Diarra v. FIFA – CJEU strengthens freedom of movement of football players in EU

RSTP as international football framework

The RSTP are a framework laying down global and binding rules for the international football industry concerning the status of professional football players, their eligibility to participate in organised football and their transfer between clubs belonging to different associations.[3] In 2001, FIFA developed the RSTP – back then even in coordination with the European Commission – as a result of and to comply with the Bosman judgment.

In the present case, the CJEU was asked to assess whether Article 17 of the RSTP, dealing with the termination of employment or player contracts without just cause, is in accordance with EU laws.

Termination of player contracts without just cause according to the RSTP

Article 17 of the RSTP specifies the consequences of terminating a player contract without just cause, including termination by the player and by the club. In any case, the party in breach must pay compensation. The new judgment focuses on scenarios where a player terminates his contract with his previous club prematurely and without just cause. Under the RSTP, players and their new clubs are jointly and severally liable for the compensation due to be paid to the player's former club. In addition, the RSTP stipulate that sporting sanctions, such as transfer bans, can be imposed on the new club that contributed to a player's breach of contract. The RSTP assume that the new club caused the player's contract to be terminated until evidence to the contrary is provided. Furthermore, the RSTP stipulate that no international transfer certificates ("ITC") can be issued by the national football association of the former club during an ongoing contract dispute. This means that the player concerned is not able to play official games for a new club during a contractual dispute with the former club. In the fast-paced world of professional football, this fact alone can be a serious intervention, often accompanied by financial and reputational damage to the athlete.

CJEU decision

The case in question concerned the former French player Lassana Diarra, who has made 34 appearances for the French national team and has played for top clubs such as Chelsea FC and Real Madrid. While at the Russian club Lokomotiv Moscow, Diarra refused to participate in training following a dispute with his coach and ultimately chose to leave the club. In the resulting contract dispute, FIFA fined the midfielder millions of euros in compensation for terminating his contract without just cause. Nevertheless, the Belgian first division club Sporting Charleroi wanted to sign Diarra. Citing Article 17 of the RSTP, FIFA and the Belgian FA announced that any club signing the player would be held jointly and severally liable for Diarra's compensation payment, as imposed by FIFA. Sporting Charleroi refrained from signing Diarra and he ultimately brought proceedings before the Belgian courts seeking compensation for the harm he claimed to have suffered as a result of the wrongful conduct of FIFA and the Belgian FA.

The Belgian Court of Appeal referred questions to the CJEU for a preliminary ruling, asking whether the liability regime and the ability of the national football association not to issue an ITC foreseen in the RSTP is precluded by EU law.

In its decision, the CJEU stated that the provisions of the RSTP in question may violate the principle of free movement of workers according to Article 45 TFEU and restricts cross-border European competition according to Article 101(1) TFEU. The RSTP provisions could drastically and broadly restrict competition between football clubs, comparable to no-poaching agreements. This is particularly true if the provisions do not stand up to a proportionality test, i.e. if it cannot be shown that the rules are limited to what is strictly necessary to ensure the regularity of club football competitions and maintain a certain level of stability in the composition of professional football clubs.

Contrary to the Bosman judgment, the CJEU did not state that the contested regulations are in fact precluded by EU law. However, the CJEU did not miss its opportunity to emphasise the inherent problem of the RSTP, which contain imprecise or even discretionary regulations that lack a clear connection to specific employment relationships or impose disproportionate measures.

Comment

Following the ECJ judgment, litigation in the Diarra case now continues before the Belgian Court of Appeal. FIFA is anxiously awaiting the decision of the national court, which is expected in early 2025 and may force FIFA to comprehensively revise Article 17 of the RSTP.

Notably, on 15 November 2024, FIFA opened a "Global Discussion Forum" on its website and invited all interested parties to participate in an extensive consultation process, gathering views from all affected stakeholders worldwide, including experts and other interested and/or affected parties, organisations or individuals regarding the regulatory framework of Article 17 of the RSTP and potential amendments to it.[4]

[1] CJEU 4 October 2024, C-650/22.

[2] CJEU 15 December 1995, C-415/93.

[3] FIFA Regulations on the Status and Transfer of Players, Edition June 2024

[4] https://inside.fifa.com/legal/football-regulatory/global-discussion-forum.

authors: Bernhard Schmidt, Maha Zöhrer