After the interesting decisions handed down by the European Court of Justice (CJEU) last winter which I commented on here (LINK), the CJEU will again decide on the compatibility of various FIFA rules relating to the system of transfers with EU rules on the free movement of workers and free competition in the Diarra Case (Case C-650/22 – Lassana DIARRA/FIFPRO/UNFP v FIFA and URBSFA).
The pivotal point of litigation is the rule contained in the FIFA Regulations on the Status and Transfer of Players (FIFA RSTP) under which, in the event of a player’s employment contract being terminated by the player without just cause, requires the player to pay their former employer compensation equivalent to the unamortized part of their transfer fee (an amount which has been agreed upon between two clubs), or even the amount paid by their former employer to transfer their “replacement” and the latter’s wages, providing that the player and their future employer are jointly and severally liable for this compensation.
Another rule allows the home federation not to issue an international transfer certificate (ITC) which is required for the transfer of a player between two clubs from different federations as long as there is an ongoing dispute between the player and their former club.
These rules were contested by the professional football player – French international and former Chelsea and Arsenal midfielder – Lassana Diarra. Diarra had signed for Russian club Lokomotiv Moscow back in 2013 but his contract was terminated a year later for an alleged breach.
Lokomotiv then applied to the FIFA Dispute Resolution Chamber for compensation. In April 2015, the player was ordered to pay EUR 10 million by the FIFA Dispute Resolution Chamber due to breach of his contract without just cause. This decision was confirmed by the Court of Arbitration for Sport (CAS).
Diarra sued FIFA and the Royal Belgian Football Association (URBSFA) in a Belgian court for damages and €6 million in loss of earnings claiming that his move to Belgian club Charleroi was jeopardized because the latter was worried about having to pay compensation to Lokomotiv under FIFA rules. As per Diarra, the real purpose of such rules is to dissuade players from breaking their contracts and clubs from signing them, which allows players to be traded as “financial assets” between clubs.
The Belgian court then asked the CJEU for guidance and posed a preliminary question to the CJEU to determine whether Articles 45 and 101 TFEU should be interpreted as precluding: “the principle that the player and the club wishing to employ him [or her] are jointly and severally liable in respect of the compensation due to the club whose contract with the player has been terminated without just cause, as stipulated in Article 17.2 of the RSTP, in conjunction with the sporting sanctions provided for in Article 17.4 of those regulations and the financial sanctions provided for in Article 17.1”; and “the ability of the association to which the player’s former club belongs not to deliver the [ITC] required if the player is to be employed by a new club, where there is a dispute between that former club and the player (Article 9.1 of the RSTP and Article 8.2.7 of Annexe 3 to the RSTP)?.”
In April 2024, the Advocate General issued the (non-binding) opinion that the FIFA rules governing contractual relations between players and clubs may prove to be contrary to the European rules on competition and freedom of movement of persons as they limit clubs’ ability to recruit players, necessarily affect competition between clubs on the market for the acquisition of professional players. The Advocate General proposed that the CJEU should hold that all the FIFA rules at issue, which in his view effectively prevented Diarra from finding a new employer, infringe the free movement of workers and constitute a restriction of competition by object, which cannot benefit from the exemption provided for in Article 101.3 TFEU.
The CJEU stated that the decision will be issued on 4 October 2024. Although such decision – if the CJEU follows the opinion of the Advocate General – does not have the potential to change the regulatory landscape of player transfers completely (in a similar way as the Bosman Ruling did in the past), it would have a considerable impact on the market, as the dissuasive impact of current rules on clubs (and players alike) when contracts are terminated without just cause will disappear.
