The Justice for Players group has brought a court action against FIFA, claiming that previous transfer market rules represented an unlawful restriction on players’ ability to move between different football clubs.
Sports law expert Trevor Watkins of Pinsent Masons said: “This is another example of where the actions of sports governing bodies are being brought under scrutiny, both in terms of their judicial and regulatory function, and claims being brought against them where their decisions made as part of their regulatory function have been deemed to be unlawful.”
The action has been brought in The Netherlands by the campaign group, and initially represents footballers from that country who claim the previous transfer rules hampered their freedom of movement rights and also imposed anti-competitive restrictions that limited the ability of other football clubs to freely recruit them.
Justice for Players, which is being funded in its lawsuit by Deminor, claims as many as 100,000 players could have been affected since 2001, and is looking to argue that affected players have lost around 8% of their career earnings as a result.
Julian Diaz-Rainey, a sports disputes expert with Pinsent Masons, said: “This is an example of the broadening scope of potential class actions from the typical ‘consumer’ type claims into actions brought by sporting professionals. It also shows how third party funders are broadening the scope of the type of claim they are prepared to fund.”
The action comes on the back of former Real Madrid and France international midfielder Lassana Diarra’s successful court case last year.
Diarra was frozen out at Lokomotiv Moscow in 2014, less than a year after joining the club, and when he refused to train or take a salary cut, the club terminated his contract and sought compensation. He was also denied a move to Belgian side Charleroi after FIFA refused to exempt it from any shared liability for the costs, and did not issue him with the certificate needed to complete the move.
A subsequent ruling by the Court of Arbitration in Sport saw Diarra banned from playing for a year and ordered to pay Lokomotiv €10 million in compensation. Diarra eventually joined Marseille, having missed the whole of the 2014-15 season, and launched a legal action against football’s governing body that was finally resolved last year when the CJEU ruled against FIFA over the joint costs restrictions and the transfer certification rules, having found that those rules infringed both EU freedom of movement laws and EU competition law.
FIFA made an interim change to its rules over transfers in the wake of the court’s decision, but now faces this new challenge which could significantly impact the nature of the football transfer market and player contracts.
Paul Williams, competition law expert at Pinsent Masons said: “Competition law is increasingly being used by clubs, players or sponsors to challenge the legal validity of rules imposed by sport governing bodies in various sports, not just football. This growing trend is particularly pronounced within the EU, where high profile court rulings have on several occasions struck down certain rules of sporting bodies. The consequences of finding that a particular sporting rule or provision breaches competition law can be serious, with the risk of fines being imposed by competition regulators. A sporting rule which breaches competition law will be legally unenforceable, and could also lead to damages claims by affected third parties – as in this case.”
Earlier this month the CJEU also found against the Court of Arbitration for Sport, opening the door for players and teams to seek challenges to court rulings within their own jurisdictions rather than being forced to accept the CAS decision with no appeal.