Editor's note: Adriaan Wijckmans is an associate specialized in sports law at the Belgium law firm Altius.
In a recent judgment, the Brussels Court of
First Instance confirmed the legality of a so-called surety undertaking, i.e. an
agreement in which the parents of a minor playing football guarantee that their
child will sign a professional contract with a football club as soon as the child
reaches the legal age of majority.
This long-awaited ruling was hailed, on the one hand, by clubs as a
much needed and eagerly anticipated confirmation of a long-standing practice in
Belgian football[1] and, on
the other hand, criticised by FIFPro, the international
player’s trade union, in a scathing press release.
Background
Jason Eyenga-Lokilo (“Jason Lokilo”), born on
17 September 1998, joined the youth academy at Belgian top club, RSC Anderlecht
(“Anderlecht”), in the spring of 2007. Anderlecht had set up a specific youth
academy a couple of months earlier, which combined school education and
football training for young football players.
As Jason Lokilo was one of the youth academy’s more
promising prospects, Anderlecht and Lokilo’s parents entered into an agreement in
which the parents, in exchange for a payment of 75,000 EUR (paid in instalments),
guaranteed Anderlecht that their son was going to sign his first professional
contract with the club upon turning 16, i.e. the minimum age in Belgium for
signing a player contract. This same agreement stipulated that the parents were
liable to pay Anderlecht a lump sum of 450,000 EUR in damages, if their son did
not sign such a player contract.
When, in 2013, Aston Villa made a request to
Anderlecht to give Jason Lokilo a trial when he was 15 years of age, Anderlecht
refused, citing the player’s training obligations and the existing surety
undertaking. Jason Lokilo’s father, a football agent, then told Anderlecht that
he wanted to revise the terms of the surety undertaking, given the fact that a number
of European football ‘powerhouses’ wanted to sign his son. Anderlecht refused
his demand.
In June 2014, Jason Lokilo and his parents sent
a letter to Anderlecht arguing that the surety undertaking was unlawful and
hence null and void. Jason Lokilo alleged that unacceptable coercion had been put
on him to sign his first contract with Anderlecht, which the player and his advisers
considered was contrary to public policy. Anderlecht replied that it considered
the surety undertaking to be perfectly valid since the surety did not prevent the
player from signing his first professional contract with another club.
By the end of July of 2014, the gridlock
between both parties ended with Jason Lokilo leaving Anderlecht and the latter
club starting court proceedings against Jason Lokilo��s parents for a damages claim
of 450,000 EUR.
Jason Lokilo eventually signed a contract with
Crystal Palace in the summer of 2015.[2]
The Brussels Court of First
Instance ruling
In its 22 November 2016 judgment, the Brussels
Court of First Instance (“CFI”) confirmed the principle of this surety
undertaking in the context of professional football.
The CFI referred to Article 1120 of the Belgian
Civil Code that expressly allows the principle of a surety undertaking. A
surety undertaking under Belgian civil law can be defined as an agreement in
which one party promises another party regarding what a third party (who is either absent or legally not competent) will do, give or refrain
from doing. The third party retains the freedom not to commit himself, since
he, as a third party, is not bound by the agreement. However, the contracting
party that made the promise will in that case be liable to pay the
contractually foreseen damages if this third party eventually does not commit himself.
The
main question the court had to decide was to determine whether the surety
undertaking had a valid object and cause.
Jason
Lokilo’s parents first argued that the contract was contrary to public policy
legislation, considering the contract violated the freedom of association
principle enshrined in the Convention on the Rights of the Child (“UNCRC”), the European Convention on Human Rights (“ECHR”) and the European Social Charter
(“ESC”). The CFI did not follow this reasoning, simply
stating that the surety undertaking did not bind Jason Lokilo and did not
prevent him from signing a contract with another club.[3]
Lokilo’s
parents also invoked an alleged violation of Belgian federal legislation, which
prohibits player contracts below the minimum age requirement. This argument was
cast aside by the court since at no point in time was a player contract signed
below the legal minimum age of 16.
Furthermore,
Lokilo’s parents argued that the contract breached a (regional) decree
guaranteeing an amateur sportsperson the right to leave their club free-of-charge
at the end of each sporting season. The CFI repeated that Lokilo was not bound
by the surety undertaking and could still freely leave Anderlecht, stating that
this outcome was, moreover, exactly what Lokilo did in 2014. An aggravating
circumstance for the CFI was the fact that Lokilo’s father had indicated to
Anderlecht that Aston Villa in 2013 was willing to cover the 450,000 EUR in
damages, as a result of which the CFI considered these damages were ‘clearly not an obstacle for Jason Lokilo to
leave Anderlecht’.
The
argument invoked by Lokilo’s parents under EU law (free movement) was also
dismissed by the CFI ‘for lack of a
cross-border EU element’[4].
In
the end, the CFI granted damages to Anderlecht but limited the amount payable
by the parents, on the one hand, based on the grounds that Jason Lokilo’s
mother was not an agent (and hence not professionally active in football) and,
on the other hand, because 450,000 clearly exceeded the actual damages suffered
by Anderlecht. The CFI set the damages ex
aequo et bono at 140,000 EUR instead.
Some considerations
The Lokilo
case echoes the Spanish Baena case,[5] although
the latter concerned a slightly different situation and had a clearly different
outcome.
Where the Spanish Supreme Court in its 5
February 2013 ruling considered a pre-contractual agreement concluded on behalf
of a minor football player at odds with the minor’s best interests and
therefore contrary to public policy, the CFI adopted a rather strict ‘pacta sunt servanda’ approach.
The CFI considered that the surety undertaking did not prevent Lokilo from signing a contract
with a club other than Anderlecht. This finding may be correct from a strictly
legal perspective, but ignores the reality that a child may not want to pursue
his or her career at another club if he realises that, by doing so, his or her parents
will be liable to pay damages. Moreover, under Belgian law, while a minor is
indeed of legal age to sign his or her first professional contract when turning
16, the minor in principle still needs parental authorisation to do so until reaching
18 years of age. Parents might of course not be very inclined to agree to their
child signing his or her first professional contract elsewhere, and therefore not
provide the necessary parental authorisation, if doing so triggers important
financial liabilities for them…
The
surety undertaking seems also incompatible with regional decrees guaranteeing
amateur sportsmen the right to leave their club free-of-charge at the end of
each sporting season. These decrees are considered to have a public policy
character by the case law, and disallow any hindrance, financial or otherwise, when
moving to another sports club.[6] The fact
that the surety undertaking related to a switch from an amateur to a
professional contract,[7] did not
alter the fact that the player was not free to leave for another amateur club
when turning 16 either, since he was forced to sign a professional contract
with Anderlecht when turning 16 or see his parents face the prospect of paying
hefty compensation.
Arguments regarding the fundamental rights of
the minor were either not invoked or not upheld by the CFI. The CFI stated that
the matter concerned a contract between the parents and the club and not between
the player and the club, as a result of which the minor’s fundamental rights were
not jeopardised.
This argument is frankly unconvincing.
It should be noted that the UNCRC[8] recognises
the right of a child to freedom of association[9] and the
right to participate freely in cultural life.[10] The UNCRC
furthermore protects children from economic exploitation.[11] The UNCRC provides also that “in all actions concerning children, whether
undertaken by public or private social welfare institutions, courts of law,
administrative authorities or legislative bodies, the best interests of the
child shall be a primary consideration.”
The UNCRC is often labeled as ‘soft’ law,[12] with Belgian
case law even considering most of its provisions lacking a self-sufficient or
self-executing character;[13] yet, the
UNCRC remains a treaty with clear moral authority. Moreover, a number of its
provisions do have direct effect, especially when read in combination with
other international legal sources, such as the ECHR and the EU Charter of
Fundamental Rights. The obligation to consider the best interests of the child
is expressly incorporated in the EU Charter of Fundamental Rights.[14] Even
though the obligation to observe the child’s best interests is not expressly
laid down under the ECHR, the ECtHR incorporates this obligation also in its
case law.[15] One
could further argue that the surety undertaking disproportionally affects the
career development and perspectives of a player who is a minor, and so violates
that player’s proprietary rights[16] and the
right to family life that both the player and the player’s family enjoy.[17]
In addition, both the Belgian Constitution[18] and the
Belgian Economic Code[19] protect
the freedom for each individual to freely choose his or her occupation. This
freedom can only be curtailed through or by law.[20] An
agreement jeopardising one’s freedom to freely choose one’s occupation, has an
unlawful causa and is null and void.[21]
The statement made by the CFI that the EU
internal market law does not apply due to a lack of cross-border effect is at
odds with the fact that Lokilo clearly intended to join a club outside Belgium,
within the EEA (as shown by Aston Villa’s interest and his eventual signing with
Crystal Palace), a fact that was not contested by Anderlecht. As Anderlecht is
a Belgian football ‘powerhouse’, and clearly one of the top clubs in Belgium
(if not the top club), a player aiming higher than Anderlecht would necessarily
have to look at opportunities abroad.
If EU law is deemed to apply, then the guiding
principles of the Bernard case must
be observed. The CJEU, in its Bernard ruling,[22]
recalled that an
obstacle to the freedom of movement of workers can be accepted only if it
pursues a legitimate aim and is justified by overriding reasons in the public
interest. The CJEU clearly accepted recruitment and training of players as a
legitimate aim. Even where that is so, that measure’s application still must be
such as to ensure the objective’s achievement and not go beyond what is
necessary for that purpose. In considering whether a system restricts the
freedom of movement, the specific characteristics of sport, and of football in
particular, their social and educational function, should be taken into account.
One may even take into account the costs of training other players that do
not succeed at establishing a professional career (the player factor).[23]
This being said, the
surety undertaking mechanism in this case seems overly restrictive for the
player. Although, again, a surety undertaking binds the parents and not the
player, and damages can only be claimed from the parents, the surety
undertaking obviously ultimately serves to discourage a player from exercising
his or her right of free movement. Moreover, the player already suffers a
restriction upon his or her free movement, following the training compensation mechanism
in place under FIFA regulations, which is criticisable in its own right.[24] The
surety undertaking constitutes an additional burden on the player’s free
movement. In Bernard, although the CJEU
seemed to accept the principle of training compensation, the CJEU dismissed the
French arrangements governing young players (‘joueurs espoirs’) since they did not involve compensation for real
training costs incurred, but rather were damages for breach of contractual
obligations calculated with reference to the total loss suffered by the club. And
taking into account the actual loss suffered by Anderlecht is exactly what the
CFI has done. To the extent a surety undertaking goes beyond what is necessary
to encourage the recruitment and training of minors (and funds those activities),
a violation of the EU internal market law seems given.
Conclusion
In conclusion, based on the considerations set
out above, it can certainly not be excluded that the ruling will be overturned
on appeal. Such an appeal, which would bring the case before the Brussels Court
of Appeal, is being considered by the player’s parents, but has not yet been
lodged.
Apart from the doubt around their
enforceability, it should be noted that payments under surety undertakings may
in addition give rise to (social) tax issues, if they are not structured
correctly.[25] [26]
The problem with the surety undertaking in the Lokilo case predominantly lies with the surety
undertaking’s disproportionate character in the specific case at hand. Less
restrictive solutions could, in the author’s view, be envisaged, although exploring
such alternatives would exceed the scope of this article.
[16] Article 1 of ECHR First Protocol: “Every natural or legal person is entitled
to the peaceful enjoyment of his possessions. No one shall be deprived of his
possessions except in the public interest and subject to the conditions
provided for by law and by the general principles of international law. (…)”.
[25] The tax and social security authorities may e.g.
argue that these payments relate to the (future) employment contract of the
player.
[26] The surety undertaking’s ‘nephew’, the money
lending contracts, in addition pose problems under Belgian finance law since
clubs as a rule do not possess the necessary licences or authorisations.