#CJUE #FIFA
- platoucheavocat
- Jan 15
- 5 min read
Updated: Jan 16
Diarra affair: Towards an upheaval of the market rules?
On October 4, 2024, the Court of Justice of the European Union (CJEU) handed down a major ruling calling into question numerous FIFA rules, deemed incompatible with European Union law.
The ruling stemmed from a contractual dispute between the famous French international, Lassana Diarra, and the Russian club, Lokomotiv Moscow.
After signing a contract with the club on August 20, 2013, it was unilaterally terminated a year later by Lokomotiv Moscow on the grounds that Lassana Diarra had breached his contractual obligations. This resulted in a heavy financial penalty for the player, amounting to 10.5 million euros to be paid to Lokomotiv Moscow, as a breach of contract for “just cause”.
This financial penalty was a real obstacle to the player signing for other clubs, and led Lassana Diarra on a long legal journey.
First of all, Lokomotiv Moscow initiated proceedings before Fifa's Dispute Resolution Chamber to obtain payment of the compensation due. The former French international then appealed to the Court of Arbitration for Sport (CAS) in 2015, contesting the decision handed down by the Dispute Resolution Chamber.
Dissatisfied with the CAS decision, the player took the case to the Commercial Court of Hainaut in Belgium in 2017, seeking payment of 6 million euros for hindering the exercise of his profession against FIFA, as well as the Royal Belgian Union of Football Associations (URBFSA).
The case took on a new dimension when FIFA lodged an appeal with the Mons Court of Appeal on November 19, 2022. In view of the complexity of the legal issues raised, the Court decided to refer a question to the CJEU for a preliminary ruling: Are the rules at issue in FIFA's Regulations on the Status and Transfer of Players (RSTJ) contrary to Articles 45 and 101 of the TFEU, concerning the free movement of workers and competition?
This legal battle led to the October 4, 2024 ruling by the CJEU, an important decision that redefined the legal contours of transfers in European soccer.
In this groundbreaking ruling, the CJEU held that the provisions of the RSTJ, while pursuing objectives such as the regularity of competitions and the stability of the workforce, go far beyond what is necessary to achieve them. Consequently, these rules restrict the free movement of professional players and are contrary to Article 45 of the Treaty on the Functioning of the European Union (TFEU).
The first two paragraphs of this article state that:
“The free movement of workers shall be ensured within the Union. [It shall entail the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work”.
Furthermore, in this judgment the Court ruled that articles 9 and 17 of the RSTJ were contrary to article 101 of the TFEU[PL1], which prohibits anti-competitive agreements “which have as their object the prevention, restriction or distortion of competition within the internal market”.
With this ruling, the CJEU warned that the criteria for calculating compensation in the event of termination “without just cause” were excessive and dissuasive. However, the notion of “just cause”, which refers to a legitimate reason enabling a player or club to terminate a contract without incurring disciplinary or financial sanctions, remains imprecise. This ambiguity therefore called on FIFA to clarify and frame its position on the matter.
This raises the issue of the International Transfer Certificate (ITC). This document is essential for registering a player with a new club in another country, so that he can take part in official competitions. This means that recruitment becomes pointless if a player who has broken his contract cannot be registered or take part in FIFA competitions.
These provisions thus constitute an “extensive and significant limitation” on cross-border competition between clubs.
Transparency, objectivity, proportionality?
It's time for change and renewal at FIFA.
In an interview on October 14, 2024, Emilio Garcia Silvero, Director of FIFA's Legal and Compliance Division, stated that it is essential to establish a dialogue between the various players in order to overhaul the RSTJ rules, which have become obsolete in the light of European law.
Such an evolution implies major challenges, notably the threat to contractual stability and the competitive balance between teams. To meet these challenges, FIFA must guarantee the transparency, objectivity and proportionality of sanctions, clarify the “just cause” criteria criticized by the CJEU, and as Emilio Garcia Silvero reminds us, discuss the “parameters for calculating compensation and sanctions in the event of contractual breach, and a mechanism for issuing the International Transfer Certificate.”
These reforms will require a constructive dialogue between the main players in soccer (clubs, associations, FIFA, players' representatives).
Discussions have already taken place, leading to a press release dated December 23, 2024, in which FIFA announced the introduction of an exceptional regulatory framework for the next mercato, comprising several key points.
Temporary regulations for the winter mercato
First of all, FIFA has clarified the notion of “just cause” in order to reduce the legal uncertainty it represented until now.
For example, it has clarified that a player may terminate his contract if he plays less than 10% of the official matches in a season (sporting just cause), or if his club fails to pay him his salary. Despite the fact that these provisions strengthen players' rights, they do not mean total freedom to leave, as the club still has the option of claiming compensation.
In addition, the amended version of article 17 of the RSTJ does away with the criteria for calculating the compensation due in the event of breach of contract, as pointed out by the CJEU.
Article 17 of the RSTJ now specifies that any party injured as a result of a breach of contract is entitled to compensation, based on the loss suffered, the facts and circumstances specific to each case, and in compliance with the legislation of the country concerned.
Furthermore, article 17 of the RSTJ stipulates that new clubs are no longer automatically considered jointly liable in the event of termination without just cause. From now on, their liability must be proven, leading to a reversal of the burden of proof and a reduction of risk for recruiting clubs.
In this context, it must be ascertained whether the recruiting club induced the player to terminate his contract.
Finally, article 11 of appendix 3 of the RSTJ introduces a modified mechanism for issuing the ITC.
FIFA now guarantees to issue the ITC within 72 hours, even in the event of a pending dispute.
For example, if a Federation submits a request for an ITC to be issued, the former Federation is obliged to issue the ITC within 72 hours. In the absence of a response from the former federation, the new federation can register the player with the new club.
This change removes a major obstacle for players, who previously risked not being able to play if the issue of the certificate was blocked.
From now on, disputes will be dealt with separately from requests for the issue of such certificates, so as not to hinder the player's registration or participation in his new club.
This measure is a major step forward for players' freedom, guaranteeing them greater security in their international transfers.
In short, despite the fact that these new rules introduced by FIFA are temporary, even experimental, they represent a real opportunity to reform the regulatory framework of world soccer.
Moreover, in the future, they could be perpetuated and applied definitively, guaranteeing compliance with legal requirements.
The ruling handed down by the CJEU on October 4, 2024 therefore heralds a potential turning point in the evolution of soccer rules worldwide.
Maitre LATOUCHE's firm, with its wealth of experience as a sports lawyer, supports and represents professional soccer players with determination and professionalism.
Source
- [Mons, 19 sept. 2022, n° 2017/RG/167]
- Affaire FIFA/BZ : chronique d'une mort annoncée mais évitée pour le marché des transferts du football professionnel ? – Vincent Giovannini, Senior Lecturer in Private Law and Criminal Sciences, Université Jean Monnet Saint-Étienne, CERCRID (UMR 5137) – October 16, 2024
- CJUE 4 oct. 2024, aff. C-650/22