Analysis and perspectives of the CJEU judgment of 4 October 2024 - FIFA v. Lassana Diarra

Reference: CJUE, 2^th Chamber, International Federation of Association Football (FIFA) v BZ, October 4, 2024, C-650/22

29 years after the Bosman judgment, a few months after the ISU and Superleague judgments, the Court of Justice of the European Union (CJEU) once again called into question the sporting regulations established by an international federation, namely FIFA.

The role of the CJEU in sports matters

Since 1976, the CJEU has been working to verify the compatibility of European and international sports regulations with European treaties (ECJ, December 12, 1974, Walrave-Koch, No. 36-74).

In 1995, theBosman stop is the first application of control by the CJEU in football. This ruling constitutes a real revolution for the transfer market by abolishing the UEFA rules prohibiting European teams from recruiting more than 3 foreign players (CJCE, 15 December 1995, Jean-Marc Bosman vs. UEFA, C-415/93).

In 2023, the trio of judgments of the CJEU - ISU, Superleague, Royal Antwerp FC — seeks to prohibit the monopoly of international sports federations (CJEU, December 21, 2023, ISU v. Commission, C-124/21; CJEU, 21 December 2023, Superleague vs. UEFA & FIFA, C-333/21; CJEU, 21 December 2023, UL & Royal Antwerp FC vs URBSFA, C-680/21).

Finally, in 2024, theStop Diarra is the latest example of this European control exercised by the CJEU.

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The dispute between Lassana Diarra and Lokomotiv Moscow

At the origin of this judgment, a contractual dispute between the professional footballer Lassana Diarra and his former Russian club, Lokomotiv Moscow.
In August 2013, Lassana Diarra signed a contract with the Russian club for 4 years.

A year later, the latter was cancelled for “unjustified absences”.

In April 2015, the Moscow club turned to the FIFA Dispute Resolution Chamber. There, he obtained a financial conviction of 10.5 million euros, based on a “breach for just cause”.

In June 2015, the athlete contested this decision and appealed to the Court of Arbitration for Sport (CAS).

By an arbitration award dated 27 May 2016, the CAS confirms this conviction (CAS 2016/A/4474, Lassana Diarra v. FC Lokomotiv Moskow, award of 27 May 2016).

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The impossibility of signing with Sporting Charleroi

Since the procedures mentioned above were long, the player sought at the same time to find a new football club in order to pursue his career.

However, the various clubs that may be interested refuse to hire him.

This is particularly the case of the Belgian club, Sporting Charleroi, which wants to recruit him, but is prevented from doing so by FIFA rules.

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The FIFA rules in question

Three sets of rules from the Player Transfer Status Regulations (RSTJ) were likely to apply to Sporting Charleroi:

• Article 9.1 of the RSTJ and article 8.2.7 of Annex 3 of the RSTJ, which prohibits the Russian National Federation from issuing the international transfer certificate to the recruiting club (CIT) as long as there is a contractual dispute with the player

• Article 17.2 of the RSTJ, which provides for the joint and several liability of Sporting Charleroi for the compensation of 10.5 million due by the player

• Article 17.4 of the RSTJ, which presumes, unless there is evidence to the contrary, that Sporting Charleroi encouraged the player to terminate his contract and therefore prohibits him from recruiting during two transfer transfers

Faced with this paralysis, on 9 December 2015, Lassana Diarra sued FIFA and the Belgian Football Federation before the Commercial Court of Hainaut (Belgium); there he requested the conviction of the two federations to a sum of 6 million euros on the grounds that they had prevented him from exercising his profession as a professional footballer.

On 19 January 2017, that court jointly condemned FIFA and the Belgian football federation.

FIFA appealed against this judgment.

On September 19, 2022, the Court of Appeal of Mons, hearing this appeal, asked the Court of Justice of the European Union (“CJEU”) on the following preliminary question:” Are the contested RSTJ rules contrary to Articles 45 and 101 of the TFEU? ”, these articles provide in particular for free movement as well as free competition on the European market.

In response to this preliminary question, the CJEU declared that Articles 9 and 17 RSTJ were incompatible with European Union law.

It is therefore necessary to carry out an analysis of this decision. (I.) before discussing the prospects for the future (II.).

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I. Analysis of the CJEU Diarra judgment

The Diarra judgment recalls the fundamental rights of professional footballers, in particular:

• their freedom of movement (A.),
• and their right to be recruited, even in the event of unilateral termination (B.).

A. Articles 9 and 17 of the RSTJ contrary to Article 45 of the TFEU: the assertion of the freedom of movement of footballers

Under Article 45 of the TFEU:

” The free movement of workers is ensured within the Union. [...] It implies the abolition of all discrimination, based on nationality, between workers in the Member States, with regard to employment, remuneration and other working conditions. ”

According to the CJEU, professional soccer players are workers like any other and thus benefit from the freedom of movement of workers guaranteed by Article 45 of the TFEU.

Although Article 45 of the TFEU prohibits in principle any obstacle based on nationality to the freedom of movement of workers, the CJEU has extended In extenso this freedom to any dissuasive measure that is indistinctly applicable.

It's the stop Bosman, issued in 1995, which confirmed this reversal by stating that the” provisions which prevent or discourage a national of a Member State from leaving his country of origin in order to exercise his right to free movement therefore constitute obstacles to that freedom, even if they apply regardless of the nationality of the workers concerned. ”.

On this basis, the Court sanctioned at the time the UEFA regulations which required a club, for a player at the end of his contract, to pay a transfer fee, thus blocking the footballer Jean-Marc Bosman in his sporting career.

In the stop Diarra, they are Articles 9 and 17 of the FIFA RSTJ, establishing a particularly exorbitant sanctions regime under ordinary law, which did not leave the judges of the CJEU indifferent.

According to the Court,” This set of rules is likely to put professional soccer players at a disadvantage ” and” are likely to hinder the freedom of movement of workers. ” (pts. 91 and 94) thus affirming the free movement of professional football players.

A. Articles 9 and 17 of the RSTJ contrary to Article 101 of the TFEU: the establishment of the right to recruit footballers

The prohibition of anti-competitive agreements in the context of international transfers

Article 101 of the TFEU prohibits all anti-competitive agreements “which have the object or effect of preventing, restricting or distorting competition within the internal market ”.

On this legal basis, the CJEU questions the consequences of articles 9 and 17 of the RSTJ, namely on the freedom of clubs to be able to recruit players who have cancelled their contracts without just cause.

• First restriction of competition: the high and dissuasive compensation due to the former club

The CJEU considers that The calculation parameters of the compensation due by the player in the event of a breakup without just cause lead to the” fixing extremely high amounts of compensation [ed] and dissuasive ” (pt. 135 of the judgment) for recruiting clubs.

In this case, the Sporting Charleroi club would have had to pay nearly 10.5 million to Lokomotiv Moscow if it actually wanted to recruit Lassana Diarra.

• Second restriction of competition: the ban on issuing the international transfer certificate (CIT)

The CJEU considers that any recruitment of a player who has broken his contract without just cause is devoid of any sporting interest, Because” This player cannot be registered with this new club or participate, on its behalf, in any competition under the jurisdiction of FIFA ” (pt. 139 of the judgment).

As a result, these FIFA rules constitute a” generalized and drastic restriction of cross-border competition between clubs through the unilateral recruitment of players already committed” (point 140 of the judgment).

Articles 9 and 17 of FIFA constitute an anticompetitive agreement by object, because of its sufficient degree of harm to competition and therefore prohibited by Article 101 of the TFEU.

In this sense, the CJEU establishes a genuine right to recruit, in return for a proportionate compensation, athletes who have unilaterally terminated their contracts, which it also extends to all athletes under contract.

• Exemption: referral to the Belgian referring court for the assessment of the proportionality of the cartel

Even if an anticompetitive agreement is, in principle, prohibited, it may be subject to an exemption on the basis of Article 101§3. This means that the positive effects of the agreement outweigh the negative effects.

On this point, the CJEU is opposed to the FIFA rules, but allows the referring court to assess the true proportionality of the FIFA rules (pt. 158).

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II. The future prospects of football and more generally of professional sport

It is necessary to discuss the reaction of FIFA (A.), the ways in which the RSTJ evolves (B.), then the necessary evolution of the structuring of the professional world (C.).

A. FIFA's reaction

An opportunity to bring the RSTJ into line with European law.

Through its legal director, Mr. Emilio García Silvero, FIFA has expressed its position on the Diarra judgment.

Initially, FIFA recalls that the RSTJ rules were deemed to be in accordance with European law by the European Commission 20 years ago.

However, this validity is not recognized today by the CJEU:

” The decision in the case (Lassana) Diarra [...] means that certain elements [...] must now be revised in order to bring the FIFA RSTJ back into line with European law, this right having now been interpreted by the Court of Justice of the European Union. ”

Secondly, FIFA expresses that this judgment does not in any way call into question the transfer system, in particular the following elements:

• rules relating to registration periods
• player transfer and registration
• the implementation of sports sanctions in certain cases
• training allowances and solidarity mechanisms to reward training clubs
• international transfers of underage players
• the dispute resolution system

Finally, FIFA indicates that it” wants to take this opportunity to change its regulatory framework, obviously taking into account the views and contributions of all the parties concerned and affected ”.

• The launch of a global consultation

In line with this desire for evolution involving the various stakeholders, FIFA has launched a” global discussion forum ” (available at this address) on which anyone interested — football players, private companies, or individuals — can express their comments until November 15, 2024.

This solution, similar to that of a citizen consultation, is a real first in the functioning of FIFA.

B. The ways in which the RSTJ evolves

In the future, FIFA sanctions for unilateral breach of contract must comply with 4 criteria (CJEU, Superleague vs. UEFA & FIFA, December 21, 2023, C-333/21):

• Transparency,
• Objectivity,
• Non-discrimination,
• Proportionality.

In this sense, it is appropriate to discuss the various ways of reforming the compensation due in the event of a breakup without just cause.

FIFA will necessarily have to:

• on the one hand, to clarify and objectify the definition of” Just cause ” (article 14 of the RSTJ)
• on the other hand, revise the parameters for calculating the benefit (article 17.1 of the RSTJ) by taking into account only criteria directly related to the footballer's employment relationship (for example, remuneration due until the end of the contract) and by excluding any external criteria (for example, transfer compensation).

These criteria should allow the footballer to have a precise vision at a moment and of the financial compensation to which he is exposed in the event of unilateral termination of his contract.

• On the financial and administrative sanctions of the recruiting club 

The joint financial responsibility of the recruiting club (article 17.2 of the RSTJ) and the associated administrative sanctions, in particular the ban on recruitment for two registration periods (article 17.4 of the RSTJ), seem to greatly exceed European rules in this area.

The renewal of such a sanction should be impossible without risking a new European condemnation.

• On the ban on the issuance of the international transfer certificate

The CJEU expressed strong reservations about the ban on the recruiting club from issuing the international transfer certificate (article 9.1 of the RSTJ); this prohibition based on a presumption that the recruiting club would have encouraged the player to terminate his contract.

On this point, the CJEU underlined the almost irrefutable nature of” general and automatic” (pt. 93) of this presumption.

It will therefore now be appropriate to provide for a case-by-case assessment.

It will also be possible to agree on certain criteria in order to establish circumstances that may be considered suspicious in the conduct of the recruiting club.

C. The necessary evolution of the structuring of the professional world

There is a multiplication of condemnations by the CJEU of regulations established by international federations (FIFA, ISU) and international confederation (UEFA).

This therefore raises some questions about the regulatory provisions established by them.

The regulatory power of these federations has thus been largely impacted so that they comply with the provisions of the TFEU.

As for the monopoly of European and international sports federations, it was also blithely reframed in the context of the Superleague case.

The freedom of athletes, and more generally of sports actors, seems to be the keystone of this movement to liberalize professional sport.

It now remains to be seen whether this movement can continue to be part of the current model, taking the form of a pyramidal structure, or if it will take the form of a multiplicity of competitive actors or even if it will consist in the creation of a single consortium bringing together all international players or even the main players, athletes.

The freedom of athletes and those involved in professional sport depends on it.