The prize for freedom of movement: the Webster case.

• Author: Soek, Janwillem

Introduction

Eighteen-year-old Andy Webster moved from Arbroath club to Heart of Midlothian PLC (Hearts), both Scottish clubs, for a transfer compensation of 75,000 [euro]. Webster's employment contract was due to run from 31 March 2001 to 30 June 2005. Halfway through this term, he signed a new contract with Hearts on 1 July 2003, to run until 30 June 2007. Webster had developed into an important player in Hearts' first eleven and in the Scottish national team. It was appealing for Hearts to bind the player to it for a longer term. In April 2005, the club made an offer to Webster--with improved terms--to play for the club for two extra seasons. No agreement was reached however. Hearts made several more offers, but they were all rejected by the player one by one. During this period, Hearts did not field Webster in a variety of matches, which led the player to believe that the club was attempting to put pressure on him through tactical considerations, to accede to the club's proposals. The relationship between the club and the player soured still further and reached its nadir following utterances against Webster in the media by the most important shareholder. Incensed at these remarks, Webster approached the Scottish Professional Footballer's Association (SPFA), which advised him to lodge a claim on the basis of clause 18 of his employment contract (1). Webster notified the club in writing that he wished to terminate his employment contract on the basis of "just cause". He argued that the club had defaulted on its obligations towards him, and that a "fundamental breakdown in trust" justified his position. In response, Hearts indicated that they had lodged a case with the Scottish Premier League Board. For Webster, this entailed the danger of a long-running procedure, making it impossible for him to sign a contract with another club for the 2006/2007 season. Webster opted for a different route: dismissal no longer based on "just cause", but dismissal without "just cause" based on art. 17 of the FIFA Regulations for the Status and Transfer of Players 2005 ("Regulations"). (2) In July 2006, Webster's business manager sent a fax to 50 clubs stating that Webster had ended his contract with Hearts, and that this termination meant he would only have to pay 200,000 [euro] compensation to Hearts. On 9 August 2006, Webster signed a three-year contract with the English club Wigan Athletic AFC. The English football association asked the Scottish association to forward the player's international transfer certificate. The Scottish association refused compliance in writing, because Webster was still under contract to Hearts. On 18 August 2006, Wigan approached FIFA and requested that they approve Webster's provisional registration. On 28 August, the Scottish association notified FIFA that they could not comply with the request. On 31 August, the Single Judge of the Player's Status Committee approved the provisional registration with immediate effect. (3)

Hearts submitted the case to the FIFA Dispute Resolution Chamber (DRC) and claimed judgment against Webster to pay 5,027,311 [euro] in compensation, Webster's exclusion from official matches for two months and, finally, payment of compensation by Wigan and a ban against the club registering any new players during one registration period.

What criteria are considered in determining compensation in the case of a unilateral employment contract termination without "just cause"? Art. 17(1) of the Regulations states on this:

"In all cases, the party in breach shall pay compensation. Subject to the provisions of Art. 20 and annex 4 in relation to Training Compensation, and unless otherwise provided for in the contract, compensation for breach shall be calculated with due consideration for the law of the country concerned, the specificity of sport, and any other objective criteria. These criteria shall include, in particular, the remuneration and other benefits due to the player under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years, the fees and expenses paid or incurred by the Former Club (amortised over the term of the contract) and whether the contractual breach falls within a Protected Period." (4)

In the Bosman judgment, the European Court of Justice had established that a player whose contract has been completed in accordance with the contractual provisions is free to sign a contract with another club of his choice in an EU member state. The club employer may not hinder the player's negotiating freedom in any way. Since the Bosman judgment, clubs can no longer demand transfer compensation on completion of the employment contract. (5) Football club managers have attempted to bind valuable players to them for an extended period by signing agreements covering a long term. (6) They were prepared to release a player before the end of a contract's term for substantial transfer fees. With the implementation of the 2001 Regulations, FIFA introduced a maximum term of five years. (7) In the Bosman judgment, it was not established whether the freedom of movement guaranteed in art. 39 of the EC treaty allowed a player to terminate an ongoing employment contract unilaterally and to enter into a contract with another club. The story of Nicolas Anelka is well known: in the summer of 1999, he no longer wished to play for Arsenal although his contract still had four years to run. Anelka wanted to be transferred to Lazio Roma. This transfer did not go ahead because Arsenal was not prepared to let the player go and Lazio was not prepared to pay the exorbitant transfer fee which Arsenal asked. (8) That was in 1999. No rule can currently be found in the Regulations which makes it impossible for a player to unilaterally terminate his contract prematurely. In favour of "contractual stability", or in other words to compel some respect for a contract and prevent clubs being in a constant state of uncertainty about which players are still in their service, FIFA drew up various rules which were intended to make unbridled "contract jumping" unattractive. In the first place, these are the provisions involving the "protected period". (9) Employment contracts for players younger than 28 entail a protected period of three years, and for players older than 28 there is a two-year protected period. (10) Should a player terminate his contract without valid reasons within the protected period, then in terms of art. 17(1) and (3) of the Regulations he is required to pay compensation (a buy-out price) and sporting sanctions can be imposed on him. In terms of art. 17(1), unilateral severance of the contract without valid reasons after the expiry of the period "only" obliges the player to pay compensation. Contract freedom allows the parties to include a "buy-out" clause in their contract. Such a clause can stipulate the amount of compensation a player must pay to the club in the case of a unilateral contract termination. The player is then entitled to end his contract unilaterally upon payment of the stipulated amount in compensation. "With this buy-out clause, the parties agree to give the player the opportunity to cancel the contract at any moment and without a valid reason, i.e. also during the protected period, and as such, no sporting sanction may be imposed on the player as a result of the premature termination". (11) Although such a clause entails some uncertainty for the club as to whether the player is still in service, on the other hand it offers certainty about the amount of compensation. If no prior arrangements have been made about this, on ending the contract there is little certainty about the extent of the compensation based on the Regulations. "There are no real criteria upon which we can determine how the compensation will be calculated, if it is not provided in the contract," according to Drolet. (12) Art. 17(1) of the Regulations of 2005 only provides that the compensation must be calculated with observance of the applicable national law, the specificity of the sport and all objective criteria relevant in casu. A complexity of factors presents itself in calculating the compensation Webster should pay to Hearts. Considering the individual factors could lead to a variety of outcomes. Hearts estimated the compensation at some 5 million [euro] while Webster's calculation came to 200,000 [euro].

The verdict of the Dispute Resolution Chamber

In its decision of 4 April 2007, (13) the DRC concluded that Webster had terminated his employment contract with Hearts unilaterally, outside the "protected period". The DRC set the residual value of the contract at 199,976 [euro]. The DRC then considered that Webster would have earned 10,000 [euro] per week at Wigan. It also noted that Hearts should have paid transfer compensation to the Arbroath club. This amount should have been settled during the term of the employment contract. It was also of significance that Webster still had to serve one more year with Hearts. The five seasons in which Webster had been under contract to Hearts should also have played a role in determining the compensation. Another crucial factor, according to the DRC, was that Hearts had contributed to the player's development to a significant degree. Webster had thus grown into a "high profile footballer" who had aroused interest from...