The FIFA Regulations on the Status and Transfer of Players (RSTP) unambiguously determines that, in all cases where there has been a termination of a contract without just cause, the party in breach shall pay compensation and where the player signed a new contract for the overlapping term, such compensation must undergo mitigation. Nevertheless, this duty to mitigate can be circumvented in some circumstances, per mutually agreed contractual clauses.
Article 17 FIFA RSTP sets forth the principle of the primacy of the contractual obligations concluded by a player and a club. Accordingly, the starting point for determining the amount of compensation payable is to assess whether the contract contains any indication of a predetermined amount in case of a breach by any party.
Constant jurisprudence of the FIFA Dispute Resolution Chamber (DRC) and Court of Arbitration for Sport (CAS) has established that any such contractual clause predetermining the compensation for a breach shall be treated as a contractual penalty or liquidated damages. Since the validity of such clauses remains uncertain; CAS...
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