Editor’s note: Kester Mekenkamp is an LL.M. student in European Law at Leiden University and an intern at the ASSER International Sports Law Centre.

On 17 February 2016, the Landesarbeitsgericht Rheinland-Pfalz delivered its highly anticipated decision in the appeal proceedings between German goalkeeper Heinz Müller and his former employer, German Bundesliga club Mainz 05.[1] The main legal debate revolved around the question (in general terms) whether the use of a fixed term contract in professional football is compatible with German and EU law. 

In first instance (see our earlier blog posts, here and here), the Arbeitsgericht Mainz had ruled that the ‘objective reasons’ provided in Section 14 (1) of the German Part-time and Fixed-term Employment Act (Gesetz über Teilzeitarbeit und befristete Arbeitsverträge, “TzBfG”), the national law implementing EU Directive 1999/70/EC on fixed-term work, were not applicable to the contract between Müller and Mainz 05 and therefore could not justify the definite nature of that contract.[2] In its assessment the court devoted special attention to the objective reason relating to the nature of the work, declining justifications based thereupon.[3] Tension rose and the verdict was soon labelled to be able to have Bosman-like implications, if held up by higher courts.[4]

The Landesarbeitsgericht Rheinland-Pfalz has however taken a different road, one going in the (radically) opposite direction, by deciding that the contested fixed term contract period between a Bundesliga football club and a professional player can in fact be justified based on the objective reason of the nature of the work.[5] This case is an example of how the successful reliance on EU law ultimately depends on the interpretation of a national implementing measure by the competent national courts.[6]

This blog post will try to provide an insight in the court’s reasoning, addressing the four main arguments raised in the judgment. Followed by some point of criticism, making comparisons with the ruling in first instance, as well as the Dahmane v KRC Genk case.[7]  

The reasoning of the court

The Landesarbeitsgericht turns to the concept of the specificity of the work (“Eigenart der Arbeitsleistung”) in the second part of its decision.[8] It thereby immediately stresses that every ‘employment relationship’ has its particularities, which thus prohibits a broad interpretation of the nature of the work. It elucidates:

It therefore must be a specificity, the nature of which transcends in an exceptional way the particularities inherent to every (normal) employment relationship, wherein also industry specific features have to be considered.[9]

Thus, for the justification of Section 14 (1) (4) TzBfG to apply, it has to be a special ‘employment relationship’, which in an extraordinary way transcends the particularities inherent to any normal form of employment. The court follows by stating that the employment relationship between a Bundesliga club and a professional football player is characterized by specific features rendering it such special status.[10] The following arguments are substantiating this claim: 

1. Extraordinary high degree of uncertainty 

At the time of concluding the contract, there is an extraordinary high degree of uncertainty regarding the timespan the player can be employed successfully in the pursuit of the club’s sporting and thereto related economical goals.[11]

In the field of professional football, however, there are special features which lead to a degree of uncertainty significantly exceeding the one present at the conclusion of other employment contracts.[12]

The court substantiates this by referring to the possibility of injuries, leading to potential constraints on the player’s future performance. The latter is in any case dependent on many factors and thus only partially predictable. Other unforeseeable circumstances are put forward by the court that may affect the player’s use and performance in a team. It depends in particular on the manager’s tactical approach, the changes therein and the player’s adaptability to those changes. Group dynamics can negatively influence the individual performance. Moreover, in their constant strive for improvement, clubs take on new players, which may cause a previously valuable player to be no longer suited to the raised performance level of the team and the associated increased sporting objective of the club. This leads the court to believe that there is a legitimate interest for the club to use fixed term contracts.[13]

2. The particular need for a balanced age structure of the professional squad

A legitimate interest, to limit the contracts of professional players, derives from professional football’s immanent nature of the particular need, guided by the sporting goal, for a balanced age structure of the squad.[14]

From this a legitimate interest to use fixed term contracts can be derived. For reasons of competitiveness, clubs are constantly striving to “refresh” their squad. They achieve this by signing young players, introducing skilled players from their own youth department in the first team and possibly endow them with a professional contract. The court states that if professional players would have indefinite contracts, this would inevitably lead (in a certain time) to an immense inflation and total oversizing of the squad, which for most teams then would no longer be financeable.[15]

3. The public’s need for variety

Taking into account the public’s variety-need in assessing the legality of a fixed-contract is justified in light of the increasing commercialization of professional football and it having many similarities with the entertainment industry.[16]

Referring to case law in the area of theatre and stage arts, the court considers sports fans’ need for variety to be a specific feature of professional football. This aspect, in view of the increasing commercialization of professional football, further justifies the use of definite contracts. Fans of course want excellent performing players and crowd favourites (“Publikumsliebling”) to stay with the club on a long-term basis, yet this cannot be foreseen at the time of the conclusion of the contract. The court is however adamant that fans strive for variety with regard to the composition of the team as such.[17]

The public expects the club’s management to, from time to time, if not in every transfer window, improve and thus change the team by attracting new players.[18]

Thus, according to the court, the public expects the club’s management to attract new players and thus periodically change the composition of the team. Likewise it notes that, when concluding a contract, clubs and players need to start from the assumption that fans want change and, hence, want to see different players over time.[19] 

4. The player’s interests

Even from the player’s perspective, according to the court, the use of fixed term contracts is beneficial.

From the player’s side it is to be considered, that by the orderly conclusion of fixed-term contracts that cannot be terminated, the player’s risk of losing his job is, at least temporarily, lifted.[20]

Again referring to the imminent threat of possible injury, the court puts forward that a fixed term contract protects players particularly against early termination of the employment contract by personal compulsory redundancy. Furthermore, it is the court’s view that the ending of fixed term contracts creates room for possible subsequent transfers, deemed in the football player’s interests.[21]

Next, the court shortly addresses the typically extraordinary amount of remuneration paid in professional football (in the Bundesliga annually amounting to an average of 1.5 million euros). It takes note of the aim of EU Directive 1999/70/EC, being the improvement of the situation of weak and thus socially vulnerable workers and to prevent the emergence of a ‘precariat’ of always only temporary salaried workers. It subsequently notes that, in balancing the interests, the exceptionally high remuneration completely changes the scale in application of Section 14 TzBfG, however unfortunately without giving any further guidance.[22]

In an overall consideration of all these circumstances the court finds that the fixed term contract signed between Müller and Mainz 05, and thus the use of fixed term contracts in professional football in general, corresponds to the view of a sensible and reasonable contractual partner.[23] 

Und Jetzt? Some points of criticism

The Landesarbeitsgericht seems to have felt the need to soothe the debate that has arisen after the ruling in first instance. In direct opposition to the Arbeitsgericht Mainz, it has concluded that the contested fixed term contract period between a Bundesliga football club and a professional player can in fact be justified based on the objective reason of the nature of the work.[24] The protective stance in favour of the player provided by the Arbeitsgericht, together with the bulk of that court’s argumentation, has now been abandoned. Although the rationale given by the Landesarbeitsgericht for its ruling, especially the first and second argument (being for large parts in consensus with a commentator of the first instance ruling),[25] seems convincing to this author. Altogether, it still leaves room for further debate. 

On the one hand, with regard to the extraordinary high degree of uncertainty, the Landesarbeitsgericht even could have gone further by developing an argument based, not on the uncertainty of successful performance, but on the inevitability of a decline in physical performance.[26]

On the other hand, the court’s claim that the use of definite contracts is in the player’s own best interest seems rather circular, when it states that the ending of definite contracts at clubs makes room for subsequent transfers.[27] It moreover does not explain the precise influence of the high remuneration received in professional football in the balancing of interests under Section 14 TzBfG.[28] This author would have also liked some further elaboration on the courts assumption of the fans’ variety-need.[29]

Perhaps most importantly, by separating these ‘special employment relationships’ in professional football from normal employment, the Landesarbeitsgericht seems to have taken away the protective shield of labour law from the hands of the players/workers (supported in the ruling in first instance) and placed it right back at the feet of the clubs. It may be that the system of fixed term contracts is the most suitable in addressing the particularities of professional football,[30] and yes, the court has provided some valuable arguments for granting a justification based on the nature of the work. Still, the court must tread warily not to give clubs a carte blanche established on this special status of sport. Because, what would be the limits of this autonomy and how would these limits be policed?

In a previous Belgium case, the Dahmane v KRC Genk case (see our earlier blog post), the outcome was somewhat different. There, the Belgian court had to rule on a player’s unilateral termination of his labour contract with his club. In relation to this matter, the court decided, first, against a differentiation between football players and other professional athletes, and second, against a differentiation between professional athletes and normal workers. According to the Belgian court sport does exhibit certain particularities, however a perceived ‘specific nature of sport’ was not a decisive factor leading it to deviate from other labour relationships.

This reasoning is more in line with the Arbeitsgericht’s view in first instance regarding the question of the nature of the work. Be that as it may, the Landesarbeitsgericht does not concur, leaving us with yet another twist in this ongoing debate since the Bosman ruling. Can we speak of this perceived separate creature, being football or sport, and should this have a special status? And, if so, what should be the implications of this special status in relation to (EU) (labour) laws? These questions are far from settled.

[1] Landesarbeitsgericht Rheinland-Pfalz: Urteil vom 17.02.2016 – 4 Sa 202/15 (Appeal decision Heinz Müller case)

[2] FIFPro Press Release,Müller case is a wake-up call for football, 8 April 2015

[3] P. Drabik, Compatibility of fixed-term contracts in football with Directive 1999/70/EC on fixed-term work: the general framework and the Heinz Müller case, Int Sports Law J (2016).

[4] “Successful lawsuit threatens time-limited contracts in football” http://www.dw.com/en/successful-lawsuit-threatens-time-limited-contracts-in-football/a-18341045.

[5] Landesarbeitsgericht Rheinland-Pfalz: Urteil vom 17.02.2016 – 4 Sa 202/15 (Appeal decision Heinz Müller case), II.1.b

[6] P. Drabik, “Compatibility of fixed-term contracts in football with Directive 1999/70/EC on fixed-term work: the general framework and the Heinz Müller case”, Int Sports Law J (2016), p. 153, 157

[7] A.R. 2009/AH/199 (6 may 2014), Dahmane v KRC Genk

[8] Appeal decision Heinz Müller case, II.1.b

[9] “Es muss sich daher um eine vertragstypische, die jedem Arbeitsverhältnis innewohnende Besonderheit in einem außergewöhnlichen Maß übersteigende Eigenart handeln, wobei jedoch auch branchenspezifische Merkmale bzw. Gesichtspunkte zu berücksichtigen sind“ Ibid, II.1.b

[10] Ibid, II.1.b

[11] Ibid, II.1.b.aa

[12] “Im Bereich des Profifußballs bestehen indes Besonderheiten, die dazu führen, dass das Maß dieser Ungewissheit das insoweit bei Abschluss sonstiger Arbeitsverträge gegebene Unsicherheitsrisiko erheblich übersteigt“, Ibid, II.1.b.aa

[13] Ibid, II.1.b.aa

[14] “Ein berechtigtes Interesse, die Verträge der Lizenzspieler zu befristen, ergibt sich auch aus der dem Profifußball immanenten Eigenart der besonderen Notwendigkeit einer ausgewogenen, der sportlichen Zielsetzung gerecht werdenden Altersstruktur des Spielerkaders“ Ibid, II.1.b.bb

[15] Ibid, II.1.b.bb

[16] “Die Berücksichtigung des Abwechslungsbedürfnisses des Publikums bei der Befristungskontrolle ist im Hinblick auf die zunehmende Kommerzialisierung des Profifußballs, der mittlerweile vielerlei Ähnlichkeiten mit der Unterhaltungsbranche aufweist, gerechtfertigt“ Ibid, II.1.b.cc

[17] Ibid, II.1.b.cc

[18] “Das Publikum erwartet von der sportlichen Leitung des Vereins, dass diese von Zeit zu Zeit, wenn nicht sogar in jeder Transferperiode, die Mannschaft durch Verpflichtung neuer Spieler verbessert und damit zugleich auch verändert“ Ibid, II.1.b.cc

[19] Ibid, II.1.b.cc

[20] “Auf Seiten des Spielers ist zu berücksichtigen, dass diesem durch den Abschluss eines befristeten, ordentlich unkündbaren Arbeitsvertrages zumindest vorübergehend das Risiko des Verlustes seines Arbeitsplatzes genommen wird“ Ibid, II.1.b.dd

[21] Ibid, II.1.b.dd

[22] Ibid, II.1.b.dd

[23] Ibid, II.1.b.ee

[24] Ibid, II.1.b

[25] Piotr Drabik, “Compatibility of fixed-term contracts in football with Directive 1999/70/EC on fixed-term work: the general framework and the Heinz Müller case”, International Sports Law Journal (2016), 15; 3-4, page 156

[26] As advocated in: Ibid, p. 152, 156,

[27] Appeal decision Heinz Müller case, II.1.b.dd

[28] Ibid, II.1.b.dd

[29] Ibid, II.1.b.cc

[30] As advocated in: Piotr Drabik, “Compatibility of fixed-term contracts in football with Directive 1999/70/EC on fixed-term work: the general framework and the Heinz Müller case”, International Sports Law Journal (2016), 15; 3-4, page 153

FIFA’s freshly adopted TPO ban entered into force on 1 May (see our Blog symposium). Though it is difficult to anticipate to what extent FIFA will be able to enforce the ban, it is likely that many of the third-party investors will try to have recourse to alternative solutions to pursue their commercial involvement in the football transfer market. One potential way to circumvent the FIFA ban is to use the proxy of what has been coined “bridge transfers”. A bridge transfer occurs when a club is used as an intermediary bridge in the transfer of a player from one club to another. The fictitious passage through this club is used to circumscribe, for example, the payment of training compensation or to whitewash a third-party ownership by transforming it into a classical employment relationship. This is a legal construction that has gained currency especially in South American football, but not only. On 5 May 2015, in the Racing Club v. FIFA case, the Court of Arbitration for Sport (CAS) rendered its first award involving directly a bridge transfer. As this practice could become prevalent in the coming years we think that this case deserves a close look.

I. Facts and procedure

Fernando Ortiz is an Argentine professional football player who entered into an employment contract with Vélez Sarsfield, valid until 30 June 2012. After the expiration of the contract, Ortiz signed an employment contract with the Uruguayan team, Institución Atlética Sud América on 11 July 2012, valid until 30 June 2017. Institución was playing in the Second Division in Uruguay at that time. A week later, on 20 July 2012, Ortiz was transferred from Institución back to Argentina. Institución and Racing Club, Ortiz’ new club, agreed a transfer fee (which was not disclosed). The first instalment should be made before 24 July 2012. Ortiz’ new employment contract was valid until 30 June 2014. Both transfers were duly registered in the FIFA Transfer Matching System (TMS). First, on 23 July 2012, the Argentine Federation (AFA) provided the Uruguayan Federation (AUF) the International Transfer Certificate (ITC). After the transfer from Institución to Racing, the AUF sent the same paperwork to the AFA on 3 August 2012. At that time, no payments were made.

Meanwhile, in view of the number of similar transfers, AFA and the Argentine Tax Authorities agreed that the players concerned would not be allowed to play in the Argentine league. This resulted in the parties (Institución, Ortiz and Racing) concluding a Rescission Agreement of the transfer contract, stating that they had “nothing to claim from each other”.[1] This agreement was not uploaded at that time in the TMS. On 23 November 2012, the FIFA TMS body sent a letter[2] to Racing asserting that they were not aware of any proof of payment of the transfer fee, and that this transfer could constitute an infringement of the TMS rules. Racing replied[3] by enclosing the rescission agreement and confirming that no payments were to be made. On June 2013, FIFA TMS opened disciplinary proceedings against Racing, claiming a violation of articles 3 and 9.1 of Annexe 3 RSTP[AD1] . In response Racing blamed Ortiz for trying to benefit himself from such operation and argued that the club had a true sporting interest in signing Ortiz and did not receive any economic benefit out of the transfer. On 14 August 2013, the FIFA TMS body submitted the disciplinary proceeding to the FIFA Disciplinary Committee (FIFA DC) for a proper investigation of the facts.

In its decision of 5 March 2014, the FIFA DC analysed the two transfers and concluded that they lacked a sporting objective. Even if, from a formal point of view, the first of the two transfers did not involve Racing directly, the FIFA DC considered, taking into account the chronological unfolding of the transfers, that the transfer of Ortiz to Institución would not make sense (according to the playing level of Institución and Ortiz), if his subsequent transfer to another club, in this case Racing Club, was not already planned. Accordingly, the FIFA DC found that the two “parts of the operation” cannot be considered separate. Hence, the whole bridge transfer scheme was deemed known to all parties involved. Thus, the FIFA DC concluded that Racing was involved in the operations carried out and therefore liable to face sanctions.[4]

Moreover, the FIFA DC drew attention to the effects the rescission agreement should have had in a rational context. Indeed, in a normal constellation, one would have expected Ortiz to return to Institución, instead the fact that he stayed on to play at Racing corroborated the non-sporting interest of the transfer. The FIFA DC considered that the aim of the TMS rules is to create transparency (Article 1 Annexe 3 RSTP) in players’ international transfers. In the view of the FIFA DC, Racing, however, used the TMS fraudulently to give a sporting appearance to such a transfer. Therefore, Racing is found to have infringed Articles 3(1)[5] and 9.1(2)[6] Annexe 3 FIFA RSTP, since the transfer was conducted through the TMS for illegitimate purposes and it did not act in good faith. As a consequence of this infringement, the Argentine club was fined CHF 15,000 and warned in accordance with the FIFA Disciplinary Code.[7] In the same proceedings, the Uruguayan club was sanctioned with a transfer ban for two complete and consecutive transfer periods and a fine of CHF 40,000.

Racing Club decided to appeal the decision to the CAS. The Argentine club based its appeal[8] on the grounds that there is no legal basis in the FIFA Regulations to sanction the club for correctly registering a transfer without a sporting reason in the FIFA TMS system.  

II. Commentary

First, we need to explicate in greater details the functioning and purposes of bridge transfers. Before, tackling the substance of the award rendered by the CAS.

A.    What is a bridge transfer?

As explained by Ariel Reck[9] (who was Racing’s lawyer in the present case), a bridge transfer has three main characteristics:

• A bridge transfer is made for no apparent sporting reason, there is a non-sporting purpose underlying the move.

• Secondly, there are three clubs involved in this triangular structure: on the one hand the club where the player was firstly registered (club of origin); secondly, the so-called ‘bridge club’, which will usually be a club of a lower level than the player involved and the final club of destination, i.e. the club where the player was intended to play for from the beginning. The lack of balance between the player and the bridge club is usually evident.

• The last feature is the short period of time that the player is engaged with the bridge club. Frequently, such a player does not play any game at all with this club.

There are three important reasons why football clubs enter into a triangular agreement that constitutes a bridge transfer:

1. The bridge transfer helps to reduce the cost of training compensation or payments to be made under FIFA’s solidarity contribution mechanism.

2. The bridge transfer allows the use of a club to circumvent the FIFA rule that prohibits TPO.[10]

3. The bridge transfer is used to evade taxes.

1.   Reducing training compensation

As far as the reduction of the value of the training compensation is concerned, it should be noted that there is already an award dealing with this matter, though without making an explicit reference to the notion of “bridge transfer”. In 2009, CAS rendered an award in a dispute between MTK Budapest and FC Internazionale. In this case, Inter was interested in signing a Hungarian player from MTK Budapest. After negotiations between the two clubs broke down, the player entered into a professional contract with a Maltese club. Yet, after nine days at the Maltese club, the player was transferred to Inter. According to the FIFA’s training compensation rules[11], if the player would have been transferred directly from MTK Budapest to the Italian club, the payable amount to the Hungarian team, for the three seasons that the player was trained by MTK Budapest, would have been €160,000.[12] The Panel, found this transfer to be irrational and considered that the training efforts of MTK Budapest should in any case be rewarded. Therefore, it decided that Inter should pay a training compensation to the Hungarian team.

On the other hand, by means of a comparable manoeuvre, the solidarity mechanism can also be manipulated. The RSTP provisions on the solidarity mechanism are only applicable to international transfers (Article 1(1) RSTP). The transfers between two clubs of the same association are “governed by specific regulations issued by the association concerned” (Article 1(2) RSTP). Thus, one can reduce the amount of the solidarity contribution via a bridge construction. The first (international) transfer is concluded for a low amount, which would be subject to the solidarity contribution. Later, a second (national) transfer is concluded for the real amount.[13]

2.   Circumventing the FIFA TPO ban

Another purpose for the use of bridge transfers is to circumvent the FIFA rules prohibiting agents (or intermediaries) or other third parties to acquire economic rights from players. This is “a way to anchor a players economic rights to a club”[14] instead of a mere third party (agent or a company). By controlling a club, the former third-party owners are able to continue investing in players while making sure that this investment is at least formally in conformity with the RSTP. With this mechanism, a third party, who controls a club (a bridge club), also enjoys the legal protection awarded by the FIFA RSTP to clubs, for example, in case of breach of the contract without just cause (17 RSTP).

 3.   Reducing Taxes

Bridge transfers are also designed to reduce taxes or hide the financial beneficiary of the amounts.[15] Bridge clubs, in these cases, are based in “tax heavens”. Consequently, two transfers need to be concluded: One from the team of origin to the bridge club, and the other one from the bridge club to the club of destination. If the bridge transfer is made with the sole purpose of reducing taxes, the fee for the first transfer would be low because this transfer fee is highly taxed. The second transfer would be concluded for a higher amount and the fee will be taxed at a low rate.

Secondly, a bridge transfer could also be used to disguise a compensation for a player (this mechanism is generally used by free agents) or payments to third parties. Usually, players who move to a new club as free agents tend to receive higher salaries than players who have been transferred to another club while still on a contract with their old club. In order to prevent the payment of high income taxes, a player and a bridge club agree to share the transfer payment made by the club of destination. Thus, the bridge club is rewarded for taking part in the bridge transfer; this reward is usually limited to a small share of the total transfer sum.[16]

The third alternative is the configuration at play in the Racing case. In Uruguay, clubs are considered cultural institutions and according to the Article 69 ‘Constitución Nacional’ (National Constitution), they are exempted from paying taxes, even on transfers of players. The clubs take the legal form of either ‘Sports Association’ or ‘Sociedad Anónima Deportiva’ (Public limited sports company), the latter being considered a cultural institution as well. A recent Uruguayan judgment[17] extended the tax exemption to the ‘Socidades Anónimas Deportivas’. However, since bridge transfers have no sporting interest and are aimed at an economic profit derived from reducing the tax burden, the Uruguayan court also held that bridge transfers are not to be tax exempted.  

B.    The Racing case: FIFA’s interpretative bridge too far

1.     The argument of the parties

Racing Club argued in front of CAS that neither Article 3(1), nor Article 9.1(2) of Annexe 3 FIFA RSTP could constitute a sufficient legal basis to impose sanctions in case of a bridge transfer. Basically, “neither the Regulations nor the TMS generates a new substantive law”.[18] No provision states that transfers with a purely economic purpose violate any FIFA provision, which “precludes any sanction based on such concept”.[19] Racing Club also pleaded the ‘principle of estoppel’. As neither FIFA nor the FIFA TMS have sanctioned bridge transfers in the past, Racing Club is of the opinion that the FIFA DC is estopped from sanctioning them in the case at hand.

FIFA recognises that “although (the FIFA regulations) are not applicable to the present matter, (they) present an unambiguous view of what falls within the scope of the Regulations in general terms”.[20] The body argues that this loophole might be covered by the association’s usual practice or, if not, by the rules that they would lay down if they were acting as legislators. Also, FIFA argues that the FIFA Disciplinary Code (FDC) has to be read in accordance with the language used, the grammar and syntax of the provisions, the historical background and the regulatory context. In other words, FIFA pleads that the Panel must sanction the club interpreting the FIFA rules by analogy, if the wording of articles 76 FDC[21] and 62 FIFA Statutes[22] in connection with the TMS rules invoked is not sufficient to ground the decision of the FIFA DC.

2.     The decision of the Panel

In the view of the Panel, the FIFA DC was competent to render a decision in this matter. However, this decision must be grounded on a legal basis found in the FIFA regulations. The key question in the present case is whether Articles 3(1) and 9.1(2) Annexe 3 FIFA RSTP can constitute such a legal basis.

Therefore, taking into account that Racing was sanctioned for having violated the provisions of Annexe 3 by having entered untrue or false data and/or having misused the TMS for illegitimate purposes in bad faith by concluding a “bridge transfer”, the Panel must decide whether the transfer breached these provisions, and if it did so, whether the sanction is proportionate according the TMS rules.

The Panel considers that it is “undisputed that the present case involves a transfer structure which, […], is to be considered as a “bridge transfer”.[23] The Panel considers that Racing Club could not ignore that it was involved in a bridge transfer and was not acting in good faith when arguing that the transfer via Institución was conducted exclusively on the basis of a sporting interest. However, this does not imply per se that Racing acted in bad faith as far as the TMS registration of the Player’s transfer from Institución to Racing is concerned.[24] Indeed, FIFA had to satisfy its burden of proof and demonstrate to the comfortable satisfaction of the Panel that Racing Club had entered untrue or false data and/or misused the TMS for illegitimate purposes. In this regard, the Panel finds that “insufficient evidence is available to prove that the Appellant must be assumed not to have acted in good faith in connection with Player’s transfer registration in the TMS”, as “it has not been proven that the Appellant has registered misleading or false information in the TMS”.[25]

If FIFA is to outlaw the recourse to bridge transfers it must do so in an express fashion. In other words, “the parties involved, in conformity with the principle of legality, shall be provided with specific guidelines in order to know how to act when international transfers of players take place”.[26] Critically, “the lack of such clear and specific set of rules does not justify, in the eyes of the Panel, the “secondary use” of the TMS rules for these purposes”[27]. The principle of legality implies that a sanction must be based on a previously existing legal rule. The CAS had emphasized this principle at various instances in its earlier jurisprudence.[28] Consequently, the Panel found that the “bridge interpretation” used by the FIFA DC to sanction Racing for taking part in a transfer construct qualified as a bridge transfer was going too far and could not be followed. In short, “the current TMS rules represent neither an appropriate nor an effective tool for combating and/or sanctioning bridge transfers”.[29] Hence, the arbitrators decided to reduce the sanction imposed to a mere reprimand.

This is not to say that the Panel endorses the recourse to bridge transfers. Instead, it clearly states that it “concurs entirely with the Respondent (FIFA) that measures should be applied against bridge transfers when such transfers are conducted for the purpose of engaging in unlawful practices, such as tax evasion, or to circumvent the rules concerning, for instance, the payment of training compensation or solidarity contributions, or to assure third party's anonymity in relation to the relevant authorities”.[30]

Yet, the basic rule of law principle requiring that FIFA must first devised clearly positivized rules on the basis of which it can then adopt the required sanctions must be respected. This is a bold move by the Panel in light of the bad reputation of bridge transfers. FIFA, as any public or private authority, cannot free itself from the duty of acting in the framework of the regulations it has adopted. The decision is an important reminder of the limits faced by the discretionary power of International Sports Governing Bodies when CAS Panels review their disciplinary decisions. These Bodies do not have an absolute discretion to exercise the disciplinary power that they derive from their statutes. This power is checked by reference to the same legal principles restricting State power in a national context. Thus, it is the duty of FIFA to make sure that it disposes of an appropriate legal basis to act. Consequently, in the (near) future, instead of jumping an interpretative bridge too far, it is advisable that FIFA adopts specific rules to tackle the potential ethical and legal challenges posed by the surging use of bridge transfers.

[1] CAS 2014/A/3536 Racing Club Asociación Civil v. FIFA, paragraph 2.9

[2] Ibid, paragraph 2.10

[3] Ibid, paragraph 2.13

[4] Ibid, paragraph 2.19

[5] “All users shall act in good faith.”

[6] “Sanctions may also be imposed on any association or club found to have entered untrue or false data into the system or for having misused TMS for illegitimate purposes.”

[7] Articles 10.c) and 15 for the fine and Articles 10.a) and 13 for the warning.

[8] CAS 2014/A/3536 Racing Club Asociación Civil v. FIFA, paragraph 7.2.2

[9] World Sports Law Report – April 2014, by Ariel Reck.

[10] CAS 2014/A/3536 Racing Club Asociación Civil v. FIFA, paragraph 7.3.2(o)

[11] Article 20 and Annexe 4 FIFA Regulations on the Status and Transfer of Players.

[12] CAS 2009/A/1757 MTK Budapest v. Internazionale Milano, paragraph 24.

[13] Ariel Reck, “What is a ‘bridge transfer’ in football”.

[14] Ibid.

[15] Ibid.

[16] “El otro triángulo de las Bermudas: los pases fantasmas a Uruguay y Chile”, 18 August 2012, Perfil.com

[17] Tribunal Contencioso Administrativo (Uruguay), fallo no. 301, 16 abril 2015.

[18] CAS 2014/A/3536 Racing Club Asociación Civil v. FIFA, paragraph 7.2.2.d)

[19] Ibid.

[20] CAS 2014/A/3536 Racing Club Asociación Civil v. FIFA, paragraph 7.3.2.k)

[21] “The FIFA Disciplinary Committee is authorised to sanction any breach of FIFA regulations which does not come under the jurisdiction of another body.”

[22] “1.The function of the Disciplinary Committee shall be governed by the FIFA Disciplinary Code. The committee shall pass decisions only when at least three members are present. In certain cases, the chairman may rule alone. 2. The Disciplinary Committee may pronounce the sanctions described in these Statutes and the FIFA Disciplinary Code on Members, Clubs, Officials, Players, intermediaries and licensed match agents. 3. These provisions are subject to the disciplinary powers of the Congress and Executive Committee with regard to the suspension and expulsion of Members. 4. The Executive Committee shall issue the FIFA Disciplinary Code.”

[23] Ibid, para.9.11

[24] Ibid, par. 9.14

[25] Ibid, para.9.15

[26] Ibid, par. 9.18

[27] Ibid.

[28] "In the Panel’s opinion, this provision of the Olympic Charter is to be properly read in accordance with the “principle of legality” (“principe de légalité” in French), requiring that the offences and the sanctions be clearly and previously defined by the law and precluding the “adjustment” of existing rules to apply them to situations or behaviours that the legislator did not clearly intend to penalize. CAS arbitrators have drawn inspiration from this general principle of law in reference to sports disciplinary issues, and have formulated and applied what has been termed as “predictability test”. Indeed, CAS awards have consistently held that sports organizations cannot impose sanctions without a proper legal or regulatory basis and that such sanctions must be predictable. In other words, offences and sanctions must be provided by clear rules enacted beforehand." CAS 2008/A/1545 Andrea Anderson, LaTasha Colander Clark, Jearl Miles-

Clark, Torri Edwards, Chryste Gaines, Monique Hennagan, Passion Richardson v. International Olympic Committee (IOC), award of 16 July 2010, para.30. See also CAS 2011/A/2670 Masar Omeragik v. Macedonian Football Federation (FFM),  award of 25 January 2013, para.8.13.

[29] Ibid. Para.9.19

[30] Ibid, para.913