What constitutes restraint of trade in football players’ and managers’ contracts?
Published 03 September 2014 By: John Mehrzad
After recent controversial football disciplinary sanctions such as the Suarez ban and contractual disputes revolving around player transfers, John Mehrzad analyses the common legal issue arising in those types of case - restraint of trade.
He discusses to what extent bans can be overturned, clubs can dictate where a player or manager can go after they leave, and clubs are able to preclude a former player or manager from criticising their staff after they leave.
Key legal principles
A prohibition on an employee, such as a player or manager, from carrying out their chosen profession will usually amount to a restraint of trade.1 However, it does not follow that a restraint will necessarily be legally unenforceable.
At domestic (England and Wales) level, courts uphold restraints where they are reasonably necessary to protect a legitimate and desirable aim.2
At international level, the Swiss Federal Tribunal has reminded FIFA and the Court of Arbitration for Sport (CAS) that a restraint, by way of a disciplinary sanction specifically (but the same analysis ought also to apply more generally), must be “proportionate” to be enforceable.
Ultimately there are two stages to establish an unenforceable restraint of trade:
- Is there a restraint in the first place? At this stage, the employee must prove that there is an obligation imposed on him which prevents him from earning or limiting his ability to earn a living at his chosen occupation.3
- If so, can the restraining party demonstrate that the restraint pursues (a) a legitimate aim in (b) a reasonable and proportionate manner?
Specificity of sport
Given there are a myriad of situations in which restraint of trade arguments arise within the context of player or manager contracts, the rest of this blog will only consider to what extent bans can be overturned, clubs may dictate where a player or manager can go after they leave, or a club is able to preclude a former player or manager from criticising its staff after they leave.
Nevertheless, the legal principles summarised above remain those under which any restraint of trade situation will be analysed by the courts or sports-specific panels.
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- Tags: Brazil | Competition Law | Contract Law | Court of Arbitration for Sport (CAS) | FIFA | Football | Governance | Regulation | Spain | Swiss Federal Tribunal | United Kingdom (UK) | Uruguay
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