Arbitration CAS 2013/A/3260 Grêmio Foot-ball Porto Alegrense v. Maximiliano Gastón López, award of 4 March 2014
1. FIFA regulations do not contain any express provision which prohibits the unilateral extension of contracts. Whether or not an extension clause is acceptable must be assessed on a case by case basis, with the deciding body having to not only look at the wordings of the said clause, but also at the factual background and circumstances which contributed to its insertion. The following elements have to be taken into consideration: 1) the potential maximal duration of the labour relationship should not be excessive; 2) the option should be exercised within an acceptable deadline before the expiry of the current contract; 3) the salary reward deriving from the option right should be defined in the original contract; 4) one party should not be at the mercy of the other party with regard to the contents of the employment contract; 5) the option should be clearly established and emphasized in the original contract so that the player is conscious of it at the moment of signing the contract; 6) the extension period should be proportional to the main contract; and 7) it would be advisable to limit the number of extension options to one.
2. It is generally unreasonable for a club to wait until only a few days before the start of the transfer period before exercising its right to extend an employment contract with a player. The player has the right to know well in advance whether or not the club would be extending the employment agreement so that he can take advantage of the transfer period and look for another club and thus avoid having to find himself unemployed in case the club decides not to extend his employment agreement.
3. Moral damages are commonly understood as the damages sustained by an individual who has suffered personal harm as result of conduct, acts or omissions which severely damage the personality or reputation of the injured party, causing physical, mental or psychological suffering. Moral damages that have been requested by a legal entity are limited in scope. A club’s request for moral damages can only be limited to losses brought about by damage to its image and reputation.