FIFA player transfer regulations in the spotlight

On April 30, 2024, Advocate General Maciej Szpunar delivered his non-binding Opinion in case C-650/22, FIFA v. BZ. Among other issues, the Opinion addresses the compatibility of various FIFA player transfer regulations with EU competition law and the free movement of persons.

The reference for a preliminary ruling is made in proceedings where a former professional soccer player claimed damages from FIFA based on the harm allegedly caused by transfer regulations after early termination of his contract with a club.

The Opinion of Advocate General Szpunar is available here.

Background

On September 19, 2022, the Court of Appeal of Mons (Belgium) referred a question for a preliminary ruling to the Court of Justice of the European Union (CJEU) concerning a dispute between Lassana Diarra, professional player between 2004 and 2019, and FIFA.

In August 2013, Lassana Diarra signed a four-year contract with the professional Russian football club Futbolny Klub Lokomotiv. One year later, the club terminated that contract for an alleged breach by the player, claiming compensation of €20 million.

As a result, Lassana Diarra was limited in his options to continue his professional career at another club, as the new team could be held jointly and severally liable for any compensation.

In 2015, the player received an offer from Sporting du Pays de Charleroi, but the Royal Belgian Football Association (“URBSFA”) refused to register the player unless his former club issued an international transfer certificate, in accordance with FIFA regulations.

Finally, in December 2015, Lassana Diarra filed a lawsuit against FIFA and URBSFA before the Commercial Court of Hainaut (Charleroi, Belgium). He sought €6 million in damages for loss of earnings resulting from not being able to sign for the Belgian club during the 2014-2015 season. The claim was upheld, and FIFA appealed the judgment to the Court of Appeal of Mons.

Against this background, the Mons Court asked the CJEU whether several provisions of the FIFA Regulations on the Status and Transfer of Players may be contrary to EU competition law and the free movement of persons.

The measures at issue concern the principle of joint and several liability in the event of termination of a contract without just cause and the possibility for an association to refuse to issue an International Transfer Certificate to a player while a dispute between one of its member clubs and that player is still pending.

The Advocate General’s Opinion

As regards the free movement of persons, the Advocate General states that the provisions at issue are restrictive in nature. On the one hand, the joint and several liability rule entails a negative financial consequence for the contracting club—and therefore acts as a deterrent to the signing of a player. On the other hand, the non-issuance of the International Transfer Certificate may make it impossible for a player to exercise his professional activity in another Member State.

On this basis, the Advocate General considers that the contested provisions effectively prevent players from moving to clubs in other Member States.

However, the Advocate General examines whether this restriction could be justified on grounds of public policy, public security, public health or public safety or in the general interest, and whether it complies with the principle of proportionality.

As to the possible justification, FIFA and URBFSA argue that the contested provisions seek to maintain contractual stability in the professional football sector and to ensure compliance with the obligations entered into by both players and clubs. For Szpunar, this seems acceptable insofar as it ensures a certain level playing field between clubs.

As for proportionality, the Advocate General considers that the provisions comply with the suitability requirement, but he is more cautious as to their necessity:  holding the new club liable for termination of the contract without just cause is not necessary to achieve the objective pursued—especially when it has played no role in that termination.

Finally, in relation to the refusal of the International Transfer Certificate, Advocate General Szpunar does not accept the circumstances alleged by FIFA and concludes that the provision is not necessary to achieve the objective of contractual stability.

As regards the interpretation of the contested provisions in the light of EU competition law, the Advocate General analyzes them from the perspective of article 101 TFEU, since they concern decisions of associations of undertakings (i.e., the various associations that are part of FIFA).

For Szpunar, the combined application of the contested provisions has such severe consequences for players (compensation, sporting sanctions, obstacles to playing for other clubs) that it is unlikely that a player would decide to terminate a contract without just cause. Therefore, they are designed to have a deterrent effect. This implies that the contested provisions, by their very nature, limit both the possibility for a player to switch clubs and for new clubs to sign players in this situation—all of which affects competition between clubs on the market for the acquisition of professional players.

Conclusion

A number of conclusions can be drawn from the Advocate General’s Opinion which are of great relevance for the interpretation of the concept of “restriction by object.” The CJEU’s ruling will shed light on this issue.

In his analysis of the FIFA transfer player regulations in the light of article 101 TFEU, Szpunar blatantly states that the contested provisions constitute a restriction by object, categorically ruling out a possible justification under article 101(3) TFEU.

This is striking in a case where, as stated in the Opinion, the Commission considers that the contested provisions would constitute a restriction by effect, insofar as they only apply in the event of termination of contract without just cause. Therefore, according to the Commission, they do not affect the possibility for clubs to compete freely on the transfer market at the end of the contract binding the players to their former club or during the term of the contract—provided that there is an agreement between the parties.

However, since the Advocate General’s Opinion is not binding on the CJEU, we have to wait to see whether the Court confirms his position and interprets the concept of restriction by object based on an analysis of the impact of the provisions, as Szpunar seems to propose ex novo. This would imply moving away from the “harm test” used so far to identify a restriction by object.