Real Madrid recently signed Belgium star Eden Hazard. To conclude the deal, the Spanish club had to sign, inter alia:
- A transfer agreement with Chelsea FC, which stipulated a transfer fee of around €100 million and
- An employment contract with the player.
When such a big star like Hazard is transferred to a top club like Real Madrid, it is common to see a video of the player undertaking a medical exam before his presentation. But does this medical exam take place before or after the signature of the transfer agreement and the employment contract?
Does it really matter?
Yes. A lot.
It is very common for a lawyer, when drafting a contract, to include clauses, which only are “subject to” another act from the counter party.
When it comes to the football industry, FIFA established in its regulations that some kinds of contractual clauses would not be recognised and therefore considered invalid. The main example of this is Article 18, par. 4, of the FIFA Regulations on the Status and Transfer of Players (RSTP):
“The validity of a contract may not be made subject to a successful medical examination and/or the grant of a work permit.”
Therefore, if any of such conditions are included in a contract it would be disregarded by FIFA and the contract would remain valid without the disputed clause.
The question is: does it apply to all types of contracts?
In CAS 2013/A/3314, the Panel ruled that “transfer agreements between football clubs can legitimately be made subject to a player passing his medical examination”. The reason for such statement resulted from the analysis of the wording of the RSTP provision. As a matter of fact, Article 18, par. 4, belongs to Section IV of the regulations, which concerns “maintenance of contractual stability between professionals and clubs”. Besides that, Article 18 provides “special provisions relating to contracts between professionals and clubs”.
Applying a prima facie literal interpretation of the wording of this provision, CAS confirmed the FIFA Players’ Status Committee’s decision and ruled that the prohibition does not encompass contracts between clubs (i.e. transfer agreements), giving effectiveness to the clauses relying on medical examinations.
Moreover, in the award CAS 2013/A/3436 the arbitrators concluded that the club and the player must proceed with the medical examination in the course of the employment negotiations – and not after the signature of the contract.
In this respect, the well-established jurisprudence of both FIFA and CAS confirms that it is possible to make the validity of a transfer agreement subject to a successful medical examination by the new club.
However, such a clause would not be deemed valid if inserted in employment contracts. Undesirable situations may arise if the lawyers advising a deal are not aware of the applicable regulations and well-established jurisprudence. Consider a situation where the transfer agreement and the employment contract are signed simultaneously and the validity of both are subject to a successful medical examination. In this instance if the player fails the examination, the transfer agreement would be deemed invalid whilst the employment contract would be considered valid and binding.
In order to avoid situations as the one explained above, it is extremely important to sign – at least – the employment contract after the approval of the player in the medical examination.
Imagine if this situation occurred with the transfer of Hazard to Real Madrid. Somebody in this story would probably lose millions – and a lawyer would probably lose their job….