The curious case of Enyimba Football Club and Chibuike Nwaiwu (Part II)
Contractual compensation clauses fall into two distinct categories.
- “Liquidated damages” clauses – If the parties agree to incorporate a “liquidated damages” clause into their contract, they must aim to assess and estimate in advance the damage that might be caused if the contract were to be terminated early due to a serious breach of contract by one of the parties. The starting point for drafting this clause is therefore an assumption that either: (i) one of the parties terminates the contract prematurely without just cause; or (ii) one of the parties violates its contractual obligations to such an extent that the other party has just cause to terminate the contractual relationship. A “liquidated damages” clause is used by the parties to establish, prior to signing the contract, the amount that will become due in compensation if such an event occurs.
- “Buy-out” clauses – “buy-out” clauses are another type of compensation clause. If a club and a professional player decide to include such a clause in their contract rather than agree a liquidated damages clause, they are not setting an amount of compensation to be paid by the party at fault if the contract is terminated unliterally due to a serious breach of contract. Rather, a buy-out clause confers a right on one of the parties to the contract to terminate the contractual relationship unilaterally and prematurely in return for the unconditional and complete payment of a predetermined sum stipulated in the contract.
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Typically, most Nigerian club sides do not include compensation clauses especially as the prevailing practice is a short-term contract. Be that as it may, inserting compensation clauses especially a ‘liquidated damages clauses’ would save the club and by extension, the player a lot of trouble by putting any potential claims against the defaulting party on a strong wicket. Once the quantum of compensation is ascertained, any potential claims filed before the FIFA football Tribunal can be expeditiously determined.
Another vital principle in deciding cases of this nature, especially in situations where a player has moved on and joined another club during the subsistence of his contract is the principle of Joint and several liability of the player and his new club. This principle of joint and several liability is founded on the principle of inducement of contract.
The trite principle is that whenever a professional player must pay compensation to a club for a breach of contract, the player’s new club will be jointly and severally liable to pay that compensation. Article 17 paragraph 2 is aimed at avoiding any debate or evidentiary difficulties regarding any potential involvement of the new club in the breach of contract. It states emphatically that the new club will be held liable, together with the player, to pay the compensation due to the player’s former club, regardless of whether the club provided any inducement to the player to breach their contract, and without considering its good or bad faith.
Equally, this provision gives the player’s former club that was damaged because of the breach of contract, a stronger additional guarantee that the compensation the player is required to pay will in fact be paid. It also contributes to contractual stability and assists the player’s former club in repairing the damage it has suffered. Paragraph 2 has accordingly been interpreted in football jurisprudence as providing the new club with a standing to be sued; a presumption is created that the new club must be involved in any potential claims for compensation. Thus, the aggrieved club must join the new club to the dispute.
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Article 17 paragraph 4 of the Regulations explicitly states that sporting sanctions should be imposed on any club found to have induced a breach of contract. Clearly, such behaviour is neither permitted nor acceptable under any circumstances. There is no doubt that the premature termination of an existing contract without just cause undermines the principle of contractual stability, and the same can certainly be said of a club approaching a professional player and inducing them to breach an existing contract.
Inducement to a breach of contract is regarded as accessory to the actual breach. This fundamental principle leads to two main conclusions. Firstly, where there is no claim for breach of contract against a professional player, there cannot be a claim for inducement to such a breach against any club. In other words, it is not possible to pursue an action against the club for inducement to breach of contract without acting against the player for their actual breach of contract. Secondly, and as explicitly stated in the Regulations, the relevant sporting sanction may only be imposed on the new club that induced a breach of contract if the player concerned terminates their contract without just cause during the protected period.
Inducing a player or a club to breach an existing valid contract is against the very principle and spirit of contractual stability and cannot be tolerated. This principle applies not only to clubs, but also to any other person subject to the FIFA Statutes and regulations. Consequently, sanctions will be imposed on any such person if they act in a manner designed to induce a breach of contract between a professional and a club to facilitate the transfer of the player concerned.
From the scenario above, it is clear that the player in question who has been spotted with an Israeli club is either already contracted to the club or has been induced to negotiate an employment contract with them. Enyimba can consider bringing a claim before the FIFA Football Tribunal against the player and his new club for termination of contract without just cause if it reasonably believes there is no just cause for the termination. The author is unaware of any precedent involving a Nigerian club side in this regard and this might as well be a test case.
References
i. FIFA Commentary on the Regulations and Status of Players, 2nd Edition @page 133
ii. ibid
