CAS Case Digest · Verified against the full award text

CAS 2025/A/11498 — Santos Futebol Clube v. Futebol Clube de Arouca

"Santos v. Arouca" · CAS upheld a 10% contractual penalty and 12% p.a. interest rate in a football transfer fee dispute, rejecting Santos's reduction requests.

What happened in Santos v. Arouca

On 28 July 2023, Santos Futebol Clube (Brazil) and Futebol Clube de Arouca (Portugal) concluded a transfer contract for player João Othávio Basso for EUR 2,500,000, payable in four instalments, plus a 15% sell-on clause. Santos paid only the first instalment of EUR 500,000. The contract provided for a 10% penalty on overdue amounts and default interest of 1% per month (12% p.a.). Arouca also transferred the player on loan to Estoril for EUR 100,000, triggering a EUR 15,000 sell-on fee owed to Arouca. Arouca filed a claim before the FIFA Players' Status Chamber, which on 11 March 2025 ordered Santos to pay EUR 2,015,000 outstanding principal, EUR 201,500 contractual penalty, and 12% p.a. interest on overdue amounts. Santos appealed to CAS, arguing the 10% penalty and 12% interest rate were excessive under Swiss law (Articles 163 and 104 SCO) and that their combination caused unjust enrichment. The Sole Arbitrator rejected all of Santos's arguments, confirming the FIFA PSC decision in full. The case matters because it reaffirms that freely negotiated penalty clauses and interest rates in football transfer contracts will be upheld under the pacta sunt servanda principle unless manifestly disproportionate, and that 12% p.a. interest is well within Swiss law's permissible threshold.

Procedural history of CAS 2025/A/11498

On 31 December 2024, Arouca filed a claim before the FIFA Football Tribunal's Players' Status Chamber (FIFA PSC) seeking EUR 2,000,000 outstanding transfer fee, EUR 15,000 sell-on fee, EUR 201,500 contractual penalty, and interest. Santos acknowledged the outstanding amounts but argued the 10% penalty and 12% p.a. interest were excessive, invoking Articles 163 and 73 SCO, and requested reductions to 5% penalty and 5% p.a. interest. On 11 March 2025, the FIFA PSC (reference FPSD-17382) partially accepted Arouca's claim, ordering Santos to pay EUR 2,015,000 net outstanding, EUR 201,500 contractual penalty, and 12% p.a. interest on each overdue amount from its respective due date. The grounds were notified on 30 May 2025. Santos filed its Statement of Appeal with CAS on 18 June 2025 and its Appeal Brief on 30 June 2025. Arouca filed its Answer on 21 July 2025. The Sole Arbitrator decided the case on written submissions alone, without a hearing.

Key holdings in CAS 2025/A/11498

• A contractual penalty of 10% on overdue transfer fee instalments is not disproportionate or excessive under Article 163 SCO where the debtor has paid only 20% of the fixed transfer fee and 0% of the agreed sell-on fee without justification.
• A contractually agreed default interest rate of 12% per annum is valid and enforceable under Swiss law and CAS jurisprudence, as interest rates below 18% p.a. are within the permissible threshold.
• FIFA regulations prevail over any national law chosen by the parties pursuant to Article R58 of the CAS Code, with Swiss law applying only subsidiarily.
• The principle of pacta sunt servanda prevents reduction of freely negotiated penalty and interest clauses absent compelling evidence of manifest disproportionality.
• The coexistence of a contractual penalty and default interest does not constitute unjust enrichment where each serves a distinct and legitimate function and their combined effect does not exceed proportionality and fairness.

How the CAS panel reasoned

The Sole Arbitrator first confirmed that FIFA regulations apply primarily, with Swiss law subsidiarily, per Article R58 CAS Code and Article 49.2 FIFA Statutes. On the penalty clause, the arbitrator applied the multi-factor test from CAS 2020/A/7007 (citing Swiss Federal Tribunal jurisprudence), examining: the seriousness of the breach (Santos paid only 20% of the fixed fee and 0% of the sell-on fee); the absence of any justification for non-payment; Arouca's manifest interest in performance having transferred a player valued at EUR 2,500,000 while receiving only EUR 500,000; and Santos's failure to advance any arguments about its financial situation. The arbitrator found Santos had not substantiated its claim of excessiveness with specific facts. On the interest rate, the arbitrator relied on CAS 2020/A/6809 & 6843 and CAS 2021/A/7673 & 7699, confirming that rates below 18% p.a. are within Swiss law's permissible threshold, and that 12% p.a. is customary in international football transfers. The unjust enrichment argument was rejected because the penalty and interest each serve distinct legitimate functions — deterrence and compensation for time value of money respectively — and their aggregate effect was not shown to be manifestly excessive. Throughout, the arbitrator emphasized that reduction of penalty clauses is reserved for exceptional cases and that contractual liberty prevails in cases of doubt.

Why Santos v. Arouca matters in CAS jurisprudence

This award reinforces the high threshold required to reduce contractual penalties and interest rates in international football transfer agreements under Swiss law. It confirms that a 10% penalty clause and 12% p.a. default interest are both enforceable and within accepted norms, that pacta sunt servanda prevails absent manifest disproportionality, and that the mere combination of penalty and interest does not constitute unjust enrichment — providing clear guidance for clubs negotiating transfer payment terms.

Cases cited in this award

CAS 2017/A/5465 CAS 2017/A/5374 CAS 2018/A/5624 CAS 2020/A/7007 CAS 2020/A/6809 & 6843 CAS 2021/A/7673 & 7699

Frequently asked questions about Santos v. Arouca

Did CAS reduce the 10% penalty clause in Santos v. Arouca?

No. The Sole Arbitrator upheld the 10% contractual penalty in full. Santos had paid only EUR 500,000 of the EUR 2,500,000 transfer fee and provided no justification for non-payment, meaning the breach was serious and Arouca's interest in performance was manifest. The arbitrator found Santos had not substantiated its claim of excessiveness with specific facts.

Is a 12% per annum interest rate enforceable in a football transfer contract under CAS jurisprudence?

Yes. The Sole Arbitrator confirmed that a 12% p.a. contractual interest rate is valid and enforceable, relying on CAS 2020/A/6809 & 6843 and CAS 2021/A/7673 & 7699, which establish that interest rates below 18% p.a. are within the permissible threshold under Swiss law. The arbitrator rejected Santos's argument that FIFA jurisprudence mandates a 5% p.a. rate, noting that 5% is merely the statutory default under Article 104(1) SCO and parties are free to agree higher rates.

Can a club argue unjust enrichment to avoid paying both a penalty clause and contractual interest in a CAS transfer dispute?

Not without specific evidence. In Santos v. Arouca, the Sole Arbitrator rejected the unjust enrichment argument because the penalty and interest each serve distinct legitimate functions — deterrence against non-performance and compensation for the time value of money respectively. The arbitrator held that their coexistence does not constitute unjust enrichment unless their combined effect is shown to be manifestly excessive, which Santos failed to demonstrate.

What law applies to penalty clauses and interest rates in FIFA transfer disputes appealed to CAS?

FIFA regulations apply primarily, with Swiss law applying subsidiarily, pursuant to Article R58 of the CAS Code and Article 49.2 of the FIFA Statutes. In Santos v. Arouca, the Sole Arbitrator noted that FIFA regulations do not specifically govern contractual penalties or interest rates, so both issues were determined under Swiss law — specifically Articles 163 and 104 of the Swiss Code of Obligations — with the FIFA PSC decision confirmed in full.

Topics: Transfers, agents, TPO & sell-on clauses at CAS

Source: official award. This digest was generated by LexXi from the full award text and machine-verified against it — every figure, article and citation above appears in the source. It is an editorial summary, not legal advice. See how ElevenLex verification works.