Another revolution in soccer world after recent court ruling?

In early October, the European Court of Justice (“ECJ”) issued a ruling that attracted much attention. The Court ruled that certain rules of world soccer federation FIFA violate European law. This issue covers several areas of law: contract law, labor law and EU law. After reading this article, you will have been updated on the course and implications of this case.

What’s at stake.

According to the ECJ, certain FIFA rules restrict the freedom of soccer players to change soccer clubs without hindrance. They are thus restricted in their right to change employers. The ECJ also ruled that these rules affect the competitive position of professional clubs. The ruling was made in response to a lawsuit filed by footballer Lassana Diarra in Belgium against FIFA. The underlying dispute dates back to 2014.

What is this case about?

Let’s go back to 2014. In that year, Diarra’s multi-year contract was terminated by his soccer club Lokomotiv Moscow. The reason? Diarra did not show up at a number of training sessions after a conflict over salary and an argument with his coach. Enough reason for the Russian soccer club to terminate his contract and sue Diarra for breach of contract. We previously wrote a general article on contract law.

Within the soccer world, soccer clubs have a lot of power in relation to (professional) players. Contracts cannot be terminated unilaterally from the player without a substantial claim for damages. Moreover, FIFA can impose a suspension on the player.

The basis for this is FIFA rules. More specifically, in Article 17 of the “Regulations on the Status and Transfer of Players.”

Liability new club

In addition, the footballer’s new soccer club may also be liable for damages. In the Diarra case, this constitutes the main point of contention. The compensation Diarra eventually had to pay to Lokomotiv Moscow amounted to 10.5 million euros. In addition, he was suspended for 15 months. When Diarra found an interested employer in Royal Charleroi Sporting Club (“Sporting Charleroi”), it soon became clear that the club was at risk of having to pay the million-dollar fee to which Diarra was sentenced. Sporting Charleroi would also face transfer sanctions. Because of all this, the club eventually renounced the transfer. Diarra was left without an employer and with a huge debt.

Thereupon, Diarra decided to go to the Belgian court. He argued that the fee he (and otherwise his new club) had to pay to Lokomotiv Moscow under FIFA rules was unacceptable. His contention was that FIFA’s rules violated European competition law and the right of free movement of workers. It unreasonably prevented him from joining another soccer club. Given the European law nature of the case, the Belgian court decided to ask the ECJ questions on the issue. In answering those questions, the ECJ expressed its views on the case.

ECJ: FIFA rules hinder free movement of professional footballers and limit club competition

The ECJ goes along with Diarra’s argument. The Court finds that the rules go too far[1]. In short, the claims for damages, suspensions and liability of new soccer clubs are too focused on deterring soccer players and soccer clubs. They can lead to significant financial and sporting harm to footballers and go beyond what is necessary to ensure stability in soccer.

With the rules, according to the Court, FIFA restricts the freedom of footballers to unilaterally terminate their contracts and continue their careers at a new club. Moreover, the liability of the new club is seen as (too) anti-competitive. This co-liability, the Court ruled, limits a crucial aspect of soccer competition. Namely, the ability to compete as a club by attracting new footballers.

Nevertheless, the ECJ defends some fundamental principles of the existing transfer system. In some cases, these FIFA rules may be applied. For example, the Court rules that restrictions in the freedom of professional footballers can be justified if they serve the public interest, namely guaranteeing leagues with stable selections.

Comparison with the Bosman ruling

Even before the Court of Justice ruled on the Diarra case, comparisons were already being made with the historic Bosman judgment of almost 30 years ago. The case concerned a transfer fee of 375,000 euros while Bosman’s contract with soccer club RC Liege had already expired.

The ECJ ruled back then that soccer clubs may not ask for a transfer fee for footballers whose contracts have expired.

Impact on Dutch professional clubs

Whether the Diarra case will have as far-reaching consequences in practice as the Bosman judgment did in the past, only time will tell. In any case, the ruling strengthens the position of the soccer professional. While in the past soccer players hardly ever terminated their contracts prematurely, this will probably happen more often in the future because termination based on the Diarra ruling will become possible without the player and a new club having to deal with such claims and suspensions. For Dutch professional clubs, this may also have major implications. After all, transfer fees are an important part of their business model. That model may come under pressure if transfer fees drop because of the decreased claim and suspension risk that new players bring.

Moreover, this ruling forces FIFA to revise its rules for contracts and transfers in Europe. Furthermore, the international union for professional footballers plans to file a mass claim against FIFA for the damages suffered by footballers due to the controversial FIFA rules.

The Diarra ruling sends a clear message: even the powerful FIFA has to abide by EU regulations. This may encourage footballers, soccer clubs and other interested parties to make their voices heard and possibly cause a shift in the current balance of power.

Questions

Several areas of law are involved in this case. Such as contract law, labor law and EU law. They are, of course, not limited to the world of soccer. Do you have questions or a dispute about contracts or a labor issue? Or do you have other questions as a result of this article? You can contact one of our lawyers by mail, telephone or fill in the contact form for a free initial consultation. We will be happy to think along with you.

[1] Case C-650/22 (Lassana Diarra and FIFPRO v. FIFA and URBSFA).