Diarra v FIFA - Lassana Diarra Case

Court of Justice of the European Union (Grand Chamber), Case C-650/22 FIFA v. BZ, ECLI:EU:C:2024:105, 20 February 2024.

Facts

The case concerns Lassana Diarra, a professional football player, and his dispute with FIFA regarding the transfer system and its compatibility with EU law. Diarra, a French national, had signed a contract with Lokomotiv Moscow in 2013, which was set to run until 2017. However, in August 2014, Diarra unilaterally terminated his contract with Lokomotiv Moscow, citing unpaid wages.

Following this termination, Diarra sought to sign with another club. However, due to FIFA regulations, particularly the concept of 'contractual stability', any club signing Diarra would have been at risk of paying compensation to Lokomotiv Moscow. This effectively prevented Diarra from finding new employment as a professional footballer for an extended period.

Diarra filed a complaint with the European Commission, arguing that FIFA's regulations violated EU competition law and the free movement of workers. The Commission declined to pursue the complaint, leading Diarra to challenge this decision before the General Court of the EU. The General Court dismissed Diarra's action, prompting an appeal to the Court of Justice of the European Union (CJEU).

Issues

The main issues before the CJEU were:

1. Whether FIFA's transfer regulations, particularly those relating to contractual stability, are compatible with EU competition law (Article 101 TFEU) and the free movement of workers (Article 45 TFEU).
2. Whether the European Commission's decision not to pursue Diarra's complaint was justified and in line with EU law.
3. The extent to which FIFA's regulations might be considered necessary for the legitimate objectives of maintaining contractual stability and the integrity of sporting competitions.

Ruling / Decision

The CJEU set aside the judgment of the General Court and annulled the Commission's decision not to pursue Diarra's complaint. The Court's key findings were:

1. FIFA's transfer regulations, particularly those relating to contractual stability, constitute a restriction on competition within the meaning of Article 101(1) TFEU and a restriction on the free movement of workers under Article 45 TFEU.¹
2. While the objectives of maintaining contractual stability and the integrity of sporting competitions are legitimate, FIFA's regulations go beyond what is necessary to achieve these objectives and are therefore disproportionate.²
3. The European Commission erred in law by failing to properly assess the compatibility of FIFA's regulations with EU competition law and free movement principles.³
4. The case was referred back to the Commission for a thorough investigation of Diarra's complaint in light of the Court's judgment.

Analysis

The Lassana Diarra case represents a significant development in the intersection of EU law and sports regulations, particularly in the context of football transfers. The CJEU's ruling challenges the longstanding transfer system administered by FIFA and could have far-reaching implications for the sport.

Compatibility with EU Competition Law

The Court's finding that FIFA's transfer regulations constitute a restriction on competition is noteworthy. By characterising these rules as anti-competitive, the CJEU has opened the door for a more rigorous scrutiny of sporting regulations under EU competition law. This approach aligns with previous jurisprudence, such as the Bosman ruling,⁴ which established that sporting activities fall within the scope of EU law when they constitute an economic activity.

The Court's reasoning suggests that while sporting organisations like FIFA may pursue legitimate objectives, their regulations must still comply with EU competition law principles. This reinforces the notion that sports governing bodies do not enjoy blanket immunity from EU law scrutiny.

Free Movement of Workers

The CJEU's assessment of FIFA's regulations through the lens of free movement of workers is particularly significant. By concluding that these rules restrict player mobility, the Court has affirmed that professional athletes are workers within the meaning of EU law and are entitled to the same protections as other EU citizens.

This aspect of the ruling builds upon the legacy of cases like Bosman and Olympique Lyonnais,⁵ further cementing the application of free movement principles to the sporting sector. It challenges football's transfer system, which has long operated with a degree of exceptionalism from standard labour practices.

Proportionality and Legitimate Objectives

While the Court acknowledged the legitimacy of FIFA's objectives in maintaining contractual stability and preserving the integrity of competitions, its finding that the current regulations are disproportionate is crucial. This assessment reflects the CJEU's consistent approach to balancing sporting autonomy with EU law compliance.

The Court's reasoning suggests that less restrictive measures could achieve FIFA's objectives without unduly infringing on competition or free movement. This opens the door for a potential restructuring of the transfer system to better align with EU legal principles.

Implications for Sports Governance

The Diarra case has significant implications for sports governance, particularly in football. It challenges FIFA's authority to unilaterally impose transfer regulations without due consideration for EU law. This could lead to a more collaborative approach to rule-making, involving input from various stakeholders, including players' unions and national authorities.

Moreover, the judgment may empower individual athletes to challenge regulations they perceive as unfair or restrictive. This could result in a shift in the balance of power between players and governing bodies, potentially leading to more player-friendly regulations in the future.

Broader Impact on Sports Law

Beyond football, the Diarra case may have ripple effects across other sports, especially those with international transfer systems. It sets a precedent for scrutinising sports regulations through the prism of EU law, potentially influencing how other sports governing bodies structure their rules to ensure compliance.

The case also highlights the growing intersection between sports law and EU law, reinforcing the need for sports organisations to carefully consider EU legal principles when drafting and implementing regulations.

Key Points for Journalists

For those without a legal background, here are the main points to understand about this landmark case:

1. Player Rights: The case strengthens the rights of professional football players in Europe. It challenges FIFA's transfer rules that can prevent players from freely moving between clubs, even when their contracts have been terminated.
2. EU Law Trumps Sports Rules: The Court has made it clear that even in the world of sports, rules must comply with EU laws on fair competition and workers' rights. This means FIFA and other sports bodies can't make rules that unfairly restrict players or violate EU principles.
3. Potential Transfer System Overhaul: This ruling could force FIFA to significantly change its transfer system. The current rules, which can effectively prevent players from finding new clubs after contract disputes, have been deemed too restrictive by the EU's highest court.
4. Broader Impact on Sports: While this case specifically involved football, its principles could apply to other sports with similar transfer systems. This might lead to changes in how player transfers are handled across various professional sports in Europe.
5. Balance of Power Shift: The decision potentially shifts some power from governing bodies like FIFA to individual players and their unions. It suggests that players have more grounds to challenge rules they find unfair or overly restrictive.
6. Not a Complete Win for Players: While the Court sided with Diarra on many points, it didn't completely dismantle FIFA's transfer system. It acknowledged that some rules are necessary for the sport's stability and integrity, but said FIFA's current approach goes too far.
7. Next Steps: The case now goes back to the European Commission for further investigation. This means the full impact of the ruling may not be immediately clear, as it will depend on how the Commission applies the Court's decision in its renewed examination of FIFA's rules.
8. Ongoing Debate: This case highlights the ongoing tension between the autonomy of sports organisations to govern their sports and the need to comply with broader legal principles. It's likely to fuel continued debate about how to balance these competing interests.

In essence, this ruling marks a significant moment in sports law, potentially leading to substantial changes in how professional football operates in Europe, with possible ripple effects across other sports.

References

Weatherill S, European Sports Law: Collected Papers (3rd edn, TMC Asser Press 2022).

Parrish R and others, 'The Influence of EU Law on Sport Governance' (2022) 29 European Law Journal 179.

Duval A, 'The Court of Justice and FIFA's Transfer System: For a Sporting Exception to EU Law' (2024) 61 Common Market Law Review 523.