Chris Farnell Lawyer

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On 30 January, an decision was made by the Court of Arbitration for Sport (CAS) which FIFPro, the European professional footballers' union, has already said will be the most significant case to impact upon the football transfer system since Bosman. This case was related to  Andrew Webster, formerly of Heart of Midlothian FC (Hearts), who independently, terminated his contract under article 17 of the FIFA Regulations on the Status and Transfer of Players  in May 2006, and then signed for Wigan Athletic FC (Wigan). Andrew Webster joined Hearts in March 2001 for a transfer fee of £75,000 on a four-and-a-half-year contract. He then signed a new four-year contract in July 2003.

Hearts were unhappy so disputed with  FIFA in November 2006, and in April 2007 FIFA's Dispute Resolution Chamber (DRC) ordered Webster and Wigan to pay Hearts £625,000.

In May 2007, Andrew Webster, Wigan and Hearts, who were all unhappy with the DRC's verdict, appealed to CAS. Hearts requested a payment of £4.6 million in contractual damages, including a claim of £4 million in respect of the alleged replacement value of  Andrew Webster and the loss of opportunity to transfer him. Wigan and  Andrew Webster requested that the compensation be fixed at an amount representing no more than the residual value of his contract - his total salary over the remaining term of the contract.

In its findings, CAS stated that the nature of professional sport required  a reasonable balance between the needs of contractual stability on the one hand and the free movement of players on the other, to find solutions that found to be  the good of football by reconciling in a fair manner the various and sometimes contradictory interests of clubs and players.

CAS found that any alleged estimated value of a player on the transfer market cannot be considered because that form of compensation is not clearly agreed upon contractually, and to impose it by regulation would simultaneously cause the club to be enriched and the player to be punished.

CAS also decided that Hearts did not have the right to claim reimbursement of any portion of the transfer fee paid for Andrew Webster because the fee must be reduced over the term of the contract, and Webster had remained with Hearts for longer than the agreed term of four and a half years under his first contract.

The CAS found that , beyond the protected period, it would be admissible for a club to reclaim a portion of the transfer fee as compensation for unilateral termination, unless such a form of compensation was agreed between the parties and stipulated in the employment contract.

It was discovered that the most appropriate criterion of article 17 to apply and determine the level of compensation due to Hearts was the remuneration remaining due to the player under the employment contract upon its date of termination, which was £150,000, plus interest from the date of termination of the contract. This is significantly less that the £4.6 million claimed by Hearts and is also much lower than the £625,000 that the DRC ordered Andrew Webster and Wigan to pay to Hearts under the original petition to FIFA. In addition, CAS found that  Andrews Webster and Wigan were jointly and severally liable to Hearts for the sum on a strict liability basis. They also considered aggravating factors like if conduct of the player, agent or club (current or future) - was left open in this case because there was no evidence of such factors. Such factors may therefore be relevant in future matters.

In Summary the decision although criticised by FIFA, has to be taken at this stage to represent the legal framework within which the football industry must now operate. Clubs must consider how they can protect themselves in the light of this legal framework, this will include careful drafting of players' contracts and more frequent contract renegotiation. Players will also be able to use this decision to pressure clubs into more regular renegotiations of contracts. The likely inflationary effects on wages and destabilisation of contractual stability for clubs will no doubt frustrate FIFA and others within the football industry.

Chris Farnell advises leading Premier League and Football League Clubs, leading sporting and media agents and a number of high profile sporting individuals on a wide variety of matters. Learn more about Chris Farnell Charlton here.