FIFA's transfer rules under fire: How a shocking court ruling could change soccer

The Court of Justice of the European Union, commonly known as CJEU, decided on Friday on a case that promises to change everything in the international transfer market, at least in soccer. Central is ex-French midfielder Lassana Diarra, who took FIFA into court, challenging the rules imposed by the governing body on clubs and athletes regarding contract terminations. In that sense, this decision guarantees far-reaching implications for both players and clubs, particularly with regard to financial and legal issues.

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Understanding the case of Lassana Diarra

The case emerged in 2014 when Diarra, a former midfielder with top clubs such as Real Madrid, Chelsea, and Paris Saint-Germain, fell out with his then-club, Lokomotiv Moscow. Diarra went public with his grievances over a salary cut he had put up with, after which he was promptly informed that his contract had been unilaterally voided. The result was a legal battle between the player and the Russian club with FIFA, which demanded a multimillion-dollar compensation for Lokomotiv to keep Diarra non-active for a year. During that year, no club wanted him, fearing the commitment of debt.

Lokomotiv sought damages of 20 million euros for the breach of contract, and a legal fight ensued that was concluded with the CJEU's ruling. The European court said FIFA's RSTP, especially Article 17, "create  barriers which restrict competition in football" in breach of European Union law.

This not only rebuffs FIFA's authority over the transfer market, but serious questions about the impact these rules have on player mobility and free competition between European and international clubs arise.

What's at stake?

Under FIFA's regulation, a player who terminates a contract without just cause has to compensate the club. If that were to happen, then in actuality, the player does sign with another team and is liable jointly for the payment. This means if some club desires to sign a player who had broken their contract, then they have to pay this compensation demand coming from the former club. While this rule should protect the clubs against financial loss, in practice it has harmed players also, as it was clear in the case of Diarra.

According to the CJEU, these rules also entail "unpredictable and potentially very high financial risks," as well as legal and sporting hazards. These risks could result in players and clubs avoiding new opportunities, while transfers that might be favorable to both the athletes and the soccer market might just not happen.

Far from being "indispensable" or "necessary" for the European Union, such rules have been found to infringe the principles of free competition at the very core of the bloc's economic laws. Such a sentence opens a tantalizing perspective: are we to witness an important revision of FIFA's soccer transfer rules?

Possible consequences for the soccer market

The decision of the CJEU shines the light on high-value discussions in regard to the global soccer landscape. In case the rules from FIFA are altered or even completely abolished, then that would leave the transfer market a lot more liquid. Players, in particular, would enjoy a fair deal of freedom to shift between clubs with less concerns about legal or financial punishment.

But it's not just the players who could benefit. Smaller clubs could also gain from this, with them most likely to take risks on players without the fear of facing large financial penalties. This would bring a bit more balance to the soccer world, where nowadays only the richest clubs have the most bargaining power.

On the other hand, it is well to remember that the larger clubs, often with more money and influence, may seek other ways of securing their interests. FIFA, as advised by the ruling of the court, would doubtless look to rule changes in order to maintain its hold on the transfer market.