Fifa embarrassed, more player power, forced transfers: Legal verdicts on the Diarra ruling

Like the Bosman ruling to which it has been compared, the shockwaves from Lassana Diarra’s victory over Fifa’s current transfer rules at the European Court of Justice may take months, perhaps even years, to be felt in full.

But legal experts are in agreement that Friday’s ECJ verdict in Brussels marks a watershed moment in the professional game and will lead to fundamental change in the way that footballers can move from one club to another.

The fear for clubs is that the Diarra case will encourage more players to attempt to break their contracts and join another team without a transfer fee having to be negotiated, depriving them of a vital source of income.

“This is a decision that creates significant uncertainty in the global football transfer market,” said Simon Leaf, a partner at Mishcon de Reya.  

“In the short term, it could lead to more attempts by players to frustrate contracts in order to achieve a desired international move. This, in turn, is likely to lead to more disputes between clubs and players arising, as players may be emboldened when it comes to trying to force a transfer to take place.”

The verdict, which decreed that some elements of Fifa’s transfer rules were too restrictive and incompatible with EU law, has “potentially very significant implications”, according to Ian Giles, a partner at Norton Rose Fulbright.

“It’s entirely possible this means players will feel they can now break contracts and sign on with new clubs, without the selling club being able to hold them or demand significant transfer fees,” he said. “This will likely result in reduced transfer fees and more economic power for players.”

Diarra’s legal team, led by Bosman lawyer Jean-Louis Dupont, successfully argued that the former Chelsea, Arsenal, Real Madrid and France midfielder was unfairly denied a transfer following a dispute with Lokomotiv Moscow by Fifa’s regulations. 

The ECJ did concede that clubs were entitled to some protection of contractual stability, but decided that the current rules went too far. They will now urgently need to be redrafted, although in the meantime players and agents may seek to exploit the uncertainty.

“The key question that Fifa will now be asking itself is what rules could be implemented to ensure that a fair balance between stability in the commercial transfer market on the one hand, and compliance with EU competition and free movement laws on the other hand is maintained,” said Leaf.

“Going forwards, we could well see a game of cat and mouse develop as players seek to test that balance and further rely on the use of EU competition and free movement law as a sword, with the possibility that clear boundaries do not emerge for some time.”

Fifa will have to ensure any rule changes make the framework “less restrictive and therefore compatible with both EU competition law and free movement rules, while seeking to maintain the stability of playing squads,” said Giles. 

“It will also be interesting to see whether more players start to breach their contracts in the meantime, emboldened by the ECJ’s judgment.”

Fifa has played down the setback, saying that the ruling only took issue with two paragraphs of its rules and in other respects endorsed the “legality of key principles of the transfer system”.

Apart from anything else, the Diarra case is another “substantial legal blow” for the world governing body after its “embarrassing defeats and delays” by football agents over proposed new rules to cap their earnings, Leaf said.

Competition law experts, meanwhile, believe it could lead to more testing of increasingly fertile regulatory ground at the ECJ and other European courts.

“Something else to keep an eye on is whether we could see other players bring damages claims, alleging they’ve suffered harm as a result of Fifa’s transfer rules, with damages claims for breaches of competition law generally on the rise in the UK and Europe,” said Giles.       

As well as the agent dispute, Mishcon’s Peter Smith cites Manchester City’s challenge to the Premier League’s Associated Party Transaction rule and legal rows resulting from the LIV Golf breakaway as examples of the trend.

“Competition law seems to be playing an increasingly important role in the world of sport,” he said. “This is unlikely to be the end of the story and we expect to see rights holders and athletes continue to explore the implications of how this important and long-standing area of law may be used in the future.”