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HOW TO RECONCILE CONTRACTUAL STABILITY IN FOOTBALL
WITH FREE COMPETITION? LESSONS FROM THE DIARRA CASE

Gustavo Albano Abreu

Lawyer by the National University of La Plata (UNLP), Argentina

Master in Business Law and Administrative Law from Universidad Austral, Argentina

Doctor in Law from Universidad Rey Juan Carlos, Spain

Arbitrator of TAS-CAS

Abstract

This article analyses the implications of the recent Diarra ruling, aiming to examine how the decision redefines the tension between the pursuit of contractual stability in football and the principles of free movement of workers and free competition, as established in the Treaty on the Functioning of the European Union (TFEU). The analysis focuses on how FIFA regulations, designed to protect employment contracts, may restrict players’ rights and competition among clubs. The ruling argues that Article 17 of the Regulations on the Status and Transfer of Players (RSTP) may impose restrictions on free movement and competition, both in its objectives and effects. This rule would limit players’ ability to change clubs and clubs’ ability to sign contracted players, violating Articles 45 and 101 of the TFEU. The decision of the Court of Justice of the European Union (CJEU) criticises the compensation system for contract termination, considering it disproportionate and discretionary, questioning the joint liability of the new club and the use of the International Transfer Certificate (ITC) as unjustified pressure tools.

This work contributes to the debate on FIFA’s role as the governing body of world football and proposes a review of Article 17 of the RSTP to balance contractual stability with players’ rights and competition among clubs, advocating for alternatives that protect contracts without violating the principles of the TFEU.

KEYWORDS

Contractual Stability, Free Movement, Free Competition, TFEU (Treaty on the Functioning of the European Union), Indemnification, Proportionality, Diarra, Sports sanctions.

HOW TO RECONCILE CONTRACTUAL STABILITY IN FOOTBALL WITH FREE COMPETITION? LESSONS FROM THE DIARRA CASE

Gustavo Albano Abreu

Lawyer by the National University of La Plata (UNLP), Argentina

Master in Business Law and Administrative Law
from Universidad Austral, Argentina

Doctor in Law from Universidad Rey Juan Carlos, Spain

Arbitrator of TAS-CAS

Summary: 1. Introduction. 2. Facts. 3. Presentation of Diarra before the ordinary courts. The prejudicial question. 4. Conclusions of Advocate General Maciej Szpunar. 5. The judgement of the Court of Justice of the European Union. 6. Analysis of the aforementioned regulations. 7. Brief comments on contractual stability and some history. 8. Are the Bosman and Diarra rulings comparable in their effects? 9. Suggested changes. 10. Conclusions.

1. Introduction

The Court of Justice of the European Union (hereinafter CJEU) gave a judgement on October 4, 2024, ruling on a reference for a preliminary ruling from the Cour d’appel de Mons (hereinafter the Mons Court of Appeal) in case C-650/22 concerning an action brought by the former professional football player of French nationality, Lassana Diarra, against FIFA and the Royal Belgian Football Federation.

The CJEU held that certain articles of the FIFA Regulations on the Status and Transfer of Players (hereinafter RSTP) adopted in 2014 are contrary to Union law insofar as they (i) may hinder the free movement of professional football players (Article 45 of the Treaty on the Functioning of the European Union1 (hereinafter TFEU); and (ii) aim to restrict cross-border competition of clubs in the transfer market (Article 101 TFEU-).

The purpose of this paper is to analyse whether, in the light of the ruling in case C-650/22, it is appropriate to amend the rules of the RSTP that are incompatible with the TFEU, and whether this is possible without irreparably damaging the contractual stability and balance of the international system of transfers of professional football players

2. Facts

French footballer Lassana Diarra, known for his time with Chelsea, Arsenal and Real Madrid, among others, was transferred from Anzhi Majachkala to Lokomotiv Moscow (hereinafter Lokomotiv) in 2013. However, a year later, the Russian club decided to terminate his contract citing a breach by the player.

In August 2013, Diarra signed a four-year contract with Lokomotiv. At the beginning he had a remarkable performance that led him to be elected as the best player of the Russian league in the months of November and December of that year. However, after the winter break, the player did not perform as well and only played a few minutes in five out of 11 games.

The peak of tension occurred in the summer of 2014, when the club proposed a salary reduction for the following season (2014-2015), which the player did not accept, refusing even to show up for training.

Faced with Diarra’s position, on August 22, 2014, Lokomotiv terminated the player’s contract and a few weeks later asked the FIFA Dispute Resolution Chamber (hereinafter the DRC) to order the player to pay compensation of €20 million, claiming that he had breached and terminated his contract “without just cause”.

In September 2014, the footballer filed a counterclaim against Lokomotiv requesting payment of wages owed and compensation equal to the remuneration he would have received until the termination of the contract on June 30, 2017.

Between August 2014 and early 2015 Diarra had several important offers from clubs in Italy (Inter Milan), England (Queens Park Rangers and West Ham United) and Scotland (Celtic Glasgow). However, negotiations did not prosper because those teams feared being held jointly and severally liable for compensation that could have been awarded by the CRD; since, according to the provisions of Article 17 of the RSTP, if a professional player must pay compensation, he himself and his new club have a joint and several obligation to make the payment, with the regulations providing for the possibility of imposing financial and sporting sanctions on both the player and the club itself.

On February 19, 2015, Diarra received a new offer: Royal Charleroi were interested in signing him, but with two cumulative suspensive conditions:

(1) that he should be registered and meet the regulatory requirements to play for the first team of Royal Charleroi in any official competition organised by the URBSFA [Union royale belge des sociétés de football association ASBL (Royal Belgian Football Federation; hereinafter “URBSFA”)], UEFA and FIFA, no later than March 30, 2015; and

(2) that (before the same date) there should be written and unconditional confirmation that Royal Charleroi could not be considered a joint debtor in respect of any indemnity (in particular, for contractual termination) that BZ may be required to pay to Lokomotiv.

The respective lawyers of Diarra and Royal Charleroi requested, in February and March, confirmation from FIFA and URBSFA that the player could be registered and meet the regulatory requirements to play in the first team and that Article 17 (2) and (4) of the RSTP would not apply against the latter.

FIFA, by letter of February 23, 2015, replied that only the competent body, and not its administrative body, has the power to apply the provisions of the RSTP. For its part, the URBSFA communicated on March 6, 2015, that, in accordance with FIFA rules, the registration of the player could not take place as long as his former club did not issue a jurisdictional International Transfer Certificate (hereinafter referred to as ITC).

On May 18, 2015, the DRC partially accepted Lokomotiv’s request and set the compensation to be paid by Diarra at €10.6 million and declared that “Article 17.2 of the RSTP would not be applied to the player in the future”. This decision would be ratified by the Court of Arbitration for Sports (hereinafter CAS) in May 2016. Finally, on July 14, 2015, Diarra was signed by Marseille of France.

3. Presentation of Diarra before the ordinary courts.
The prejudicial question.

In December of the same year, with the support of the International Federation of Professional Football Players (hereinafter FIFPRO), Diarra filed a lawsuit against FIFA and the Belgian Football Association before the Commercial Court of Hainaut (Belgium) claiming 6 million euros in damages for loss of profit suffered as a result of the application of provisions that he considers contrary to European Union Law.

The two provisions invoked by the player in support of his request were as follows:

The first is the one that enshrines the principle of free movement of workers within the Union, i.e., Art. 45 TFEU, which provides as follows:

“1. The free movement of workers shall be assured within the Union.

2. Freedom of movement shall entail the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment.

3. Subject to limitations justified on grounds of public policy, public security and public health, freedom of movement for workers shall include the right: to respond to effective offers of employment; to move freely for this purpose within the territory of the Member States; to terminate in one of the Member States in order to take up employment there, in accordance with the laws, regulations and administrative provisions applicable to the employment of national workers.

(...).”.

The second is Art. 101 TFEU. which establishes which decisions, agreements or practices will be contrary to the right to free competition, stating:

“1. All agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States, and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which consist in:

a) directly or indirectly fixing purchase or sale prices or other transaction conditions;

b) limiting or control production, market, technical development or investments;

c) sharing markets or sources of supply;

d) applying unequal conditions for equivalent services to third parties, causing them a competitive disadvantage;

e) subordinating the conclusion of contracts to the acceptance by the other contracting parties of supplementary services which, by their nature or according to commercial usage, have no relation whatsoever with the object of such contracts.

2. Agreements or decisions prohibited by this article shall be null and void.

However, the provisions of paragraph 1 may be declared inapplicable to:

– any agreement or category of agreements between companies, - any decision or category of decisions of associations of companies

– any concerted practice or category of concerted practices, which contribute to improving the production or distribution of products or to promoting technical or economic progress, while allowing users an equitable share of the resulting benefit, and without:

a) imposing restrictions on the enterprises concerned that are not indispensable to the attainment of such objectives;

(b) affording such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question”.

On January 19, 2017, the Belgian court declared his claim to be founded in principle and ordered FIFA and URBSFA to pay a provisional amount of €60,001. In the judgement, the court ruled that article 17.2 of FIFA violates EU Community law, in particular, the right to free movement of workers, and urged the highest international football body to compensate the footballer.

FIFA appealed the judgement to the Mons Court of Appeal, arguing mainly that the court lacked jurisdiction over the player’s claim because the matter fell under the exclusive jurisdiction of CAS, or at least not under Belgian international jurisdiction. Alternatively, FIFA asked the court to declare the claim inadmissible or unfounded.

URBSFA joined the case and supported FIFA’s arguments. Royal Charleroi filed a voluntary intervention in support of FIFA and the player filed a counterclaim requesting the court to declare that Article 17 of the RSTP, Article 9 (1) of the RSTP and Article 8.2.7 of Annex 3 of the RSTP violate Articles 45 and 101 of the TFEU, and .to establish that FIFA and URBSFA are liable jointly and severally for the damages caused by the existence and application of these rules.

In its referral decision, the Mons Court of Appeal upheld the decision of the Hainaut Commercial Court to declare itself competent to hear Diarra’s claim for damages in Belgium and concluded that the CAS arbitration agreement invoked by FIFA was not valid under Belgian law because the relevant FIFA statutes were too general and unclear to provide for such an agreement.

The court also found that it had international jurisdiction over URBSFA because its headquarters were in Belgium and the alleged damage occurred in Charleroi, where the player was unable to play football despite the job offer from Royal Charleroi.

In addition, the court rejected the argument that Diarra had artificially created a conflict in Belgium by securing a fictitious job offer, stating that the player had made genuine efforts to secure employment at various clubs throughout the European Union.

The court found Diarra’s claim admissible, as he had sufficiently demonstrated his interest in pursuing the case, given the alleged harm caused by the conduct of FIFA and URBSFA.

Finally, the court confirmed that the case raised the question of whether the damage suffered by the player when he was prevented from playing professional football, during the 2014/2015 season, was caused by the misapplication of rules in violation of Articles 45 and 101 TFEU.

Beyond the grounds invoked by the player, FIFA and URBSFA, the Mons Court of Appeal considered that these rules could indeed violate freedom of movement and competition and referred the preliminary question to the Court of Justice of the European Union.

By order of 19 September 2022, received at the Court of Justice on 17 October 2022, the Mons Court of Appeal referred the following question to the Court for a preliminary ruling:

“Are Articles 45 and 101 of the Treaty on the Functioning of the European Union to be interpreted as prohibiting:

– the principle of solidarity in the payment, by the player and the club wishing to contract him, of the compensation owed to the club with which the contract has been terminated without just cause, as regulated in article 17.2 of the [RSTP], in connection with the sporting and financial sanctions provided for, respectively, in paragraphs 4 and 1 of the same article;

– the possibility that the federation of the player’s former club may refuse to issue the international transfer certificate required for a new club to sign the player if there is a dispute between the former club and the player (Article 9.1 of the [RSTP] and Article 8.2.7 of Annex 3 of the above-mentioned Regulations)?” .2

4. Conclusions of Advocate General Maciej Szpunar

In the preliminary question, the Advocate General intervened by presenting his legal opinion after analysing the case in detail and examining the legal and contextual aspects of the preliminary question, offering his interpretation on how European law should be applied or interpreted in the case in question.

This opinion was thorough and impartial and analysed the case both from the point of view of European Union law and its impact on the legal system of the Member States. Although his opinion is influential, the Advocate General did not participate in the deliberation or in the final decision of the judges of the Court and his opinion remained indicative and non-binding, although the final judgement is often aligned with his analysis.

4.1. The bottom line

The Advocate General held that: “What is decisive is that players are effectively prevented from being able to sign for clubs in other Member States”. As was the case with Diarra, a French footballer who was an employee and intended to take up a job in Belgium, a country of which he is not a national, and the controversial provisions effectively prevented him from being able to do so.3

It then considered it necessary to analyse whether the provisions at issue, Article 17 (1), (2) and (4) and Article 9(1) of the EUTR and Article 8 (2) (7) of Annex 3 to the EUTR, pursuant to Article 101 (1) TFEU, can be equated to conduct that has as its object or effect the prevention, restriction or distortion of competition within the internal market.

To this end, it noted that the contested provisions constitute decisions of associations of undertakings within the meaning of Article 101 (1) TFEU4 , which may affect trade between Member States within the meaning of the same provision, clarifying that this conclusion is not undermined by the fact that the contested provisions involve what is commonly regarded as labour law.5

According to Article 17 of the RSTP, as soon as a player terminates a contract without just cause, he is obliged to pay compensation and serious sporting sanctions apply. In addition, pursuant to Article 8.2.7 of Annex 3 of the RSTP, such a player shall not receive an international transfer certificate in order for a club to field him.

The provisions in question, according to the reasoning of the Advocate General, are designed to have a deterrent effect on any player and the same applies to clubs potentially interested in acquiring players when they still have a contract in force because the price to be paid for such a transaction would be extremely high.

Following this argument, the regulations in question limit the possibility for players to change clubs upon termination of their contract without just cause and, correlatively, for other clubs to hire those players, when they have terminated their contract without just cause.

Thus, the contested provisions, by limiting for clubs the possibility of hiring workers, necessarily affect competition between clubs in the market for the acquisition of professional players.6 While there are other situations in which players can change clubs and be hired, as is usually the case in most cases, when a contract is terminated without just cause, by the application of the contested rules, competition is doomed to disappear.7

According to the Advocate General, contrary to the European Commission’s interpretation8, these elements constitute strong indications that there is a restriction of competition by object and, in the light of this analysis, he considered that the contested provisions also have, at the very least, the effect of restricting competition.

On this question, it concluded that Article 101(1) TFEU precludes the provisions at issue and, in the event that the Court of Justice declares that there is a restriction to competition not by object but by effect, the next step would be to assess such provisions in the light of their objectives in accordance with the judgement in Wouters et al., in order to determine whether they are justified in pursuing one or more legitimate objectives in the general interest which are not, in themselves, anti-competitive.9

4.2. Justification of the restriction

In this regard, according to the Advocate General, a restriction on the free movement of workers can only be justified if, firstly, it is based on one of the grounds listed in Article 45(3) TFEU10 or on an overriding reason relating to the public interest11 and, secondly, if it complies with the principle of proportionality, which implies that it is appropriate to ensure, in a consistent and systematic manner, the achievement of the objective pursued and that it does not go beyond what is necessary to achieve it.12

4.2.1. Identification of a compelling reason of general interest.

FIFA and URBSFA argued, as a reason of general interest, that the disputed provisions are intended to preserve contractual stability in the professional football sector and, more specifically, to ensure compliance with the obligations assumed by both players and clubs.

On this point, the Advocate General saw no problem in accepting these reasons as overriding reasons of general interest, insofar as they do not constitute objectives of a purely economic nature.

Moreover, the Advocate General recognized that contractual stability is supposed to help ensure a certain level playing field between clubs and recalls that the Court of Justice has expressly accepted the objective of maintaining a balance between clubs, preserving a certain equality of opportunity and uncertainty of outcome.13

4.2.2. Proportionality

In accordance with the principle of proportionality, limitations may be imposed only where they are necessary and actually meet the objectives of general interest recognized by the Union or the need to protect the rights and freedoms of others.

The burden of proving the proportionality of the contested provisions, in this case, lies with FIFA, which must substantiate why they are appropriate to ensure, in a consistent and systematic manner, the achievement of the objectives pursued and that they do not go beyond what is necessary to achieve them. It is then up to the referring court to assess the proportionality of the contested provisions.

Generally speaking, it appears that the disputed provisions may promote contractual stability and thus contribute both to the stability of the composition of teams in sports competitions and to the objective related to the maintenance of a balance between clubs in sports competitions, while also preserving a certain equality of opportunities.

Finally, regarding adequacy, the Advocate General admitted that the obligation of the player and the new club to pay compensation14 should encourage players not to terminate their contracts without just cause and discourage clubs from signing players who have terminated their contracts early without just cause. The same applies to sporting sanctions15 and the International Transfer Certificate16, the non-issuance of which worsens the situation of the player concerned, creating a technical obstacle to his joining a new club belonging to another federation.17

4.2.3. Need

With respect to the need for the disputed provisions not to go beyond what is necessary to achieve the objective of contractual stability, the payment of compensation for termination without just cause, according to the Advocate General, may be considered reasonably necessary to achieve the objective of contractual stability.

However, such compensation must be calculated in such a way that the amount owed by the party to whom the lack of just cause is attributed does not exceed the amount that could reasonably be considered necessary to compensate the other party for the prejudice suffered as a result of the termination of that contract and to dissuade, in this case, the player from terminating the contract without just cause.18

With regard to the solidarity of the new club19, the Advocate General considers that systematically holding the new contracting club responsible for this goes beyond what is necessary to achieve the legitimate objective, especially when the new club has not been involved in any way in the termination of the contract. The presumption in Article 17(4) of the RSTP that the new club has induced the player to terminate the contract seems draconian.

While it may be argued, as FIFA does, that it is possible to derogate from the application of Article 17(2) of the RSTP, since the DRC is empowered to restrict the application of the principle of joint and several liability, conferring this power on the DRC does not provide players and clubs with the necessary legal certainty, since everything depends on the feasibility and speed of a procedure that is difficult to assess.

With respect to the issuance of the CTI, Article 8(2)(7) of Annex 3 of the RSTP, in the opinion of the Advocate General, entails the risk that the issuance of the CTI may be refused on the basis of the mere allegation that the player has not respected the terms of his contract and that the club had to terminate it due to his alleged failure to comply with his contractual obligations.

Again, it could be argued that this system is sufficiently flexible in that, in the event of a dispute between the player and his former club, FIFA may take interim measures at the request of the new club in exceptional circumstances.20 However, the Advocate General considers that these arguments are too weak to conclude that such provisions are necessary to achieve contractual stability.

4.3. Conclusion of the Advocate General.

On the basis of the foregoing, the Advocate General proposed that the Court of Justice answer the questions referred for a preliminary ruling by the Mons Court of Appeal as follows:

“Article 101 TFEU must be interpreted as precluding rules adopted by an association responsible for the organisation of football competitions at world level and applied both by that association and by the national football associations which are members of it, which provide that a player and a club wishing to sign him are jointly and severally liable for compensation owed to the club with which the player has terminated his contract without just cause and that the federation to which the player’s former club belongs may refuse to issue the international transfer certificate, required for a new club to be able to sign the player, if there is a dispute between the former club and the player, provided that it is established, on the one hand, that such decisions by associations of undertakings are liable to affect trade between Member States and, on the other hand, that their object or effect is to restrict competition between professional football clubs, unless, in the latter case, it is shown by convincing arguments and evidence that they are justified in order to achieve one or more of their legitimate aims and that they are strictly necessary for that purpose.

Article 45 TFEU must be interpreted as precluding rules adopted by an association responsible for the organisation of football competitions at world level and applied both by that association and by the national football federations which are members of that association,

– which provide that a player and the club wishing to employ him are jointly and severally liable for compensation owed to the club with which the player has terminated without just cause the contract, unless it can be shown that it is actually possible, within a reasonable time frame, not to apply that principle if it is established that the new club was not involved in the early and unjustified termination of that player’s contract, and

– which provide that the federation of the player’s former club may refuse to issue the international transfer certificate required for a new club to sign the player if there is a dispute between the former club and the player, unless it can be shown that effective, real and expeditious interim measures can be taken if it is merely alleged that the player has not respected the terms of his contract and that the club had to terminate his contract because of his alleged failure to fulfil his contractual obligations.

5. The judgement of the Court of Justice
of the European Union

The Tribunal (Second Chamber) ruled:

“(1) Article 45 TFEU must be interpreted as precluding rules adopted by a private law association whose purpose, in particular, is to regulate, organise and control football at world level and which provides:

– firstly, that a professional player who is part of an employment contract, to whom a termination without just cause of this contract is attributed, and the new club that hires him after this termination are jointly and severally liable for the payment of the compensation due to the first club for which this player worked and which will be fixed on the basis of sometimes imprecise or discretionary criteria, sometimes devoid of an objective link with the employment relationship in question and sometimes disproportionate;

– secondly, that, in the event that the incorporation of the professional player takes place during a period protected by the terminated employment contract, the new club incurs a sporting sanction consisting in the prohibition to register new players for a given period, unless it proves that it did not encourage this player to break this contract, and

– thirdly, that the existence of a dispute relating to this breach of contract prevents the national football association of which the former club is a member from issuing the international transfer certificate necessary for the player’s registration with the new club, with the consequence that this player cannot participate in football competitions on behalf of this new club, unless it is established that such rules, as interpreted and applied in the territory of the European Union, do not go beyond what is necessary to achieve the objective of ensuring the regularity of football competitions inter-club while maintaining a certain degree of stability in the membership of professional football clubs.

(2) Article 101 TFEU must be interpreted as meaning that such rules constitute a decision by an association of undertakings which is prohibited by paragraph 1 of that Article and which can only benefit from an exemption under paragraph 3 of that Article if it is shown, by convincing arguments and evidence, that all the conditions required for that purpose are met.”

5.1. General analysis of the sentence

The court, in line with the opinion of the Advocate General, decided that FIFA’s regulations are contrary to the movement of workers and infringe competition in the market.

Following the Advocate General’s Opinion at21, the Court decided that the solidarity provided for in Article 17.2 of the EULA, together with the presumption of Article 17.4 and the sporting sanctions foreseen for the new club, together with the non-issuance of the international transfer certificate, effectively prevent players from signing for clubs in other Member States.

According to their reasoning, the combination of the aforementioned regulations configures a legal and financial situation that is unpredictable and potentially very burdensome for the new club, which, added to the possible sporting sanctions, is sufficient to discourage the contracting of players.22

In addition, the regulations provided for in Articles 9 of the RSTP and 8.2.7 of Annex 3 of the RSTP, which prohibit the issuance of a CTI while there is a dispute between the player and his former club for the early termination without cause of the employment contract, may prevent such players from exercising their economic activity in any Member State, other than their Member State of origin, preventing the sporting and economic interest of any club in another Member State from hiring them, contrary to the principle of free movement of workers within the Union .23

The judgement, based on recent decisions on the matter24, also inferred that the aforementioned regulations have the purpose of restricting or even preventing competition within the European Union.

Although it is recognised that such regulations are designed to prevent poaching practices by clubs with greater economic resources, in practice, such rules are comparable to a general, absolute and permanent ban on unilaterally hiring players already under contract, imposed by the decision of an association of companies to all professional football clubs and whose weight falls on the workers, who are the said football players.

The distribution of these resources is thus restricted to the possible transfers negotiated between these clubs, thus constituting a flagrant restriction of the competition that these clubs could develop if the aforementioned restrictions did not exist, generating a compartmentalisation of the market to the benefit of these same clubs.25

In short, according to the ruling, the regulation analysed is, by its very nature, detrimental to the competition that professional football clubs could carry out by unilaterally hiring players already under contract with a club or players whose contracts have been terminated without just cause.

6. Analysis of the aforementioned regulations

6.1. Solidarity established in art. 17.2 of the RSTP

In its pertinent part, the regulation states:

“If a professional player is obligated to pay compensation, the professional and his new club shall be jointly and severally liable for its payment.”

This rule was designed to discourage players from breaching contracts and to provide sporting and financial protection to the club that has invested time and money in selecting the best players, securing their availability or eligibility (often at a significant transfer fee), and signing them for a specific period of time to secure their sporting services.

The solidarity of the new employer for indemnity payments in cases of termination of contract without just cause is a principle recognised in labour law in several countries. This principle is most frequently applied in situations of company transfer, labour continuity or outsourcing, where there is a direct or indirect relationship between the old and the new employer with respect to the employee’s employment relationship.

However, it is fair to recognise that the purpose of solidarity in labour law is to protect the rights of the worker against corporate manoeuvres that could deprive him of his rights. That is to say, to prevent the change of employer or corporate ownership from implying a loss of labour rights and to protect the worker against unfair practices, such as fraudulent transfers or simulations aimed at evading responsibilities or violating his acquired rights.

The case of professional football players is clearly different. As we have seen, the direct protection is towards the previous club, but it is important to highlight that, although indirectly, the worker is also protected by guaranteeing contractual stability, so important in the world of professional football, and high salaries that are usually due to the clubs investing a lot of economic effort into “buying their passes” and then in paying salaries in accordance with those investments.

Following this reasoning, it does not appear that the solidarity of the new club, by itself, constitutes a restriction on competition for the object. This is so because it has not been regulated with the sole purpose of deliberately limiting the mobility of players or dissuading clubs from competing with each other. In fact, when there are clubs interested in contracting players with current contracts, if both clubs and the player agree, the transfer of the professional services of a contracted player is possible and it is common for this to happen.

The solidarity of the new club seems more of an accessory measure to protect contractual stability and compliance with sporting rules and to prevent the new club from taking advantage of or enriching itself without cause26, than a regulation to deliberately restrict player mobility or deter clubs from competing with each other. The key may lie in analysing the proportionality, purpose and actual effects of such regulation on the market.

Finally, it should be noted that the principle of proportionality -and this ruling is no exception-, since it has not always been adequately weighed, confuses strictly general labour matters with the specifics of football, in which not only are the workers special subjects, but proportionality must also be weighed against the rights of the clubs and the investments made, both in the transfers to acquire the services of the football players and in the significant salaries agreed with them.

There is no other field, outside of sports, in which an employee is “invested in” as in this area, and this investment must also be an extreme of proportionality, as the principle of contractual stability, which has been so weakened, must also be.

6.2. The calculation of the compensation established
in Article 17.1 of the RSTP

In this respect, the judgement questions this regulation because, according to its understanding, the indemnities are fixed:

“...on the basis of criteria that are sometimes vague or discretionary, sometimes devoid of an objective link to the employment relationship in question and sometimes disproportionate.”

According to the judgement, the compensation system regulated by FIFA allows the relevant courts to impose compensation for breach of contract with sometimes imprecise, discretionary and disproportionate criteria. An analysis of section 17 (1) shows that this is not the case.

First, the FIFA system allows the parties (clubs and players) to agree on liquidated damages clauses in the employment contract to regulate the economic consequences of a unilateral termination without just cause. That is, clubs and players are free to include clauses in the contract that predefine the amount of compensation in the event of termination without cause, both on the part of the player and the club.

These clauses, known as termination clauses, contractual compensation clauses or liquidated damages clauses, seek to provide certainty and predictability to both parties in the event of breach of contract. They must respect certain basic principles in order to be valid, such as proportionality between the agreed amount and the damages that the breach may cause, with respect to FIFA regulations and applicable labour laws in the country where the contract is entered into, and the contract must clearly detail how it will be calculated or what will be paid in case of breach.

If such a clause exists in the contract, it will be the main basis for calculating compensation, provided it is valid. FIFA generally respects such agreements, unless it is considered abusive, disproportionate, or contrary to the general rules of law.

Only in the event that the parties have not incorporated any specific provision regarding the indemnity due in the event of premature termination of the contract, the indemnity for breach of contract shall be due on the basis of article 17.

Unlike what happens in the labour laws of most professional sports around the world, FIFA’s regulatory system for determining compensation for breach of contract without just cause can be considered comprehensive and effective in addressing the problems related to breach of contract, as it establishes clear and detailed rules to protect both players and clubs.

The regulation addresses all key elements: calculation of compensation, mitigation of damages, and protection of contractual stability. It also allows the inclusion of liquidated damages clauses in players’ and clubs’ employment contracts, provided they are reasonable and respect the general rules of the RSTP and national laws.

In addition, the case law of the Court of Arbitration for Sport (CAS) on compensation for termination without just cause of the contract of professional football players can be described as evolutionary, reasoned and balanced, since it has applied general principles of sports and labour law, taking into account the particularities of the football market

CAS general jurisprudence has shifted from favouring player mobility (Webster) to a more balanced approach that protects contractual stability and club rights (Matuzalém and El Hadary), while maintaining key principles such as mitigation of harm and proportionality, always seeking to establish compensation proportional to the actual harm suffered, avoiding excessive punishment or arbitrary compensation.

All this, in addition, adapted to the sports context and recognizing the specificity of the football market, where the mobility of players and the investments in them are fundamental. In sum, the analysed regulation plus the briefly summarised jurisprudential path, allow the undersigned to disagree with the arbitrary way in which the indemnities for early termination without just cause of the employment contracts of professional football players are allegedly established.

6.3. The sporting sanctions established in art. 17.3 and 4 of the RSTP

In its pertinent part, the regulation establishes with respect to the player:

“17. 3. In addition to the obligation to pay compensation, sporting sanctions shall be imposed on a player who terminates a contract during the protected period. The sanction shall consist of a four-month restriction on his eligibility to play in any official match.”

Regarding the club:

17.4. “...sporting sanctions should be imposed on a club that terminates a contract during the protected period or has induced the termination of a contract. Any club signing a contract with a professional player who has terminated his contract without just cause shall be presumed, unless proven otherwise, to have induced the professional player to terminate the contract. The sanction shall be to prohibit the club from registering new players, both domestically and internationally, for two complete and consecutive registration periods.”

The judgement challenges this regulation only in relation to the club because, according to its understanding:

“...in the event that the incorporation of the professional player occurs during a period protected by the terminated employment contract, the new club incurs a sporting sanction consisting of a ban on registering new players for a specified period, unless it proves that it did not encourage this player to break this contract,...”

6.3.1. Analysis of sports sanctions

For many years, the sports sanction has been designed to protect the stability of employment contracts in football, which is a fundamental pillar of the professional sports system. Without this measure, clubs could directly incentivise players to break contracts without cause, upsetting the competitive and contractual balance by simply offering a higher salary.

The main objective is to discourage clubs from acting as “facilitators” of contract breaches, thereby promoting an environment where labour relations are respected. By imposing a severe ban, FIFA has always sought to discourage clubs from seeking to gain undue advantage by signing players who have broken contracts without just cause.

This forces clubs to be more diligent and responsible in their negotiations with players under contract. In this way, the sporting sanction complements the compensation obligations that already exist, ensuring that the new club not only compensates the former aggrieved club financially, but also faces a serious sporting consequence.

Since the origin of organised football, contractual stability has been and is crucial in professional football to ensure the predictability of clubs’ investments in players, and this sanction is intended to reinforce that principle. In this way, the new club’s solidarity (economic and sporting) prevents players from acting unilaterally without considering the consequences for their former clubs, especially if the new club encourages or tolerates such actions.

However, it is also fair to recognise that the transfer ban for two transfer windows may be perceived as excessively severe, especially in cases where the new club did not deliberately act as an incentive to break the contract. If this were the case, the new clubs could be disproportionately punished and, in addition to the sporting sanction, have to pay compensation.

The ban on squad reinforcements during transfer windows has a very negative impact on the competitiveness of the sanctioned club, severely limiting its ability to compete in the transfer market and affecting its sporting and financial performance for at least one year. Although sporting sanctions are not so common in practice, for both players and clubs, the fact is that the sanction is in force and, ultimately, it is the members of the DRC or the members of the arbitration panels who make the final decision.

Perhaps it is time to look at less restrictive solutions and, instead of banning transfers, less restrictive sanctions could be implemented, such as significant sporting fines or partial restrictions on the transfer market (e.g., limiting the number of transfers in a window instead of banning them altogether).

One possible improvement would be to adjust the sanction to be more flexible, depending on the degree of responsibility of the new club. This would ensure that the measure is fair and does not disproportionately affect market dynamics and club competitiveness.

The sanction of a transfer ban for two transfer windows is reasonable from the point of view of protecting contractual stability, deterring unjustified breakups and holding clubs accountable for encouraging such behaviour. However, its proportionality may be questioned in cases where the new club has not acted maliciously or consciously.

6.4. The sports sanctions established in Articles 9 of the RSTP
and 8.2.7 of Annex 3 of the RSTP

In its pertinent part, the regulation states:

“9. International Transfer Certificate (RSTP)

1. Players registered with one association may be registered with a new association only after the latter has received the international transfer certificate (hereinafter referred to as “the ITC”) from the previous association”.

“Art. 8.2 Creation of an ITC for a professional player (Annex 3 of the RSTP)

7. The former association shall not deliver an ITC if a contractual dispute has arisen due to the circumstances provided for in annex 3, article 8.2 paragraph 4 b) between the former club and the professional player, in which case, at the request of the new association, FIFA may take interim measures in exceptional circumstances”.

The ruling questions the validity of this regulation because it prevents the player in conflict with his former club from participating in football competitions for another club:

“...the existence of a dispute related to this breach of contract prevents the national football association of which the former club is a member from issuing the international transfer certificate necessary for the player’s registration with the new club, with the consequence that this player cannot participate in football competitions on behalf of this new club...”

6.4.1. Analysis of sports sanctions

The purpose of the rule preventing the national association of the former club from issuing the International Transfer Certificate (ITC) in cases where a player has terminated his employment contract without just cause has always been to protect the contractual stability and to ensure that FIFA regulations on the Status and Transfer of Players are effectively enforced.

This mechanism has several specific purposes, one of the fundamental principles of FIFA’s Regulations on the Status and Transfer of Players (RSTP) is the stability of employment contracts in football. By blocking the issuance of the ITC in the event of a breach without cause, FIFA seeks to discourage conduct that undermines the integrity of contracts and to ensure that parties respect the agreed terms, promoting greater accountability in the transfer market.

The idea is that, if a player breaks his contract without just cause and the national association issues the ITC automatically, the player could benefit from his breach by being eligible to play for another club without facing immediate consequences. By prohibiting the issuance of the ITC in these cases, the contractual dispute is forced to be resolved first, preventing the player and the new club from benefiting from the breach.

Thus, the retention of the ITC obliges the parties (player, former club and new club) to resolve the dispute in an appropriate manner, generally through possible direct agreements between the parties or otherwise by requesting a decision from the FIFA Football Tribunal and, ultimately, through the intervention of CAS.

Although the player cannot be immediately sanctioned without due process, the non-issuance of the ITC acts as a deterrent by preventing the player from participating in official competition until the situation is resolved. This protects the rights of the former club while it is determined whether or not there was a justified breach.

If the dispute is not resolved within a reasonable period of time, FIFA may authorise a provisional registration of the player with the new club, in order to prevent his career from being suspended indefinitely. This occurs in absolutely all cases where it is requested under the principle of the protection of the player’s professional career.27

The refusal to issue the ITC is also intended to put pressure on the new club, which may be held jointly and severally liable in the event of a termination without just cause, by encouraging quick settlements or resolutions.

In summary, the rule preventing the national association of the former club from issuing the ITC in cases of breach of contract without cause is aimed at preserving contractual stability, promoting respect for employment contracts, and preventing players or clubs from taking undue advantage of breaches of contract. While protecting the rights of the former club, it also seeks to maintain a balance between protecting the player’s career and enforcing contractual rules.

However, even if the objective of the rule to maintain contractual stability is very defensible, this should not prevent the player in question from exercising his professional activity, nor should it prevent the new club from registering the player for the sole reason that there is a dispute between the player and his former club concerning a breach of contract that may not have just cause.

Such a situation violates the principle of proportionality, in particular because its application ignores the specific circumstances of each individual case, in particular the factual context in which the breach of contract occurred, the respective behaviour of the player in question and his former club, as well as the role or lack of role played by the new club, which, however, ultimately influences the ban on registering this player and fielding him in competitions.28

7. Brief comments on contractual stability and some
history

The CJEU has considered that maintaining a certain degree of stability in a club may constitute a legitimate objective, provided that the principle of proportionality is respected. In this regard, and although the final decision is left to the discretion of the rosters of the Mons Court of Appeal of, the CJEU seems to suggest that the current regulation cannot be considered proportionate, given that it is not based on objective elements.

While arguing that contractual stability should not be considered as a legitimate general interest objective in itself, it should be considered as one of the possible means to contribute to the achievement of the objective valid general interest of ensuring the regularity of inter-club football competitions.29

It is clear, then, that the Diarra case is centred on the contractual stability of the contracts of professional football players, considered by the CJEU as one of the possible means to ensure regularity in competitions. In other words, the centrality and importance of this legal principle for the international system of football competitions is not disputed, but some aspects of the regulation that, more than twenty years after its creation, should be corrected, are highlighted.

Contractual stability emerged as a compromise between clubs and players to balance the freedom of movement of players with the need to protect the contracts and investments of clubs. Until the Bosman ruling, it had not been necessary to regulate contractual stability because, in the first place, international transfers were not as frequent as they are now, and secondly, in most countries there was still the right of retention.

With the Eastham vs. Newcastle ruling, the lien was repealed for England30, and this jurisprudence soon led other countries to follow suit, but only at the national level. Thus, in Argentina, they ceased to apply lien at the national level in 1973 with the enactment of Decree Law 20.160: in Spain in 1979, when the AFE-Clubs agreement was signed and then Royal Decree 318/81 was enacted; and in Italy in 1981, with the enactment of Legge 91/81, to give a few examples.

However, with the Bosman ruling, the European transfer system was analysed, which still contained many countries, including Belgium, that maintained a right of retention at the local level that affected the rules throughout the European Union and had an international impact, as it involved not only clubs from different countries, but also national federations and the UEFA.

The Bosman case had wider implications, not only for European football, but also for other sports, setting precedents on the application of free movement rules to professional athletes and revolutionising European football by allowing players to move freely between clubs at the end of their contracts without transfer fees. It also removed limits on the number of foreign players from the European Union, promoting a more open labour market in European football.

The system of competitions and transfers had returned to the stage before the Retain and Transfer System, which the English had created in 1893 to bring order to the competition and establish, for seventy years (until 1963), a kind of “English-style contractual stability”.

As a matter of strict necessity, in 2001, FIFA introduced major reforms to its Regulations on the Status and Transfer of Players (RSTP), consolidating the principle of contractual stability as a pillar of the system through the Agreement between FIFA, UEFA and the European Union. These reforms were partly driven by negotiations with the European Union, mainly due to the effects of the Bosman case, which forced the transfer system to be reconfigured and adapted to the principles of the European single market.

The origin of contractual stability in FIFA’s regulations is linked to the need to regulate professional football in a balanced manner, after the disappearance of the lien31, protecting both the rights of players and the interests of clubs. Its implementation since the 2001 reforms, in the context of the RSTP, reflects a commitment to fostering trust and respect for contracts, consolidating a predictable system that benefits football as a whole.

8. Are the Bosman and Diarra rulings comparable
in their effects?

Both the Bosman and Diarra rulings, although referring to different specific circumstances, apply general legal principles that impact contractual relationships in professional football. When comparing the legal effects of both decisions, remarkable similarities and differences can be identified.

From the first, the restriction of freedom of movement, both judgements recognise the fundamental right to free movement of workers, enshrined in the Treaty on the Functioning of the European Union, and how sports rules can restrict it.

In “Bosman”, the CJEU declared that the rules on transfer fees and the limitation of foreign players violated this right. In “Diarra”, the same court also recognised that FIFA rules, articles (in particular article 17) and concordant of the Regulations on the Status and Transfer of Players (RSTP), may hinder the freedom of movement of players.

Both decisions sought to strike a balance between the contractual autonomy of clubs and the rights of players. In “Bosman”, the CJEU limited the ability of clubs to impose restrictions on player mobility. In “Diarra”, the CJEU analysed the validity of the FIFA rules establishing the joint and several liability of the player and the new club in case of breach of contract without just cause and the corresponding sporting sanctions.

In both cases, the CJEU required an objective justification for any restriction on the free movement of workers. In “Bosman”, the court rejected justifications based on the protection of competitive balance and the promotion of the training of young players. In “Diarra”, it also analysed whether FIFA’s rules complied with the principle of proportionality, i.e., whether they were necessary and appropriate to achieve their legitimate objectives.

As for the differences, these seem to be much greater. The Bosman ruling had a broader and more direct impact on the system, invalidating the rules on transfer compensation and the limitation of foreign players. In contrast, in the Diarra case, the CJEU did not invalidate the FIFA rules, but asked the national court to assess whether the relevant specific rules of the case complied with the requirements of EU law.

“Bosman” focused on restrictions on freedom of movement imposed by the transfer rules and “Diarra”, on the other hand, focused on the joint and several liability of the player and the new club in case of breach of contract without just cause and on sporting sanctions, more specific aspects of the RSTP.

Both “Bosman” and “Diarra” demonstrate the complex interaction between EU law and the rules of professional sport. Both decisions contribute to case law that seeks a balance between the interests of clubs and the rights of players, ensuring free competition and the protection of fundamental rights.

The Bosman case transformed transfer rules, while the Diarra case reaffirmed the importance of contractual stability and severance payments by confirming that it remains FIFA’s responsibility to establish, protect and enforce an efficient regulatory system for international football to protect the integrity of international sporting competition.

“Bosman” had a transformative impact on European football, changing the rules of the transfer market in a fundamental way; while “Diarra”, although important, focused on a more specific area (breach of contract) and its impact is clearly more limited in terms of systemic scope. This is further confirmed by the statistics that, of the total number of transfers, those with unilateral breach of contract do not reach 5% of international transfers.

Following this reasoning, it can be inferred that the Bosman and Diarra rulings are not directly comparable due to their differences in legal context, objective and systemic impact. However, both cases are examples of how players’ rights and football regulations are constantly evolving.

9. Suggested changes

The following changes are suggested for the sole purpose of providing ideas:

1) To eliminate the automatic joint and several liability in case of breach of contract without just cause, leaving such a possibility only for cases in which it can be demonstrated that the new club actually induced the breach of contract.

2) Ensure a fair and equitable procedure for the issuance of the ITC that allows the player to demonstrate the existence of just cause for the breach of contract or the lack of merit of the dispute, or eliminate the rule prohibiting the issuance of the ITC in the event of a contractual dispute between the player and his former club.

3) Eliminate the automatic sporting sanctions imposed on clubs and players that hire players who have broken their contracts without just cause, leaving such a possibility only for cases in which the effective inducement of the new club to break the contract can be demonstrated.32

4) Establish objective, less discretionary criteria for determining severance pay. For example, the player’s salary, the length of the remaining contract, the player’s age and the value of the transfer.

Given that a possible elimination of automatic new club solidarity and sporting sanctions in the context of breach of contract without just cause may discourage clubs from paying high transfer fees and offering contracts with high salaries as hitherto33, the formation of a guarantee fund, aimed at compensating clubs whose players break their contract without cause, could be an innovative and balanced solution to address this type of conflict in professional football.

This fund could guarantee compensation to the affected clubs while protecting the players’ freedom to work for other clubs. This system should ensure that the affected clubs receive compensation commensurate with the financial loss suffered by the breach of contract. With respect to the players, this fund should protect the players’ rights by preventing financial sanctions from unfairly impeding the players’ labour mobility, without prejudice to the labour liability that may correspond to them.34

The fund should be managed independently and be financially sustainable; it could also be administered by FIFA or an independent entity supervised by FIFA, guaranteeing neutrality and compliance with international regulations. The sources of financing could be contributions from the clubs, a percentage of international transfer revenues, contributions from federations and leagues with a portion of their revenues from television rights or commercials, fines for non-compliance imposed on players or clubs that violate contractual regulations, etc.

10. Conclusions

The Diarra case, which does not constitute a new Bosman case, only raises crucial questions about the compatibility of the RSTP with EU law, especially with regard to free movement of workers and the competition.

The CJEU’s ruling in the Diarra case sets an important precedent by ruling that certain regulations of the RSTP are incompatible with Articles 45 and 101 of the TFEU. This decision has the potential to transform the transfer system in professional football.

The regulations analysed, while seeking to protect contractual stability, negatively affect the ability of players to seek new opportunities and of clubs to compete on a level playing field.

The automatic joint and several liability of the new club in the event of a breach of contract without just cause and the associated sporting sanctions, such as a ban on signing players, or a ban on issuing the ITC, are considered disproportionate restrictions on the free movement of labour and competition.

However, the CJEU decision does not completely invalidate the RSTP, but rather urges FIFA to amend it in order to bring it into conformity whith EU law, opening a space for a constructive dialogue between FIFA and the European institutions, with the aim of finding a balance between the interests of clubs, players and fair play in football.

The Diarra case, while marking a new milestone in the relationship between EU and professional law, and its in-depth analysis may provide valuable insights into the future of football, does not call into question FIFA’s position as world football’s governing body or its legitimacy to regulate international football.

It is now up to FIFA to initiate a comprehensive dialogue with key stakeholders to determine what conclusions should be drawn from the Diarra decision and what are the most appropriate and desirable changes to be made to Article 17 and the concordant provisions of the FIFA RSTP in order to continue to provide, as in the past, a modern, robust and legitimate regulatory framework for international football.

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