CJEU Diarra Ruling on FIFA’s Transfer Regulations: Implications for international football and Cypriot clubs

Introduction

In October 2024, the Court of Justice of the European Union (the CJEU) issued a ground-breaking judgment regarding FIFA’s Regulations on the Status and Transfer of Players (the RSTP). This ruling is perhaps the most significant challenge to FIFA’s regulatory framework since the Bosman case in 1995, raising critical questions about the balance between contractual stability and the freedom of movement for professional football players.

The facts

The case centred around French midfielder Lassana Diarra, who contested the joint liability and compensation provisions under Article 17 of the RSTP as violating EU laws on worker mobility and competition.  In 2014, a dispute arose between Diarra and Russian club Lokomotiv Moscow, leading the player to leave the club after one year of the four-year contract. Diarra’s contract was formally terminated by the club prematurely, due to alleged contractual breaches that amounted to a termination without “just cause”, according to Article 17 of the RSPT. The club had brought the claim against Diarra in the FIFA Dispute Resolution Chamber (the DRC), to which the player counter-claimed for unpaid wages, pursuant to the original contract between himself and the club. The DRC ruled in favour of the club, ordering Diarra to pay EUR 10.5 million to Lokomotiv Moscow.

Pending the DRC’s determination, Diarra faced challenges to his career, including to find new employment opportunities due to potential burdens on any new club. In particular, the player received an offer from Club Sporting Charleroi, on the condition that FIFA and the Belgian Football Federation would provide a written guarantee that the club would not be liable to compensate Lokomotiv for any amount due to the ongoing dispute. The organisations were not able to provide this, leaving the player without a club for a season.

Subsequently, Diarra brought a claim in the Belgian courts against FIFA and the Belgian Football Federation for loss of earnings (seeking EUR 6 million in damages), alleging that the provisions of Article 17 created unjust barriers to employment, contrary to EU law. The Belgian court ruled in favour of Diarra, upholding the claim that Article 17 had hindered his ability to find a new club, leading FIFA to appeal the decision.

The position before the judgment

FIFA’s RSTP has long provided the global framework for managing contracts, eligibility, and player transfers in professional football. Article 17, which addresses the consequences of terminating contracts between football clubs and players/coaches without just cause, intends to balance the need for contractual stability and a deterrent against premature terminated, with the freedom of movement (pursuant to Article 45 of the Treaty of the Functioning of the EU). It provides parameters for the calculation of compensation, sporting sanctions, and joint liability. Specifically, Article 17 provides that, where a player has been found to have terminated their contract with their former club without just cause, the player and the new club will be jointly and severally liable for paying any compensation owed to the former club. Furthermore, it provides that the new club shall be presumed to have induced a breach of contract without just cause during the two to three year “protected period” following a unilateral termination of the contract with the club.

The CJEU judgment

The Belgian Court of Appeal referred Diarra’s case to the CJEU for a preliminary ruling. The CJEU found that Article 17’s provisions disproportionately restrict players’ freedom of movement under Article 45 TFEU and distort market competition under Article 101 TFEU. It noted that while contractual stability is essential, the sanctions under the RSTP must be proportionate. Traditional contract law, the court presented, offers sufficient mechanisms to ensure stability without infringing on worker mobility or competition principles.

Implications for European and Cyprus football

The CJEU’s ruling is poised to reshape the global football transfer system, with significant implications for players, clubs, and governing bodies. For Cypriot football clubs, which rely heavily on foreign players, the judgment presents a mixed picture.

On the positive side, the loosening of mobility restrictions could enable smaller clubs in Cyprus to compete more effectively in the global transfer market, without the burden of excessive financial compensation for terminated contracts. This could allow Cypriot clubs to attract talented players who might otherwise have been deterred by the potential liabilities of moving mid-contract.

However, the changes may also undermine contractual stability, creating challenges for clubs to retain their key players. In a competitive environment where Cypriot clubs already face constraints such as limited budgets and visibility, adapting to the new regulatory landscape will require strategic planning and vigilance.

The judgment has prompted FIFA to suspend all ongoing disciplinary cases related to Article 17, signalling a major shift in its regulatory approach. FIFA has since initiated a global consultation to gather input on potential reforms to Article 17, reflecting the judgment’s far-reaching implications. In addition, FIFA has announced a comprehensive review of Article 17 of the RSTP as part of its broader strategy to modernise its regulatory framework. As part of this process, FIFA has launched a global consultation forum, inviting stakeholders such as the European Club Association, FIFPRO, and the World Leagues Association to contribute their insights. Additionally, individual players, clubs, and other interested parties were encouraged to submit their feedback through FIFA’s dedicated platform, until 15 November 2024.

To navigate this evolving framework, Cypriot clubs and governing bodies must actively monitor developments and participate in shaping the reforms to safeguard their interests while seizing new opportunities. The CJEU’s decision in the Diarra case has set the stage for a transformative period in football regulation. While the ultimate implications for Article 17 and the RSTP remain uncertain, it is clear that FIFA’s framework will undergo substantial changes to align with EU law and the realities of the global football market. For Cypriot clubs, this presents both challenges and opportunities, underscoring the importance of proactive engagement in the dialogue shaping the future of the sport. 

By Jomana Nayed

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