FIFA’s rules challenged again: the legality of player transfer regulations questioned before the ECJ

A new case concerning the compatibility of FIFA’s rules with EU law has been added to the list of ongoing similar proceedings before the Court of Justice of the European Union (ECJ). EU’s top court has been asked to clarify whether FIFA’s international transfer rules and the Royal Belgian Football Association (RBFA) rules are sufficiently respectful of EU laws protecting the free movement of persons and prohibiting agreements which restrict competition.

Background

The case at hand concerns the French football player Lassana Diarra. In 2013 Diarra signed a four-year contract with Russian football club Lokomotiv Moscow. One year later, in 2014, the player sought to quit the club having suffered a salary cut. The club formally terminated the contract and filed an action before FIFA’s Dispute Resolution Chamber (DRC) asking for compensation from Diarra for lack of “just cause” in the termination of the contract.

Two major provisions of FIFA’s Regulations on the Status and Transfer of Players (RSTP) are under the microscope. The RSTP establish that where a contract is terminated without just cause, the player responsible for this breach shall pay compensation and shall be held liable together with its new club for the payment (the latter provision defined hereafter as the Solidarity Rule) (Article 17, RSTP). The RSTP also hold that the International Transfer Certificate that a player needs to obtain from its former football association in order to be lawfully transferred to a new club shall not be delivered as long as such a contractual dispute is ongoing  (see RSTP October 2022 edition, Article 9; and Annex 3 (Article 8(1)(i) and Article 11).

Despite facing considerable difficulties in finding a new club – due to the risk to such club of being held jointly responsible for the payment of compensation to Lokomotiv – Diarra finally received an offer from Belgian club Sporting Charleroi. However, the Belgian club refused to sign the player before it was confirmed that Diarra could be registered and able to play in any official competition, and that Sporting Charleroi would not be held liable for the compensation claimed by Lokomotiv. Therefore, in February 2015 both Diarra and Sporting Charleroi asked FIFA and the RBFA for this clearance which was, unsurprisingly, refused.

In 2015, FIFA’s DRC upheld Lokomotiv Moscow’s claims and ordered the player to pay €10.5m in damages to the Russian club. At the same time, the DRC also decided that the Solidarity Rule would not apply to Mr. Diarra in this case. It reasoned that at the time the claim was lodged, in 2014, the player was unemployed. Accordingly, there was no new club at that time that could be held jointly liable with Mr. Diarra. The DRC’s decision was consequently confirmed in 2016 on appeal by the Court of Arbitration for Sport (CAS).

This led to Diarra finally signing with French club Olympique de Marseille in July 2015. Despite finding a new club, the aggrieved player launched an action against FIFA and the RBFA before the local commercial court of Charleroi, seeking compensation for the prejudice caused by the two associations’ decisions, which ultimately prevented him from joining Sporting Charleroi. The local court upheld the player’s claims and ordered FIFA and the RBFA to compensate the harm caused. This judgment was appealed before the Court of Appeal of Mons, which has subsequently sought guidance from the ECJ.

The dispute before the referring court and the preliminary question

Diarra brought two main arguments before the Court of Appeal of Mons.

First, the player claimed that the Solidarity Rule constitutes an obstacle to the free movement of workers. The reason is that any club interested in signing a player that has a contractual dispute with their former team would refrain from doing so in order to avoid being held liable – together with the player – for any potential damages claims resulting from the dispute. Diarra argued that this hinders the player’s freedom to freely move as a worker and to be employed by clubs in the EU.

Second, Diarra contended that the rules on the attainment of the International Transfer Certificate are also in breach of EU law. According to the player, this provision would effectively force the new club to pay the player’s old club the claimed compensation. In practice, this would amount to a transfer fee, despite the player being free of contract.

FIFA maintained that both rules are compatible with EU law, given the “specific nature of sport” recognised by EU law. The provisions would be justified by objectives of public interest that govern sport, such as contractual stability and the need to ensure the integrity, the regularity and the good development of sports competitions. These arguments are in line with ones more recently advanced by FIFA and UEFA before the ECJ in another pending case, concerning the European Super League.

The Court of Appeal of Mons reflected that there are “serious, precise and concordant presumptions” that the RSTP provisions at the centre of this debate actually prevented Diarra from joining Sporting Charleroi because of his ongoing dispute with his former club. According to the referring court, such presumptions were confirmed by the swiftness with which Diarra was able to find another club once the CAS decided in 2016 not to apply the Solidarity Rule to the player.

Therefore, in order to conclude whether the FIFA and RBFA rules prejudiced Lassana Diarra, the Court of Appeal of Mons determined it is first necessary to assess the compatibility of the relevant provisions of the RSTP with EU law, and in particular with the free movement of workers and the cartel prohibition of Article 101 TFEU.

What next?

Over a number of recent years, the case practice of the European Commission and the case law of the ECJ have slowly but surely chipped away at the immunity of the sports sector from EU (antitrust) law, by interpreting the “specific nature of sport” more and more narrowly.

The present case adds new interrogations to the growing list of question marks on the compatibility of rules implemented by sport governing bodies with EU law.

In light of the ECJ’s extensive jurisprudence on the free movement of workers (including football’s landmark Bosman case in 1995), it would not come as a surprise if the contested RSTP provisions were deemed to be an obstacle to the free movement of workers. While we await the ECJ’s thoughts on this topic, including in the Super League case, the rather rigid nature of the obligations and prohibitions set out in the RSTP leads us to the conclusion that finding arguments to keep such regulations in place will not be an easy task.

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