In an October ruling, the Court of Justice of the EU (CJEU) has called into question the long-established football transfer system. The judgment also demonstrates the continued ‘lawyering up’ of football and other major sports. ‘This could lead to an increase in players moving clubs without the massive financial risk,’ says David Sharpe KC, Chair of the IBA Sports Law Subcommittee, ‘but does also show how players and clubs are less likely to accept any given situation and will take legal advice on how to proceed.’ 

The preliminary ruling involved Lassana Diarra’s attempted move from Russian club Lokomotiv Moscow to Belgian side Charleroi. Diarra and Lokomotiv were in dispute over his salary and his contract with the club was terminated in 2014, after just one year. The matter escalated with Lokomotiv demanding millions of Euros in compensation, while Diarra brought a counterclaim for remuneration. Under FIFA rules, any such compensation as claimed here by the club is, potentially, the responsibility of both the player and any new club.  

The Court held that aspects of FIFA’s rules impede competition and restrict freedom of movement. The case has been widely labelled as ‘Bosman Mark 2’, a reference to the landmark 1995 judgment in which the CJEU ruled that players could move freely, without a fee, at the end of their contract. Some commentary has suggested the case could lead to the transfer fees being scrapped altogether. Other commentators predict something less dramatic. 

Dan Plumley is Principal Lecturer in Sport Finance at Sheffield Hallam University. ‘We will see tweaks in the rules rather than huge re-writes,’ he says. ‘FIFA has global considerations and the EU, though clearly a hugely important region, is not the only factor to consider.’ Sharpe agrees and says that ‘the authorities are pretty good at finding a “common sense” solution’ after these judgments.  

Emilio Garcia Silvero, FIFA’s Chief Legal and Compliance Officer, has stated that FIFA sees the Diarra judgment ‘as an opportunity to keep modernising its regulatory framework.’ Its items for discussion are ‘the parameters to calculate compensation for breach of contract, [non-financial] sanctions for breach of contract’ alongside the certification ‘mechanism.’ 

FIFPRO – the union for players internationally, which supported Diarra’s case – declared the judgment a victory for players that have been ‘impeded’ by the ‘system’, one that ‘can lead to the premature end of a player’s career.’  

For clubs, however, the transfer fee is a vital and fundamental source of income for those developing youth players. Without the fee, there are concerns that these smaller clubs, already financially precarious, could fail, destroying football’s ecosystem. Sharpe, however, points to a separate FIFA-operated compensation system that’s in place to address this. ‘This FIFA system works as a development model that the clubs can rely on’, he says. 

Some clubs appear nervous about stability in the transfer market following the CJEU judgment. Karren Brady, Vice-Chair of West Ham FC’s Board, says, ‘the result could be chaos and anarchy.’ But Sharpe says clubs have various options for incentivising players to stay. ‘You can get loyalty from your players in other ways apart from punitive transfer fees,’ he says. ‘Players do not want to move club: many have young families and want the stability and to live as close to a normal life as they can. In many ways, it’s the same as any other job.’  

Indeed, three recent judgments have highlighted that sport is not a special case and that its governing bodies and rules are subject to EU laws. The European Super League case scrutinised UEFA and FIFA’s ability to veto alternative competitions. The International Skating Union case, meanwhile, involved the rules penalising skaters for taking part in unauthorised competitions. Finally, the Royal Antwerp Football Club case focused on UEFA’s rules requiring a minimum number of ‘home-grown’ players within a team.  

In the Diarra case, the Court was clear that FIFA’s rules fall within the scope of EU law. The only exception is where the rules relate directly to the sporting activity itself. ‘[Sport] no longer has special status in society. Given the professionalism and level of money in it, this was inevitable,’ says Sharpe. 

Diarra has long since retired from football and his case must go back to the Belgian court to determine his loss of earnings. 

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