Fifa’s transfer rules go against European Union law, declares EU’s highest court

The court of justice of the European Union (CJEU) has said key Fifa rules governing the transfer system are “contrary to EU law”, which could have explosive consequences for the future of club football.

The resolution of Fifa v the player “BZ” – AKA the former Chelsea, Arsenal and Portsmouth midfielder Lassana Diarra – will cause great uncertainty across the game. It contains two key judgments after the court found that rules relating to the authorisation of transfers for players restrict freedom of movement, a key tenet of EU law, and that current rules requiring buying clubs to cover the cost of compensation for a player who breaks a contract “without just cause” are anticompetitive.

Related: Landmark transfer case verdict: court says Fifa rules breach EU law: football news – live

In a summary of the judgment the CJEU headlined “Some Fifa rules on international transfers of professional footballers are contrary to EU law”, the court argued: “First, 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. Those rules impose considerable legal risks, unforeseeable and potentially very high financial risks as well as major sporting risks on those players and clubs wishing to employ them which, taken together, are such as to impede international transfers of those players.”

Second, the summary argued, “as regards competition law, the Court holds that the rules at issue have as their object the restriction, and even prevention, of cross-border competition which could be pursued by all clubs established in the European Union, by unilaterally recruiting players under contract with another club or players about whom it is alleged that the employment contract was terminated without just cause”. These rules, the court said, “do not appear to be indispensable or necessary”.

These top-line conclusions were borne out by the full judgment of the Luxembourg-based court, which found that any justification that the rules were necessary in order to “ensure the regularity of sporting competitions” were insufficient because the rules “go beyond what is necessary to achieve that objective”. The case will now return to the Belgian courts, where it has been running for the past nine years, and be resolved there.

To prove that its rules should be exempt from EU law, the CJEU said Fifa must “by means of convincing arguments and evidence, [demonstrate] that all the conditions required for that purpose are met”.

Fifa’s initial response was to downplay the verdict. “Fifa is satisfied that the legality of key principles of the transfer system have been reconfirmed in today’s ruling,” a spokesperson said. “The ruling only puts in question two paragraphs of two articles of the Fifa regulations on the status and transfer of players, which the national court is now invited to consider. Fifa will analyse the decision in coordination with other stakeholders before commenting further.”

A subsequent comment from Emilio García, Fifa’s chief legal and compliance officer, read: “It is important to clarify that today’s decision does not change the core principles of the transfer system at all. Fifa has been continuously improving that system for many years … to ensure that players can train, be developed and have stability, while safeguarding the integrity of competitions by implementing a robust regulatory framework for the international transfer system.”

More forceful opinions on the verdict were available, however, including from the lawyers Jean-Louis Dupont and Martin Hissel, who represented Diarra and also Jean-Marc Bosman in his landmark case of 1995. “For Lassana Diarra, who dared to defy the all-powerful Fifa this is a total victory,” they said in a statement. “The CJEU severely censured the structurally illegal actions of the current football regulators and thus paves the way for a modernisation of governance. All professional players have been affected by these illegal rules and may therefore now seek compensation for their losses.”

The global players’ union, Fifpro, said it welcomed the court’s ruling and called on Fifa to work with players and their representatives to improve regulation.

“As we have done many times before, Fifpro reiterates its willingness to enter negotiations with Fifa and the other social partners in professional football to collectively agree on a new set of rules which is compliant with EU law and respects the rights of players,” read a statement.

Meanwhile Maheta Molango, the chief executive of the Professional Footballers’ Association (PFA), said: “As they consider the impact of this ruling, the football authorities need to be making an honest and open assessment of the suitability of their rules and how they sit alongside employment laws. They then need to start making genuine and proactive efforts to work with players and their unions.”

The genesis of the case reaches back to 2014, when Diarra was playing for Lokomotiv Moscow. The then France international was in dispute with the Russian club over his salary. Lokomotiv decided this amounted to a breach of contract and terminated it. They then took Diarra to Fifa’s dispute and resolution chamber (DRC), seeking damages. Despite a counterclaim from Diarra, the DRC found in Lokomotiv’s favour and fined the player €10.5m.

At the same time, Diarra received an offer of a contract from the Belgian club Charleroi. It came with a condition, however: Charleroi wanted confirmation from Fifa that Diarra would be able to move and that his new club would not be liable for any of the costs owed to Lokomotiv. Fifa did not give those guarantees, with its rules mandating that an international transfer certificate must be granted by the league a player is leaving before any deal could take place.

With no monies having been paid to Lokomotiv, that permit was not forthcoming. As a result, in December 2015, Diarra brought legal action against Fifa and the Belgian football league, claiming a loss of earnings and starting a long process that has led to this week’s judgment.