee Reimbursement of all BAT costs Reimbursement of all legal fees”
29. On 5 October 2013, the Claimant sent an email to the BAT Secretariat stating, inter alia:
“Please be advised that since the request for arbitration was sent to you, claimant has received 2 x $ 10,797.00 = $ 21,594.00 from the respondent.
Claimant therefore wishes to lower his claim with the above $ 21,594.”
4.2 The Respondent’s Submissions
30. The Respondent agrees that the total amount payable to the Claimant for the 2012-
2013 season is USD 320,000.00.
31. However, the Respondent submitted that it has paid the Claimant a total of USD 248,869.37 (not USD 217,594.00, as is asserted by the Claimant). The Respondent submitted that the payments totalling USD 248,869.37 comprise:
(i) USD 20,000.00 paid by the Respondent directly to the Claimant as
“pre-season 2012/2013 payments”;
(ii) USD 59,481.00 paid by the Respondent directly to the Claimant pursuant to the League Contract; and
(iii) USD 169,388.33 paid by Magellanica to Pantheon pursuant to the
Image Rights Contract.1
32. The Respondent submitted that it deducted USD 2,096.00 from the Claimant’s salary for traffic offences committed by the Claimant. The Respondent asserts that the total outstanding amount that it owes to the Claimant is USD 71,130.62. The Respondent has requested that the BAT:
“- ascertains that the actual amount due to the Player is equal to USD 71,130.62;
– orders that each [sic] the Claimant and the Respondent bear their own costs.”
4.3 The Claimant’s Response to the Second Procedural Order
33. In his response to the Second Procedural Order, the Claimant submitted that the amount that he actually received from the Respondent was “USD 77.385 in league salary payments and USD 139.133 in image payments totaling USD 216.518.” The Claimant acknowledged that “USD 3.482 may have gotten “lost” due to wiring fees” and so he accepts that he has effectively “received a total of 220.000 USD of the
320.000 USD that is contractually owed to him.”
34. The Claimant concludes that he is still owed two “image payments” of USD 50,000.00 each.
1 It appears that there is a minor error in the Respondents’ calculations and that the sum of 169,388.37 is mistakenly used in the Respondent’s submissions, instead of the sum of 169,388.33.
35. 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).
36. The jurisdiction of the BAT presupposes the arbitrability of the dispute and the existence of a valid arbitration agreement between the Parties.
37. The Arbitrator notes that the dispute referred to him is clearly of a financial nature and is thus arbitrable within the meaning of Article 177(1) PILA.2
5.2 Formal and substantive validity of the arbitration agreements
38. The existence of a valid arbitration agreement is to be examined in light of Article 178
PILA, which reads as follows:
“1 The arbitration agreement must be made in writing, by telegram, telex, telecopier or any other means of communication which permits it to be evidenced by a text.
2 Furthermore, an arbitration agreement is valid if it conforms either to the law chosen by the parties, or to the law governing the subject-matter of the dispute, in particular the main contract, or to Swiss law.
2 Decision of the Federal Tribunal 4P.230/2000 of 7 February 2001 reported in ASA Bulletin 2001, p. 523.
3 The validity of an arbitration agreement may not be contested on the grounds that the principal contract is invalid or that the arbitration agreement concerns a dispute which has not yet arisen.”
39. The Employment Contract is in written form and thus the arbitration clause fulfils the formal requirements of Article 178(1) PILA. With respect to substantive validity, the Arbitrator considers that there is no indication in the file that could cast doubt on the validity of the arbitration agreement under Swiss law (referred to by Article 178(2) of the PILA). In particular, the wording “[a]ny dispute arising out of, or in connection with, this Agreement shall be submitted” clearly covers the present dispute.
40. Three separate contracts have been produced to the Arbitrator in support of the
(i) the Employment Contract (signed first in time) between the Claimant and the Respondent;
(ii) the Image Rights Contract (signed second in time) between Pantheon (a company to which the Claimant assigned the rights to his promotion) and Magellanica (a company which manages the image and endorsement rights of the Respondent); and
(iii) the League Contract (signed third in time) between the Claimant and the Respondent.
41. The Employment Contract contains a jurisdiction clause in favour of BAT; the Image Rights Contract contains a jurisdiction clause in favour of the Courts of Bologna; and the League Contract contains a jurisdiction clause in favour of the Italian Basketball League’s Permanent Board of Conciliation and Arbitration.
42. It is unclear from the face of the three contracts how it was intended that the contracts would co-exist or relate to one another. The Employment Contract provides that the
Respondent will pay the Claimant USD 320,000.00 for the 2012-2013 season in accordance the payment schedule set out in paragraph 8 above. The League Contract provides that the Respondent will pay the Claimant EUR 79,000.00 for the 2012-2013 season, but provides no payment schedule. The Image Rights Contract provides that Magellanica shall pay USD 284,620.00 to Pantheon in accordance the payment schedule set out in paragraph 10 above.
43. It is not uncommon for players to sign more than one contract with a given club. There are often league or national association requirements stipulating that a pro-forma contract must be executed and registered. Such contracts are sometimes executed in addition to a second contract that is not limited by the prescriptive requirements of a league or national association pro-forma contract. Additional contracts (including image rights contracts) may also be executed in an effort to obtain tax, or other, advantages. Where inconsistencies and contradictions exist between competing contracts, it is for the Arbitrator to determine what the contractual relationship between the parties actually is, in order to resolve the dispute.
44. It is necessary at this stage to determine the extent to which the Employment Contract (i.e. the contract which grants jurisdiction in favour of BAT) governed the Parties contractual relations because that will, in turn, determine the scope of BAT’s jurisdiction over the present dispute. The Arbitrator considers that there are four factors of particular importance in determining the scope of BAT’s jurisdiction over the present dispute.
5.2.1 Factor 1: The performance of the contracts
45. Firstly, the payments actually made to the Claimant by the Respondent (or their respective representatives) do not accurately reflect the terms of any of the contracts. The Respondent has submitted evidence to show that it paid USD 20,000.00 (which it
describes as “pre-season payments”) to the Claimant as follows:
|September 7th 2012||USD 10.000,00|
|September 24th 2012||USD 10.000,00|
46. The Respondent has submitted evidence that it paid a further USD 59,481.00 (which it describes as “payments made through… the League Contract”) to the Claimant as
|October 9th 2012||USD 5,745.00|
|November 11th 2012||USD 5,917.00|
|December 28th 2012||USD 5,938.00|
|February 1st 2013||USD 6,235.00|
|February 20th 2013||USD 6,071.00|
|March 13th 2013||USD 5,947.00|
|May 29th 2013||USD 10,700.00|
|May 29th 2013||USD 1,171.30|
|September 4th 2013||USD 10,832.00|
|September 4th 2013||USD 924.70|
47. The Respondent has submitted evidence that Magellanica paid USD 169,388.33
(which the Respondent describes as “amounts paid… through the Image [Rights]
Contract”) to Pantheon as follows:
|November 2nd 2012||USD 38.485,20|
|November 2nd 2012||USD 14,924,86|
|December 3rd 2012||USD 15,330,33|
|December 20th 2012||USD 50,259,85|
|February 22nd 2013||USD 18,155,35|
|March 1st 2013||USD 18,109,18|
|March 6th 2013||USD 14,123,57|
48. Hence, the Respondent paid USD 79,481.00 directly to the Claimant, which is a similar amount to the EUR 79,000.00 that the Respondent is required to pay to the Claimant under the League Contract, minus the traffic fines deducted. This fact, and the fact that payments were made by Magellanica to Pantheon, might suggest that the League Contract and the Image Rights Contract were both performed (as opposed to the Employment Contract, which provides that the Respondent must pay USD 320,000.00 directly to the Claimant). However, the actual amounts paid and the dates on which they were paid, do not correspond consistently with any of the three contracts.
49. Furthermore, the Respondent has deducted sums from the Claimant’s salary that relate to traffic fines. The Claimant has agreed to such deductions. The only contract which stipulates that the Respondent will provide the Claimant with a car and stipulates that the Claimant will be responsible for traffic fines is the Employment Contract (at clause
50. It is therefore unclear from the performance of the contracts, precisely how the three contracts inter-relate. However, it is apparent that elements of both the Employment Contract and the Image Rights Contract were performed.
5.2.2 Factor 2: The content of the contracts
51. The League Contract is only one page long and it contains very few terms. In contrast, the Employment Contract is three pages long and contains most, if not all, of the terms one might expect to find in a professional basketball player’s contract of this nature. Terms which feature in the Employment Contract, but not the League Contract include: a payment schedule; provisions setting out what bonuses the Claimant can earn; details of the accommodation, transport and health insurance provided by the Respondent; and various conduct obligations of the Claimant (for example, regarding drug or alcohol abuse, absence from practices and permitted sportswear).
52. The Employment Contract also states on its face that it contains the entire agreement between the Parties and that no other agreement shall be deemed to exist or bind the Parties. Clearly another agreement between the Parties did exist (namely the League Contract) and a third agreement relating to the payments obligations set out in the Employment Contract also existed (namely the Image Rights Contract). However, the entire agreement clause is still evidence that the Parties evinced, at some point in time at least, an intention that the Employment Contract would be the sole agreement that governed the relationship between the Parties.
5.2.3 Factor 3: The Parties’ submissions
53. Neither of the Parties dispute BAT’s jurisdiction to determine this case. Furthermore, neither of the Parties dispute the validity of any of the three contracts. Indeed, both Parties indicate that they consider all three contracts to be valid and effective.
54. The Claimant clearly considers that the Employment Contract is valid and binding as he is bringing his claim pursuant to that contract. In the Second Procedural Order, the Arbitrator asked the Claimant: (i) if it was intended that the League Contract and the Image Rights Contract would replace the terms of the Employment Contract; and (ii) if not, what was the relationship between the three contracts intended to be? The Claimant did not provide a direct answer to those questions. Instead, he referred to the “League portion” and the “image portion of the contract” and re-iterated his claim for outstanding sums due from the Respondent.
55. The Respondent, too, appears to acknowledge the validity of the Employment Contract by agreeing that it is obliged, under the Employment Contract, to remunerate the Claimant USD 320,000.00 in salary payments. Moreover, by seeking to set-off traffic fines against sums owed to the Claimant, the Respondent has affirmed the validity of the Employment Contract. The Respondent describes the Employment Contract as a “general agreement” between the Parties, pursuant to which the Respondent agreed to employ and pay the Claimant to play for its team. However, the Respondent, like the Claimant, submits that certain of its payment obligations exist pursuant to the League Contract and certain others pursuant the Image Rights Contract.
56. Correspondence between the Parties prior to the commencement of these proceedings is consistent with the Parties’ submissions that the Respondent’s payment obligations to the Claimant included a component that was attributable to the Image Rights Contract. For example, in an email sent to the Claimant’s agent on 21 February 2013, the president of the Respondent stated “I paid 18.000 USA dollars… about payment of [sic] 31st January 2013 and I will finish to pay the 3rd installment [sic] of image contract next week.” In his response, sent on the same day, the Claimant’s agent wrote:
“For clarification purposes: What is this money for? Is this agent fee or is this Steven
We have the following balances open:
– 6.000 agent fee due Oct 31st 2012
– 16.000 agent fee due Jan 21st 2013
– 50.000 image payment for Steven Smith due Jan 31st 2013
Again, what is the 18.000 usd you wired today for?”
57. From the Parties’ submissions and earlier correspondence, it would appear that the Respondent and the Claimant intended that all three contracts would co-exist and that the League Contract and the Image Rights Contract would supplement the Employment Contract.
5.2.4 Factor 4: The arbitration clause in the Employment Contract
58. The Employment Contract is in written form and thus the arbitration clause fulfils the formal requirements of Article 178(1) PILA. With respect to substantive validity, the Arbitrator considers that there is no indication in the file that could cast doubt on the validity of the arbitration agreement under Swiss law (referred to by Article 178(2) of the PILA).
59. The arbitration clause in the Employment Contract provides that BAT shall have jurisdiction to determine “any dispute arising out of, or in connection with” the Employment Contract. The Arbitrator considers that this wording grants BAT jurisdiction to determine disputes regarding not only breaches of the Employment Contract, but also disputes which are connected with the Employment Contract.
60. From the analysis of the four factors above, the following conclusions can be drawn.
The wording of the three contracts does not explain how they should inter-relate. The terms of the League Contract and the Image Rights Contract (when read alongside the Employment Contract) suggest that it may have been intended that the League Contract and the Image Rights Contract were designed to supplement the Employment
Contract. The submissions of, and correspondence between, the Parties indicate that the Parties intended (and still intend) for all three contracts to co-exist and for the League Contract and the Image Rights Contract to supplement the Employment Contract.
61. The contractual relationship between the Parties is therefore governed by a matrix of overlapping contractual terms contained in all three contracts. Given the overlapping nature of the three contracts, it is not possible to categorise the present dispute as one which arises entirely out of any one individual contract. However, in light of the above analysis, the Arbitrator finds that BAT does have jurisdiction to adjudicate the Claimant’s claim. In summary, BAT has jurisdiction to adjudicate the claim because:
(i) the Employment Contract sets out a significant majority of the terms governing the relations between the Parties;
(ii) the League Contract and the Image Rights Contract supplement the
(iii) the Employment Contract provides BAT with jurisdiction to determine disputes that are connected with the Employment Contract;
(iv) the present dispute is a dispute which is connected with the Employment
(v) the Parties’ submissions (and correspondence prior to the commencement of these proceedings) are consistent with points (i) – (iv) above; and
(vi) neither of the Parties has disputed the jurisdiction of the Arbitrator to determine any aspect of the present dispute.
62. However, the Arbitrator notes that BAT does not have jurisdiction to resolve any breach of the Image Rights Contract by one of the parties to the Image Rights Contract because neither of those parties are party to the present arbitral proceedings.
6.1 Applicable Law – ex aequo et bono
63. 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”, as opposed to a decision according to the rule of law referred to in Article 187(1). Article 187(2) PILA is generally translated into English as follows:
“the parties may authorize the arbitral tribunal to decide ex aequo et bono”.
64. Under the heading “Applicable Law”, Article 15.1 of the BAT Rules reads as follows:
“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.”
65. As explained above, the BAT’s jurisdiction to adjudicate the Claimant’s claim stems from the BAT arbitration clause in the Employment Contract. Hence, the Arbitrator is required to determine the Claimant’s claim in accordance with the governing law stipulated in the Employment Contract (regardless of any governing laws provided for in the League Contract or the Image Rights Contract). The Employment Contract states “[t]he arbitrator shall decide the dispute ex aequo et bono”.
66. In light of the above, the Arbitrator will decide the issues submitted to him in this proceeding ex aequo et bono.
67. 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’arbitrage3 (Concordat),4 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.”5
68. In substance, it is generally considered that the arbitrator deciding ex aequo et bono receives “a mandate to give a decision based exclusively on equity, without regard to legal rules. Instead of applying general and abstract rules, he/she must stick to the circumstances of the case”.6
69. 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”.
70. In light of the foregoing matters, the Arbitrator makes the following findings.
3 That is the Swiss statute that governed international and domestic arbitration before the enactment of the PILA (governing international arbitration) and, most recently, the Swiss Code of Civil Procedure (governing domestic arbitration).
4 P.A. KARRER, Basler Kommentar, No. 289 ad Art. 187 PILA.
5 JdT 1981 III, p. 93 (free translation).
6 POUDRET/BESSON, Comparative Law of International Arbitration, London 2007, No. 717, pp. 625-626.
6.2.1 The Claimant’s remuneration
71. The Parties agree that, pursuant to the Employment Contract, the Claimant was entitled to overall remuneration of USD 320,000.00 in relation to the 2012-2013
Season. The Parties also agree that this remuneration was supposed to comprise a salary element and an element relating to the Claimant’s image rights.
72. The Respondent claims that it has paid a total of USD 248,869.37 to the Claimant and has withheld USD 2,096.00, which relate to traffic fines incurred by the Claimant. The Respondent submits that it is only liable to pay to the Claimant a further USD 71,130.62.
73. However, the Claimant maintains that the Respondent still owes him USD 100,000.00, comprising two “image payments” of USD 50,000.00 each.
74. The Claimant accepts the deductions made by the Respondent in relation to the traffic fines and accepts that a small amount of money transferred by the Respondent may have been deducted for banking fees and due to changing currency exchange rates. Allowing for such deductions, the Claimant accepts that he has received all of the payments set out in paragraphs 45 to 47, except two. The two payments he claims not to have received are: (i) the payment of USD 14,924.86 made by Magellanica to Pantheon on 2 November 2012; and (ii) the payment of USD 15,330.32 made by Magellanica to Pantheon on 3 December 2012 (hereinafter referred to as the “Missing Amounts”).
6.2.2 The Missing Amounts
75. Both Parties submit that the Missing Amounts were payable in accordance with the Image Rights Contract. The Claimant describes them as payments due under “the image portion of the contract” and the Respondent describes them as “amounts paid… through the Image [Rights] Contract”. As such, the payments were not made directly from the Respondent to the Claimant, but from Magellanica to Pantheon.
76. For the reasons given at paragraphs 45 to 61 above, the Arbitrator considers that the Image Rights Contract supplements the Employment Contract. The Employment Contract contains general terms of the Claimant’s employment by the Respondent, including an obligation on the Respondent to pay the Claimant USD 320,000.00 for the
2012-2013 season. The Image Rights Contract supplements this payment provision by containing what is, in effect, an overlapping provision that part of the Claimant’s USD
320,000.00 remuneration will be provided in the form of payments made by Magellanica (a company which manages the image and endorsement rights of the Respondent) to Pantheon (a company to which the Claimant assigned the rights to his promotion). The conduct and submissions of both Parties indicate that the Parties agreed that payments made from Magellanica to Pantheon under the Image Rights Contract would have the effect of discharging certain of the Respondent’s payment obligations under the Image Rights Contract (see paragraphs 45 to 61 above). In particular, the Claimant accepts in his submissions that certain sums7 paid by Magellanica to Pantheon (which were subsequently paid on to the Claimant) discharged the Respondent’s liability to the Claimant under the Employment Contract
by the same amount.
7 Specifically: the sum of USD 38,485.20, paid on 2 November 2012; the sum of USD 50,259.85, paid on 20
December 2012; the sum of USD 18,155.35, paid on 22 February 2013; the sum of USD 18,109.18 paid on 1 March 2013; and the sum of USD 14,123.57, paid on 6 March 2013.
77. The Claimant submits that he has not received the Missing Amounts. He has submitted copies of his bank statement to show this. The Respondent, however, has submitted copies of Magellanica’s bank statement to show that Magellanica did pay the Missing Amounts to Pantheon. It would appear from the evidence before the Arbitrator that Pantheon has failed to pass the Missing Amounts on to the Claimant.
78. The Image Rights Contract states that the Claimant “assigned to Pantheon Services Limited representation and economic rights to his promotion”. Pantheon is therefore an assignee and representative of the Claimant. It is not an agent of the Respondent. Hence, if Pantheon has failed to make payments to the Claimant, that is an issue for the Claimant to take up with Pantheon. There is no evidence to suggest that it is somehow the Respondent’s responsibility to ensure that Pantheon (the Claimant’s representative) makes payments to the Claimant.
79. The Arbitrator considers that payment by Magellanica to Pantheon of the Missing Amounts is sufficient to discharge the Respondent’s payment obligations to the Claimant under the Employment Contract by the same amount (for the reasons given in paragraph 76 above). As a result, the Arbitrator accepts the Respondent’s submission that the amount it owes to the Claimant is USD 71,130.62, and not USD 100,000.00, as claimed by the Claimant.
80. The Claimant has requested interest on the unpaid salaries at a rate of 1% per month.
None of the three contracts provide for payment of default interest. However, default interest is a generally accepted principle embodied in most legal systems. Indeed, payment of interest is a customary and necessary compensation for late payment, and the Arbitrator considers that there is no reason why the Claimant should not be awarded interest in this case. Also, according to BAT jurisprudence, default interest
can be awarded even if the underlying agreement does not explicitly provide for an obligation to pay interest. However, the rate claimed by the Claimant (1% per month) is equivalent to a compounded annual rate of 12.68%. The Arbitrator considers that this rate is disproportionately high, given the circumstances of this case. The Arbitrator considers that 5% per annum is a reasonable rate of interest (and in line with the jurisprudence of the BAT).
81. It is not possible to determine a precise date from which such interest should run by reference to the relevant contracts alone. This is because, firstly, there are conflicting payment schedules in the Employment Contract and the Image Rights Contract. Secondly, the actual payments that were made were irregular and did not match the payment schedules (in terms of date or amount) that are set out in any of the contracts. However, comparing the payments that were actually made with the payment schedule in the Employment Contract, the Respondent was overdue in making payments from as early as 10 September 2012 (albeit for an amount that was significantly less than the USD 71,130.62 being awarded) and has remained overdue (by varying amounts) since. Comparing the payments that were actually made with the payment schedule in the Image Rights Contract, the Respondent was overdue in making payments from
30 September 2012 (for an amount that was in excess of half of the USD 71,130.62 being awarded) and has remained overdue (by varying amounts) since.
82. In light of the aforementioned, the Arbitrator finds, ex aequo et bono, that interest should run on the full amount awarded in relation to the Claimant’s remuneration from
1 January 2013. The Arbitrator therefore awards interest on the sum of USD 71,130.62 at a rate of 5% per annum from 1 January 2013.
83. Article 17.2 of the BAT Rules provides that the final amount of the costs of the
arbitration shall be determined by the BAT President and may either be included in the award or communicated to the Parties separately. Furthermore, Article 17.3 of the BAT Rules provides that the award shall grant the prevailing party a contribution towards its reasonable legal fees and expenses incurred in connection with the proceedings.
84. On 25 February 2014, 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 at EUR 8,948.09.
85. The Arbitrator notes that the Claimant was successful in establishing the Respondent’s liability to pay compensation for unpaid remuneration. The Respondent was, however, successful in demonstrating that the Claimant should only be awarded USD 71,130.62 of the USD 100,000.00 that he claimed. The Arbitrator also notes that the Respondent failed to pay its share of the Advance on Costs. Thus, the Arbitrator decides that, in application of Article 17.3 of the BAT Rules and in light of the circumstances of the case, the Respondent shall bear 90% of the costs of the arbitration. Therefore, the Arbitrator decides that the Respondent shall pay to the Claimant EUR 8,053.29, as reimbursement of arbitration costs advanced by the Claimant.
86. The Claimant has claimed EUR 7,135.00 in legal fees and expenses (including the non-reimbursable fee of EUR 2,000.00). The Arbitrator considers that such fees and costs are excessive for this case, given the volume and content of submissions that were required to be made (for example, the Arbitrator notes that Claimant provided very brief replies to the Arbitrator’s two procedural orders requesting further information
from the Parties). In the circumstances, the Arbitrator finds that it would be reasonable for the Respondent to pay to the Claimant EUR 5,000.00 as a contribution towards the Claimant’s legal fees and expenses, including the non-reimbursable fee.
For the reasons set forth above, the Arbitrator decides as follows:
1. Virtus Pallacanestro Bologna S.p.A. is ordered to pay to Mr. Steven Smith USD 71,130.62 as compensation for unpaid salary and bonus, together with interest payable at a rate of 5% per annum from 1 January 2013.
2. Virtus Pallacanestro Bologna S.p.A. is ordered to pay to Mr. Steven Smith
EUR 8,053.29 as reimbursement of the advance on BAT costs.
3. Virtus Pallacanestro Bologna S.p.A. is ordered to pay to Mr. Steven Smith
EUR 5,000.00 as a contribution towards his legal fees and expenses.
4. Any other or further-reaching requests for relief are dismissed.
Geneva, seat of the arbitration, [ ] February 2014