(CN) — In a move giving professional soccer players more freedom to change teams, the European Union’s high court on Friday said it was unlawful to force players to pay large sums when they prematurely break off contracts and seek a transfer to another squad in another country.
The European Court of Justice ruling was related to a decade-old contract dispute between Lassana Diarra, a former high-profile French defensive midfielder, and Lokomotiv Moscow, a top-notch Russian team.
Under tough breach of contract rules established by FIFA, soccer’s world governing body, Diarra faced paying millions of dollars in compensation to the Moscow team and he was even barred for 15 months from playing soccer.
But the Court of Justice said those FIFA rules were unlawful and violated the European Union’s laws by restricting players’ free movement and hindering competition between soccer clubs.
The ramifications of the ruling were significant, though it remained hard to gauge how it might shake up an already huge market in player transfers and also whether it might wind up benefiting the largest clubs.
The case goes back to 2014 when FIFA passed new rules for international player transfers and included provisions to punish players deemed to have ended their contracts without just cause. Lokomotiv Moscow relied on these tough rules in Diarra’s case.
When contracts are breached, the FIFA rules said a player and any club wishing to hire the player could be ordered to pay compensation to the former team.
But the rules went further and prevented players from joining another club until the contract dispute was resolved and said teams acquiring players who’d breached their contracts could be banned from hiring new players for a period.
“The rules in question are such as to impede the free movement of professional footballers wishing to develop their activity by going to work for a new club,” the Court of Justice said in a statement. The ruling was not immediately available in English.
The court said the “rules impose considerable legal risks” and “unforeseeable and potentially very high financial risks” for players and teams. Taken together, the court said the rules “impede international transfers of those players.”
The court acknowledged rules on transfers may be justified to ensure teams can keep a steady roster of players, but it said the rules “in a number of respects … go beyond what is necessary to pursue that objective.”
In a statement, Diarra’s lawyers, Jean-Louis Dupont and Martin Hissel, called the ruling a “total victory” for their client and said scores of other players may now claim compensation. His lawyers declined to say how much Diarra may be owed.
“All professional players have been affected by these illegal rules,” they said. “We are convinced that this ‘price to pay’ for violating EU law will — at last — force FIFA to submit to the EU rule of law and speed up the modernization of governance.”
In Diarra’s case, his troubles with Lokomotiv got very messy.
In 2013, he signed a lucrative four-year contract with the team and became one of the biggest stars in the Russian league. He was 28 at the time, but his best years were behind him. Besides playing on France’s national team, Diarra had also played for powerhouses Arsenal, Chelsea and Real Madrid.
By the summer of 2014, he’d fallen out with the Russian team as his performance worsened. After the team threatened to cut his salary, he refused to practice and then he was tossed in August 2014.
But it did not end there. Lokomotiv accused Diarra of breaching his contract without just cause and demanded he pay 20 million euros (about $22 million) in compensation. Diarra countersued, asking to be paid all the money still owed him under the contract.
Meanwhile, Diarra started looking for a new team to play for, but most clubs were wary of hiring him due to his contract dispute and the risk of being forced to pay compensation to Lokomotiv Moscow.
In February 2015, a Belgian club, Sporting du pays de Charleroi, offered to hire him, though on the condition that it would not be held liable to pay compensation to Lokomotiv Moscow.
But a FIFA dispute resolution panel annulled the transfer and ordered Diarra to pay 10.5 million euros (about $11.5 million) to Lokomotiv Moscow. That ruling was upheld by the Court of Arbitration for Sport in May 2016.
Diarra returned to playing soccer for Olympique de Marseille, a French team, in July 2015 but he also hit back in the courts. He sued FIFA and Belgium’s soccer association, seeking damages of 6 million euros (about $6.6 million) in lost earnings. A Belgian court sided with him in January 2017, ordering FIFA and the Belgian association to pay him a provisional sum of 60,000 euros ($65,700).
FIFA then appealed to the Court of Justice, leading to Friday’s ruling.
In a statement, FIFA said the ruling left intact “key principles of the transfer system” and “only puts in question two paragraphs” of its rules.
“FIFA will analyze the decision in coordination with other stakeholders before commenting further,” the statement said.
Courthouse News reporter Cain Burdeau is based in the European Union.