Case update: Jurisdiction to hear football employment disputes with an international dimension

A recent Swiss Federal Court case (Mezökövesd Zsory FC v Serderov CAS 2022/A/8571) has considered the exemption under Art.22 lit b) of the FIFA Regulations on the Status and Transfer of Players (the RSTP) which enables parties to deviate from FIFA’s default jurisdiction over employment cases with an international dimension.

The case demonstrates that to exercise the exemption under Art.22 lit b) of the RSTP, the jurisdiction clause must be explicitly clear that the parties intend to submit to the jurisdiction of the local court for employment disputes.

In this case, the Swiss Federal Court rejected an appeal brought by football player, Serder Serderov (Serderov), in relation to his unsuccessful claim against his former club Mezökövesd Zsory FC for underpayment of wages.

Article 22 RSTP states:

“Without prejudice to the right of any player, coach, association, or club to seek redress before a civil court for employment-related disputes, FIFA is competent to hear:…b) employment-related disputes between a club and a player of an international dimension; the aforementioned parties may, however, explicitly opt in writing for such disputes to be decided by an independent arbitration tribunal that has been established at national level within the framework of the association and/or a collective bargaining agreement. Any such arbitration clause must be included either directly in the contract or in a collective bargaining agreement applicable on the parties. The independent national arbitration tribunal must guarantee fair proceedings and respect the principle of equal representation of players and clubs."

Facts

Serderov is a Russian national who played in Hungary for Mezökövesd Zsory FC (the Club) between mid-August 2020 and 11 June 2021.

On 3 November 2021, Serderov was successful in a claim against the Club for payment of outstanding salaries and compensation for breach of contract (the Appealed Decision). A summary of the Appealed Decision is set out below.

Appealed Decision

The key terms of Serderov’s employment contract with the Club (the Contract) included the following relevant provisions:

  • The Club’s management could determine in its sole discretion which team Serderov could play for and/or train with (i.e., the Club could remove Serderov from the Club’s first team) provided there was a medical basis;
  • If Serderov was excluded from the Club’s first team, his basic wage could be reduced by up to 50%; and
  • Clause 49 of the Contract stated: ‘The Parties agree that they shall make efforts to settle their possible dispute in amicable way by negotiations. If these efforts fail – in cases determined by the rules of MLSZ or FIFA – the Parties may turn to the organizational units with MLSZ or FIFA scope of authority, in case of labour dispute to the Administrative and Labour Court having competence and scope of authority, and in all other disputes arising out of their legal relationship the Parties stipulate the exclusive jurisdiction of the Sports Standing Arbitration Court based on the Article 47 of the Sports Law. The number of arbitrators is three; the procedure is determined by the Procedural Rules of the Arbitration Court’.

On 31 January 2021 the Club informed Serderov by letter that he would be dropped to the second team with immediate effect and his basic wage would be reduced by 50%. Serderov contested the decision, alleging the Club could only impose these changes if there was a medical basis for doing so, of which there wasn’t. Nevertheless, the Club proceeded to pay Serderov at 50% of his basic wage, whilst Serderov continued to contest the decision and request that he be reinstated to the Club’s first team.

On 11 June 2021, Serderov terminated his contract on the basis of just cause for outstanding salaries (under Art. 14bis of the RSTP) and requested compensation for breach of contract. On 23 June 2021, he lodged a claim against the Club before the FIFA Dispute Resolution Chamber (the FIFA DRC) primarily for the outstanding sums plus interest.

The Club objected to the competence of FIFA DRC to hear the claim, on the basis that: (i) an employment claim was already pending in the local labour court; and / or (ii) the Labour Tribunal of Miskolc (in Hungary) had exclusive jurisdiction to hear the case, rather than the FIFA DRC, as the parties had chosen, under clause 49 of the Contract, to opt out of Art.22 lit b of the RSTP and submit employment disputes to the exclusive jurisdiction of the Hungarian Labour Court.

The FIFA DRC partially accepted Serderov’s claim and required the Club to pay outstanding sums and interest. It also concluded that clause 49 of the Contract did not clearly and exclusively establish the competence of the Labour Court in Hungary, meaning the Club’s objection to the competence of FIFA DRC was not upheld.

Appeal

On 5 January 2022, the Club lodged an appeal with the Court of Arbitration for Sports (CAS), primarily on the basis that clause 49 of the Contract provided the Labour Tribunal of Miskolc with exclusive jurisdiction to decide the original dispute, which it alleged was consistent with the RSTP.

On 6 July 2022 the sole arbitrator appointed by CAS allowed the Club’s appeal, ruling that the FIFA DRC did not have jurisdiction to hear the dispute as the parties had expressly agreed to the exclusive jurisdiction of the Labour Tribunal of Miskolc for any labour dispute (as provided for under Art. 22 lit b) of the RSTP) (the CAS Decision).

On 7 September 2023, Serderov appealed the CAS Decision in the Swiss Federal Court, alleging that the arbitrator wrongly interpreted clause 49 of the Contract and that the parties could refer the matter to the state court in question or the FIFA DRC.

The Swiss Federal Court rejected Serderov’s appeal. It decided that when Serderov and the Club agreed to clause 49 of the Contract, they had chosen to submit employment disputes to the exclusive jurisdiction of the Hungarian Labour Court and, by effect, opted out of art.22 lit b of the RSTP. The Swiss Federal Court said it did not matter whether a claim may or may not have already been submitted in the Hungarian Labour Tribunal.

Key takeaways

This case serves as useful reminder of the importance of clear and unequivocal drafting of jurisdiction clauses. However, it should also serve as a reminder to consider the potential application of other laws, particularly where there is an international element to a dispute.