Analysis Series

The Analysis Series:Post Diarra (part II), further analysis of the football transfer system (Jan 2025 – present day)

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Post-Diarra: A legal, economic, and governance analysis of the football transfer system (January 2025 – January 2026)

The governance of global football has historically operated under a unified, vertical command structure centered in Zurich, often referred to as the Pax FIFA.

For over two decades, the Regulations on the Status and Transfer of Players (RSTP), specifically the version implemented in 2001 following the European Commission’s intervention, provided the bedrock for the global transfer market.

This system, designed to balance the freedom of movement with contractual stability, effectively monetised the transfer of human capital between clubs, creating a multi-billion euro economy. However, the period between January 2025 and January 2026 witnessed the structural disintegration of this monopoly, precipitated by the landmark ruling of the Court of Justice of the European Union (CJEU) in Case C-650/22 Fédération Internationale de Football Association (FIFA) v BZ (the “Diarra Judgment”).

This report provides an analysis of the aftermath of that judgment. It explores how a legal challenge brought by a single player, Lassana Diarra, metamorphosed into a systemic crisis that forced FIFA into a regulatory retreat, emboldened European stakeholders to declare legislative independence, and unleashed billions of euros in potential liability through class-action litigation. The analysis covers the implementation of FIFA’s Interim Regulatory Framework in January 2025, the operational testing of these new rules in the Lucas Ribeiro Costa case, the rise of the “Justice for Players” collective action, and the “December 1st Resolution” by European social partners.

The year 2025 serves as a case study in the collision between Lex Sportiva (the private law of sports governing bodies) and Lex Publica (public EU law). It demonstrates that while sports governing bodies enjoy autonomy, this autonomy is not absolute and must yield when it infringes upon fundamental economic freedoms. The subsequent restructuring of the transfer market, shifting from a system of punitive sporting sanctions to one of compensatory contract law, represents the most significant shift in sports jurisprudence since the Bosman ruling of 1995.

Anatomy of the Diarra Judgment (Case C-650/22)

To comprehend the regulatory upheaval of 2025, it is essential to dissect the legal architecture of the CJEU’s ruling delivered on October 4, 2024.

The judgment did not merely suggest reforms; it dismantled the enforcement mechanisms that made the transfer system legally binding and economically viable for selling clubs.

The “by object” restriction of competition

The most devastating aspect of the CJEU’s ruling for FIFA was the characterisation of the contested RSTP provisions as a restriction of competition “by object” under Article 101 of the Treaty on the Functioning of the European Union (TFEU). In antitrust jurisprudence, a “by object” restriction is considered so pernicious that its negative effects are presumed, requiring no detailed market analysis to prove anti-competitive outcomes.

The Court reasoned that the combination of Article 17 RSTP provisions effectively “cloistered” the market. By creating a high-risk environment for any club wishing to employ a player who had terminated their contract unilaterally, FIFA had engineered a de facto “no-poach” agreement among clubs. The Court noted that these rules prevented clubs from competing for essential inputs (talent) and deprived players of their fundamental right to freedom of movement under Article 45 TFEU.

The judgment highlighted that the possibility of competition is essential. By imposing unpredictable financial risks and automatic sporting sanctions on new clubs, FIFA effectively prevented the market from functioning. The Court stated that such rules “manifestly disregard” the principle of proportionality, as they go far beyond what is necessary to achieve the legitimate objective of contractual stability.

The CJEU identified three specific mechanisms within the RSTP that violated EU law, necessitating the regulatory overhaul seen in 2025:

The punitive compensation regime

The Court found that the criteria for calculating compensation under Article 17(1) were “vague, unpredictable, and discretionary”. Specifically, the inclusion of the “specificity of sport” and the “un-amortised costs of the player” allowed decision-making bodies (FIFA DRC and CAS) to award damages that bore no relation to the actual economic loss suffered by the former club. This unpredictability acted as a deterrent to freedom of movement, as neither the player nor the new club could estimate the “exit price” of a contract termination.

The automatic joint liability

Prior to Diarra, Article 17(2) of the RSTP stipulated that the new club of a player who terminated their contract without just cause was automatically jointly and severally liable for the compensation. The CJEU ruled this automatic liability to be disproportionate. It shifted the risk of the player’s breach entirely onto the new employer, regardless of their involvement in the termination. This created a barrier to entry for players seeking new employment, effectively blacklisting them from the market.

The sporting sanctions and ITC blocking

The imposition of sporting sanctions (transfer bans) on new clubs under Article 17(4) was found to be a draconian measure that severed the link between the conduct (hiring a player) and the penalty (ban on all transfers). Furthermore, the practice of withholding the International Transfer Certificate (ITC) while a contractual dispute was pending (Article 9 and Annex 3) was ruled a manifest violation of Article 45 TFEU. The Court held that an administrative formality (the ITC) cannot be weaponised to enforce private contractual claims.

The regulatory response: FIFA’s interim regulatory framework (2025)

Facing the immediate illegality of its transfer system within the EU/EEA, FIFA was forced to act with unprecedented speed. Following a “global consultation” period in late 2024, the FIFA Council approved amendments to the RSTP, announced via Circular no. 1917 in December 2024. These amendments, known as the Interim Regulatory Framework, came into force on January 1, 2025, and governed the global transfer market throughout the year.

Codification of “just cause”

For the first time in the history of the RSTP, FIFA codified the definition of “just cause” for contract termination. Previously, this concept relied entirely on the evolving jurisprudence of the FIFA Dispute Resolution Chamber (DRC) and the Court of Arbitration for Sport (CAS).

New Definition (2025):
“In general, just cause shall exist in any circumstance in which a party can no longer reasonably and in good faith be expected to continue a contractual relationship”.

Analysis: While this definition broadly aligns with previous CAS awards, its statutory inclusion provides players with a stronger legal footing. Throughout 2025, players cited this definition to terminate contracts in cases of abusive behavior, lack of sporting opportunity, or breakdown of trust, arguing that the “good faith” requirement for continuation had been breached. This shift placed the burden on clubs to maintain a professional environment, as players could no longer be held hostage by the threat of sporting sanctions.

The “positive interest” compensation principle

The most significant economic shift in 2025 was the reformulation of compensation calculations under Article 17(1) RSTP. The CJEU had explicitly criticised the inclusion of “transfer fees paid” and the vague “specificity of sport” as criteria for damages, viewing them as punitive rather than compensatory. In response, FIFA adopted the “positive interest” principle.

The table below illustrates the fundamental shift in compensation calculation methodology between the pre-Diarra regime and the 2025 Interim Framework:

Evaluation Criteria Pre-Diarra / Old RSTP (2024) Post-Diarra / Interim Framework (2025)
Primary Principle Punitive / Discretionary Positive Interest (Restitutio in Integrum)
Objective Deter breach of contract; protect transfer fees. Place the injured party in the position they would have been in had the contract been performed.
Transfer Fees Unamortised transfer fees paid by the former club were a key component. Explicitly Excluded: Transfer fees paid by the former club are no longer a factor.
Specificity of Sport Used to increase compensation arbitrarily (discretionary uplift). Removed: Replaced by “specific facts and circumstances of the case.”
Mitigation Deducted new salary, but often inconsistent. Strict deduction of mitigation (e.g., costs saved by not paying the player’s salary).
Result Predictability Low (High variance in CAS awards). Higher (Based on residual contract value).

Analysis: The shift to “positive interest” fundamentally caps the liability. A player (or their new club) is theoretically only liable for the difference between the contract value and the value the club can recoup (e.g., by saving on the player’s salary). If a player terminates a contract with 2 years remaining at €2 million per year, and signs a new contract for €1.5 million, the “damage” to the old club might be calculated based on the lost service value, but they also save €4 million in wages. In many cases analyzed in 2025, this resulted in compensation awards of zero or nominal amounts, drastically lowering the barrier to exit for players.

The abolition of automatic joint liability

Circular 1917 removed the automatic presumption that a new club is jointly and severally liable for compensation payable by the player. Under the 2025 rules, a new club is only liable, and subject to sporting sanctions, if the former club can prove that the new club induced the breach of contract.

This reversal of the burden of proof is pivotal. Proving inducement requires a high evidentiary threshold (e.g., emails, messages showing the new club encouraged the termination). Throughout 2025, this change emboldened clubs to sign players who had terminated their contracts, knowing they were shielded from automatic financial contagion unless explicit inducement could be demonstrated. This effectively destroyed the no-poach mechanism that the CJEU had condemned.

The mandatory ITC Issuance (72-Hour rule)

To comply with the CJEU’s finding on freedom of movement, FIFA amended Annex 3 of the RSTP. The new rule, rigorously applied throughout 2025, mandates that a former association must deliver an ITC within 72 hours of a request. If the association fails to do so (e.g., because the former club disputes the termination), FIFA will provisionally register the player immediately.

This procedural change had immediate operational impact. It removed the pocket veto that clubs used to exercise over players. Even if a club believed a player had breached their contract without just cause, they could no longer stop the player from working for a new employer while the financial dispute was litigated. This separated the “sporting” consequences (playing) from the “financial” consequences (damages).

Operationalising the new world: The Lucas Ribeiro Costa case

While legal scholars debated the theoretical implications of the Interim Framework, the practical application of the post-Diarra rules faced its first major stress test in August 2025 involving the Brazilian player Lucas Ribeiro Costa. This case serves as the definitive precedent for the operational reality of the transfer market in 2025.

Case background and termination

Lucas Ribeiro Costa, a Brazilian forward, had established himself as a premier talent in the South African Premier Soccer League (PSL) with Mamelodi Sundowns, winning the Player of the Season and Top Goalscorer awards. Despite having a valid contract, Ribeiro sought a move to Europe or Qatar, citing “just cause” for termination in August 2025.

Ribeiro and his legal representatives, the Belgian firm Dupont-Hissel (the same firm that represented Lassana Diarra and Jean-Marc Bosman), explicitly invoked the Diarra judgment and the new FIFA regulations. They argued that the player had a fundamental right to resign and seek new employment, and that any dispute regarding compensation should not hinder his registration.

The conflict and FIFA’s intervention

Mamelodi Sundowns, supported by the South African Football Association (SAFA), initially attempted to block the transfer by refusing to issue the International Transfer Certificate (ITC). They argued that the player had no just cause and was simply trying to force a move to a lower-tier league (Spanish Second Division) to facilitate a future transfer, undermining the club’s investment.

Under the pre-2025 rules, Ribeiro would have been stuck in limbo, unable to play until the dispute was resolved (which could take years). However, under the Interim Regulatory Framework, Ribeiro’s new club, Cultural y Deportiva Leonesa (Spain), requested the ITC via FIFA’s Transfer Matching System (TMS).

FIFA’s Decision:
Applying the new 72-hour rule (Circular 1917), FIFA intervened. When SAFA failed to release the ITC within the deadline, FIFA provisionally registered Ribeiro with Cultural Leonesa immediately.

Legal and market implications

The Ribeiro case confirmed three critical realities of the 2025 market:

  1. Global Applicability: The Diarra principles, codified in the RSTP, applied globally, not just within the EU. A dispute between a South African club and a Brazilian player moving to Spain was governed by the same “freedom of movement” logic.
  2. Severance of Liability: Cultural Leonesa was not held jointly liable for any potential compensation. The Spanish club was able to register the player without the risk of a transfer ban or financial penalty, proving that the “inducement” burden of proof effectively shielded new employers.
  3. Financial Dispute Isolation: The dispute between Sundowns and Ribeiro regarding whether he actually had “just cause” proceeded to the FIFA Football Tribunal purely as a financial claim. Sundowns sought “positive interest” damages (loss of investment/replacement value), but they lost the leverage to force the player to stay.

The successful unilateral exit of a high-profile player like Ribeiro sent shockwaves through the market, demonstrating to agents and clubs that the “sporting handcuffs” were truly unlocked.

Class actions and damages (2025)

The legal clarity provided by Diarra unleashed a wave of litigation in 2025, moving from theoretical disputes to massive quantification of damages. The narrative shifted from “is the system illegal?” to “how much does the system owe us?”

The “Justice for Players” class action

In August 2025, the Dutch foundation “Justice for Players” (JFP) launched a historic class action against FIFA and several national associations (Netherlands, France, Germany, Belgium, Denmark).

Jurisdiction and structure

The claim was filed in the District Court of Midden-Nederland under the Dutch WAMCA (Wet afwikkeling massaschade in collectieve actie) regime. The Netherlands has become a preferred jurisdiction for mass claims due to the efficiency of the WAMCA, which allows for an “opt-out” mechanism for Dutch residents and an “opt-in” mechanism for international claimants.

The economic theory of harm

Supported by the economic consultancy Compass Lexecon, the claim relies on a sophisticated theory of wage suppression. The economists argue that the restrictive transfer system (specifically the threat of joint liability and sporting sanctions) functioned as a cartel-like mechanism that reduced player mobility and bargaining power.

  • The 8% Figure: The analysis estimates that without these unlawful restrictions, the friction in the labour market would have been lower, and player wages would have been, on average, 8% higher over the period from 2002 to 2024.
  • The Class: The class includes approximately 100,000 professional players (current and former) who played in the EU or UK during the relevant period.
  • Total Damages: While precise figures are subject to court determination, the claim seeks billions of euros in retroactive compensation for lost earnings.

Institutional support and funding

The litigation is fully funded by Deminor, a leading litigation finance firm, which removes the financial risk for individual players joining the action. Significantly, throughout late 2025, major national player unions officially joined the action as co-plaintiffs.

  • UNFP (France): In October 2025, the French players’ union joined, citing the need to secure “fair compensation for injured players” and to force a “lasting reform” via social dialogue.
  • SPINS (Slovenia): In December 2025, the Slovenian union joined, encouraging its members to register for the claim.

This institutional backing transformed the lawsuit from a private initiative into a coordinated labour movement strike against FIFA’s financial reserves.

The Lassana Diarra personal claim

Parallel to the class action, Lassana Diarra returned to the Belgian courts in 2025 to finalise his personal damages claim. Following the CJEU ruling, the case resumed at the Court of Appeal of Mons.

  • The Claim: Diarra is seeking €65 million from FIFA and the Belgian FA (RBFA) for lost earnings during the 2014-2015 period when he was prevented from signing with Charleroi.
  • Legal Basis: The claim is based on “loss of a chance” and direct loss of earnings. Diarra argues that but for the illegal RSTP rules, he would have earned significant wages at Charleroi and potentially subsequent clubs.
  • Status: Throughout 2025, the focus was on the quantification of these damages. This individual claim serves as a bellwether for high-profile stars who can prove specific lost transfer opportunities, distinct from the statistical wage suppression argument of the JFP class action.

The geopolitical fracture: Social dialogue vs. unilateralism

The most profound political development of 2025 was the isolation of FIFA by European stakeholders. Following the Diarra judgment, FIFA attempted to lead a “global dialogue” to reform Article 17 RSTP. However, European stakeholders, feeling that FIFA’s unilateral rulemaking was the root cause of the illegality, bypassed FIFA to establish their own principles.

The joint resolution of December 1, 2025

On December 1, 2025, a historic Joint Resolution was signed in Brussels by the “European social partners”: FIFPRO Europe (representing employees/players), European Leagues, and the European Club Association (ECA) (representing employers), with UEFA acting as Chair.

Principles of the resolution

The resolution, adopted within the EU Sectoral Social Dialogue Committee for Professional Football, established a “European consensus” on the future of the transfer system, largely excluding FIFA from the drafting process.

  • Collective Governance: The signatories declared that future transfer rules must be the product of Collective Bargaining Agreements (CBAs) rather than regulations imposed unilaterally by a global governing body. This asserts the primacy of the employer-employee relationship over the “federation” model.
  • Legal Compliance: The resolution explicitly commits to a framework grounded in EU competition and labour law, rejecting the “specificity of sport” as a justification for non-compliant rules.
  • Priority Areas for 2026: The partners agreed to focus future negotiations on:
  • Compensation mechanisms (replacing the punitive FIFA model).
  • Training rewards and solidarity mechanisms (to protect developing clubs).
  • Protection of minors and career pathways.

Geopolitical significance

This resolution represents a “declaration of independence” for the European football market. By aligning with UEFA and leveraging the EU’s Social Dialogue mechanism, the European leagues and unions have effectively created a parallel regulatory track. They signaled that if FIFA’s global rules do not align with their negotiated standards, Europe (which accounts for 90% of global transfer value) will operate under its own collectively bargained rules.

The Malta FA precedent (May 2025)

A precursor to this continental shift occurred in May 2025, when the Malta Football Association (MFA) and FIFPRO reached a landmark agreement regarding amateur and youth player transfers. This agreement served as a microcosm of the broader shift towards negotiated regulations.

  • The Issue: Youth players in Malta were bound to clubs for excessive periods without professional contracts.
  • The Agreement: Following legal pressure and CAS cases supported by FIFPRO, the MFA agreed to amend its regulations.
  • Age Brackets: Registration periods were reduced. For players aged 14, the obligatory period was reduced from 4 seasons to 2 seasons.
  • Freedom of Movement: Players aged 18+ were granted the freedom to transfer if offered a professional contract, subject only to training compensation.
  • Retrospective Application: Crucially, the new rules applied retrospectively to existing registrations, freeing players immediately.
  • Significance: This “historic agreement” led to the withdrawal of pending CAS cases and demonstrated that national associations could and should, reform transfer rules via social dialogue with unions without waiting for FIFA.

National implementation: adapting to the new reality

Beyond the international level, 2025 saw significant regulatory adjustments at the national level as federations scrambled to align their domestic rules with the Diarra principles to avoid antitrust liability.

Italy: The Serie A collective bargaining agreement (July 2025)

In July 2025, the Italian Footballers’ Association (AIC), the Lega Serie A, and the FIGC signed a new Collective Bargaining Agreement (CBA) governing professional players in Italy.

  • Updates: The CBA integrated the “Sports Reform” (Legislative Decree No. 36/2021) and the post-Diarra reality.
  • Contract Duration: Extended the maximum duration of contracts to 8 seasons (up from 5) to allow for longer amortisation of transfer fees, a move designed to help clubs manage the financial instability caused by the potential loss of transfer fee recoupment in termination cases.
  • Protected Period: The CBA refined the “comporto” (protected period) rules, aligning domestic disciplinary sanctions with the new burden of proof required by FIFA’s Interim Framework.

France and the Netherlands

In France, the Diarra ruling (involving a French citizen) had immediate resonance. The UNFP (French union) actively advised players on their new rights to terminate contracts.

In the Netherlands, legal analysis highlighted the conflict between the Diarra ruling and Dutch employment law, which generally prohibits unilateral interim termination of fixed-term contracts unless agreed in writing. The Diarra judgment forced a re-evaluation of KNVB arbitration rules, questioning whether Dutch clubs could still claim “residual value” compensation that exceeded the actual damage suffered.

Economic impact on the transfer market (2025-2026)

The fear that Diarra would cause the immediate collapse of the transfer system, with players walking out of contracts en masse, did not materialise in a chaotic fashion in 2025. Instead, the market adapted through sophisticated legal and financial hedging.

Depression of transfer fees

While transfer fees did not vanish, the leverage shifted. Selling clubs, no longer protected by the threat of sporting sanctions on buying clubs, lost the ability to demand exorbitant fees for players willing to agitate for a move.

  • Market Correction: Analysts noted a softening of transfer fees for players entering the final two years of their contracts. Buying clubs, aware that “positive interest” compensation (essentially the remaining wages) is likely cheaper than a high negotiated transfer fee, used the Diarra ruling as leverage in negotiations.
  • Wage Increases: Consistent with the JFP class action theory, top-tier players began negotiating higher signing bonuses and wages. The logic was simple: if the acquiring club saves money on the transfer fee (due to the lower termination risk/cost), that value should be captured by the talent.

The rise of liquidated damages clauses

To regain the certainty lost by the abolition of FIFA’s rigid compensation formulas, clubs increasingly utilised private contract law.

  • Buy-out Clauses: There was a proliferation of “liquidated damages” or buy-out clauses in player contracts across Europe, not just in Spain (where they are mandatory). These clauses set a pre-agreed price for termination.
  • Legal Validity: While Diarra struck down FIFA’s imposed compensation, it did not ban negotiated compensation. However, legal experts warned that if these clauses are set at punitive levels (e.g., €1 billion), they might still be challenged under EU law as a restriction on movement. The validity of these clauses remains the next frontier of litigation for 2026.

Impact on developing clubs

The Diarra fallout disproportionately threatened the business model of smaller “developing” clubs (e.g., in Portugal, Belgium, South America). These clubs rely on selling players for fees significantly higher than the player’s residual wage value. With “positive interest” limiting compensation to the residual value in many termination cases, the incentive to develop talent for profit was undermined. The December 2025 Social Dialogue resolution specifically identified the urgent need to increase “training rewards and solidarity mechanisms” in 2026 to prevent the collapse of the grassroots financing model.

Conclusion: The Post-Diarra order

The period from January 2025 to January 2026 marked the end of FIFA’s absolute hegemony over the football transfer market. The Diarra judgment forced the transition from a punitive, regulatory-led system to a compensatory, contract-law-based system.

Key developments of the year:

  1. Regulatory shift: The FIFA Interim Regulatory Framework (Circular 1917) successfully removed the most egregious “no-poach” elements (automatic joint liability, ITC blocking), stabilising the market while complying with the CJEU.
  2. Operational proof: The Lucas Ribeiro Costa case demonstrated that players can now effectively utilise the new rules to force transfers, proving the “sporting handcuffs” are unlocked.
  3. Litigation risk: The “Justice for Players” class action has firmly established that FIFA faces existential financial liability for past conduct, with major unions backing a claim for billions in lost wages.
  4. Political Realignment: The December 1, 2025 Joint Resolution by European stakeholders signaled the beginning of a new governance era where transfer rules are negotiated via Social Dialogue rather than imposed by FIFA.

Future outlook (2026+):
As the industry moves into 2026, the focus will shift to the negotiation of a “European Collective Bargaining Agreement” for transfers. FIFA will likely be forced to adopt the principles agreed upon by UEFA and the unions or risk a schism where the European market operates under different rules than the rest of the world.

Simultaneously, the quantification of damages in the JFP class action will continue to loom over the sport, potentially forcing a historic financial settlement that could redistribute wealth from governing bodies to the labour force. The Diarra judgment did not kill the transfer market, but it irrevocably civilised it, transforming players from assets subject to sporting sanctions into employees subject to contract law.

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  1. Pingback: The Analysis Series – Diarra Judgment Case C-650/22 (Part I)

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