Katy Sharpe says the Diarra case could enable footballers to unilaterally terminate their contracts and sign for a rival club
FIFA have fumbled the ball… almost as badly as Loris Karius in the Champions League Final in 2018. However, FIFA’s fumble is wider reaching and will have a major impact on not only the transfer system, but on free movement as a whole.
Background
For those interested in football, you will be well aware of the landmark judgment of Bosman which applied the EU’s freedom of movement provisions to allow football players to transfer to another club once their contract had come to an end, without the approval of the player’s former club.
Post-Bosman, FIFA introduced rules to govern the transfer of players between clubs, including to restrict players who are under contract, from moving to another club without the consent of their current club. Under the Regulations on the Status and Transfer of Players (‘the Rules’), if a party (club or player) terminates a contract ‘without just cause’, they are required to pay compensation. If a player terminates their contract without just cause, the new club that employs that player will be jointly and severally liable with the player for payment of compensation to the former club. I know what you’re thinking, what is so wrong about ensuring players stick to their contracts? That is what happens in any other employment setting. So what is the issue when it comes to football?
The Diarra Case
On the face of it, it would appear that the Rules go against the ruling of Bosman and still restrict the movement of players. Well, that is exactly what the Court of Justice of the European Union (‘CJEU’) has just determined.
The facts of the Diarra case
In 2014, Lassana Diarra was playing for Lokomotiv Moscow. The French player was in dispute with the club over alleged unpaid wages, and he unilaterally terminated his contract.
In such a scenario, the Rules would have required Diarra and his new club (Charleroi) to compensate Lokomotiv Moscow. As a result, Diarra was prevented from finding new employment for an extended period.
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He filed a complaint with the European Commission, stating that the FIFA Rules violated EU competition law and the free movement of workers. The Commission declined to pursue the complaint, meaning that Diarra had no other choice but to appeal to the CJEU.
What was the CJEU decision?
The main issues before the CJEU were:
- Whether FIFA’s Rules are compatible with EU competition law and the free movement of workers;
- Whether the European Commission’s decision not to pursue Diarra’s complaint was correct and in line with EU law; and
- The extent to which the Rules might be considered necessary to maintain contractual stability and the integrity of sporting competitions.
The CJEU confirmed that the Rules (particularly those relating to contractual stability) constitute a restriction on the free movement of workers and although the objectives of maintaining contractual stability and the integrity of sporting competitions are legitimate, the Rules go way beyond what is necessary to achieve those objectives.
The CJEU has referred Diarra’s complaint back to the European Commission in light of their findings.
What does this mean for football transfers?
The CJEU’s ruling could lead to a major overhaul of the transfer system and may have opened the door for player’s to unilaterally terminate their contracts and sign for competing clubs. However, the general contractual provisions applicable for breach of contract are still likely to act as a deterrent to most.
