Yesterday the sports law world was
buzzing due to the Diarra decision of
the Tribunal de Commerce du Hainaut (the Tribunal) based in Charleroi, Belgium.
Newspapers were lining up (here, here and here) to spread the
carefully crafted announcement of the new triumph of Jean-Louis Dupont over his
favourite nemesis: the transfer system. Furthermore, I was lucky enough to
receive on this same night a copy of the French text of the judgment. My first
reaction while reading quickly through the ruling, was ‘OMG he did it again’!
“He” meaning Belgian lawyer Jean-Louis Dupont, who after a string of defeats in
his long shot challenge against FIFA’s TPO ban or UEFA’s FFP (see here and here), had [at least
I believed after rushing carelessly through the judgment] manufactured a new
“it”: a Bosman. Yet, after carefully re-reading the judgment, it
became quickly clear to me that this was rather a new Mutu (in the sense of the latest CAS award in the ‘Mutu
saga’, which I have extensively analysed on this blog and in a recent commentary for the new Yearbook of International Sports Arbitration) coupled with some reflections reminding a bit (but
not really as will be explicated below) the Pechstein
case.
In this blog, I will retrace briefly
the story behind the case and then analyse the decision of the Belgium court.
In doing so, I will focus on its reasoning regarding its jurisdiction and the
compatibility of article 17(2) RSTP with EU law.
I.
The facts of the case
On 20 August 2013, the French
footballer Lassana Diarra and the Russian top-tier club FC Lokomotiv Moscow
(Lokomotiv) agreed on a four-year contract (Contract). Article 8 (3) of the
Contract provided that in case Lokomotiv terminates the Contract for
disciplinary reasons, Mr. Diarra would be liable for compensation amounting to
EUR 20,000,000 (Compensation). One year
later, on 22 August 2014, Lokomotiv terminated the Contract due to Diarra's
recurring failures to perform his obligations arising thereof. Lokomotiv relied
on Article 8 (3) of the Contract and claimed the Compensation.
Less than a month later, Lokomotiv
lodged a request for compensation with the FIFA Dispute Resolution Chamber
(DRC) against Diarra. Diarra subsequently filed his counterclaim in which he
asked for the payment of bonuses and wage arrears as well as the compensation
amounting to the remuneration which would still have to be paid between August
2014 and 30 June 2017, the term provided for in the Contract. On 10 April 2015,
the DRC rendered its decision ruling that Lokomotiv’s decision to terminate the
Contract was justified (DRC Decision). Regarding the compensation due by
Diarra, the DRC noted that Article 8 (3) of the Contract provided for the
Compensation (amounting to EUR 20,000,000) claimed from Diarra. On the other
hand, in case a compensation was due by Lokomotiv, Article 8 (5) of the
Contract set a limit to three months of Diarra’s salary (approximately EUR
1,500,000). Taking into account the discrepancy, the DRC noted that the
respective rights of the parties were completely disproportionate and the
Contract should be disregarded. The DRC nevertheless decided that the
consequences of the Contract's termination had to be assessed in light of
Article 17 (1) of the FIFA Regulation for the Status and Transfer of Players
(RSTP). In line with the said provision, the DRC decided that Diarra had to pay
Lokomotiv the amount of EUR 10,500,000 for having repeatedly breached the
Contract. Although this issue was not directly related to the case, the DRC
pointed out that, following the termination of the Contract, Diarra did not
immediately manage to find a new club so that Article 17 (2) RSTP (making a
professional player and his new club jointly and severally liable for a
compensation owed to a previous club) was in principle not applicable to the
case. Furthermore, the DRC ruled that, having regard to the date of the
Contract's termination and the time elapsed between that date and the issuance
of the DRC Decision, Article 17 (2) would not apply in case Diarra finds a new club
in the future.
Yet, during the period between 22
August 2014 and 10 April 2015, Diarra had attracted attention from several
European clubs (e.g. Inter Milan, West Ham United, Celtic Glasgow and Sporting
Charleroi). Negotiations, however, did not succeed for the reason that those
clubs were afraid of being held jointly liable for a compensation which could
have been potentially awarded by the DRC. On 19 February 2015, the Belgian
football club Sporting Charleroi (Charleroi) offered Diarra a 15-month contract
concerning the period between 30 March 2015 and 30 June 2016. This offer was,
however, subject to the following conditions:
- Diarra is
registered and qualified as a member of Charleroi by 30 March 2015 at the
latest; and
- The governing
bodies, Belgian Football Association (URBSFA) and FIFA, expressly confirm that
Charleroi is not required to pay the compensation for which Diarra could be
held liable at the end of the proceedings before the DRC.
On this second condition, Diarra
and Charleroi demanded confirmation from FIFA and the URBSFA. Both governing
bodies refused to adopt a concrete position with respect to the application of
Article 17 (2) RSTP to the case at hand. On 27 March 2015, in light of the
abovementioned replies obtained from FIFA and URBSFA, Diarra referred the case
to the President of the Commercial Court of Brussels asking to order FIFA and
URBSFA:
- To register and
qualify him as a professional football player of Charleroi, thereby allowing
him to play for the rest of the 2014/2015 season;
- Not to apply
Article 17 (2) and (4) RSTP to Charleroi.
No order had been delivered before
the DRC Decision was issued. Furthermore, the DRC Decision confirmed that
Article 17 (2) RSTP was not applicable to any new club which would hire Diarra
in future. As a result, Diarra decided to withdraw his action from the
Commercial Court of Brussels. However, he was not able to play as a
professional player for Charleroi until the end of the 2014/2015 season. In
July 2015, Diarra entered into a contract with the French top-tier club
Olympique Marseille. This contract is still in force.
Diarra also appealed against the
DRC Decision before the CAS in Lausanne. On 27 May 2016, the CAS rendered its
award by which it confirmed the DRC Decision. In the end, Diarra filed a
lawsuit with the the Tribunal de Commerce du Hainaut. Diarra sued both FIFA and
URBSFA for damages caused by not being able to exercise the status of a
professional football player during the entire 2014/2015 season. Finally, on 19
January 2017, the Hainaut Commercial Tribunal – Charleroi division rendered the
judgment analysed in this blog.
II.
The decision of the Tribunal of Charleroi
A.
Does the Tribunal of Charleroi
have jurisdiction?
FIFA (and the Belgium federation)
argued that the Tribunal lacked jurisdiction for two (main) reasons: Diarra was
bound by a CAS arbitration clause and the Belgium court is incompetent based on
the Lugano Convention. Let’s turn to
the Tribunal’s rebuttal of both objections.
1.
The inexistence
of a CAS arbitration clause
FIFA argued that M. Diarra was
bound, through his registration as a professional football player with the
French Football Federation, by the CAS arbitration clause included in the
Statutes of FIFA.[1] In
particular it refers to Article 68 of the FIFA Statutes.
The Tribunal finds that this
provision poses difficult problems of interpretation. Especially, Article 68(3)
FIFA Statutes does not stipulate that the prohibition to have recourse to
ordinary courts entails necessarily an arbitration clause in favorem of the CAS. Instead, the Tribunal finds this lack of
clarity in the wording of the provision to play in favour of the player. Thus,
it concludes that the FIFA Statutes do not create an obligation for the player
to turn to the CAS to solve this dispute.
The judges add that even if one
considers the FIFA Statutes to be sufficiently clear and precise, the parties
must have concluded an arbitral convention in the sense of Article 1680 of the Code Judiciaire Belge (Belgian Judicial Code). In this regard, FIFA needs
to demonstrate through documentary evidence (not necessarily signed by the
parties) the existence of an agreement fulfilling the law’s requirements of
clarity and precision.[2]
Yet, in the present case, FIFA was unable to show that it had any contractual
links with Diarra. Hence, the judges concluded that there were no elements
demonstrating that Diarra would have consented expressly or implicitly to
arbitrate at the CAS disputes stemming from its relation with FIFA. Additionally,
the Tribunal refers in footnote 7 to the evident contradiction between FIFA’s
claim and the agreement signed with the European Commission to put an end in
2001 to the Commission’s investigation into the FIFA RSTP. Indeed, this
agreement clearly stipulates that “arbitration is voluntary and does not prevent recourse to national
courts”.[3]
Finally, the Tribunal insists that any general prohibition (as the one included
in FIFA’s statutes) to have recourse to national courts would be contrary to Ordre Public and, therefore, must be disregarded
by the Tribunal.
Is it a new Pechstein? Hardly. FIFA is not relying on a specific arbitration
clause included in its Statutes, nor does it refer to any arbitration clause
included in the Statutes of the French Football Federation. In the Pechstein case (on ‘Pechstein’ see our
blogs here and here), Claudia
Pechstein was forced (as a condition of entry to the competitions of the ISU)
to sign an arbitration agreement in favour of the CAS. In the Diarra case, the player never signed
anything and the Tribunal just highlighted that the vague language included in
the FIFA Statutes cannot be constructed as a sufficient legal basis for a
general arbitration agreement binding all football players (and clubs) for all
disputes involving FIFA or national federations around the globe.
2.
The competence of
the Tribunal of Charleroi on the basis of the Lugano Convention
The second objection raised by
FIFA and the URBSFA regarding the competence of the Tribunal is related to the Lugano Convention. In principle, as pointed out by the respondents, Article 2.1. Lugano
Convention foresees that one should be sued in the courts of her domicile. Any
derogation to this general rule is, in their view, limited to exceptional
circumstances in which there is a particularly close linked between the dispute
and the jurisdiction other than the one of the domicile of the respondent.
Yet, the Tribunal refers to
Article 5.3. Lugano Convention, which stipulates that “in matters relating to tort, delict or quasi-delict, in
the courts for the place where the harmful event occurred or may occur”. It held that this special competence is grounded on
the existence of closed connecting factors between the dispute and the place
where the damage occurred. The judges refer to the Mines de potasse and Shevill jurisprudence of the Court of Justice of the EU to
conclude that the notion of harmful event covers both the place where the damage
materialized and the place where the event occurred. In the present case, it
entails that Diarra is not forced to lodge a complaint in Switzerland, where
FIFA adopted the controversial regulation. Instead, he could also submit a
complaint at the place where the damage was felt. More precisely in Belgium
(and more specifically Charleroi) due to the missed opportunity to be employed
by Sporting Charleroi.
This is (with other cases we have
chronicled on this blog, see here and here) a good reminder
that FIFA’s regulations, as long as they have damaging effects outside of
Switzerland, are easily subjected to challenges in the EU Member States. In
particular due to a potential incompatibility with EU free movement and
competition law.
B.
The compatibility
of article 17(2) FIFA RSTP with EU law?
The core of the substantial
evaluation of the case plays out mainly around the question of the
compatibility of article 17(2) FIFA RSTP with EU law. Unfortunately for the
European Sports Law geek, but reasonably in the context of the factual
construction of the case, the Tribunal did not pick on the request of Diarra’s
lawyer to send a preliminary reference to the CJEU regarding the compatibility
of article 17(1) FIFA RSTP with EU free movement law. [4]
Instead, the Tribunal focused on
the interpretation (at least until April 2015) by FIFA (and the URBSFA) of
article 17(2) FIFA RSTP. Indeed, it refers to the legislative history of the
FIFA RSTP and in particular the EU Commission-FIFA agreement to strongly affirm
that “there is no doubt that the European Commission would have never given its
green light to such a system, which boils down in fine to preventing a worker
dismissed by his employer – even if it is due to his behaviour - to find a new
job”.[5]
To further support this argumentation it refers directly to the CAS award rendered
in the latest episode of the ‘Mutu saga’. In that case, the CAS clearly affirmed that the
interpretation provided by the FIFA DRC, insofar as it extends the
applicability of article 17(2) FIFA RSTP to players dismissed by their clubs on
the basis of their behaviour, is contrary to EU law and the Bosman jurisprudence. Thus, the Tribunal
concludes that the application of article 17(2) FIFA RSTP supported by the
defendants in the present case was contrary to the freedom of movement of
workers. Henceforth, the faulty behaviour of FIFA was established.
Interestingly, and this is the
more original aspect of the decision, the Tribunal found that the URBSFA should
also be deemed at fault for having implemented the rule on FIFA’s behalf. The
national federation cannot hide behind its duty to implement FIFA regulations,
especially because since 21 January 2015 (meaning before it opposed the move to
Sporting Charleroi) it should have been aware of the decision of the CAS (here
the Tribunal is a bit unfair with the URBSFA because the full text of the award
was not published until March 2015, and until then it was impossible for the
URBSFA to clearly assess the CAS’ reasoning). Moreover, the Tribunal rejects
the objection raised by the URBSFA that the Russian federation would not have
issued an International Transfer Certificate. Instead, the judges held that
“when the contract is terminated by the club, the player must have the
possibility to sign a new contract with a new employer, without restrictions to
his free movement”. The Tribunal added [and this is the key part that had me believe
in a new Bosman for a minute ;)]
“Allowing, like
the RSTP seems to do, a federation or association to which the former club
belongs […] not to deliver an ITC if there is a contractual disputes between
the former club and a player that has been dismissed (and who has not taken the
initiative of breaching his contract) and who has concluded (or wishes to
conclude) a new contract in another country, is equivalent to requiring the new
club to pay to the former club the compensation requested from the player,
which is akin to imposing to the new club to pay a transfer fee to the former
club to recruit a player who in fact is out of contract. This is exactly the
practice deemed contrary to EU law in the Bosman case.”[6]
The scope of this paragraph could
have been way broader if the Tribunal had not included the “who has been
dismissed” part. Indeed, it seems to exclude situations where the player
decides to leave his club and, thus, preserves the possibility to hold the new
club accountable for compensation due by the player to his former club for having
terminated his contract.
Conclusion: Interpreting
the FIFA RSTP with a lot of help from EU law
This case matters, not so much for
Diarra, who has secured a meagre EUR 60 001 in damages (and not the EUR 6
million announced everywhere) plus a bit more if his lawyers manage to
demonstrate a substantial loss of opportunity from not having played with
Sporting Charleroi (which, with all due respect, should prove rather difficult),
not so much for its substantial solution because the CAS had come to a similar
conclusion in its Mutu award from
2015, not so much either for its arbitration dimension as the Tribunal’s
considerations regarding the absence of an arbitral agreement are not really
surprising (or new for that matter). No, its importance lies in the
reaffirmation of the need to read the RSTP in the light of EU law and to
interpret it with the jurisprudence of the CJEU in mind and the agreement with
the EU Commission on the table. This decision is laying further ground for broader
challenges to the RSTP on the basis of EU law. For example, I do not see where
one can find in the EU Commission-FIFA agreement the endorsement of a joint
liability of the new club and a player for damages incurred by the latter when terminating
his contract with his former club. Thus, the entire article 17(2) FIFA RSTP is
build on shaky legal grounds, and if one pursues the logic of the Tribunal
until the end there is no reason why it should not be deemed contrary to the EU
free movement rights of players.