Written by Introduction
Football disputes resolution involved in Football industry. A considerable part of the clubs’ expenses is related to transfers of football players. In FIFA’s Global Transfer Report for 2021, it is revealed that the total spending on international football transfers for 2021 was USD 4,86 billion, split between more than 18,000 transfers, which constituted a decrease of 13.6% from 2020 and a decrease of 33.8% compared to the all-time high of 2019. Heyagoal try to elaborate on this topic.
However, in a longer perspective, the value of the football industry and the number of international transfers has seen a formidable growth in recent years. The growth in the number of transfers and transfer fees have contributed to a rising number of Football disputes between the involved parties, typically buying clubs, selling clubs, players, coaches and intermediaries/agents. Many of these Football disputes are handled by FIFA’s decision-making bodies, and by the Court of Arbitration for Sports (CAS).
If Football disputes should be handled by domestically, either by ordinary courts or domestic sports tribunals or by international sports tribunals, such as FIFA’s football tribunals, will primarily depend on whether the Football disputes have a international dimension. Many national football associations have established domestic sports arbitration systems, handling domestic sports related Football disputes, i.e. where all the parties to the Football disputes are based in the same country. Football disputes with an international dimension will normally be handled by FIFAs football tribunals.
An overview of FIFA’s football tribunals
FIFA distinguishes between its judicial bodies and its football tribunals. The judicial bodies, which deal with disciplinary cases and alleged breach of FIFA’s regulations, consist of the Disciplinary, Appeal and Ethics Committees. The football tribunals on the other hand, are competent to pass decisions relating to football disputes and regulatory applications.
Until 2021, FIFA’s football tribunals consisted of the Players’ Status Committee and the Dispute Resolution Chamber. As from 1 October 2021, FIFA made changes to its regulations governing its decision-making bodies, in an effort modernise its football disputes processes. The new model consists of three chambers; the Dispute Resolution Chamber (DRC), the Players’ Status Chamber (PSC) and the Agents Chamber.
PSC and DRC offer arbitration in international football disputes between member associations, clubs and players, disputes mainly regulated by the Regulation on the Status and Transfer of Players (RSTP). The Agent Chamber will offer football disputes resolution and arbitration in international football disputes involving players’ agents.
When FIFA announced the changes to the rules regulating its decision-making bodies, they made a number of changes to the process. An important change is that the procedures are now free of charge if at least one of the parties is a natural person, i.e. a player, coach, football agent or match agent. FIFA anticipates that DRC alone will handle about 3,500 disputes per year, while PSC will handle approximately 700 Football disputes and 6,000 regulatory applications on an annual basis.
The Players’ Status Chamber (PSC)
PSC consists of 33 members, including a Chairperson and two Deputy Chairpersons. PSC has an equal representation of players and clubs, as 15 of its members represent players, and 15 of its members represent clubs. As a general rule, at least three members shall take part in a case, including the chairperson or a deputy chairperson. However, in Football disputes cases that are urgent or raise no difficult factual or legal issues, and for decisions on the provisional registration of a player in relation to international clearance, Football disputes may be settled by a single judge.
Pursuant to FIFA RSTP Article 22 and 23 (1), PSC has the competence to handle four types of Football disputes cases. Firstly, PSC is competent to handle international coach disputes, or more specifically, employment-related disputes between a club or an association and a coach of an international dimension. The criteria of “international dimension” will be fulfilled if the coach is of a different nationality from the club or national association involved in the football disputes. Although PSC normally will be competent to handle international coach football disputes, the national association in question may establish an independent arbitration tribunal that can handle the footbal disputes, given that the national association can guarantee fair proceedings and respect the principle of equal representation of players and clubs, pursuant to FIFA RSTP Article 22 (1-b).
Secondly, PSC is competent to hear football disputes between clubs affiliated to different member associations that are not related to the maintenance of contractual stability, training compensation or the solidarity mechanism.
Thirdly, PSC may handle all football disputes between clubs belonging to different associations that fall outside the scope of DRC. Most club/club football disputes handled by PSC are related to international transfer agreements, more specifically to overdue payables of transfer fees or fees that arise from sell-on clauses.
Finally, PSC may pass decisions on any regulatory applications where the Regulations or other FIFA regulations provide it with competence.
The Dispute Resolution Chamber (DRC)
DRC is composed of 32 members, including a Chairperson and a Deputy Chairperson, representing national associations, clubs, players and other shareholders. Pursuant to FIFA RSTP Article 22 and 23 (1) DRC has competence to adjudicate in three types of disputes.
Firstly, DRC may handle international football disputes between clubs and players in relation to the maintenance of contractual stability where there has been an request for an International Transfer Certificate (ITC) and a claim from an interested party in relation to said ITC request. Disputes handled under this provision are typically when a football player unilaterally terminates his contract with a club in order to join a new club, and the former club claims that the termination was unlawful, i.e. without just cause. Although DRC handles disputes relating to maintenance of contractual stability following an ITC request, it is PSC that handles disputes concerning the issuance of an ITC, from one member association to another.
Secondly, DRC is competent to adjudicate in disputes between a club and a player of an international dimension, which in practice entails, inter alia, all contractual football disputes where the player’s nationality is different from the country where the club is based. This kind of contractual football disputes between clubs and players contribute to a large share of the football disputes handled by DRC, and these football disputes normally circle around the issue of whether one of the parties have unilaterally terminated the contract unlawfully. Whether a party to such a contract may unilaterally terminate the contract will, according to FIFA RSTP, depend on whether there is just cause for termination. In short, termination due to just cause may only occur when one of the parties fail to fulfil its contractual obligations, e.g. the football club fails to pay wages, or the player does not show up for training. In other words, the club will normally not have the possibility to unilaterally terminate the football player’s contract due to the club’s financial difficulties. In accordance with the principle of pacta sunt servanda (agreements must be kept), a club that fails to fulfil its financial obligations towards the player, due to the club’s financial difficulties, commits a breach of contract. Any contractual breach does not constitute just cause, so even if the football club or the football player fails to fulfil its contractual obligations, it might not give the other party the right to terminate the contract. In fact, the commentary edition of FIFA’s transfer regulations and extensive jurisprudence from DRC and CAS show that a contractual breach must be material to justify termination with just cause.
Thirdly, DRC may hear football disputes related to training compensation and solidarity mechanism of an international dimension. Training compensation and solidarity mechanism was introduced by FIFA in 2001, in the aftermath of the Bosman-case, and was initiated to encourage training of young football players, and to strengthen solidarity amongst clubs, by securing financial compensation to clubs that had invested in training young players. It is worth noting that in accordance with Article 13 of the “Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber”, (the “Procedural Rules”), the FIFA administration may, in disputes relating to training compensation and solidarity mechanism without complex factual or legal issues or in cases in which the DRC already has clear, established jurisprudence, the FIFA administration may make written proposals regarding the amounts owed, where the parties are given a time limit of 15 days of receipt of the proposal, to accept or reject the proposal. If the parties accept the proposal or fail to provide an answer, the proposal will become final and binding. If, on the other hand, a party requests a formal decision, the proceedings will be conducted according to the procedure laid down in the Procedural Rules.
The FIFA Agents Chamber
Whilst DRC and PSC have been handling thousands of football disputes for many years, the Agents Chamber, launched by FIFA 1st October 2021, is not yet fully established. The creation of the Agents Chamber must be seen in relation to FIFA’s plans for new agents’ regulations. Today, football agents/intermediaries are, as from 2015, regulated by the Regulations on working with intermediaries. These regulations are expected to soon be replaced by the FIFA Football Agent Regulations.
FIFA’s legal portal
In May 2022 FIFA launched a new FIFA Legal Portal, an online platform through which proceedings before the FIFA Football Tribunal and FIFA judicial bodies will be conducted. The FIFA Legal Portal aims to enable clubs, players, associations, agents/intermediaries, legal representatives and others involved in proceedings the ability to lodge and reply to claims handled by FIFA’s decision-making or judicial bodies by ensuring “simple, secure and transparent communication between FIFA and the parties involved, as well as a better understanding of the proceedings and heightened traceability”.
The launch of the FIFA Legal Portal will only affect how FIFA communicate with the parties to a dispute. Although the parties to a proceedings for some time may choose to communicate by email, the FIFA Legal Portal will gradually be the only available form of communication for parties to such football disputes.
The FIFA Legal Portal will also offer the possibility for users to report conduct they consider is incompatible with the FIFA regulations, which adds to the existing whistle-blower platform.
In addition to the FIFA Legal Portal itself, FIFA has also released a user manual which provides the users of the FIFA Legal Portal with further information about how to submit and access documents through the portal.
Appealing FIFA’s decisions to CAS
Any decision issued by DRC, PSC, and the Agents Chamber, once it is properly established, is subject to appeal to CAS in accordance with chapter IX of the FIFA’s statutes. The appeal must be lodged with CAS within 21 days of receipt of the decision in question.
CAS is competent to make final decisions on football disputes including football disputes that have been dealt with by FIFA’s football tribunals. The framework for CAS’ competence, as well as provisions on procedures, deadlines etc. is regulated in the CAS-code. The parties to a case can choose from a list of just under 400 arbitrators appointed by the International Council of Arbitration for Sport (ICAS) on the basis of their competence in sports or international arbitration. There has been a large increase in cases handled by CAS in recent years, and in 2019 it registered just under 900 cases, whereas football related cases constitute a large share.
Sports Mediation
An increasingly popular alternative to court proceedings and arbitration before FIFA and CAS, is sports mediation. Through sports mediation, it will be possible to achieve good solutions for all involved parties, in a manner that normally will be more cost-effectively for the parties.
In contrast to a court and arbitration proceedings, sports mediation will focus on resolving the dispute in a way that is appropriate for all the parties involved. In sports mediation the focus will be on finding solutions that the parties will benefit from in the future by seeking to satisfy the parties’ needs.
CAS has offered mediation for many years, and have had a list of mediators who have been appointed by ICAS. Recently, FIFA has added mediation to its football tribunals, and parties to a dispute may be invited to undertake a voluntary and free mediation process under the supervision of one or more of the mediators featured on FIFA’s list of mediators. If the sports mediation is not successful, and the parties fail to agree on a solution, the parties still have the option to take the dispute to FIFA’s other football tribunals and to CAS.
Looking ahead – consequences of FIFA’s Clearing House
On 25 September 2019 the FIFA Football Stakeholders Committee decided to establish the FIFA Clearing House, a decision that was endorsed by the FIFA Council a month later. The FIFA Clearing House has since been postponed on several occasions, but expected to be launched rather soon.
The main aims of the FIFA Clearing House is to increase the transparency of the transfer system, to protect its integrity and reinforce solidarity mechanisms for training clubs. These aims are sought to be reached by establishing a clearing house that centralise, process, and execute all payments related to transfers, hereunder transfer fees, solidarity contribution, training compensation and intermediaries/agents’ fees. When an international transfer is completed and submitted by the involved clubs in the FIFA Transfer Matching System (TMS) all agreements related to the transfer should be submitted, including the agreement for a transfer fee and agreements for agents/intermediaries services. If the conditions for paying training compensation or solidarity payments are met, FIFA will calculate these fees based on the player passport. Once the fees have been calculated The FIFA Clearing House will request the new club to make the full payment and, when the payment is received, distribute the payment to the all the parties that are entitled to payments, i.e. the selling club, the training clubs and the agents/intermediaries. Although FIFA will be responsible for the FIFA Clearing House, all payments will be processed through a separate legal entity which will operate within the European banking system.
Now, before the launch of the FIFA Clearing House, solidarity payments and training compensation is paid based on the player passport provided either by the selling club or by the training clubs. These player passports are normally created by the national associations, based on their domestic transfer systems. For FIFA to be able to calculate training compensation and solidarity contribution within the FIFA Clearing House system it is dependent on having access to information in the national associations’ domestic transfer systems with regards to which clubs the players’ have been registered with since the age of 12. FIFA’s solution to this issue is the introduction of FIFA Connect. In FIFA’s Circular no. 1679, issued 1 July 2019, FIFA informed that FIFA Connect had been implemented in the RSTP, and described FIFA Connect as “an information system designed and implemented by FIFA that provides the FIFA ID and the API that provides the technical interface between electronic domestic transfer systems, electronic player registration systems and TMS for the electronic exchange of information”. In the same circular FIFA stated that national associations were required to assign each player a FIFA ID and to have domestic electronic player registration systems that must be linked with the FIFA Connect System in order to exchange information electronically, hereunder registration information for all players from the age of 12.
Once FIFA Connect is fully integrated with national associations’ domestic electronic player registration systems, FIFA Connect will be able to create complete player passports. Based on these player passports the FIFA Clearing House can calculate training compensation and solidarity contribution.
If the FIFA Clearing House will function as intended, it will undoubtedly be positive for clubs that train players who at some point become good enough to sign contracts as professional players. In such a case, clubs will automatically be awarded with the compensation they are entitled to. Clubs that today are reluctant to pay training compensation and solidarity contribution, will find this more difficult. As such, the FIFA Clearing House will contribute to a distribution of transfer fees that are in line with the intentions as set out in RSTP.
On the other hand, the FIFA Clearing House would require FIFA to handle a significant number of cases in order to distribute the transfer fees, training compensation and solidarity payments correctly. The workload could potentially lead to long delays before the affected clubs can receive what they are owed.
