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How Fifa’s autocratic rule is being threatened by a third division German side

Tony Attwood

I wrote the other day about a legal challenge to the transfer fee policy within the EU.  It’s quite a big deal – easily a deal the size of Bosman.

But there is another legal battle on the horizon, and just as the Bosman case involved a player you’d probably not heard of, so this one involves a club that may well have slipped under your radar.

In this case the club you probably don’t know is SV Wilhelmshaven  of Lower Saxony, who some years ago signed Sergio Sagarzazu, aged 19.  He had an Italian passport so could be signed by the German club, although the player originated from Argentina.

He came to Germany on a free transfer, got 11 games in 18 months, and then went back to Argentina on a free.

But Fifa, in their almighty wisdom and insanity, said that although there was no transfer fee, there should be a payment of “training compensation,” which is paid by the club taking on a player as a pro for the first time.   It is a payment that follows a player in his transfers, until he is 23 years old.

So to bring this home, Arsenal have to pay Aston Villa for Dan Crowley this sort of fee, even though (as I understand it) Crowley was not a professional at Villa, but is about to, or just has, signed pro forms with Arsenal. There is talk on one web site of £1m being paid.   Under the arrangements as I read them, if Arsenal sell Crowley before he is 23, some of the money has to go back to Villa under Fifa regulations.

Now back to the Sergio Sagarzazu case.  He had two former “training” clubs, River Plate and Atletico Excursionistas.   They demanded money from the third division German club, and took the case to Fifa.  Fifa said that Wilhelmshaven owed 157,500 euros, even though the guy only played a handful of third division games.

And even though it represents around two thirds of the annual turnover of the German club, that’s what was demanded.  It would have bankrupted the club.

Now there is a particular issue about training compensation, because in the EU we have very, very strong laws about restraint of trade.  No one, not an employer, nor anyone else, can do anything that stops an individual legally carrying out his/her trade.  So even if you have signed a contract that says that if you were to leave your current employer you must not work for a rival for three years, that contract is not enforceable in the EU because it is a restraint of trade.  (You can stop a person giving away your secrets to a rival, but you can’t stop them earning a living).

As it happens, in 2004 Wilhelmshaven used this part of fundamental EU law when another German club had made the demand for this sort of compensation.  The local court naturally threw the demand out.  Training compensation restricts an individual’s freedom to choose the employer of his choice.

At this time Wilhelmshaven decided not to take on Fifa, despite having won in the local court – because as we all know, Fifa has a rule that says you can’t go to court on a footballing matter.   So the German club offered to pay a fraction of the fee but Fifa said no.

The matter then went to the Court of Arbitration for Sport, a court which upholds the validity of the Fifa claim to be above the law in that it fixes its own super-national laws.   In 2009 the CAS said that the Argentine clubs’ claim was valid under Fifa rules, and steadfastly ignored both EU and German law on restraint of trade.

Fifa, never an organisation to resist an opportunity to kick the little fellow when he’s down, told the German FA to deduct six points from Wilhelsmhaven.

Then, for a reason that I still can’t get to the bottom of, Fifa ordered the German FA to deduct another six points in 2012, although there was no new case.   It might be because the club had still not paid the fee, but I really can’t be sure of this.

Then in November 2013 Fifa told the German FA that they had to demote Wilhelmshaven – again I am guessing because Wilhelmshaven still had not paid the compensation fee to the Argentine clubs – on the grounds that the fee was illegal in German law.   Fifa also told the German FA that if it didn’t relegate the club and get the matter sorted, Fifa might ban Germany from the World Cup.

So now the club is going back to court, to get an order that the Fifa demand that the German FA relegate the club, is unlawful in German and EU law.  If they win that one, then the German FA will not be able to comply with Fifa regulations, since if it deliberately acts in an illegal manner after being told by the court explicitly that this action is illegal, then the FA will be in contempt of court, and so would presumably be seriously fined by the courts until it stopped being in contempt – which would mean reinstating the club.

That would then trigger action by Fifa, who have a habit of taking any attempt to reduce their power very seriously.

Of course, such fights can often end in some sort of fudge, especially where a big hitter realises it has got itself into a corner from which it can’t escape except by fudging.

But it is interesting that here and there these issues keep cropping up, as people do realise that just because Fifa or Uefa say something, that does not put them above the law, even though they like to think they are.

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15 comments to How Fifa’s autocratic rule is being threatened by a third division German side

  • Nelson Wong

    I am a not familiar with the juristictions of courts in Europe. If the German FA lost, would that mean they would bring it to EU?

    Or if German court lost and FIFA punish them,can they bring it to the EU? That might actually trigger a case where EU ruling out FIFA rules.

    I just run to check with wiki and find that the FIFA is registered in Switzerland. (I have to admit my lack of knowledge.) While the Swiss aren’t in EU, they signed a lot agreement and to bring some of their practise in line with EU. We might need an expert in this but that might mean FA of certain country or several country, bringing a case against FIFA in the court of Switzerland under laws/ rules of EU.

    Tony, please follow this closely.

    It is extremely interesting.

    Thank you very much for drawing our attention to the case!!!

  • Mike Collins

    Tony

    It is reporting like this that raises Untold Arsenal way above the standard of other blogs.
    Great stuff

  • Gf60

    Interesting. Thanks Tony. Can’t help feeling that Alice in Wonderland and the Queen of Hearts may finish up appearing in this. 🙂

  • menace

    Interesting….If a player gets kicked in a football match, a watching policeman cannot arrest the assailant. So the law of the land does not supersede the Laws of the Game. The sports field is not above or beyond the law. It is sporting etiquette that dictates the behaviour of policemen and of the officials. FIFA, EUFA, FA are all dictatorial and corrupt when it comes to justice. These organisations must be brought to earth by nations that have ‘power’ in the game. I hope there is a stand off and the football associations are chastised with legal penalties against their officers.

  • Gord

    Tony (for Making the Arsenal) makes best of the blogs again.

    http://www.arsenal.com/news/news-archive/royal-arsenal-comes-to-an-end

  • blacksheep63

    @menace

    is that the case? When John Terry was accused of racist abuse (and found NG by a magistrates’ court) the offence was committed on the pitch but was not reported by the match officials but by fans watching the game. If we witnessed an assault or attempted (such as that by the sp*rs player on Monreal last weekend) could we report it and have it investigated by the police and CPS?
    Interesting stuff

  • nicky

    If only the German FA would accept a World Cup ban by FIFA, it would spark off a wholesale secession from this corrupt body by a host of nations, including, I hope, the UK Associations.

  • Mike T

    FIFAs rules are written in such a way as to both acknowledge and account for transfer of players within the EU. Players came move freely but when players move training compensation becomes a consideration and quite rightly so. I don’t think its correct to say that CAS ignored German & EU law on restraint of trade.This case is different because it involves the transfer of a player from outside the EU to a club inside the EU hence the reason that FIFA are involved as opposed to UEFA
    Football administration and in particular the signing of player can be complex. Transfers from within the same FA is reasonably straight forward process, it gets more complex within the same confederation but from another consideration is an absolute nightmare.
    Wilhelmshaven, it seems, failed in the very first instance to carry out basic checks in terms of the players past clubs at one point they claimed that the player was not a professional at River Plate.
    The ruling took into account FIFA precedents and also Swiss Law.

  • Brickfields Gunners

    @ blacksheep 63 – Along with your suggestion of assault,
    Can we take up a case against those Spuds fans that they :-

    a) Knowing committed bodily harm on Theo by throwing metal objects with the intent of injuring, maiming or murdering
    him ? Could there have been another ulterior motive in preventing him from going to the WC ; so that Lennon and/or Townsend would go in his stead ? One wonders !

    b)Intentionally doing the same at said place and time to those medical staff and attendants ,with the full knowledge of the consequences of their heinous actions .It follows the old adage a friend of an enemy , becomes my enemy .

    c)Prevented the administering of proper medical attention due to Theo by the medical staff ,by inducing a dangerous and hostile environment by their moronic actions of those cretinous fans . Not at all conducive to render fit, favourable ,due and diligent care ( As per the Geneva convention ).

    d) Further escalated and aggravated the situation when the injured Theo smilingly and sportingly showed the ‘peace’ sign with one hand .( With the other hand he did make a ‘zero’ sign ; which most Arsenal fans acknowledge [ with mucho gusto!] and approve as representing the Spuds fans
    IQ !)The key point here is ‘smiling ‘- implying that there was no ill intent nor malice !

  • Florian

    Congratulations Tony!

  • OlegYch

    it’s great that clubs that raised a young player get their share of transfer fee, but if there was no transfer fee this just doesn’t make any sense

  • OMGArsenal

    If I understand the principles of common Law,European jurisdictional law and the separate but equal principles of Sports laws, basically the following has to occur:

    1)A sports organization must first try to apply its laws and regulations fairly and adequately,

    2)Failing that the injured parties may appeal to the court of arbitration for sport,

    3)If they are dissatisfied with the CAS ruling, they do have the right to appeal to a higher court, usually the European court of Appeals or something similar,such as the British court system,

    4)Failing that they can appeal to the World Court in the Hague but that, to my knowledge, has never happened before.

    Normally the local courts cannot deal with sports issues unless a criminal act was committed or a specific law or regulation was infringed by the fans or management, regardless of whether it occurred at an event or in the daily operations of the Club. This is what happened at Ranger’s FC, they broke civil laws and were pursued by HM revenue and excise apparently.

  • Ray from Norfolk, Virginia

    Tony,
    I hope these modest Germans win their case.
    It is time that football (and other sports) get some decisions that have a sense of justice; law is variable and unfair, and it is time that local jurisdiction is legitimized ahead of global forces. I am surprised that the German federation has not tackled FIFA. Incidentally, if we believe FIFA, shouldn’t the German club be also owed money as the player moved on promptly before age 23, and the acquiring party or Club in Argentina should pay.

  • Mike T

    Ray

    In terms of compensation I thought the same however to be paid compensation, if its not paid without demand,you have in to invoice for it.

    If Wilhelmshaven were to try and claim compensation they will in effect acknowledge that such compensation is appropriate and their argument is blown out of the water.

    On the other hand it may be the club that signed the player from Wilhelmshaven may have covered this aspect before they signed the player so the issue was already dealt with.

    I am surprised that some want to see FIFAs authority usurped as you really need to think through the consequences of that. For instance how about say Argentina passing a law that could be used to enable their football clubs to sign players without a transfer fee or without compensation when signing a player .
    Argentinian law would prevail so FIFA wouldn’t be able to do anything when say River Plate said to Hazard, to Ozil or whoever sign for us and we would then transfer you to whoever you want and for so arranging such a situation we will take a mere 20% from your £20 million signing on fee.

    As they say be careful what you wish for!

  • Nelson Wong

    Thanks guys

    Your explanations have cleared a lot of issues.