Astronomically high football transfer fees, commonly seen in Europe’s top leagues, may soon become a thing of the past following a landmark ruling by the Court of Justice of the European Union (CJEU), which found certain FIFA regulations on international transfers to be illegal.

The ruling stems from a case brought against FIFA, the International Federation of Association Football, in a Belgian court by former French professional footballer Lassana Diarra. The Belgian court referred the case to the CJEU for a ruling.

The European court concluded that current FIFA transfer regulations hinder the free movement of professional footballers and restrict or even obstruct cross-border competition.

"These rules impose significant legal risks, unpredictable and potentially very high financial penalties, as well as major sporting disadvantages on players and the clubs seeking to employ them. Taken together, they impede the international transfer of these players," stated the CJEU.

"While restrictions on the free movement of professional players may be justified by public interest to ensure the integrity of inter-club football competitions, the rules in question seem to exceed what is necessary to achieve that objective," the court continued.

The CJEU further argued that the restrictive regulations were "neither indispensable nor necessary."

Diarra, who previously played for top clubs such as Chelsea, Arsenal, Real Madrid, and Paris Saint-Germain, unilaterally terminated his contract with Lokomotiv Moscow in 2014 after only one year, despite being contracted for a longer term. Lokomotiv Moscow had paid €20 million for the player but, dissatisfied with his performance, sought to reduce his salary. Following missed training sessions, the club sued him for breaching his contract.

The Court of Arbitration for Sport and FIFA both ruled against Diarra, ordering him to pay more than €10 million in damages and imposing a 15-month playing suspension.

Belgian club Charleroi considered signing Diarra but abandoned the idea due to the sanctions FIFA had imposed on him.

Although Diarra eventually returned to professional football at a high level, he reportedly remained aggrieved by the situation. He contacted two prominent lawyers known for securing the Bosman ruling, a decision that removed restrictions on foreign EU players in national leagues and enabled players to move freely between clubs within the EU at the end of their contracts, without requiring a transfer fee.

Like the Bosman ruling, which emerged from a Belgian case and revolutionised the football transfer market, the Diarra ruling is expected to have a far-reaching impact.

A key driver of exorbitant transfer fees is the logic that clubs pay large sums for players, and in return, those players face equally substantial financial penalties if they wish to leave their contracts early. If players could exit contracts more easily or with lower financial penalties, the justification for such astronomical transfer fees would diminish.

This ruling could fundamentally alter the business model of many clubs, especially those that rely on selling their top players to wealthier clubs or leagues, such as the English Premier League.

The case will now return to the Belgian court, which will make a final decision on the dispute between Diarra and FIFA. Depending on that outcome, FIFA may be compelled to significantly reform its transfer regulations.