BASKETBALL ARBITRAL TRIBUNAL (BAT)
Ms. Annett Rombach
in the arbitration proceedings between
Mr. Saulius Kulvietis
– Claimant 1 – UAB “East Players”
Ménulio g. 7, 04326 Vilnius, Lithuania
– Claimant 2 –
both represented by Mr. Linas Jakas and Mr. Antanas Paulauskas, attorneys at law, ADLEX, Gynèju g. 16, 01109 Vilnius, Lithuania
Viešoji Istaiga “Krepšinio Rytas”
Ozo g. 14A, 08200 Vilnius, Lithuania
– Respondent –
represented by Mr. Martynas Purlys, director
1. The Parties
1.1 The Claimants
1. Mr. Saulius Kulvietis (the “Player” or “Claimant 1”) is a professional basketball player of
2. UAB “East Players” (the “Agency” or “Claimant 2” and together with Claimant 1 the “Claimants”) is an agency representing professional basketball players. It is seated in Lithuania.
1.2 The Respondent
3. Viešoji Istaiga “Krepšinio Rytas” (the “Club” or “Respondent” and together with
Claimants the “Parties”) is a professional basketball club located in Vilnius, Lithuania.
2. The Arbitrator
4. On 30 July 2013, Prof. Richard H. McLaren, the President of the Basketball Arbitral Tribunal (the “BAT”), appointed Ms. Annett Rombach as arbitrator (the “Arbitrator”) pursuant to Article 8.1 of the Rules of the Basketball Arbitral Tribunal (the “BAT Rules”). None of the Parties has raised any objections to the appointment of the Arbitrator or to her declaration of independence.
3. Facts and Proceedings
3.1 Summary of the Dispute
5. On 16 April 2009, the Parties entered into a contract (the “Player Contract”), pursuant to which the Club engaged the Player as a professional basketball player for a term of
Arbitral Award 2/32 (BAT 0416/13)
four seasons, expiring on 31 May 2013. According to Clause 2.2 of the Player Contract, the Player was to be assigned to different teams in the following manner:
“The Club, Player and Representative agree that the Player during the
2009/2010 season shall represent the second team of the Club. The team of the Club which the Player represents during the 2010/2011 season shall be selected by mutual consent of the Club, Player and Representative with a view to assure fast and fluent development of the Player and assurance of interests of the Club. During the seasons
2011/2012 and 2012/2013 the Player shall represent the main team of the Club.”1
6. The Player played for the Club’s second team Vilniaus Perlas in 2009-2010 and 2010-
2011, and for Pasvalio “Pieno žvaigždes” in 2011-2012. He played for the Club’s main team in 2012-2013 until delivery of his termination notice on 15 October 2012.
7. The net remuneration the Club promised to pay the Player as per Clause 4.1 of the
Player Contract is as follows:
no less than EUR 7,550 for the 2009-2010 season (i.e. EUR 755 per month);
no less than EUR 10,450 for the 2010-2011 season (i.e. EUR 1,045 per month);
no less than EUR 42,250 for the 2011-2012 season (i.e. EUR 4,225 per month); and
no less than EUR 74,150 for the 2012-2013 season (i.e. EUR 7,415 per month).
8. The stipulated payments were to be made by the 10th day of each month (Clause 4.14).
1 Any reference to the Player Contract is made to the certified English translation provided by Claimants.
Respondent has not challenged its accuracy.
Arbitral Award 3/32 (BAT 0416/13)
9. The Agency was to receive an annual commission of 10% from the Player’s net salary by 30 October of each season (Clause 9.3).
10. It is undisputed that Respondent fully satisfied its payment obligations vis-à-vis the Player for the 2009-2010, 2010-2011 and 2011-2012 seasons, and vis-à-vis the Agency for the 2009-2010 season. What is disputed in this arbitration is whether Respondent unjustifiably delayed certain salary payments due for the 2012-2013 season, and whether the Player was entitled to terminate the Player Contract with immediate effect as a result thereof. The relevant events leading up to the Player’s termination notice on 15 October 2012 can be summarized as follows:
11. Prior to the start of the 2012-2013 season, the Club executed a contract with the bank DNB (the “Bank Contract”). Clause 11 of the Bank Contract (English translation) required the Club to “execute at least 100 per cent of all individual monetary operations carried out by the [Club] through accounts of the [Club] opened with the Bank [… ]. The date as of which the operations referred to in this paragraph shall commence through
the accounts opened with the Bank: 30 September 2012” (emphasis added).
12. On 18 September 2012, the Club and the Player engaged in an SMS conversation whereby the Club requested that the Player provide the Club with his address, passport number and personal number. The Player did not have the requested information readily available. The Club explained to the Player that this information was needed to set up a bank account for him.
13. On 1 October 2012, the Club sent an email to the Player stating:
“On September 18 I asked you to send your passport number and home address. I also informed you that this information was necessary to open an account with the bank to which your salary would be remitted. Seeing that so far we have not received the requested information from you, we cannot remit salary.”
Arbitral Award 4/32 (BAT 0416/13)
14. On 2 October 2012, the Player responded to the Club’s email request by providing his passport number and current address.
15. On 7 October 2012 and 8 October 2012, the Player asked the Club via SMS message if he could play for his university on 8 October 2012. The Club, responding by SMS message on 8 October 2012, denied the Player’s request.
16. On 9 October 2012, the Club remitted a payment of LTL 13,602.51 (EUR 3,940) for “sports activities’ services” to the account that the Club had set up for the Player at DNB bank.
17. On 11 October 2012, Claimants’ counsel sent a warning letter to Respondent via e-mail and fax (the “Warning Letter”) informing it that the Player had yet to receive his August
2012 and September 2012 salary payments totalling EUR 14,830 and requested that the Club “cover fully the indebtedness of the Club to the Player within 72 (seventy two) hours, but no later than by 14 October 2012 inclusively […] and we hereby notify the Club about the unilateral Contract termination from 15 October 2012 in the event of failure to perform the aforementioned requirement” (emphasis added).
18. On 12 October 2012, the Club remitted a payment of LTL 12,000 (EUR 3,475) for “sports activities’ services” to the account that the Club had set up for the Player at DNB bank.
19. On 15 October 2012, Claimants’ counsel sent a letter to the Club via email and fax (“Termination Letter”) stating that the Club had failed to pay the outstanding salary within the necessary time period, purportedly terminating the contract based on Clause
4.17 of the Player Contract and demanding that a letter of clearance be issued immediately based on Clauses 4.17 and 3.4.10 of the Player Contract. The e-mail
attaching the Termination Letter was sent at 3:29 pm on 15 October 2012.
Arbitral Award 5/32 (BAT 0416/13)
20. On the same day, the Club remitted a payment of LTL 25,602.51 (EUR 7,415) for “sports activities’ services” to the account that the Club had set up for the Player at DNB bank, and the Club sent an email to Claimants’ counsel at 5:36 pm, stating that “[a]ll obligations to Saulius Kulvietis pending to date have been fulfilled. A copy of the payment order is attached.”
21. Also on the same day, the Player requested to play for his university that night, and the Club responded that he could not via SMS message. The Player played in the game for his university anyway.
22. On 19 October 2012, the Club remitted a payment of LTL 25,602.51 (EUR 7,415) for “sports activities’ services” to the account that the Club had set up for the Player at DNB bank.
23. On 22 October 2012, Claimants’ counsel, claiming to have not received a response to his previous letter dated 15 October 2012, sent a follow-up letter to the Club requesting it to “issue immediately, but no later than by 26 October 2012, the Letter of Clearance to the Player and the Lithuanian Basketball Federation.”
24. On 23 October 2012, the Club sent a letter to Claimants responding to their counsel’s letters dated 11 October 2012 and 22 October 2012. In this letter, the Club stated that it had “fulfilled its obligations towards Saulius Kulvietis under the agreement” and argued that:
“Všl Krepšinio Rytas could not pay the salary to Mr. Kulvietis in accordance with the terms of the agreement due to the fault of Mr. Kulvietis … Mr. Kulvietis only submitted this information to the club on
02-10-2012 (copies of the emails are enclosed). Hence, Mr. Kulvietis deliberately and maliciously procrastinated so that the club would miss the terms established in the agreement and Mr. Kulvietis could terminate the agreement on sports activities signed between the parties.”
Arbitral Award 6/32 (BAT 0416/13)
25. The Club, based on its position that the Player did not validly terminate the Player Contract, continued to refuse the issuance of a letter of clearance on behalf of the Player.
26. On 31 October 2012, Claimant 2 sent a warning letter to the Club, demanding payment of the outstanding agent fees for the 2010/2011, 2011/2012 and 2012/2013 seasons in the total amount of EUR 13,090 plus VAT by no later than 11 November 2012, and stating:
“Therefore, we state and emphasize that in the event the Club fails to pay to the Representative the outstanding agency fee for the basketball seasons of the year 2010/2011, 2011/2012 and 2012/2013 (EUR 15,838.90) the Contract shall be terminated unilaterally by the Representative from 12 November 2012 on the grounds of this notice without providing to the Club the additional notice about unilateral Contract termination.”
27. The Club did not make the requested payments.
28. In November 2012, the Player agreed to play for a French club, but was unable to join the club because the Lithuanian Basketball Federation (“LBF”) denied issuance of the letter of clearance requested by the French Basketball Federation (“FFBB”).
29. On 12 December 2012, Claimants sent another letter to the Club reaffirming that “the Contract by and between the Player and the Club is terminated and non-binding to the Parties from 15 October 2012” and requesting that the Club “terminate immediately the said actions infringing the legitimate and justified interests of the Player and [meet] the obligations set forth in Clauses 3.4.10 and 4.17.”
30. At the end of January 2013, the Player agreed to play for another French club. On 4
February 2013, the LBF again denied issuance of a letter of clearance to the FFBB, arguing that the Player was still under a valid contract with the Club until 31 May 2013.
Arbitral Award 7/32 (BAT 0416/13)
31. On 5 February 2013, Claimant 2 sent a “Request for deciding on the dispute arising from the refusal to issue the letter of clearance” to the FIBA Secretary General, along with a description of the dispute and several exhibits.
32. On 22 February 2013, FIBA decided that, in accordance with Article 3-97 of the FIBA Internal Regulations, the Player “is allowed to register with a club in France” because he “validly terminated the Contract on 15 October 2012 … [and] is not subject to a validly binding contract in Lithuania” (the “FIBA Decision”). In summary, the FIBA Decision is based on the following legal considerations:
The Player was entitled to terminate the Player Contract with immediate effect on 15
October 2012, because, on the day he delivered the Termination Letter, the Club was late in paying part of the August salary and the entire September salary for more than 30 days;
The Player’s delay in providing the necessary information for the opening of a bank account is not a valid reason for the Club’s payment default;
The Player Contract does not contain any specific provisions regarding the method of payment for salaries. The Club had a general obligation to ensure that the Player receives his salary on the agreed due dates. The alleged commitment vis-à-vis DNB bank does not justify the delay or refusal of payment vis-à-vis the Player;
The Club’s obligation to perform all financial transactions through bank accounts of DNB bank started at a time when the Club was already in default with the August and September 2012 salary instalments. The Club could have made these payments without any of the alleged restrictions under the Bank Contract;
The alleged delay by the Player to provide his personal data to the Club occurred when the Club was already in breach of the Player Contract due to the payment delay concerning the August salary;
The Club was in possession of the requested information since 2 October 2012 and
had, therefore, enough time to make the outstanding payments before the Player
Arbitral Award 8/32 (BAT 0416/13)
sent the Warning Letter on 11 October 2012 and the Termination Letter on 15
33. After the rendering of the FIBA decision, the Player was engaged by a French club for a short period as an amateur player before he joined the Lithuanian club Viešoji istaiga Vilnius sakalai as of 25 February 2013 under a Sports Activity Agreement (the “New Contract”). Under the New Contract, the Player received a monthly net remuneration of EUR 1,420 for the period between 25 February until 25 April 2013 (Clause 4.1 of the New Contract), i.e. a total amount of EUR 2,840 net for two months.
3.2 The Proceedings before the BAT
34. On 21 May 2013, Claimants filed a Request for Arbitration together with several exhibits in accordance with the BAT Rules, which was received by the BAT Secretariat on the same day. The non-reimbursable handling fee of EUR 2,000 was received in the BAT bank account on 18 April 2013.
35. On 5 August 2013, the BAT informed the Parties that Ms. Annett Rombach had been appointed as Arbitrator in this matter, invited Respondent to file its Answer in accordance with Article 11.2 of the BAT Rules by no later than 26 August 2013 (the “Answer”), and fixed the amount of the Advance on Costs to be paid by the Parties by no later than 16 August 2013 as follows:
“Claimant 1 (Mr. Saulius Kulvietis) EUR 3,500
Claimant 2 (UAB “East Players”) EUR 1,000
Respondent (Viesoji Istaiga Krepsinio Rytas) EUR 4,500”
36. On 26 August 2013, Respondent filed its Answer.
37. By letter to the Parties dated 30 August 2013, the BAT Secretariat acknowledged receipt of the full amount of the Advance on Costs. The Arbitrator declared the
Arbitral Award 9/32 (BAT 0416/13)
exchange of documents completed and invited the Parties to submit a detailed account of their costs by no later than 6 September 2013.
38. On 4 September 2013, Claimants submitted the following account of costs:2
“4. Summary and total amount of costs
Total amount of all costs incurred by
Claimant I (EUR):
Total amount of all costs incurred by
Claimant II (EUR):
2 The summaries presented herein were supported by a detailed statement of all amounts mentioned in this award below.
Arbitral Award 10/32 (BAT 0416/13)
39. Along with his account of costs, Claimant submitted an unsolicited reply (the “Reply”) to Respondent’s Answer, accompanied by several new exhibits. The Arbitrator, in her procedural order dated 13 September 2013 (the “First Procedural Order”) and exercising her discretion in accordance with Article 12.1 BAT Rules, decided that the Reply was inadmissible and would not be considered in the decision-making process.
40. Respondent did not file any cost account.
41. On 19 September 2013, Respondent informed the BAT Secretariat that it had no comments on Claimants’ cost account.
42. On 13 November 2013, the Arbitrator issued a procedural order in which she modified her First Procedural Order to the extent that Claimant 2’s letter to the Club dated 31
October 2013, submitted by Claimants as Exhibit 3 to the (inadmissible) Reply, was admitted to the record, because Claimants had referred to that letter already in their Request for Arbitration, along with a promise to submit it at a later stage of the proceeding. The Arbitrator clarified that the rest of the Reply remained inadmissible and would not be considered in the decision-making process.
43. Respondent was invited to comment on the letter by 22 November 2013. Respondent did not file any comments.
44. As none of the Parties requested a hearing, the Arbitrator decided, in accordance with Article 13.1 of the BAT Rules, not to hold a hearing and to render the award based on the written record before her.
4. The Positions of the Parties
45. This section of the award does not contain an exhaustive list of the Parties’ contentions, its aim being to provide a summary of the substance of the Parties’ main arguments. In
Arbitral Award 11/32 (BAT 0416/13)
considering and deciding upon the Parties’ claims in this award, the Arbitrator has accounted for and carefully considered all of the submissions made and evidence adduced by the Parties, including allegations and arguments not mentioned in this section of the award or in the discussion of the claims below.
4.1 Claimants’ Position and Request for Relief
46. Claimants submit the following in substance:
Despite the Player properly fulfilling his obligations under the Player Contract, the Club breached its payment duties thereunder;
Despite Claimant 1’s Warning Letter (requesting payment of the outstanding
August and September salaries within 72 hours, but no later than by 14 October
2012), the Club only made partial payments on 9 October and 12 October 2012;
The Player legitimately terminated the Player Contract on 15 October 2012 because of the Club’s failure to satisfy its outstanding payment obligations in full within the deadline set by the Player’s counsel;
The Player could not secure new employment prior to the end of February 2013 as a result of the Club’s refusal to issue a letter of clearance despite several requests made by the Player’s counsel;
The Agency is entitled to payment of all outstanding agent fees because it provided the services promised under the Player Contract.
47. In their Request for Arbitration, Claimants requests the following relief:
“- To award a compensation in the amount of EUR 49,065.00 (forty nine thousand sixty five euros) plus interest at rate of 5 % per annum on such amount for the period starting from 15 October 2012 to the actual day of payment of this amount from the Respondent VIEŠOJI ISTAIGA “KREPŠINIO RYTAS” in favour of the Claimant I Saulius Kulvietis;
Arbitral Award 12/32 (BAT 0416/13)
– To award the agency fee in the amount of EUR 12,685.00 (twelve thousand six hundred and eighty five euros) and VAT, in total EUR
15,348.85 (fifteen thousand three hundred and forty eight euros eighty five eurocents) from the Respondent VIEŠOJI ISTAIGA “KREPŠINIO RYTAS” in favour of the Claimant II UAB “East Players”;
– To award interest at rate of 5 % per annum on the below indicated amounts from the Respondent VIEŠOJI ISTAIGA “KREPŠINIO RYTAS” in favour of the Claimant II UAB “East Players’):
• EUR 1,264.45 (one thousand two hundred and sixty four euros fourty five eurocents) for the period starting from 30 October
2010 to the actual day of payment of this amount;
• EUR 5,112.25 (five thousand one hundred and twelve euros twenty five eurocents) for the period starting from 30 October
2011 to the actual day of payment of this amount;
• EUR 8,972.15 (eight thousand nine hundred and seventy two euros fifteen eurocents) for the period starting from 30 October
2012 to the actual day of payment of this amount;
– To award legal fees and other expenses incurred by the Claimants Saulius Kulvictis and UAB “East Players” in connection with the proceedings of arbitration from the Respondent VIEŠOJI ISTAIGA “KREPŠINIO RYTAS” in favor of the Claimants.”
48. With respect to costs, Claimants specified their request for relief in their account of costs as follows:
“- To award EUR 11,064.92 (eleven thousand and sixty four euros ninety two eurocents) of costs incurred by the Claimant I Saulius Kulvietis in connection with the proceedings of arbitration from the respondent Viešioji istaiga “Krepšinio rytas” in favour of the Claimant I Saulius Kulvietis;
– To award EUR 1,850.44 (one thousand eight hundred and fifty euros forty four eurocents) of costs incurred by the Claimant II UAB “East Players” in connection with the proceedings of arbitration from the respondent Viešioji istaiga “Krepšinio rytas” in favour of the Claimant II UAB “East Players.”
Arbitral Award 13/32 (BAT 0416/13)
4.2 Respondent’s Position and Request for Relief
49. Respondent submits the following in substance:
With respect to the Player’s salary claim
Since the beginning of the 2012-2013 season, the Player was extremely dissatisfied with his role in the team and looked for different ways to terminate the Player Contract;
The Player deliberately delayed transmission of personal information, which the Club had requested since August 2012 in order to make salary payments via DNB bank, until 2 October 2012;
Such deliberate delay caused the Club’s tardiness in making the Player’s salary
As soon as the Club was in possession of the requested information, it paid the outstanding salaries owed to the Player in various instalments between 9
October 2012 and 19 October 2012;
The Player improperly sought to terminate the Player Contract despite the payments;
The Player was not entitled to terminate the Player Contract, because the Club was only 15 days late with payment of the September salary (and not 30 days, as required by the Player Contract), which became due on 30 September 2012.
With respect to the Agency’s payment claim
The Agency did not provide any services to the Club for the 2010-2011 and
2011-2012 seasons because the Player represented other professional basketball teams (Vilniaus Perlas and Pasvalio “Pieno žvaigždes”) during that time. Therefore, it is not entitled to any agent fees;
Arbitral Award 14/32 (BAT 0416/13)
Because the Player illegally terminated the Player Contract on 15 October
2012, the Agency is also not entitled to seek payment of the agent fee for the
50. The Club, in its Answer, submits the following request for relief:
“ 1. To reject the claim of the Claimant Saulius Kulvietis to PI “Krepšinio rytas”, as invalid.
2. To reject the claim of the Claimant JSC “East Players to PI “Krepšinio rytas”, as invalid.
3. To adjudge the costs of litigation of Claimant 1 and Claimant 2.”
5. The Jurisdiction of the BAT
51. Pursuant to Art. 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”).
52. The jurisdiction of the BAT presupposes the arbitrability of the dispute and the existence of a valid arbitration agreement between the parties.
53. The Arbitrator finds that the dispute referred to her is of a financial nature and is thus arbitrable within the meaning of Art. 177(1) PILA.
54. The jurisdiction of the BAT with respect to all Parties of this dispute follows from
Clause 11 of the Player Contract, which reads as follows:
Arbitral Award 15/32 (BAT 0416/13)
“11.1. The Parties shall choose FIBA Arbitral Tribunal and Arbitration Rules according to which the Agreement must have following reference of the text In English below:
11.2. 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 resolved in accordance with the FAT Arbitration Rules by a single arbitrator appointed by the FAT President.
11.3. The seat of the arbitration shall be Geneva, Switzerland.
11.4. The arbitration shall be governed by Chapter 12 of the Swiss Act on Private International Law (PIL), irrespective of the parties’ domicile.
11.5. The language of the arbitration shall be English.
11.6. 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.
11. 7. The arbitrator and CAS upon appeal shall decide the dispute ex aequo et bono.”
55. In accordance with Article 1.1 of the BAT Rules, these rules “shall apply whenever the parties to a dispute have agreed in writing to submit the same to the BAT – including by
r efer ence t o it s f or m er name “FIBA Ar bit r al Tr ibunal ( FA T)” (emphasis added). Article
18.2 of the BAT Rules says: “Any reference to BAT’s former name “FIBA Arbitral Tribunal (FAT)” shall be understood as referring to the BAT.” The Parties’ reference to the “FIBA Arbitral Tribunal (FAT)” in Clause 11 of the Player Contract is therefore understood as a reference to the BAT.
56. The arbitration agreement is in written form and thus the arbitration clause fulfils the formal requirements of Article 178(1) PILA.
Arbitral Award 16/32 (BAT 0416/13)
57. With respect to substantive validity, the Arbitrator considers that there is no indication in the file which could cast any doubt on the validity of the arbitration agreement in the present matter under Swiss law (cf. Article 178(2) PILA). In particular, the wording “[a]ny dispute arising from or related to the present agreement” in Clause 7 of the Settlement Agreement clearly covers the present dispute. Furthermore, Respondent did not object to the jurisdiction of the BAT.
58. For the above reasons, the Arbitrator has jurisdiction to decide the present dispute.
6. Applicable Law – ex aequo et bono
59. 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 reads as follows:
“the parties may authorize the arbitral tribunal to decide ex aequo et bono”.
60. 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.”
61. In Clause 11.7 of the Player Contract, the Parties have explicitly directed and empowered the Arbitrator to decide this dispute ex aequo et bono. Consequently, the
Arbitrator will decide the issues submitted to her in this proceeding ex aequo et bono.
Arbitral Award 17/32 (BAT 0416/13)
62. 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”:
63. “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
64. 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.”
65. In light of the foregoing considerations, the Arbitrator makes the findings below.
66. The central issue that must be resolved in the present dispute is whether the Player validly terminated the Player Contract on 15 October 2013 (see below 7.1) and which, if any, consequences the findings on the contract termination issue trigger with respect to the quantum of the claims presented here (see below 7.2).
7.1 Did the Player validly terminate the Player Contract?
67. Claimants’ case rests on the premise that the Player validly terminated the Player
Contract on 15 October 2012 and that, based on such termination, they are entitled to
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).
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the outstanding Player salary for the 2012-2013 season and agent fees for the 2010-
2011, 2011-2012 and 2012-2013 seasons. In justifying the termination of the Player Contract, Claimants rely on Clause 4.17 of the Player Contract, which provides as follows:
“If the payment of remuneration to the Player is delayed for more than 30 days, the Player shall be entitled to send a warning letter regarding the unilateral Contract termination at the address of the seat of the Club by mail, fax or official e-mail address […] Should the Club fail to cover the indebtedness to the Player within 72 hours, the Player shall be entitled to terminate the Contract unilaterally. In this event all financial obligations of the Club undertaken in Part 4 hereof shall remain valid for the benefit of the Player. In this event the Club shall undertake to issue to the Player a Letter of Clearance and provide a possibility to sign a contract with any other basketball club. Having such letter sent the Club is deprived of any rights to the Player.”
68. Pursuant to Clause 4.14 of the Player Contract, the salary payments were due “by the
10th day of each month”, i.e. by 10 August 2012 and 10 September 2012 for the August and September salary, respectively (and not on the 30th of each month, as argued by Respondent). It is undisputed that Respondent failed to make any payments for August and September 2012 (totalling EUR 14,830) before 9 October 2012, when it remitted a first partial payment of EUR 3,940.
69. Despite this partial payment, when the Player sent the Warning Letter on 11 October
2012, the Club was “delayed for more than 30 days” with half the August and the full
70. On the date the Player delivered the Termination Letter to the Club (15 October 2012), the latter – although it had remitted another partial amount of EUR 3,475 on 12 October
2012 – was still late in paying a full monthly salary, for more than 30 days. Therefore,
the Player was principally justified in terminating the Player Contract pursuant to
Clause 4.17 after the expiration of the 72 hours-deadline.
71. Respondent argues that its payment default was caused by the Player and his deliberate delay in providing the Club with his personal information necessary for the
Arbitral Award 19/32 (BAT 0416/13)
opening of a bank account, through which the payments were to be remitted. In the Club’s view, the Player, in withholding his personal information, provoked contract termination by preventing the Club to fulfil its financial obligations under the Player Contract.
72. The Arbitrator disagrees with Respondent. In this respect, she notes that, although she is not legally bound by the FIBA Decision, she has carefully read it as part of her consideration of the evidence on the record. For the reasons set forth below, the Arbitrator concurs with the findings of FIBA regarding issues relevant to the present arbitration.
73. First, the Player Contract does not restrict the method of payment of the Player’s salary. The Club had a general obligation to ensure that the Player received his salary on the agreed days. It had several methods for making the payments, including by transfer to the Player’s known bank account, as in the previous seasons of the Player Contract. In this context, the Club’s (alleged) commitment under the Bank Contract to execute all financial transactions through DNB bank cannot justify delay or refusal of payment vis-à-vis the Player, who is entitled to receive his salary under the Player Contract without any limitations regarding the payment method.
74. Second, even if the Bank Contract were of any relevance for the Club’s payment obligations vis-à-vis the Player (which it is not), the Arbitrator notes that the Club’s obligation to execute all financial transactions through DNB bank started on 30
September 2012 (Clause 11 of the Bank Contract), i.e. long after the outstanding salary instalments became due on 10 August 2012 and 10 September 2012. Therefore, the Club was not restricted on how it would pay the Player at the time it was obligated to fulfil its obligations. The Club failed to explain why it did not simply pay the Player on or before the due dates through the Player’s bank account or in any other way. Similarly, there is no evidence on the record suggesting that the Club ever had difficulties paying
the Player in the past.
Arbitral Award 20/32 (BAT 0416/13)
75. Third, by the time the Club requested the Player’s personal data on 18 September
2012 (and not since August 2012, as alleged in Respondent’s Answer), it was already in breach of the Player Contract. Because the Club was late in paying the August salary for more than 30 days when the Club first sought information from the Player on
18 September 2012, the Player’s right to send the Warning Letter had already been established. Therefore, the fact that the Player only submitted his personal data on 2
October 2012 (i.e. a little more than two weeks after the initial request) was not the cause for the Club’s breach of the Player Contract.
76. Fourth, even if one were to assume (ad arguendo) that the Player unreasonably delayed the transmission of his personal data to the Club, the Club had sufficient time to satisfy the Player’s payment claims between 2 October 2012 and 14 October 2012, before the Player terminated the Player Contract on 15 October 2012. The Club was obligated to immediately settle all outstanding payments (and not only a part of them) on behalf of the Player. This is all the more true for the period after 11 October 2012, i.e. after receipt of the Player’s Warning Letter requesting settlement of all outstanding debts by 14 October 2012. Respondent has not proffered any explanation why it only remitted partial payments on 9 October 2012 and 12 October 2012 despite being fully aware of the full amount of the Player’s claim.
77. The Arbitrator concludes that the Club’s payment delay was not justified, and that the Player validly terminated the Player Contract on 15 October 2012. The fact that the Club remitted a further payment covering all outstanding amounts for August and September 2012 on 15 October 2012 does not affect the termination, which had already been validly exercised by that time.
7.2 To which amounts are Claimants entitled on the quantum side of their case?
78. Respondent’s breach justified the termination of the Player Contract on 15 October
2012. As a result, Claimants are principally entitled to damages for the losses caused by the early termination of the Player’s employment.
Arbitral Award 21/32 (BAT 0416/13)
79. The quantum side of Claimants’ case consists of three positions: (i) lost salary payments on behalf of the Player for the remainder of the 2012-2013 season (November 2012 to May 2013); (ii) agent fee payments in favour of the Agency for the
2010-2011, 2011-2012 and 2012-2013 seasons; and (iii) interest on the above- mentioned amounts.
i. Lost salary payments on behalf of the Player
80. In accordance with the principles explained above, the Arbitrator must calculate the compensation which is due by the Club for the period between the actual termination date and – following Claimants’ request for relief – the end of the 2012-2013 season.
81. The consequences of early contract termination are addressed in Clause 4.17 of the Player Contract, which sets forth that “all financial obligations of the Club undertaken in Part 4 hereof shall remain valid for the benefit of the Player.” The Arbitrator notes that this provision is somewhat uncommon in the world of basketball, as it does not provide for payment acceleration in a sense that all outstanding amounts promised under the Player Contract become due and payable immediately after the termination. The express reference to “Part 4” of the Player Contract, which includes Clause 4.14 (providing that the contractual salary payments become due on the 10th of each month), further evidences that the Parties obviously intended to adhere to the originally agreed payment schedule instead of payment acceleration even in the event of termination.
82. Pursuant to Clause 4.14, the monthly salary payments in the amount of EUR 7,415 became due on the 10th of each month, i.e.:
On 10 November 2012,
On 10 December 2012,
On 10 January 2013,
On 10 February 2013,
Arbitral Award 22/32 (BAT 0416/13)
On 10 March 2013,
On 10 April 2013,
On 10 May 2013.
83. Because all outstanding salary payments for the 2012-2013 season have become due by now, the Player is principally entitled to receive these payments (7x EUR 7,415 = EUR 51,905) as compensation under Clause 4.17 of the Player Contract.
84. However, according to generally accepted principles of the law of damages and also of labor law, any amounts which the Player earned or might earn by exercising reasonable care during the remaining term of the Player Contract must be deducted.6
85. In this respect, the Arbitrator accepts Claimants’ submission that the Player was unable to secure new employment prior to February 2013 because of the Club’s unjustified refusal to issue a letter of clearance. Since the Player had validly terminated the Player Contract on 15 October 2012, the Club was obligated, pursuant to Clause 4.17 of the Player Contract, “to issue to the Player a Letter of Clearance and provide a possibility to sign a contract with any other basketball club.” The Club failed to comply with its obligation and has to bear the respective consequences, i.e. that the Player could not mitigate his damages until FIBA decided that he was allowed to join a new club on 22
86. After the issuance of the FIBA decision, the Player played for a short period as an amateur in France and then signed a new contract with a Lithuanian Club, under which he received salary payments totalling EUR 2,840 for the remainder of the 2012-2013 season. This amount has to be deducted from the salary payments he would have
received under the Player Contract (EUR 51,905).
6 These principles are also reflected in the BAT jurisprudence, see e.g. ex multis BAT Award 237/11 (Ivanovic, GPK Sports Management Limited vs. Kolossos Rhodes Basketball Club).
Arbitral Award 23/32 (BAT 0416/13)
87. The Arbitrator, deciding ex aequo et bono, finds that no further deductions on the Player’s payment claim are warranted. In particular, because the Player obtained FIBA’s approval to join a new Club relatively late during the season, it is comprehensible that he was unable to find a Club that would pay a similar salary as Respondent.
88. In summary, the Arbitrator finds that Claimant is entitled to compensation payments in the requested amount of EUR 49,065 (EUR 51,905 minus EUR 2,840).
ii. Agent fee payments in favour of the Agency
89. The Agency requests payment of agent fees for the 2010-2011, 2011-2012 and 2012-
2013 seasons. Pursuant to Clause 9.3 of the Player Contract, the Club undertook to pay the Agency “the agency fee in the sum of 10 (ten) percent from the net remuneration of the respective season of the Player and value added tax until October
30 of current season.” Accordingly, the following amounts in agent fees became, in
principle, due on the following dates:
EUR 1,045 plus VAT (10% of EUR 10,450) on 30 October 2010;
EUR 4,225 plus VAT (10% of EUR 42,250) on 30 October 2011;
EUR 7,415 plus VAT (10% of EUR 74,150) on 30 October 2012.
90. The agent fees for 2010-2011 and 2011-2012 became due before the Player terminated the Player Contract on 15 October 2012, and the Arbitrator finds that the Agency is entitled to these fees irrespective of the subsequent contract termination. Respondent’s argument that Claimant 2 is not entitled to these payments because the Player did not play for the Club, but for other teams in 2010-2011 and 2011-2012, is
Arbitral Award 24/32 (BAT 0416/13)
91. Clause 2.2 (quoted in para. 5 above) expressly envisions the possibility of loaning the Player to a different team. Therefore, the Arbitrator concludes that Clause 2.2 permits the Player to represent different teams in the two years at issue. Respondent does not allege that Claimant 1’s performance for different teams occurred without the Club’s consent. Similarly, it also does not allege that the Club terminated the Player Contract as a result of the Player not playing for the Club in the 2011-2012 season.
92. In any event and irrespective of the above, the Arbitrator finds that there is nothing in the Player Contract that would suggest that the Agency’s entitlement to receive its fee depends on the Player’s performance specifically for the Club. It is undisputed that the Player was under a valid contract with the Club throughout the agreed term (until the Player terminated the Player Contract). The Club’s decisions regarding how and where it employs the Player cannot have any effect on the Agency’s claim in the absence of any agreement to the contrary.
93. The agent fee for 2012-2013 became due on 30 October 2012, i.e. after the Player terminated the Player Contract. Respondent argues that the Agency has no right to claim the 2012-2013 fee because of the early contract termination. The Arbitrator disagrees.
94. The Agency’s claim for the 2012-2013 agent fee remains unaffected by the Player’s termination of the Player Contract because such termination was caused by the Club’s breach. It would be unfair to burden the Agency with the negative consequences arising out of a contract termination that was provoked solely by the Club’s misbehaviour, i.e. by the Club’s failure to fulfil its payment obligations vis-à-vis the Player. The Agency has provided the services it owed under the Player Contract, and the Club’s actions that lead into the early termination of the agreement cannot go to the
Arbitral Award 25/32 (BAT 0416/13)
95. In light of this reasoning, the impact of the Agency’s own attempts to terminate the
Player Contract based on Clauses 9.3 and 9.4 (by means of a warning letter of 31
October 2012, in which it requested payment of the outstanding agent fees and terminated the Player Contract “in the event the Club fails to pay [him] … on the grounds of this notice without providing to the Club the additional notice about unilateral Contract termination”) can be left undecided.
96. In summary, the Arbitrator finds that the Agency is entitled to payment of all outstanding agent fees for the 2010-2011, 2011-2012 and 2012-2013 seasons.
97. Claimants request payment of interest at the rate of 5% p.a. on the outstanding remuneration for the Player from 15 October 2012, and on the outstanding agent fees from 30 October 2010 (for the 2010-2011 season), 30 October 2011 (for the 2011-2012 season), and 30 October 2012 (for the 2012-2013 season).
98. The Player Contract does not provide for any obligation by the Club to pay interest in case of a non-payment. However, it is a generally accepted principle embodied in most legal systems and reflected in the BAT jurisprudence,7 that default interest can be awarded even if the underlying agreement does not explicitly provide for a respective obligation. The Arbitrator, deciding ex aequo et bono and in accordance with constant BAT jurisprudence, considers an interest rate of 5% per annum to be fair and just to
avoid that the Club derives any profit from the non-fulfillment of its obligations.
7 See, ex multis, the following BAT awards: 0092/10, Ronci, Coelho vs. WBC Mizo Pecs 2010;
0069/09,Ivezic, Draskicevic vs. Basketball Club Pecsi Noi Kosariabda Kft; 0056/09, Branzova vs. Basketball Club Nadezhda); 0237/11, Ivanovic, GPK Sports Management Limited vs. Kolossos Rhodes Basketball Club.
Arbitral Award 26/32 (BAT 0416/13)
99. With respect to the starting date, the Arbitrator finds that default interest should accrue from the day after the stipulated payments became due. The payment due dates are explicitly set out in Clause 4.14 (for the Player’s remuneration) and Clause 9.3 (for the agent fees) so that Respondent knew at what time it was obligated to effectuate the payments. The Player’s termination notice of 15 October 2012 does not change this analysis, because – as explained above at para. 81 – the Player Contract provided for the initial payment schedule to remain in force even after the termination of the agreement. Because the Parties did not agree on payment acceleration as of the date of the termination notice, Claimants’ request for an interest award from 15 October
2012 with respect to the entire outstanding remuneration must be rejected.
100. Instead, the Arbitrator awards interest as follows:
On the Player’s remuneration
from 11 November 2012 on the amount of EUR 7,415;
from 11 December 2012 on the amount of EUR 7,415;
from 11 January 2013 on the amount of EUR 7,415;
from 11 February 2013 on the amount of EUR 7,415;
from 11 March 2013 on the amount of EUR 7,415;
from 11 April 2013 on the amount of EUR 7,415;
from 11 May 2013 on the amount of EUR 7,415.
On the agent fees
from 31 October 2010 on the amount of EUR 1,264.45;
from 31 October 2011 on the amount of EUR 5,112.25;
from 31 October 2012 on the amount of EUR 8,972.15.
Arbitral Award 27/32 (BAT 0416/13)
101. Claimant 1 is entitled to an amount of EUR 49,065.00 (net) in salaries for the remainder of the 2012-2013 season, plus interest of 5% p.a. from the 11th day of November and December 2012, and January to May 2013 on the amount of EUR 7,415.00, respectively.
102. Claimant 2 is entitled to agency fees for the 2010-2011, 2011-2012 and 2012-2013 seasons in the total amount of EUR 15,348.85, plus interest of 5% p.a. from 31 October
2010 on the amount of EUR 1,264.45, from 31 October 2011 on the amount of EUR
5,112.25, and from 31 October 2012 on the amount of EUR 8,972.15.
103. 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.
104. On 28 November 2013 – 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”; 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”, and 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
Arbitral Award 28/32 (BAT 0416/13)
105. Considering that Claimants prevailed with all of their claims (except for a small part of Claimant 1’s claim for payment of interest), it is appropriate that all of the costs related to this arbitration be borne by Respondent and that Respondent be required to cover its own legal costs.
106. With respect to Claimants’ legal costs in the amount of EUR 5,194.37 for Claimant 1 and EUR 850.44 for Claimant 2, the Arbitrator finds that these costs are not recoverable to the extent that they relate to preparatory work completed prior to the initiation of these proceedings. Pursuant to Claimants’ Statement of Costs, “pre- arbitrational” costs included, inter alia, attorneys’ fees for the preparation of the Warning Letter, the Termination Letter, and submissions in relation to the letter of clearance dispute.8
107. According to Article 17.3 BAT Rules, legal fees may be reimbursable if “incurred in connection with the proceedings” (emphasis added). The “pre-arbitrational” costs incurred by Claimants are not directly related to this proceeding, but would have been incurred in any event and independent of the initiation of this arbitration.9 Thus, these costs have not arisen “in connection” with this proceeding and cannot be considered.
108. Hence, Claimant 1 is entitled to reimbursement for his legal fees in the amount of EUR 2,630.79 (EUR 5,194.37 minus EUR 2,563.58). Claimant 2 is entitled to reimbursement for his legal fees in the amount of EUR 780.35 (EUR 850.44 minus EUR 70.09).
8 According to Claimants’ Statement of Costs, their “pre-arbitration” legal costs amount to EUR 2,563.58 (for
Claimant 1) and EUR 70.09 (for Claimant 2).
9 The rule established in Article 17.3 BAT Rules conforms with widely accepted principles of international commercial arbitration. See, e.g., ICC Case No. 5896 (1992) (ICC Bulletin, Vol. IV, No. 1, 1993, p. 38): “The Arbitrators consider that the costs of the arbitration cannot include costs incurred before the commencement of the arbitration, which by Article 3 of the Rules is for all purposes to be the date when the Request for Arbitration is received by the Secretariat of the Court”.
Arbitral Award 29/32 (BAT 0416/13)
109. Additionally, pursuant to Articles 17.1 and 17.3 of the BAT Rules, Claimants are entitled to the handling fee, which qualifies as “other expenses” incurred in connection with the present arbitration.
110. Given that Claimants and Respondent paid their respective shares of the Advance on
Costs, the Arbitrator decides that in application of Article 17.3 of the BAT Rules:
(i) Respondent shall pay EUR 3,500 to Claimant 1 and EUR 1,000 to Claimant 2 as a reimbursement for the respective arbitration costs advanced by them;
(ii) Furthermore, as stated above, the Arbitrator considers it appropriate to take into account the non-reimbursable handling fee of EUR 2,000, paid by Claimant 1, when assessing the expenses incurred by Claimants in connection with these proceedings. Hence, because the Arbitrator considers an amount of EUR 2,630.79 for Claimant 1’s legal fees and expenses to be reasonable, the Arbitrator fixes the contribution towards Claimant 1’s legal fees and expenses at EUR 4,630.79. The contribution towards Claimant 2’s legal fees and expenses is
fixed at EUR 780.35.
Arbitral Award 30/32 (BAT 0416/13)
For the reasons set forth above, the Arbitrator decides as follows:
1. Viešoji Istaiga “Krepšinio Rytas” is ordered to pay to Mr. Saulius Kulvietis
EUR 49,065.00 net together with interest of 5% p.a.
– from 11 November 2012 on the amount of EUR 7,415.00;
– from 11 December 2012 on the amount of EUR 7,415.00;
– from 11 January 2013 on the amount of EUR 7,415.00;
– from 11 February 2013 on the amount of EUR 7,415.00;
– from 11 March 2013 on the amount of EUR 7,415.00;
– from 11 April 2013 on the amount of EUR 7,415.00; and
– from 11 May 2013 on the amount of EUR 7,415.00.
2. Viešoji Istaiga “Krepšinio Rytas” is ordered to pay to UAB “East Players”
EUR 15,348.85 (inclusive of VAT) together with interest of 5% p.a.
– from 31 October 2010 on the amount of EUR 1,264.45;
– from 31 October 2011 on the amount of EUR 5,112.25; and
– from 31 October 2012 on the amount of EUR 8,972.15.
3. Viešoji Istaiga “Krepšinio Rytas” is ordered to pay to Mr. Saulius Kulvietis EUR 3,500.00 and to UAB “East Players” EUR 1,000.00 as a reimbursement of their respective arbitration costs.
4. Viešoji Istaiga “Krepšinio Rytas” is ordered to pay to Mr. Saulius Kulvietis EUR 4,630.79 and to UAB “East Players” EUR 780.35 as a contribution towards their respective legal fees and expenses.
5. Any other or further-reaching requests for relief are dismissed.
Arbitral Award 31/32 (BAT 0416/13)
Geneva, seat of the arbitration, 3 December 2013
Arbitral Award 32/32 (BAT 0416/13)