FIFA’s New Transfer Rules: Key Changes After the Diarra Case Decision

With the Transfer window now closed and following our previous article last week concerning International Transfer Certificate (ITC) challenges for clubs during the January transfer window, we now look (in brief) at the additional provisions that FIFA has now put in place following the judgment of the Court of Justice of the European Union in the Diarra case at the end of 2024.

We won’t go into the details of the case in this article, save to say that certain provisions of FIFA’s Regulations on the Status and Transfer of Players (RSTP) were found to be unlawful. As such, these provisions were found to violate players’ free movement rights under EU law, and competition law.

FIFA has since implemented interim regulatory provisions designed to close the loopholes caused by Diarra, whilst it consults on the future of the RSTP.

So what does this mean for clubs and other stakeholders?

Interim Regulatory Framework

Firstly, there were three key infringements identified in the Diarra decision:

1. The calculation of compensation due by a player to his former club for breaching their contract without just cause;
2. The automatic liability of a player’s new club following termination without just cause by the player (for compensation and/or sporting sanctions), and
3. The possibility of withholding the ITC pending resolution of a contractual dispute.

Definition of “just cause”

The interim regulatory framework inserts the following definition of “just cause” into Article 14(1) of the FIFA RSTP:

“In general, just cause shall exist in any circumstance in which a party can no longer reasonably and in good faith be expected to continue a contractual relationship.”

Whilst no great change from the previous RSTP, it does provide some further clarity.

Calculating compensation

The new interim FIFA RSTP has sought to remove vague and unclear notions of “the specificity of sport” and other irrelevant factors to the extent that:

“Compensation for the breach shall be calculated taking into account the damage suffered, according to the “positive interest” principle, having regard to the individual facts and circumstances of each case, and with due consideration for the law of the country concerned.”

From this, it is assumed that FIFA has sought to bring the general principle of contract law – that damages should put the innocent party in the position they would have been in had the contract been properly performed – back into clear focus.

Nevertheless, and whilst this will be welcome news for clubs, only time will tell whether it will eliminate the existing discrepancy between the calculation of compensation owed by a club to a player, and the calculation of compensation owed by a player to a club.

Equally, it remains to be seen whether the interim regulatory framework goes far enough, in particular given the requirement merely to give “due consideration for the law of the country concerned”.

It will be interesting to see this in practice, and one would anticpiate further difficulties to the extent that national law is given full effect, whilst also recognising the aim of facilitating cross-border dispute resolution.

No automatic liability for new clubs

The elimination of the presumption that a player’s new club had induced a breach of contract will come as welcome news to clubs.

Another welcome change on this issue is that, if a new club is found to have induced a breach of contract, the new club will be “jointly liable” with the player, rather than “jointly and severally liable”, as was the case under the old regulations.

However, it remains to be seen how this will work in practice if, for example, it may be that FIFA’s Football Tribunal may require claimant clubs to sue both the new club and the player (jointly), in order to obtain any compensation from the new club.

Nonetheless, in order to assist parties seeking to establish that a new club has induced a breach of contract, the interim regulatory framework also introduces a new disclosure obligation, which appears prudent in the circumstances. However, we will see how this works in reality.

ITC cannot be withheld

Further welcome news for clubs (and as mentioned in our earlier article) is that the new interim framework will ensure that ITCs will be issued regardless of any contractual dispute between a player and their former club.

It is no longer possible for a national association to reject a request for an ITC and, moreover, if the national association of a player’s former club fails to respond to a request for an ITC within 72 hours, the new association will be able to register the player with the new club regardless.

Pending cases

Lastly, FIFA has recognised that the rules affected by the Diarra decision will be applicable to many cases which are currently pending before the Football Tribunal. Again, this will come as welcome news to many

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The information and opinions contained in this blog are for information only.  They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice.  Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.