KRFACTS OCTOBER EDITION 2024 FIFA's Illegal Transfer Rules
This is not the first time that the rules of football's world governing body FIFA have given rise to a legal dispute. On 4 October 2024, the European Court of Justice (ECJ) ruled that the association's transfer rules unlawfully restrict the freedom of movement and residence of EU citizens as enshrined in the fundamental rights of the European Union. But what exactly does that mean? This article provides a brief overview of the ruling and gives an outlook on the implications of the judgement for FIFA.
The dispute centres on the FIFA regulations regarding the status and transfer of players. According to Art. 17 of the regulations, a party who breaches a contract without a valid reason must pay compensation. If a player is obliged to pay compensation, his new club is also jointly and severally liable with the player. The new club also faces severe sanctions if it instigates the player to "breach the contract".
Footballer Lassana Diarra signed a contract with a Russian football club in 2013. After one year, he cancelled the contract for no good reason. Diarra then wanted to move to a Belgian club. As the Belgian club feared massive sanctions and claims for damages, the transfer fell through. Diarra then took FIFA to the Belgian courts, claiming that the disproportionately harsh rules made a transfer to the Belgian club impossible and violated the aforementioned EU law.
The Belgian Court of Appeal decided to interrupt the proceedings and asked the ECJ for a preliminary ruling on the interpretation of certain EU provisions. The judges of the ECJ have now ruled - almost eleven years after the case was brought - that certain FIFA transfer rules that apply to the specific case do not comply with EU law as they are disproportionately harsh. Specifically, the joint and several liability imposed on the new club and the threat of harsh sanctions are not proportionate. This would deter clubs from signing the player in question, as they could be exposed to harsh consequences.
The decision could have some significance for the current transfer rules. For example, players could in the future find it easier to withdraw from current contractual relationships with clubs, as the new clubs would not have to fear harsh sanctions or high compensation claims, but only claims for damages to the extent that could reasonably be considered necessary.
Should this scenario materialise, it would have a negative impact on the continuity of the teams, as players could leave or transfer more easily. This, in turn, could have an impact on the high transfer fees demanded by the transferring clubs.
The ECJ's judgement means that the Belgian courts must now make their decision in accordance with the ECJ's considerations. As a result, it is likely to be several weeks and months before the dispute is definitively settled. The next few months will show whether and, if so, to what extent FIFA will revise its transfer rules and whether a "transfer revolution" is imminent, as the judgement in the "Bosman" case in 1995 brought about.
