Justice questions legality of sanctions and solidarity in player transfers

Full article

Diarra case: CJEU challenges the validity of article 17 of the FIFA RETJ

FIFA has put an article of the Regulations on the Status and Transfer of Players (RETJ) on the table to be debated, to listen to proposals for improvement, to reformulate and to succeed in improving the rules of football.

But let's not get ahead of ourselves. Let's start at the beginning.

When the legislative branch of a government drafts a regulation, it expects it to be applicable, correct and in accordance with the law, as it is reviewed and analysed by multiple experts in the field. The same is true of FIFA's rules and regulations.

However, on occasion, some of the articles, when they take effect, reveal a shortcoming, an inapplicability or, as in the case we are dealing with today, are contrary to a higher regulation and, consequently, violate it.

In 2014, FIFA approved the RETJ and implemented its effects on player transfers that were to take place that same season.

This was the case of the now former French professional footballer Lassane Diarra, who had decided to unilaterally terminate his contract with the club Lokomotiv Moscow in order to be signed by the club Royal Charleroi S.C. But, due to the entry into force of the RETJ, this player saw his contract with the club Royal Charleroi S.C. vanish. Not only that, but he was ordered to pay 10.5 million euros to his former club.

The basis for the ruling of the FIFA Dispute Resolution Chamber - which was later confirmed by the Court of Arbitration for Sport - was mainly article 17 of the RETJ, as Diarra's termination of his contract was deemed to have been ‘without just cause’.

What are the relevant elements of this article that caused so much damage to the player?

The first point details how the compensation to be paid by a player who terminates his contract ‘without just cause’ will be calculated.

In the second point, i.e. article 17.2 of the RETJ, there is a first element to discuss, as we will see below. Joint and several liability is established. That is to say, a club that hires a player who has terminated his former contract without just cause is obliged to pay, together with the player, compensation to the player's former club.

Again, in Article 17.4 of the RETJ we find an affectation with regard to the new club if the player is found to have terminated his contract without just cause. On this occasion, the provision establishes a rebuttable presumption (iuris tantum) on the player's new club. In this sense, it is presumed that this club has induced the player to terminate the old contract and, consequently, sporting sanctions are imposed, such as, for example, the impossibility to sign players for two transfer periods.

After receiving this judgment, Diarra decided to go to the ordinary courts to claim compensation from FIFA and the Royal Belgian Football Association for the damages suffered as a result of the effects of the RETJ.

When this case came before the Court of Appeal in Mons (Belgium), the court questioned whether FIFA's regulations, the RETJ, were in line with European rules - which take precedence. Specifically, whether the RETJ violated articles 45 and 101 of the Treaty on the Functioning of the European Union (TFEU). As a result, a referral was made to the CJEU and case C-650/22 was opened.

How the case ended

In its judgment of 4 October 2024, the CJEU concluded that the FIFA regulations (Articles 17.2 and 17.4 of the RETJ) are contrary to the principle of freedom of movement for workers within the European Union.

The justification lies in the fact that the solidarity provided for in article 17.2 of the RETJ, together with the presumption established in article 17.4 of the RETJ and the resulting sanctions for the club that intends to employ the player, may dissuade them from doing so, thus causing disproportionate legal and financial insecurity.

Furthermore, the CJEU also assesses other sporting sanctions provided for in the EUTR for this type of unilateral termination of a contract without just cause.

For example, the impossibility of issuing the CTI (International Transfer Certificate) to the player for the duration of the litigation, which entails preventing the player from carrying out his economic activity outside his country of origin. This sanction is, according to the court, contrary to free competition within the European Union.

This limitation of competition has already been discussed in the courts in other cases, such as, for example, Superliga case C-333/21 and Royal Antwerp case C-680/21.