The new Bosman?
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Webster ruling provides answers to many questions: The ruling of CAS, the highest sports arbitration tribunal, has caused quite a stir. The Court ruled that Webster must pay GBP 150,000 for breaking his contract in his final year, while his former club, Heart of Midlothian had filed a claim for the amount of GBP 5 million. This decision gives clear answers to a number of questions which until now remained unanswered. Although football clubs and their organizations often want to give a different impression, since 2001 a football contract can be terminated like any other contract. Only the consequences may differ somewhat as a result of agreements made that year between the world football organization FIFA and the European Commission. The reason for this agreement in 2001 was the Bosman-ruling in 1995, which put an end to the transfer system. The most significant element of the agreement is the so-called protected period of 3 years for players who signed their contract before their 28th birthday; for players over the age of 28 this period is two years. These agreements are stipulated in the FIFA Regulations on the Status and Transfer of Players and apply worldwide. The European Commission and FIFA agreed that in the case of a unilateral breach of contract within the protected period, extra sanctions may be imposed on the breaching party. For the player this is a suspension for a period of a maximum of six months, while the club may be temporarily banned from registering new players from abroad. During the past years there have hardly been any players who committed breach of contract within the protected period. The regulation could therefore be considered to be effective. With any extension of the contract a new protected period starts. Andy Webster signed a two-year contract in 2001 with the Scottish Hearts. This contract was reviewed after one year and replaced by a new four year contract. Webster soon became a permanent value for the team and was even a Scottish international. After 2 ½ years of the new contract, Hearts started to press for a new agreement. When the parties could not come to an agreement, Webster stated that he wanted to serve out the contract. Whereupon Hearts informed him that he would not play until he had renewed the contract. This was the final reason for Webster to cancel the contract at the end of his third season. Only then did he start looking for a new club. As the breach of contract took place outside the protected period, the only significant factor was which price tag would be put on it and which criteria would have to be applied. Suspension was no longer in question as the protected period had expired. The club argued that the value of the contract should be determined by the market value of the player, whilst the player and the new club were of the opinion that the determining factor should be the amount of salary to be paid for the remaining period of the contract. As everybody involved is a member of FIFA through their national football assocation, the FIFA Regulations on the Status and Transfer of Players are applicable to disputes with an international aspect. Webster´s move from the Scottish to the English competition (Wigan Athletic was Webster´s new club) is such an international aspect. Article 17 of these Regulations stipulates the criteria which will determine the amount of the compensation, if one of the parties commits breach of contract without just cause. An important aspect is that there is no mention of the market value of a player. The residual value of the contract and a pro rata share of the redemption money are specifically mentioned indicators. The FIFA Dispute Resolution Chamber (DRC) ruled that Webster must pay an amount of GBP 625,000 as compensation. All parties were however in agreement that the DRC had not clearly motivated the calculation of this amount. Hearts, Wigan Athletic as well as Webster therefore lodged an appeal to the Court of Arbitration for Sport (CAS). Prior to the ruling the tribunal reached some important conclusions. First of all the CAS determined that a case like this must be primarily judged under FIFA regulations and additionally based on Swiss law. In principle the own national law is of minor importance. This seems logical since the FIFA-rules apply worldwide to all the member countries. The tribunal then determined that a football contract is first and foremost an employment contract and not a commercial contract and that breach of such a contract should be seen in that light. The reciprocity of consequences is thereby an important guiding principle. It cannot be that a club that terminates a contract prematurely gets away with just the compensation of the residual value of the contract, while a player who does the same must pay a multiple of this amount. That would mean that this compensation would wrongly become a sort of punishment. The tribunal concisely formulates: “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.†With the regulation of the protected period of three years and the stipulation that a contract cannot be broken until the end of a season the CAS considers the position of clubs adequately protected. Furthermore, a club is not allowed to negotiate with a player more than six month before the end of his contract with another club. Chelsea for instance, was heavily fined for negotiating with Ashley Cole when he was still under contract with Arsenal. The course that Webster followed is only open to players who are willing to break their contract without any prospect of a new contract. Such a player must therefore be quite sure of himself. The panel subsequently reviews article 17 of the FIFA Regulations and comes to the conclusion that in this case only the residual value of the contract, based upon the player´s salary for the remainder of his contract is a relevant and objective criterion and that there are no mitigating or aggravating factors. The CAS keeps the possibility open, that in other cases a pro rata share of the redemption money may have to be paid. However, that only seems to apply to a first contract, or to the original duration thereof. In the Webster case both periods had expired. This ruling means it would be wise for clubs to write off the paid redemption amounts for the duration of the protected period or to a maximum of the duration of the first contract if that is longer. Finally the ruling indicates that the new club of a player who has committed breach of contract is responsible for the remuneration, even if this club had no influence whatsoever on the breach. The most important conclusion of this ruling is without any doubt, that the decision was taken within the boundaries of the FIFA-regulations and the agreement between FIFA and the European Commission. It is therefore rather surprising that FIFA president Blatter makes such a fuss about this case in the press. He is, among other things, worried about the position of power of the players´ agents. The position of the players´ agents has however become more vulnerable by this ruling, instead of improving it. As it is now clear what the residual value of a contract is, players will not hesitate to hold a players´ agent responsible when he has made agreements with a club that deviate from this value. Wil van Megen, head of Legal Department FIFPro |
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