The Webster case: justified panic as there was after Bosman?

• Author: de Weger, Frans

As we know, the notorious Bosman case had a major impact on the international football world and can be regarded as one of the most important sports cases in history. (1) In it the European Court of Justice stressed in 1995 that transfer compensation to be paid by a club for a player who had ended his contractual relationship with his former club was not permitted, violating the free movement of people within the European Union. This was a serious shock to the international football world. Clubs faced particular difficulties after the Bosman case, in that they had to prevent players reaching the end of their contracts and then running off freely. The clubs had to invent legal constructions to maintain a stronger hold on their players. So they began negotiating contracts for longer periods, and were tempted to draft contract clauses allowing them to secure compensation for their losses. (2) Another method the clubs invented after Bosman was to insert clauses whereby they unilaterally reserved the right to extend the agreement, the so-called unilateral extension option. This unilateral extension option is now generally a standard feature of player contracts.

The Court of Arbitration for Sport (CAS) recently ruled the so-called 'Webster case'. (3) Here the CAS decided that the player was permitted to terminate his employment contract unilaterally after the socalled 'protected period'. (4) The CAS also decided that as a result of his termination after the protected period, player Webster only had to pay the remaining value of his contract to his former club as compensation. The football world again reacted with panic. FIFA was also highly dismayed at the CAS decision, stating that this verdict in the player's favour would have far-reaching and damaging effects on the game as a whole. (5) The important question now is whether it will indeed be another landmark judgment in the world of sports law. In other words, does this mean that every player who terminates his employment contract after the protected period only has to pay the remaining value of his contract as compensation? Or more importantly, will clubs once more face serious difficulties, given that players might be entitled to terminate their contracts unilaterally after this protected period? Let us begin with the facts of the case.

Scottish international Andrew Webster was a player with Heart of Midlothian. In 2006 he was relegated to the bench after a conflict with club owner Vladimir Romanov. This motivated Webster to terminate his contract. He did it outside the protected period, so that no sporting sanctions would be imposed. (6) Then he signed a new contract with Wigan Athletic. But Heart of Midlothian did not agree to the termination and refused to cooperate in the transfer to Wigan Athletic. Webster thus appealed to FIFA, asking for a provisional registration for his new club; this was allowed by the PSC's Single Judge. Now the dispute was only about the amount of compensation. Heart of Midlothian claimed a market value of GBP 5,000,000. The DRC believed that the player had terminated his contract outside the protected period--a highly important element in establishing the compensation amount. (7) The DRC decided it was undeniable that the unilateral termination had occurred after three seasons, i.e., after the protected period and within 15 days of the season's last match. It referred to the maintenance of contractual stability, which represents the backbone of the agreement between FIFA/UEFA and the European Commission signed in March 2001. In this decision, the DRC referred to Article 17 Paragraph 1 of the Regulations for the Status and Transfer for Players (RSPT), edition 2005, which provides the key to assessing the amount of compensation due by a player to a club. (8) Here it states that compensation for breach shall be calculated with due consideration for the law of the country concerned, the specificity of the sport and other objective criteria such as 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 and whether the breach falls within the protected period. In this case the remaining value of the player's employment contract was EUR 199,976. But the DRC again emphasised that he could not terminate his contract by simply paying his club the remaining value of his contract, citing article 17 mentioned above. Besides his basic salary, the player also received a number of appearance bonuses and the former transfer compensation of EUR 75,000 also had to be taken into consideration, as well as the five seasons the player had spent with his club, the DRC stated. It noted another crucial factor to be taken into account: the way in which his club had contributed to the player's steady improvement. These considerations together produced the conclusion that Webster should pay his former club GBP 625,000. (9) Finally the DRC's statement also emphasised that the player was ineligible to participate in any official football match for two weeks from the beginning of the following national league championship for which he was registered, for failing to give Heart of Midlothian due notice of termination. (10)

But Webster disputed the DRC's 4 April 2007 decision and appealed to the Court of Arbitration (CAS) in Lausanne, Switzerland. (11) He believed the compensation amount to be excessive. He also thought it wrong that the DRC had imposed a two-week playing ban as it was disproportionate to the four-day delay in the service of the player's notice. The CAS decided as follows. (12) On the appeal concerning the two weeks' ineligibility as a disciplinary measure, it ruled that it had no jurisdiction to entertain an appeal against that part. (13) It also concluded that the DRC had failed to meet the requirements of article 13.4 of the FIFA Rules Governing the Procedures of the Players' Status Committee and the Dispute Resolution Chamber which provides that the decisions of the DRC must contain 'reasons for its findings'. The CAS was of the opinion that in this case the DRC had failed to meet the requirements of FIFA Rules article 13.4, since although the DRC decision does discuss some of the criteria in article 17 of the RSTP, edition 2005, for determining the level of compensation owed, in the final analysis the CAS felt it was impossible to understand from reading the decision, what weight was given to what criteria in determining the quantum. In other words, there was no indication of the method of calculation used by the DRC to arrive at the amount of GBP 625,000. In line with the DRC the CAS also referred to article 17 of the RSTP, edition 2005, for determining the level of compensation owed. Heart of Midlothian claimed the market value of the player as lost profit in the amount of GBP 4 million. The Panel was unequivocal. It decided there was no economic, moral or legal justification for a club to be able to claim the market value of a player as lost profit. In this the CAS believed it would be difficult to assume a club could be deemed the source of appreciation in a player's market value while never being deemed to be responsible for a depreciation in value. The Panel also considered that the remuneration and benefits due to the player under his new contract is not the most appropriate criterion on which to rely in cases involving unilateral termination by the player...