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FIFPro lawyer Wil van Megen made an analysis of the Olivier Bernard Case: 'European Court puts paid to compensation system.' Van Megen also writes about the consequences of the ruling by the European Court of Justice.

 

Introduction:

On 16th March 2010, the European Court issued a ruling regarding the regulations for professional footballers in France concerning the training of youth players. The French system stipulated that a player was obliged to conclude a contract with the club which trained him. If he did not want to do so, the player had to pay compensation to the club. With this ruling, the Court has brought an end to this arrangement. In order to take this measure, the Court had to pass through a number of steps.

 

Violation of the free movement of workers
The first question which the Court had to answer concerned the issue of whether the obligation to sign a contract was in conflict with the principle of the free movement of workers. The Court answered this question in the affirmative. Although a player did have the possibility of signing for another club, the regulations were nevertheless deemed to represent an excessive restriction of the aforementioned right.

 

Is the violation justified in this case?
Under certain circumstances, the violation of the right to free movement can be justified. In particular, this may be the case if a legitimate aim is served and there are overriding reasons for doing so from the perspective of the common good. The aim to be served in this case is the protection of professional football clubs’ training of youth players. This aim is regarded by the Court as legitimate and may therefore serve as justification for the violation of the principle of free movement.

 

Are the regulations proportional?
The regulations stipulated that players who refused to sign the contract offered to them had to pay compensation. This is excessive in the view of the Court. Compensation implies offsetting all conceivable consequences of not accepting the offered contract. However, the Court is of the opinion that the compensation to be paid must be limited to the costs which the club has invested in training the player in question.

 

Which training costs?
Under the French system, the former club in this case did not claim the costs of training the player, but rather compensation. This amounted to the entire salary that the club had offered the player in the proposed contract. However, according to the Court this is not the correct criterion. It is notable that the Court describes the club’s claim as one for full compensation.

 

Based on the view of Advocate-General, Mrs. Sharpston, one can identify two possible approaches as regards the reclamation of an employee’s training costs. It may be a situation in which the employee him/herself must repay the costs or one in which the costs can be recovered from the employee’s next employer.

 

In the first case, the training costs are the actual costs which have been incurred for the individual employee in question. If the new employer has to pay, one may no longer take into account the fact that the employee was trained in the broader context of a training system. The reason for this is that the new employer has saved itself the costs of such a system for training employees. It has been noted by several other countries involved in this procedure that the current FIFA system which provides for the compensation of training costs by the new employer satisfies these criteria.

 

The consequences of the ruling
With this ruling, the Court recognises that the club which has trained the player in question has a claim to reimbursement. However, this reimbursement must be strictly linked to the costs of training and may not have the characteristics of compensation.

 

As a result of this ruling, the systems employed in some countries, whereby the payments to the club which trained the player increase as he becomes more successful at his new club, are on a loose footing. According to the Court, a reimbursement scheme whereby the training costs are exceeded is not permissible.

 

The FIFA system tested
When one looks at the criteria which the Court imposes for the validity of a reimbursement scheme, it seems that the FIFA system as described in article 20 and Annex 4 of the Regulations for the Status and Transfer of Players satisfies the stated criteria. After all, the payment to be made is strictly related to the costs of training, even if they have been fixed for each country and competition. The age limit set by FIFA is 23 years. If a player leaves a club at the end of his contract after his 23rd birthday, no training costs are owed.

 

What has to change now?
It is clear that the French system which requires a player to accept a contract offered by the club which has trained him cannot survive. A player cannot be forced to sign a contract. If, in this situation, the player leaves for a foreign club, only his training costs are owed and not full compensation.

 

The English system which provides for increasing payments by the new club as the player becomes more successful is also affected by this ruling. If the payments exceed the level of the training costs, they are no longer permissible.

 

The specificity of sport
This concept has been frequently bandied about in recent times in order to erode the position of players, particularly with regard to the early ending of contracts. Through the application of this specificity, it becomes particularly difficult for footballers to determine what the consequences are of terminating their contract prematurely. International institutions also reach for this concept in order to argue that professional sport should not be subject to EU law.

 

With its ruling in this case, the Court indicates that it is not blind to the specificities of sport but, at the same time, it also indicates that no great significance should be attached to them. Only the fact that there is a claim for the reimbursement of training costs is alluded to in this sense. Since the Bosman ruling, it is clear that EU law is fully applicable to the agreements between clubs and professional footballers. The course taken here is also being continued via the Meca-Medina ruling.

 

The opinion of the Advocate-General also assumes the uncurtailed application of EU law in this case. For the outcome of the case as envisaged by her, it is not necessary to render any opt-out clauses applicable.

 

Conclusions
Fully in keeping with its earlier rulings, the Court continues to be of the opinion that professional sport as a whole falls under the scope of European law. Once again, EU law appears to provide sufficient instruments in order to arrive at a balanced and fair judgement. There is therefore no need to diverge from it.

 

The rejection of a compensation scheme has consequences for those countries in which a system is employed whereby the payments exceed the training costs. FIFA’s system for the compensation of training costs appears to be adequate.

 

According to this ruling, the demand of international organisations such as the IOC, FIFA and UEFA to make sport an exceptional case in order to be able to better regulate it must be regarded as an empty slogan. It is nothing other than a misplaced attempt to regain the old positions of power such as they were in the pre-Bosman era, whereby the voices of employees were not heard.

 

Just like all other employees, professional footballers have the right to protection offered to them by EU Treaty. The abandonment of this basic principle not only harms the legal position of professional sportsmen and women, but also that of all employees within the European Union. After all, if the legal protection of one category of employees can be eroded, that of the others is also no longer safe.