The following is another article in my series on third-party influence. Previous articles in the series can be found, here, here, and here.
Once again, Article 18bis of FIFA’s RSTP forbids a club from entering into any transaction that may allow the counter-club or a third party to influence “in employment and transfer-related matters [the club’s] independence, [their] policies or the performance of [their] teams.”[1]
That said, not all third-party influence is the same. Depending on the transaction, it may exist in different forms and with different levels of potency. Further, not all episodes of third-party influence will violate 18bis. And with that, we arrive at an important question: At what point does third-party influence begin to encroach upon a club’s independence?
Until recently, the answer was clear. Across numerous third-party influence cases, the FDC examined only whether the agreement allowed one club to influence the other’s treatment of the player being transferred. In other words, the agreement did not need to grant one club general influence over the other’s transfer decisions.
The types of clauses addressed in previous articles – “rivals,” penalty, consent, and insurance – also abided by the “one player” principle.[2] That is, in each case, the problematic clause only applied to how the club dispensed with a single player. In fact, the principle became so common in the FDC’s jurisprudence that few cases found the need to analyze the issue directly. It would be fair to say the principle was assumed.
Then came the Chelsea cases. These examined two unusual transfer agreements Chelsea executed to acquire youth players – one from Ajax and the other from Rangers.[3] In both transfers, essentially, Chelsea agreed to buy the player at a later date, for a fixed sum.[4] Between the date the agreement was signed and the date the player was transferred, the player would remain with the selling club. During this time, the selling club could not transfer or loan the player and had to agree to release him to Chelsea whenever they requested.[5]
On the surface, these agreements would look like clear violations of 18bis. Indeed, the selling clubs would continue to hold a player they could not transfer. Further, Chelsea could pull the player from the selling club at any time, regardless of whether this hurt the selling club’s interests.
But functionally, the arrangements look more benign. In each case, the time between the transfer agreement being executed and the player’s transfer to Chelsea was short – no more than 4 months. Further, both interim periods covered an entire summer. So the player would not have many official games to play with his original club. It should also be noted that, in the Rangers’ case, the player turned 16 during the interim period. This may indicate Chelsea and Rangers agreed to the transfer but waited until the player qualified for an international transfer under Article 19.[6]
All told, on a practical level, the agreements work more like sales with the player loaned back to the selling club for a short period. That is, the conditions that forbade the selling clubs from transferring or loaning the player during the interim period were merely instructions to keep the player in place until he could officially join Chelsea.
Nonetheless, in each instance, the FDC did not look beneath the transfer agreements as written. Thus, it saw two clubs that had a player on their books and no control over him. This gave Chelsea extreme influence over Ajax and Rangers, which, in the FDC’s opinion, violated 18bis.[7]
Eventually, both decisions reached the Court of Arbitration for Sport, which overturned them. Given the substance of the transfers, this result may not be surprising. But the reasoning was new. The CAS sole arbitrator upheld the clauses because each agreement only concerned one player. And unless he were truly exceptional (a description that applied to neither player in these cases), one club could never influence another by controlling a single player.[8] Thus, neither agreement violated 18bis.
It is difficult (if not impossible) to square the Chelsea CAS decision with the prior and subsequent FDC rulings on third-party influence. The FDC cases focus only on the third-party influence over decisions regarding a single player – usually, the one being transferred. The CAS decision, on the other hand, holds that Chelsea could not influence Ajax or Rangers because each player was only a small part of those clubs – not nearly enough to direct the entirety of the clubs’ transfer operations.
The CAS’ redirection of third-party influence jurisprudence might strike a lawyer raised in a common law system (like myself) as dramatic. Indeed, if viewed as binding precedent, the sole arbitrator’s decision would sweep away a long and unanimous set of rulings that prohibited any third-party influence, even if limited to a single player. In its place would be a standard that confined 18bis to a small patch of cases where a relationship between clubs suffered from chronic third-party influence. Further, the CAS would have installed this new regime without acknowledging the change or explaining why it was necessary.
But the sole arbitrator was not operating under common law principles. Rather, FIFA’s jurisprudence and the CAS’ oversight is more like a code system. The comparison between code and common law systems is well beyond this article. But it is enough to say that, in code systems, the language of the code provision at issue (in this case, 18bis) is the most relevant standard – as opposed to a common law system, where precedent is often binding.
Here, the sole arbitrator’s decision exemplified this code-based approach. Specifically, the arbitrator undertook review of 18bis’ language, targeting the aspects of a club’s operations that must be free from influence: “independence,” “policies” and team “performance.” He concluded that, in most cases, the scope of these terms would extend beyond a club’s contractual relationship with one player. Moreover, powerful clubs were less likely to succumb to third-party influence. In both Chelsea cases, the alleged victim was a tradition-rich club that appears regularly in European competitions.[9] So it would be “illogical” to think that control over one player would make them bend to Chelsea’s will.
Notably, the sole arbitrator did not rely on, or even mention, the history of decisions limiting analysis to whether the third-party influenced the club’s relationship with the player in question. This would indicate that precedent did not factor into his ultimate conclusion.
While all this makes for productive speculation, neither the CAS nor the FDC explains these opposing results. As such, it is uncertain that the code law tradition accounts for their differences. Nonetheless, the differences are stark. So without further clarity, clubs will have to tread lightly with any unorthodox transfer agreements.
[1] FIFA Regulations on the Status and Transfer of Players, Art. 18bis(1), 2021 edition
[2] See e.g., Real Madrid, FIFA Disciplinary Committee, Case No. 190679 (October 17, 2019)(Clause decreasing sell-on if player transferred to selling club’s local rivals encroached upon buying club’s independence in sporting decisions); Udinese, FIFA Case No. APC-200093 (June 24, 2020)(Clause imposing a penalty against club for not playing a player loaned to them restricted the club’s independence in their sporting decisions); Argentinos Juniors, FIFA Disciplinary Committee, Case No. 90202 (May 16, 2019)(Clause requiring buying club to obtain selling club’s consent for any future sale of the player deprived buying club of their “total freedom” in sporting and economic matters); Celta de Vigo, FIFA Case No. APC-180161 (February 18, 2019)(Insurance clause violated 18bis because it could interfered with the buying club’s right to define their employment relationship with the player in question)
[3] Chelsea v. FIFA, CAS 2019/A/6301, ¶5(vi)
[4] Ajax, FIFA Disciplinary Committee, Case No. 190494, at ¶¶1-2 (August 13, 2019); Rangers, FIFA Disciplinary Committee, Case No. 190616, at ¶¶1-2 (September 20, 2019)
[5] Ajax, Case No. 190616, at ¶¶1-2; Rangers, Case No. 190616, at ¶¶1-2
[6] Article 19 of the RSTP bars international transfers of players under age 18, unless the transfer is between countries in the European Economic Community, in which case the minimum is 16. FIFA Regulations on the Status and Transfer of Players, Art. 19(1), (2)(b), 2021 edition
[7] Ajax, Case No. 190494, at ¶¶23-25; Rangers, Case No. 190616, at ¶¶23-25
[8] Chelsea, CAS 2019/A/6301, ¶177
[9] Id. at ¶178
Terry Brennan Law 