EU ruling dismantles FIFA's transfer system

*Eduardo Carlezzo, lawyer specialising in sports law and partner at Carlezzo Advogados

The decision announced on 4 October by the Court of Justice of the European Union has a huge and direct impact on relations between clubs and players, and especially on the transfer system and contract stability rules implemented by FIFA since 2001, and will mean that FIFA will have to make substantial changes to some of its fundamental pillars, which are the rules on compensation for breach of contract, liability for the payment of such compensation and sporting sanctions for players and clubs.

It is important to emphasise that the 2001 system was put in place precisely because of a previous ruling by the Court of Justice of the European Union in 1995, in the famous Bosman case, which basically declared that the federative right that bound the player to the club forever was illegal.

When forced by the European Union to create a new system for player transfers, FIFA eliminated the eternal federative rights and made the duration of the federative right conditional on the duration of the employment contract, so that once the employment relationship ended, the player would be free to move to another club.

At the same time, with the aim of seeking contractual stability in relations between clubs and players and avoiding premature and unfair terminations, financial compensation and sporting sanctions were established for clubs and players in the event of unfair termination.

In addition, another important rule concerns the possibility of extending and transferring to the new club the responsibility for paying compensation when the player it has hired has previously been ordered to compensate the previous club for breach of contract. This was the case with Lassa Diarra, who had a contract with Lokomotiv Moscow. There was a dispute between the parties in 2014, which was brought to FIFA's judgement, and FIFA declared that the player had broken his contract and should pay compensation of 10.5 million euros to the Russians. In addition, the player's new club would be jointly and severally liable for the payment of this compensation, which made it difficult for him to be signed by a new club.

And it is precisely these aspects that have now been struck down by the European Court of Justice, which has declared the illegality, in the specific case of Diarra, of the decisions taken by FIFA regarding the amount of compensation, the incidence of a sporting sanction for breach of contract and the liability of the new club with which he eventually signs a contract for the payment of the compensation owed to Lokomotiv Moscow.

The point to be noted from this decision, apart from the direct effect it will have on future relations between clubs and players, will also be to look to the past and the hundreds, if not thousands, of decisions in disputes involving clubs and players, decided by FIFA and the Court of Arbitration for Sport, which have similarities to the Diarra case and have resulted in the payment of compensation. Is there a legal avalanche in the European courts aimed at holding FIFA responsible for such payments? We'll see in the next chapters.


Todos os Direitos Reservados | 2020
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