Damages and Compensation in Case of Breach of Contract

Abstract

The CAS in the “Matuzalem case” determined the positive interest, the player has to compensate more than the damages which the former club actually suffered. The CAS deliberately chooses for the calculation of the indemnity a method which is unforeseeable for the football player. The European Court of Justice held in this decision that an indemnity for damages can only be calculated based on fixed criteria, i.e. criteria that are known. However, the approach of the CAS is contrary to the principle that the damage suffered is to be concretely calculated and that an indemnity may not contain any deterrent or punishing elements. According to the principles of Swiss tort law the reimbursement of damages is limited to the extent it can be expected within the usual course of affairs and the general experience of life that such damages are suitable to cause damages of the kind that actually occurred. The calculation of the compensation is to be based on the difference between the terminated and the new player’s contract as well as under consideration of a compensation for acquisition costs of the former club which have not been fully amortized due to the early termination of the contract. This seems to be the one and only adequate solution to achieve the balance between the contractual stability and the freedom of movement for players, which is actually the purpose of the FIFA regulations.