FIFA REGULATIONS FOR THE STATUS AND TRANSFER OF PLAYERS IS IT ALL ABOUT « SPECIFICITY »? Michele Colucci info@colucci.eu - www.colucci.eu SLPC Lunch - time Seminar Bruxelles 30 March 2011 09/12/2018

GENESIS CoJ : the Bosman case 15 December 1995 The 2001 Gentlemen’s agreement The five principles: free of movement, protection of minors, training compensation, solidarity mechanism, dispute resolution and arbitration system. 2001 FIFA Regulations 2005 – 2008 – 2009- 2010 FIFA Regulations 09/12/2018

SCOPE To establish global and binding rules concerning the status of players their eligibility to participate in Organised Football, and their transfer between clubs belonging to different Associations the release of players for Association teams and players’ eligibility to play for such teams (art. 1) 09/12/2018

CONTRACTUAL STABILITY PACTA SUNT SERVANDA! Article 13 Respect of contract A contract between a professional and a club may only be terminated upon expiry of the term of the contract or by mutual agreement. Article 14 Terminating a contract with just cause A contract may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions) where there is just cause. Article 15 Terminating a contract with sporting just cause - An “established professional” who has, in the course of the season, appeared in fewer than ten per cent of the official matches in which his club has been involved may terminate his contract prematurely on the ground of sporting just cause. Article 16 Restriction on terminating a contract during the season A contract cannot be unilaterally terminated during the course of a season. 09/12/2018

ART.17 Consequences of terminating a contract without just cause The following provisions apply if a contract is terminated without just cause: 1. In all cases, the party in breach shall pay compensation. Subject to the provisions of article 20 and Annexe 4 in relation to training compensation, and unless otherwise provided for in the contract, compensation for the breach shall be calculated with due consideration for: the law of the country concerned, The specificity of sport, and any other objective criteria. WITHIN PROTECTED PERIOD: SPORTING SANCTIONS 09/12/2018

THE “OBJECTIVE CRITERIA” These criteria shall include, in particular: the remuneration and other benefits due to the player under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years, the fees and expenses paid or incurred by the former club (amortised over the term of the contract) and whether the contractual breach falls within a protected period. 09/12/2018

Interpretation The wording of the article (literal meaning) If unclear, its internal logic Its relationship with other provisions of the Regulations Its purpose revealed by the history of its adoption 09/12/2018

WEBSTER CAS 2007/A/1298 of January 2008 Art. 17 FRSP Does not allow a club or a player unilaterally to terminate an employment contract without just cause Breach of contract even outside of the “protected period” Does not deal directly with training compensation Gives primacy to the parties’contractual stipulating agreement . 09/12/2018

WEBSTER CAS 2007/A/1298 of January 2008 Art. 17 FRSP SPECIFICITY “It is a reference to the goal of finding particular solutions for the football workd which enable those applying the provision to strike a reasonable balance between the needs of contractual stability, on the one hand, and the needs of free movement of players, on the other hand” 09/12/2018

WEBSTER CAS 2007/A/1298 of January 2008 “There is no economic, moral or legal justification for a club to be able to claim the market value of a player as lost profit” “Becasue of the potentially high amounts of compensation involved, giving clubs a regulatory right to the market value of players allowing lost profits to be claimes in such manner would in effect bring the system partially back to the pre-Bosman days. 09/12/2018

WEBSTER CAS 2007/A/1298 of January 2008 Conclusions COMPENSATION SHOULD BE BASED ONLY ON THE BASIS OF THE RESIDUAL VALUE OF THE CONTRACT! 09/12/2018

MATUZALEM CAS 2008/A/1519 and 1520 19 May 2009 “unless otherwise provided for in the contract...” Parties are free to terminate the contract by “buy out clauses” The so –called “spanish clause” Very high amount Reduced by ordinary judges 09/12/2018

CAS “Matuzalem” para.68 Whether such clauses are called “buy out-clauses”, “indemnity” or “penalty clauses” or otherwise, is irrelevant. To meet the requirements of art. 17 para. 1 FIFA Regulations the parties shall have “provided otherwise”, i.e. the parties shall have provided in the contract how compensation for breach or unjustified termination shall be calculated. Legally, such clauses correspond therefore to liquidated damages provisions, at least so far as the real will of the parties to foresee in such clause the amount to be paid by the breaching party in the event of a breach and/or of a unilateral, premature termination of the employment contract is established. 09/12/2018

MATUZALEM para.79 “Within the framework of the "reconstruction" of the FIFA and UEFA rules following the well-known Bosman decision, the concept of contractual stability was introduced to move forward and replace the former transfer fee system: accordingly, the pre-Bosman transfer fees due after the expiry of a contract have been replaced by compensations due for the breach or undue termination of an existing agreement.” 09/12/2018

PACTA SUNT SERVANDA SCOPE: “small” and “big” clubs Unknown and top players; Employees and employers...notwithstanding their importance, role, and power 09/12/2018

MATUZALEM “Compensation”- Amount to be paid in order to compensate the injured pary fro the damage suffered because of the breach or the premature termination of the contract Hard to predict! 09/12/2018

MATUZALEM The principle of “POSITIVE INTEREST” or “EXPECTATION INTEREST”: The amount which shall basically put the injured pary in the position that the same party would have had if the contract was performed properly, without such contractual violation to occur” BUT WHY??? 09/12/2018

MATUZALEM Duty to consider all circumstances Objective criteria, but also a .... Considerable scope of discretion...so that the amount of compensation becomes....rather unpredictable!!! (para. 89) 09/12/2018

MATUZALEM While the information on the remuneration under the existing contract may provide a first indication on the value of the services of the player for that employing club, the remuneration under the new contract may provide an indication not only on the value that the new club/clubs is/are giving to the player, but possibly also on the market value of the services of the player and the motive behind the decision of the player to breach or terminate prematurely the agreement (para.92) 09/12/2018

MATUZALEM “The Panel is eager to point out that the sole object of this approach are the services provided by a player and not... “the human being as such”. (103) An offer made by a third party is very likely to reflect or at least bring some additional information on the value that a third party (and possibly the market) is giving to the services of the player at stake 09/12/2018

MATUZALEM The loss of a possible transfer fee can be considered a compensable damage head if the usual conditions are met, i.e. in particular if between the breach or the unjustified termination of the agreement and the lost opportunity to realize a certain profit there is the necessary logical nexus. (para. 117) 09/12/2018

MATUZALEM THE FEES ANS EXPENSES PAID BY THE FORMER CLUB (AMORTIZED) Agents’ fee NO SOLIDARITY CONTRIBUTIONS 09/12/2018

MATUZALEM Even the “EXTRA REPLACEMENT COSTS”!!!! (Swiss jurisprudence in employment matters recognises for instance a claim for replacement costs where the employer had extra costs)... 09/12/2018

MATUZALEM The specificity of Sport paras. 152 ff. SPECIAL WORLD SPECIAL WORKERS SPECIAL PROBLEMS AND ... .....VERY SPECIAL SOLUTIONS!!! 09/12/2018

MATUZALEM “Taking into account the specific circumstances and the course of the events, a panel may consider, as guidance, also that under Swiss law (art. 337c para. 3 and art. 337d para. 1 of the Swiss Code of Obligations), a judging authority is allowed to grant a certain “special indemnity” to the employee, in the event of an unjustified termination by the employer, and to the employer, in the event of an unjustified termination by the employee.” (para. 156) 09/12/2018

MATUZALEM In “ordinary” employment law the employee is normally considered the weak party, and it is therefore understandable that such “special indemnity” is potentially much higher in the event of an unjustified termination by an employer than by an employee. However, professional football is a special sector, and the Panel considers that it may be often wrong to treat the players as being the weak party per se.(para. 156) 09/12/2018

MATUZALEM Specificity... The time remaining of the existing contract (sic!) Protected period The status and the Behavious of the player (sic!) Indemnity of six months salary...according to SWISS LAW 09/12/2018

CAS 2010/A/2145 DE SANCTIS 28 of February 2011 “The POSITIVE INTEREST” , sic! Para.61 Thus: Loss of possible transfer fee Replacement costs (no mention in art.17!) 09/12/2018

CAS 2010/A/2145 DE SANCTIS 28 of February 2011 “in the absence of any concrete evidence with respect to the value of the player, the panel cannot apply exactly the same calculation as in Matuzalem and shall use a different calculation method to determine the appropriate compensation... 09/12/2018

CAS 2010/A/2145 DE SANCTIS 28 of February 2011 ...”The one which would be the closest to the amount that Udinese would have got or saved if there had been no breach by the player” (para.86) By using the value of the replacement costs only rather than the estimated value of the player, the panel does not seek to depart from the Matuzalem jurisprudence (sic!) but wished to emphasies that there is not jsut one and only calculation method... 09/12/2018

CAS 2010/A/2145 DE SANCTIS 28 of February 2011 SPECIFICITY OF SPORT (para.96) It is not an additional head of compensation nor a criteria allowing to decide in equity. It is a correcting factor which allows the Panel to take into consideration other objective elements not envisaged in art. 17 09/12/2018

CAS 2010/A/2145 DE SANCTIS 28 of February 2011 IT DOES NOT ENABLE A TRANSFER FEE THROUGH THE BACK DOOR (para. 99), ref. To clause in the new contract! IT CAN BE USED AND SHOULD BE USED...when the injured pary suffers losses whish it may not be able to prove in Euros... (101) 09/12/2018

CAS 2010/A/2145 DE SANCTIS 28 of February 2011 How to calculate it? SWISS CODE OF OBLIGATIONS Judge’s discretion Ordinary course of the events Mitigation to limit the damages RESULT: 6 months remuneration under the NEW CONTRACT 09/12/2018

THE WAY AHEAD BUY OUT CLAUSES IN THE CONTRACTS (carefully drafted) Possible amendment of Art. 17 of FIFA regulations An International Sports Arbitration Panel subject to EU Law 09/12/2018

KEEPING IN MIND that... A Compensation System: ‘… presupposes precisely that a player can be regarded as a sort of merchandise for which a price is to be paid. Such an attitude may correspond to today’s reality, as characterised by the transfer rules, in which the ‘buying’ and ‘selling’ of players is indeed spoken of. That reality must not blind us to the fact that this is an attitude which has no legal basis and is not compatible with the right to freedom of movement …’ Opinion of the Advocate General Lenz (BOSMAN case,para.234) 09/12/2018

ALL ROADS LEAD TO ROME ... BUT FIRST GO THROUGH BRUSSELS CONCLUSION ALL ROADS LEAD TO ROME ... BUT FIRST GO THROUGH BRUSSELS 09/12/2018