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It's been known that the recent Court of Justice of the European Union (CJEU) ruling in the Lassana Diarra case has generated considerable debate regarding the future of FIFA's transfer regulations. This case, which challenges critical aspects of player transfers and contract termination, raises significant questions about the evolution of international football law and its alignment with European legislation.
In the summer of 2014, French footballer Lassana Diarra was engaged in a contractual dispute with Lokomotiv Moscow over his salary, leading him to unilaterally terminate his contract with the club. Lokomotiv deemed this termination a breach of contract and subsequently filed a claim against Diarra with FIFA's Dispute Resolution Chamber (DRC), seeking 20 million euros in damages on the grounds that the player had terminated his contract "without just cause" under Article 17 of the Regulations on the Status and Transfer of Players (RSTP). Despite Diarra's counterclaims, the DRC ruled in favor of Lokomotiv, imposing a fine of 10.5 million euros on the player.
Simultaneously, Diarra received a contract offer from the Belgian club Royal Charleroi S.C., but the offer was contingent on FIFA confirming that Diarra could transfer without the new club incurring any financial liability for the obligations owed to his former club. However, FIFA declined to provide such assurances. Under FIFA regulations, a transfer requires the player's originating league to issue an International Transfer Certificate (ITC), which in this case would have prevented Diarra's transfer to Charleroi due to the following stipulations:
- Article 17.2 of the RSTP mandates joint liability for the acquiring club, holding it responsible for any compensation owed by the player to his previous club in cases of contract termination "without just cause."
- Article 17.4 presumes, unless disproven, that the acquiring club has induced the player to terminate the contract without just cause, thereby imposing sporting sanctions on the club, such as a prohibition on registering new players for two consecutive transfer windows.
- Article 9, in conjunction with section 8.2.7 of Annex 3 of the RSTP, prohibits national associations from issuing the ITC-essential for player registration-if a contractual dispute exists between the player and his former club concerning the premature termination of their employment agreement.
Consequently, in December 2015, Diarra took legal action against FIFA and the Belgian football league, claiming lost earnings and initiating a lengthy process that sparked the CJEU's involvement in clarifying the boundaries of such liabilities under European law.
The CJEU questioned three crucial elements of FIFA's RSTP:
Joint Liability of the New Club: Whether a player's new club can be jointly held liable for compensation owed after contract termination without just cause. Traditionally, the new club of a player terminating a contract without just cause could be held liable for damages owed to the former club. The CJEU questioned whether this aligns with European labor standards, suggesting that enforcing joint liability could dissuade clubs from hiring players who have recently terminated contracts, potentially restricting player mobility.
2. Calculation of Compensation: How such compensation should be determined in these cases. The CJEU's emphasis on clearer, fairer compensation mechanisms signals that current RSTP methods may lack precision. The court hinted that compensation should not only reflect financial losses but also consider players' rights to career progression without imposing excessive financial burdens. This could lead to a reevaluation of the compensation guidelines in Article 17 of the RSTP to ensure they are consistent with EU principles on proportionality and labor rights.
3. Issuance of International Transfer Certificates: The potential for clubs to block transfers following a contract breach. By allowing clubs to block a player's transfer following contract disputes, FIFA's current rules arguably infringe on free movement, a principle upheld within the EU under Article 45 of the Treaty on the Functioning of the European Union (TFEU). The CJEU suggests this practice may be incompatible with European standards, prompting FIFA to seek a system that respects players' rights to international mobility without undermining contractual stability.
These elements, which were originally agreed upon by FIFA and the European Commission in 2001, have now been put under scrutiny. The ruling signifies that FIFA will need to revisit some aspects of its regulatory framework to ensure compliance with European law. In response to the CJEU ruling, FIFA has committed to initiating a global dialogue with key stakeholders in football. This dialogue will focus on revising Article 17 of the RSTP, particularly the mechanisms for calculating compensation, enforcing sanctions for contract breaches, and managing the issuance of International Transfer Certificates (ITC).
Contrary to some speculation, the Diarra case does not signal the end of football's transfer system. Essential elements, such as transfer fees, training compensations, and the protection of minors, remain unaffected by the ruling. The case, however, reinforces the need for a more balanced approach to player and club rights in contract termination scenarios.
As expected, FIFPRO supports the decision. In a statement released right after the ruling was announced, the union called it a "significant judgment on the regulation of the football labor market (and, more broadly, in sports) that will reshape the professional football landscape." and emphasized that "this decision will benefit thousands of players worldwide, both active and retired." According to Emilio García Silvero, FIFA's Chief Legal and Compliance Officer, this decision is seen as an opportunity to modernise FIFA's transfer regulations. However, it does not undermine the fundamental principles of the transfer system, such as contractual stability and the financial obligations tied to player releases.
Conclusion
The Lassana Diarra case marks a pivotal moment in the relationship between European law and international football regulations. As FIFA begins the process of reforming its RSTP, the football world will watch closely to see how these changes will shape the future of the transfer market and contractual stability. By aligning its rules with European legal standards, FIFA has the opportunity to strengthen the legitimacy and fairness of its regulatory framework, ensuring that the integrity of football competitions is preserved.
