A clause limiting compensation for unjustified termination to three monthly salaries did not, on the facts of this case, displace the default regime under the FIFA Regulations on the Status and Transfer of Players (Ed 2023) and Swiss Law. The Sole Arbitrator treated the clause as regulating the financial consequences of termination, not as advance consent to termination itself, and tested its validity under the mandatory provisions of Swiss Law, including whether it rested on reciprocal and equivalent concessions.
Introduction
In CAS 2024/A/10666 Vedran Naglić v. Al Shabab Football Club (Award), the Sole Arbitrator addressed a question that has divided recent CAS jurisprudence: can a liquidated damages clause remain valid where it caps compensation at an amount far below the residual value of the contract?
The dispute arose after Al Shabab Football Club (Club) terminated assistant coach Vedran Naglić (Coach) on 25 December 2023, just over two months into a contract that was due to run until 30 June 2026. he contract provided for compensation of only three monthly salaries in the event of termination without just cause. The Coach challenged the clause before FIFA, arguing that it was invalid and could not displace the default compensation regime under Article 6.2 of Annex 2 to the
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