B&K Newsletter: The Case C-650/22

On 4 October, the Court of Justice of the European Union (CJEU) will judge the case of the former French professional footballer Lassana Diarra challenging the rules governing contractual relations between players and clubs under the FIFA regulation.?

In the case of C-650/22, a former professional footballer is challenging FIFA’s “Regulations on the Status and Transfer of Players (RSTP), which governs contractual relations between players and clubs. The dispute arose after the player’s contract (which is non-disclosed) with Russian football club Lokomotiv Moscow was terminated, allegedly without cause.?

Under the RSTP, when a contract is terminated without cause, the player and any club that hires him are held jointly liable for compensation to the former club. This also includes potential sporting and financial sanctions.?

In this case, the player claimed that these rules made it difficult to secure a new club, as any new team would risk liability for compensation. Due to these conditions, a potential transfer to the Belgian club Sporting du Pays Charleroi fell through.?

The player sought compensation through FIFA’s Dispute Resolution Chamber while also counterclaiming for unpaid wages. He is now suing FIFA and the Belgian Football Association (URBSFA) in a Belgian court for €6 million in damages, alleging loss of earnings due to the RSTP’s restrictive conditions.?

It’s (not) all about money?

The recent case before the CJEU could significantly impact football governance, pressuring the largest football organization to amend its regulations. Defining the relationship between players and clubs has always been complex, especially as the football industry continues to grow. FIFA established various rules to regulate the status and transfer of professional football players. However, some of these regulations may conflict with EU principles, particularly regarding competition law and freedom of movement.?

Concerns over competition law and freedom of movement??

Advocate General Maciej Szpunar has issued an opinion on the case, suggesting that specific FIFA regulations may violate EU law. The case focuses on FIFA’s Regulation on the Status and Transfer of Players (RSTP), specifically Article 17.??

The Advocate General highlighted that these regulations limit players' ability to find new employment as workers. He suggested that such restrictions should only apply when a new club is directly involved in the unjustified termination of the player's contract. This adjustment would maintain the regulation's goals without imposing unnecessary restrictions.?

However, the regulations still conflict with Article 101 of the Treaty on the Functioning of the European Union (TFEU), as they distort competition between clubs. Clubs are discouraged from recruiting players due to the financial and sporting risks imposed by the regulations, thereby limiting competition.?

The Precedent of the Bosman Case???

This is not the first time the CJEU has to intervene in football regulations. The landmark Bosman case (C-415/93) set a precedent by ruling that the transfer system of the time violated the freedom of movement for workers, as stated in Article 45 of the TFEU. Before this case, professional football players had a unique legal status, and their contracts bound them to clubs even after expiry. The ruling transformed players into workers with employment contracts and revolutionized the football transfer market, giving players (and sports agents) more power and changing the rules on foreign player restrictions.?

A battle in the broader war?

This last CJEU judgment is just one part of a broader context of the complicated relationship between the European Union and football’s governing body. In December 2023, the Court of Justice of the EU found that football associations are ‘abusing a dominant position’ by prohibiting clubs and players from playing in breakaway competitions (read, the?Super League, the proposal for a parallel competition to the Champions League that a group of Europe’s wealthiest clubs).?

On that occasion, The Court of Justice ruled that football competitions and the commercial exploitation they generate, such as merchandising, are "economic activities" and must comply with EU competition laws and freedom of movement principles. While sports organizations like FIFA and UEFA have regulatory and sanctioning powers, these must be exercised proportionately and transparently. The CJEU criticized FIFA and UEFA for abusing their dominant market position, as their powers are not subject to objective, non-discriminatory, or transparent criteria.?

Nonetheless, although the court addressed general questions about FIFA and UEFA's rules, it did not specifically rule on the European Super League project, which these associations had vetoed. However, the ruling implies that the rules used to block the Super League may have violated EU law.?

It’s not over until the referee whistles?

Initially launched in April 2021, the Super League project, which includes the 12 wealthiest clubs in European football, quickly became a legal battleground. Madrid’s Commercial Court ordered FIFA and UEFA to refrain from sanctioning the clubs involved, as their dominant position in football governance raised concerns under EU competition law. Six preliminary questions were raised to the CJEU. While the court’s Advocate General initially sided with UEFA and FIFA, deeming their rules compatible with EU law, subsequent cases showed a more nuanced interpretation.

The 4 October judgment could tell us more about the pressure the European Union wants to exert on FIFA to align its regulations with EU law and introduce more competition in football management.?

Football regulations are still evolving and need to adapt to different factors such as the increasing pressure exerted by lawmakers to regulate the sector, the increasing power of sports agents and sponsors on footballers’ professional careers, and the difficult exercise of making football accessible to the public while making it more profitable.?

As the CJEU often follows the Advocate General’s recommendations, the outcome of this case could lead to a significant shift in football regulations by pushing FIFA to amend its RSTP regulation and, simultaneously, by setting a precedent that would accommodate the shift of power from the football organization to players and sports agents.?

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