The Belgian Court of Appeal has recently ruled that the regulations on remuneration following the unilateral termination of a player contract contained within the Act on Professional Athletes contravene the Belgian Constitution. Bob Laes, an Attorney with MODO Advocaten, explains how the ruling considered that although sport has specific rules, it still has to operate within the remit of national labour law. He also examines whether the ruling will create a new ‘Bosman’ ruling for football player contracts.
Mohamed Dahmane is an Algerian soccer player who played for different French clubs (Lens, US Maubeuge, etc.) before arriving in Belgium in 2005 to play for the third division club Francs Borains. In January 2006, he was signed by RAEC Mons, which he helped to win the Belgian second division title later that year. Due to his large contribution to this success, the player was noticed by Belgian first division club KRC Genk. On 1 July 2007, the transfer of Dahmane from RAEC Mons to KRC Genk was completed for the amount of €700,000.
At his new club, the midfielder signed a four-year contract. Although he quickly made a very good impression during the training sessions and first matches, Dahmane was sent to the second team, due to a personal conflict with the club board and Hugo Broos, the manager of the first team. Shortly after his removal from the first team, Dahmane decided to unilaterally end his labour contract with the club on 23 January 2008.
KRC Genk filed a writ of summons to the Labour Court of Hasselt, demanding compensation of €878,888.88 from the player due to the alleged unlawful termination of the labour contract between the parties. The Court of Hasselt ruled in favour of the club, stating that a professional soccer player, such as Dahmane, has to accept his (temporary) removal from the first team and therefore condemned Dahmane to the payment of an indemnity of €800,000 (being 36 times his monthly salary!).
The ruling was based upon the legal provisions of Article 4, §4 of the Belgian Act on Professional Athletes of 24 February 1978 (hereafter ‘the Act on Professional Athletes’) and Article 5, §2 of the Royal Decree of 13 July 2004 (hereafter ‘the Royal Decree’), which state that any professional athlete who wishes to ends his/her contract with his/her employer before its expiry date, is obliged to remunerate the latter, hereby taking the remaining contractual period into account. Since the player ended his contract shortly after its execution, the Court found itself compelled to condemn Dahmane to the maximum penalty.
Shortly after this ruling, Dahmane filed an appeal before the Court of Appeal of Antwerp. During these proceedings, Dahmane pointed out that there exists a rather important discrepancy between the legal provisions of the Belgian Act on Labour Contracts, which are applicable to ‘common’ employees on the one hand, and the legal provisions of the Act on Professional Athletes on the other, especially when it comes to the indemnities due in case of an early termination of a labour contract. If Dahmane had been a ‘common’ employee (and consequently would have been judged based upon Article 40, §1 of the Belgian Act on Labour Contracts), the player would have been condemned to an indemnity of (maximum) nine to 10 times his monthly salary (or 26 to 27 months less than ruled by the Court of Hasselt). According to Dahmane, the above-mentioned Articles of the Act on Professional Athletes and Royal Decree have therefore to be qualified as a breach of Article 10 and 11 of the Belgian Constitution on equal treatment and non-discrimination.
KRC Genk argued that the mentioned difference between professional athletes and common employees can be justified by the ‘specific character of labour agreements of professional soccer players and the specific character of sport in general.’ Such specificity implies a special status for sport whereby ‘common’ law cannot be applied in order to achieve the objectives inherent to soccer, including the necessity to avoid competition distortions and the preservation of the stability of participating sport clubs. Therefore, specific measures, as embedded in the Act on Professional Athletes and the Royal Decree, can be withheld in order to safeguard the legal certainty of labour relationships in the sports and soccer world.
On 6 May 2014, the Court of Appeal decided to review the judgment of the Court of Hasselt and reduced the indemnity to an amount of €220,000. Although the Court of Appeal agreed with the argument of KRC Genk that sport exhibits certain characteristics that can deviate from ‘normal’ labour relationships, the Court stated clearly that the Royal Decree does not provide any objective justifications which can be invoked to justify separate rulings relating to the compensation after an unilateral termination of a labour contract in the field of professional sports. According to the Court of Appeal, sport’s economic dimension can also be covered by the existing ‘common’ labour legislation.
With regards to KRC Genk’s point of view that the specific regulation of the Act on Professional Athletes and the Royal Decree is needed in order to prevent richer clubs from buying all the good players, thereby distorting the balance of competition in sports, the Court found this argument to be incorrect. Although the Court of Appeal confirmed that the transfer system in soccer can be considered as different from the ‘normal’ movement of labour workers, a distinction has to be made between the buying/selling of professional players on the one hand and the unilateral termination of a labour contract (i.e. this case) on the other hand.
The Court of Appeal also reminded both parties that the transfer system, which consists of two periods per calendar year during which players can be sold and/or bought to/from other clubs, limits the possibility for professional soccer players to switch from one club to another (and therefore limits the possibility to improve their financial situation by doing so). A compensation of (only) 12 months salary comprises two transfer periods, and should therefore be qualified as reasonable.
Finally, the Court of Appeal referred to the fact that an average career of a professional athlete is ‘relatively short’ (six to eight years). An indemnity of 36 months of salary would, for many professional athletes, be equal to a third of the salary that such athletes will have earned during his/her entire professional career, and should therefore be considered as ‘unjustifiable.’ Taking the abovementioned into consideration, the Court of Appeal considered the regulation on the remuneration following the unilateral termination of a labour contract, as stipulated in the Act on Professional Athletes and the Royal Decree, contrary to the prohibition of discrimination between citizens and the principle of equal treatment and non-discrimination, as embedded in the Belgian Constitution.
Although certain media have qualified the judgment of the Court of Appeal as ‘a new Bosman ruling,’ it is rather unlikely that the decision of the Court will have the same effect on the professional sports and/or soccer world as the Bosman case. Notwithstanding the fact that Dahmane had demanded that the Court of Appeal raise a preliminary question to the Court of Justice of the European Union (CJEU) with regards to the compatibility of the Act on Professional Athletes with the European principle of the free movement of workers, the Court was of the opinion that this case could be decided under Belgian law.
Moreover, other European countries have implemented labour law regulations which are demonstrably different from the Belgian legislation and therefore would not have been automatically influenced by the decision of the Court of Appeal of Antwerp in this case, even if the CJEU had ruled similarly as the said Court. However, it is clear that the decision of the Court of Appeal has created the possibility for any other Belgian court to inspire itself using this ruling, if these courts are faced with a similar case.
Professional sport clubs in Belgium now fear that the outcome of the Dahmane case will facilitate an athlete to end his/her contract prematurely, every time when such an athlete is no longer happy with his/her current (financial or sporting) situation at the club in question. In such cases, the compensation - which has to be paid by these athletes - will (under normal circumstances) always be inferior to the amount that his/her employer would receive in case of a normal transfer of the athlete in question. On the other hand, the ruling of the Court of Appeal makes it, financially speaking, also less difficult for clubs/employers to terminate a labour contract with athletes which have become, from their point of view, redundant.
If we take a look at other aspects of the labour relationship between professional athletes and their club/employer across Europe, it cannot be denied that various mechanisms have been put in place in order to disproportionately limit the freedom of movement of professional athletes, such as ‘option clauses,’ which provide the clubs with the possibility to unilaterally extend a labour contract with a certain athlete, and/or the system of so-called ‘buy-out clauses.’ In Spain, for example, almost every soccer player of the Primera Division has concluded a labour contract in which a huge amount is mentioned in order to prevent these players from terminating their contract before the original expiry date. Future economic and sportive developments and specific judicial cases will decide if these mechanisms will stand the test of time.
This article was originally published in World Sports Law Report Volume 12, Issue 8, August 2014. You can access the original here.