The European Court of Justice (ECJ) in October 2024 ruled in favour of former Arsenal, Chelsea and Real Madrid midfielder Lassana Diarra after it found central parts of FIFA’s transfer rules break European Union law. It is a landmark judgement set to improve professional footballers’ freedom of movement.
So, what does this mean now for footballers and clubs?
FIFPRO Europe, who supported Diarra’s legal claim along with FIFPRO and French player union UNFP, breaks down what the ruling signifies, why the previous system restricted players, and why a new transfer system must be the result of collective bargaining.
Why did Lassana Diarra take FIFA to court?
Diarra was involved in a dispute with Lokomotiv Moscow in 2014 and left the Russian club, leading to a dispute in the FIFA Dispute Resolution Chamber (DRC). Sections of the FIFA regulations prevented him from taking up a new contract offer in Belgium.
At the age of 29, at the peak of his career, the Frenchman spent a year without a club. Diarra subsequently had stints with Marseille and Paris Saint-Germain before ending his 15-year playing career in 2019.
According to Diarra, the regulations unfairly interrupted and negatively impacted his career. The ECJ ruled in Diarra’s favour in the sense that the judges confirmed that the FIFA rules are contrary to EU laws, forcing FIFA to adapt their regulations.
What were the core principles of the ‘old’ FIFA rules?
FIFA’s ‘old’ rules concerning contractual stability were built on three core points:
- A player or a club that terminated an employment contract without a so-called “just cause” had to pay compensation for breach of contract to the other party.
- If a club or player terminated the contract without a “just cause” during the first three years of the contract, a sporting sanction would be imposed such as a transfer ban on a club or playing ban on a footballer.
- If it was the player who terminated the contract without a “just cause”, the first new club of the player was automatically jointly liable (collectively responsible) for the payment of the compensation by the player to the former club. In addition, the federation of the former club could oppose the issuance of the International Transfer Certificate (ITC), affecting the player’s freedom of movement.
What were the consequences under the old rules?
For over two decades it was relatively easy for clubs to unilaterally terminate contracts without a valid reason, whereas players unilaterally terminating their contract would be unable to calculate in advance the compensation that needed to be paid, would find it difficult to find a new club, and would receive a ban from playing football.
When it came to compensation being paid to the player, FIFA’s rules required a club to pay a pre-determined and fixed compensation. This would be equal to the remaining value of the contract, to be reduced by any salary the player would earn at a new club after the termination of the contract. In other words: a club knew its maximum damage when they terminated a contract with a player and even benefited from the player’s new employment.
Under the old rules, players would rarely terminate their contract given that – contrary to the regime applicable to the clubs – the compensation to be paid to the club was unknown, not fixed and therefore entirely unpredictable. As a player would not know with certainty what the financial consequences would be if they terminated a contract, a player would be far less inclined to do so.
What’s more, the first new club of the player would be automatically jointly liable for the compensation. This rule significantly reduced the employment possibilities of any player who terminated their contract as clubs would be likely hesitant to sign a player knowing they would be responsible for the payment of an undetermined amount of compensation.
The results of such an unbalanced system were clear: clubs in the football industry regularly terminated contracts, whereas players almost never terminated contracts. FIFPRO Europe’s data further underlines that around 95 percent of the employment cases pending at FIFA are the result of the breach by a club.
What did the European Court of Justice’s judgement change?
The decision of the ECJ, the highest court of the European Union, has now partially changed the rules. While the ECJ only referred to the specific question posted to it and therefore has not mentioned anything in relation to the regime applicable to clubs when they terminate a contract, it did denounce the rules applicable to a termination by a player.
When it comes to the calculation of compensation, and in line with what FIFPRO and FIFPRO Europe have historically expressed, many of the components that FIFA Regulations identified as being relevant have been declared illegal given that they do not directly relate to the employment relationship and were negotiated by other persons (i.e. club-club) rather than the player. As the most important example, the transfer fee paid between clubs – the fee agreed between two employers to obtain the services of the employee – can no longer be used in the calculation for compensation.
In fact, the only two components of art. 17 of the FIFA Regulations on the Status and Transfer of the Players (RSTP) which have not been considered incompatible with EU law are the following:
- The remaining value of the contract.
- National (labour) law.
This in turn leads to the general advice to players that, in case a player now terminates the contract without a so-called “just cause”, the compensation to be paid to the club should presumably be limited to the residual value of the contract, with a possible further reduction or increase on the basis of the national law. This is very different from the old rules of art. 17 FIFA RSTP.
Additionally, the ITC was questioned, and FIFA’s amended regulations have already simplified the procedure: the former club can no longer object to the registration of the player with the new club.
With regards to sporting sanctions, the ECJ also questioned the presumption that the new club has induced the breach during the protected period, and the amended regulations of FIFA have already removed the presumption, so such inducement should be proven. All this considered, it is safe to say that it will be generally easier for players to find a new club if they terminate their contract.
Why is the European Court of Justice’s decision good for players?
The ECJ has confirmed again that professional footballers are workers and that therefore EU and labour law applies to them. As such, there should now be more clarity and protection for players considering terminating their contracts.
The arbitrariness of the calculation for contract-breach compensation has been criticised in the sense that transfer fees negotiated between clubs, as well as vague concepts such as the ‘loss of a transfer fee’, the ‘specificity of sport’ or the ‘alleged market value’ of a player, should no longer be relevant for the calculation of compensation. It led to a discretionary and unpredictable implementation of the rules.
The ECJ has stated that the consequences for players terminating a contract should be reasonable and predictable which, as indicated in the previous point, includes the notion that no player can be made responsible for any amount negotiated between clubs.
The new club of the player is no longer automatically jointly liable for the payment of compensation which should make it far easier for the player to find new employment after the termination of the contract.
Is this like the Bosman case?
There are some similarities. The claim by Jean-Marc Bosman against FIFA transfer regulations also hinged on the freedom of movement of workers in the European Union.
Bosman’s career was affected because Liege, a club with whom his contract had lapsed, could still demand a transfer fee for him, impeding his move to another club.
The ECJ in 1995 ruled in Bosman’s favour, a decision which led to FIFA allowing all out-of-contract players to move clubs on a free transfer. FIFPRO Europe supported Bosman in his successful claim.
What should happen now, according to FIFPRO Europe and player unions?
FIFPRO Europe has consistently informed FIFA and the other stakeholders that it is in no way aiming to have a system in which every club or every player can unilaterally terminate existing employment contracts at any given moment.
Having said that, and while FIFPRO Europe is willing to negotiate a new ‘transfer system’ and endorse universal principles around contractual stability, a new system introducing restrictive measures on player movement must be the result of genuine negotiations in the framework of collective bargaining between the representatives of employees and employers.
Do FIFA’s interim rules solve the current issues?
FIFPRO Europe believes that the interim regulatory framework put in place by FIFA in December 2024 does not comply with the ECJ ruling. Neither the process put in place leading up to the adoption of this framework, nor the new wording of art. 17.1 of the FIFA RSTP abide by the clear principles established by the highest court of the European Union.
In this respect, it is important to keep in mind that the ECJ also put questions around FIFA’s legitimacy to impose rules to begin with, as they are not tasked by any government to create “labour law” and FIFA does not have as an objective to protect workers. Indeed, in any regular democracy, the people vote for their political leaders and in turn the political leaders will create the laws that apply to the people.
In football, FIFA has declared itself as the regulator of football and believes they can make rules and regulations that are ‘law’, which players should abide by. However, these rules and regulations are not democratically made given that in the global football pyramid system, footballers have no influence on i) the decision-making and ii) on the election of the decision-makers. In that sense, it is not odd that the legitimacy of FIFA to even make the rules that impact players as workers is questioned by the ECJ.
What should players do if they want to end their contract before the expiry date?
Players can reach out to their national union or FIFPRO Europe for trusted legal advice in this area.
FIFPRO Europe President David Terrier said: “While we declared victory upon reading the judgment handed down on October 4 by the European Court of Justice following the complaint filed by Lassana Diarra, joined by FIFPRO, FIFPRO Europe, and the UNFP, we knew that the fight against the Regulation on the Status and Transfer of Players, which began 23 years earlier, from the moment it was first implemented, was not over.
“After many concerned footballers in France and elsewhere contacted their unions, eager to know the direct impact of the October 4 ruling on the RSTP and therefore on their careers, and also with the two summer transfer windows about to open—the Club World Cup obliges—and since we have always considered the current period to be ideal for allowing players to terminate their contracts without incurring the wrath of sanctions that clubs have escaped and continue to escape since nothing has been changed in this area, it was necessary, useful, and I would even say our duty, to provide answers to the legitimate questions players are asking.
“They already know, however, that they will still have to wait for the new regulations they are demanding, and which the European Court of Justice has strongly requested, to be implemented, which due to the absence of a real dialogue and a real desire for FIFA to open up to a joint collective bargaining agreement that will eventually be imposed on it, is still impossible today.”