On October 4, the Court of Justice for the European Union (“CJEU”) will announce its decision in FIFA v. BZ (“Diarra”). Technically, the court will determine whether FIFA’s rules punishing clubs for signing players who break their previous contracts comply with European Union law. But if the CJEU answers this question in the negative, its ruling could unleash the most fundamental change to soccer’s transfer system in at least 19 years.[1]
The big change stands a domino or two away from the CJEU’s decision. So let’s walk through the chain of events that may lead there, beginning with the facts.
Facts
The player – known in the case as “BZ” – is French defensive midfielder Lassana Diarra. Now retired, Diarra enjoyed a 16-year career that included stints at multiple big clubs – the most noteworthy being the 3 ½ seasons (from 2009 to 2012) when he featured over 100 times for Real Madrid. Diarra left Madrid in the summer of 2012 for the Russian Premier League, eventually settling with one of its top clubs, Lokomotiv Moscow. He signed a four-year contract.[1]
Only a year later (2014), Lokomotiv released Diarra, alleging he breached his contract by terminating it without just cause. Lokomotiv also filed a claim with the FIFA Dispute Resolution Chamber, seeking €20M in damages stemming from Diarra’s breach.[2] The claim was at least partially successful in that the DRC agreed Diarra breached his contract and awarded Lokomotiv €10.5M. [3]
As he was now out-of-contract, Diarra began searching for a new club. Even for a player with his pedigree, this was challenging. Diarra attributed the difficulty to two provisions in FIFA’s Regulations on the Status and Transfer of Players (the “RSTP”), which, in effect, barred other clubs from signing him.[4] First, under Article 17, because Diarra terminated his contract without cause, any club that signed him would have had to assume joint liability for his breach of contract damages, as well as sporting sanctions.[5] The sporting sanctions are an onerous two-window transfer ban.[6] Second, again due to his termination without cause, Article 9 forbade Russia’s national association from issuing an international transfer certificate (“ITC”) for Diarra’s move to a new club. A transferred player cannot be registered without the previous club’s national association delivering the ITC to the new club’s association.[7] So the regulation blocked Diarra’s path to a new club.
How the case arrived at the European Union’s highest court
Despite the impediments, Diarra did find one club willing to sign him – theoretically. Belgium’s RSC Charleroi offered him a contract, on the condition they received assurances from FIFA and the Belgian federation that they (1) could register Diarra before March 2015 and (2) would not be held jointly liable for Diarra’s contractual breach. [8] Both organizations refused – FIFA, for administrative reasons, and the Belgian federation, due to RSTP 9. [9]
Diarra responded by filing suit in a Belgian court against FIFA and the Belgian federation seeking €6M – lost wages for the period clubs avoided him.[10] According to Diarra, by preventing clubs from signing him, FIFA’s breach of contract rules violate Articles 45 and 101 of the Treaty for the Functioning of the European Union, the EU’s governing document. [11] Article 45 guarantees the free movement of workers between European member-states.[12] Article 101 prohibits regulations that restrict trade between member-states.[13]
The Belgian court issued a preliminary ruling in Diarra’s favor.[14] FIFA and the Belgian federation appealed to the Court of Mons, the next level court in Belgium.[15] The Court of Mons has asked the CJEU for, in effect, an advisory opinion as to whether the FIFA rules violate TFEU 45 and 101.[16] This request suspends the appeal until the CJEU rules.
How the current transfer system depends on FIFA’s breach of contract rules
The current transfer system is a creature of practicality. At least at the higher levels of the game, a player signs a contract to play for a club. Most contracts will be for fixed terms – though some have specified option years. In the contract, the player will agree to play for the club throughout the entire contract term, and the club will agree to pay him an agreed-upon sum for his efforts.
During the contract term, the player may decide he wants to play for a different club. In that circumstance, he cannot simply leave his current employer without breaching his contract. But this alone does not prevent him from joining a new club. Rather, FIFA’s rules penalizing contractual breaches discourage or, in RSTP 9’s case, bar other clubs from signing him. Again, under RSTP 17, the new club would have to endure rough sanctions, including a transfer ban. And under RSTP 9, a new club would not have an ITC, which they need to register a new player.
With unilateral action blocked, the player can only switch clubs if his current club agrees. Specifically, the current club could allow the player to break his contract, and sign with the new club, in exchange for a fee from the new club – a transfer fee. Once such an agreement is finalized, the player and his current club terminate his contract, and he signs a new contract with the new club.
In short, the transfer fee system exists because the player cannot break his contract with one club and move to another without the current club’s approval. So the current club has leverage to demand a fee for that approval.
But the system only works because the player cannot join and play for the new club until the current club grants the approval. Without RSTP 17’s sanctions, new clubs would suffer no penalties for accepting a player who has allegedly breached his contract. So while the breach issue is being resolved – or even if it has already resulted in monetary damages against the player – the new club would be undeterred from signing the player and using him in games. Any breach of contract liability would fall on the player and, under most legal regimes, would not force him to remain with his previous employer.
The consequences of losing the ITC requirement are more straightforward. If the previous club’s national association could not withhold the ITC, the new club could now register the player.
Taken together, the previous club would lose any leverage for demanding a transfer fee. The new club could acquire the player, consequence-free, without paying such a fee. The previous club’s only recourse would be a breach of contract action against the player – a burden only the player would assume and one that could not prevent his move.
Therefore, if Diarra can push RSTP 9 and 17 over the cliff, the current transfer system will go over with them.
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[1] Opinion of Advocate General Szpunar, FIFA v. BZ, CJEU Case no. C-652/22, 30 April 2024, at ¶14
[2] Id. at ¶25
[3] Id. at ¶20
[4] Id. at ¶16
[5] FIFA Regulations on the Status and Transfer of Players (2024), Art. 17(2); Note that DRC cases are adjudicated under the version of the RSTP in effect when the relevant conduct occurred. RSTP (2024), Art. 26(2). In this case, that would be 2014, when Diarra allegedly breached his contract. Still, because there is no substantive difference, this article cite the RSTP provision as they appear in the most recent version, 2024.
[6] FIFA RSTP (2024), Art. 17(4)
[7] FIFA RSTP (2024), Art. 9(1)
[8] Opinion of Advocate General Szpunar, FIFA v. BZ, CJEU Case no. C-652/22, 30 April 2024, at ¶17
[9] Id. at ¶19
[10] Id. at ¶22
[11] Id. at ¶¶22, 25
[12] TFEU, Art. 101(1)
[13] TFEU, Art. 45
[14] Opinion of Advocate General Szpunar, FIFA v. BZ, CJEU Case no. C-652/22, 30 April 2024, at ¶23
[15] Id. at ¶24
[16] Id. at ¶25
Terry Brennan Law 
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