FIFA Limits on Player Transfers Are Illegal, Europe’s Top Court Rules

A decision could force soccer’s governing body to rewrite the regulations that govern the sport’s multibillion-dollar transfer market.

Europe’s top court ruled on Friday that some elements of soccer’s multibillion-dollar global player trading market are illegal, a decision that is likely to force changes to the way thousands of athletes move between teams around the world every year.

The ruling, concerning the right of players under contract to terminate those agreements under rules drawn up by FIFA, soccer’s global governing body, came in a case brought by a French player who was subject to millions of dollars in fines after walking out of his agreement with a Russian team in a pay dispute and trying to sign with a club in Belgium.

The penalties levied against the player, Lassana Diarra, and any team that wanted to sign him, “are contrary to E.U. law,” the European Court of Justice said in a statement on Friday.

The full 43-page ruling was published a few hours later, and the details in that decision will be pored over by lawyers from each side in order to understand of how significant any changes to player trading rules will be. Any changes would have wide-ranging implications: Soccer’s transfer market is an industry unto itself, a global bazaar that involves thousands of players each year, is closely followed by tens of millions of soccer fans, and serves as a major engine source of revenue for the hundreds of teams that develop players around the globe.

The statement from the E.C.J. said judges at the court had considered the impact of roster stability in its decision but determined that the rules managed by FIFA “go beyond what is necessary to pursue that objective.”

Diarra’s case was brought by a Belgian lawyer, Jean Louis-Dupont, who was also a key figure in a major case heard by the court a generation earlier that revolutionized the trading market. That case, named for Jean Marc-Bosman, the former player who brought it, mandated that free agents could join the club of their choosing without a fee after their contracts expired — instantly flipping the power over the market from clubs to players, and ushering an era of supersize contracts for the game’s top stars.

Diarra’s case now will be considered at the Belgian court where it was first lodged, and a definitive ruling there, which may take at least a year, will set the precedent for players, clubs, leagues and governing bodies.

Confusion about the significance of Friday’s ruling could be read by the reactions to it: FIFA acknowledged the decision but said it would lead to only minor adjustments to its rules, while Mr. Dupont and a global players union described it as seismic.

“It is important to clarify that today’s decision does not change the core principles of the transfer system at all,” FIFA’s chief legal and compliance officer, Emilio Garcia, said. FIFA, he added, has made regular updates to the system for years, “to ensure that players can train, be developed and have stability, while safeguarding the integrity of competitions by implementing a robust regulatory framework.”

The players union, FIFPro, described it as a “major ruling” and said it would “change the landscape of football.”

Mr. Dupont said the ruling meant that players could now seek compensation for losses as a result of the regulations that have been in place since 2001. “We are convinced that this ‘price to pay’ for violating E.U. law will — at last — force FIFA to submit to the E.U. rule of law and speed up the modernization of governance,” said a statement released by his law firm, Dupont-Hissel.

In recent years, soccer’s transfer industry has grown to become a form of entertainment in itself, creating entire media businesses solely focused on news and rumors about player movements.

The market’s growing profile and value have turned a group of agents into significant actors in the sport, with the ability to shape entire rosters while taking huge commissions, payments so large that they can dwarf salaries for all but the biggest stars.

The ruling is the latest setback for FIFA, which failed to tame agents after losing a legal challenge over rules to cap their commissions. In similar wording, courts around Europe agreed that those rules ran the risk of contravening existing employment and commercial laws.

FIFA officials have previously noted that the current transfer system was created after negotiations with the European Commission, in an effort to balance the sport’s needs with the law.

But they also had privately been warning that any changes to the transfer rules based on the claim brought by Diarra would lead some agents to encourage players to break contracts in an effort to move to bigger clubs without compensation to their current teams. That, FIFA said, would reduce the motivation for smaller teams to nurture talent in their own academies, and set back the development of players more broadly.

Other groups at loggerheads with FIFA over separate issues linked the case to FIFA’s monopoly position in deciding how the game works. European Leagues, an umbrella body for domestic competitions that is suing FIFA over its control over soccer’s calendar, quickly moved to demand a seat at the table in any discussions about changes to the transfer system.

“Considering this ruling will have a major impact on the future of the football labor market, the inclusion of leagues and players’ unions representatives in the international governance of football is now becoming legally essential considering the collective role they play in the social dialogue at national level,” it said in a statement.

Antoine Duval, the head of the Asser International Sports Law Centre in the Netherlands, described the ruling as seismic and said it might lead to a further concentration of soccer’s power in the hands of the wealthiest clubs — and ever higher salaries for the game’s wealthiest players — by making it easier and less punitive for athletes to walk out on their contracts.

Until now, Dr. Duval said, soccer’s wealth was able to be redistributed to smaller clubs and less high-profile leagues and countries known through transfer fees — the payments clubs make to acquire talents under contract to other teams. That system has allowed teams known for producing assembly lines of talent, like Porto, Benfica and Sporting Lisbon in Portugal and Ajax in the Netherlands, to count on high transfer fees as part of their business models. That previously reliable revenue stream is now in doubt.

“It is terrible for those teams,” Dr. Duval said. But, he added, soccer “now has the opportunity to entirely overhaul the system.”

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