FIFA Clearing House
Preamble
The formal starting point for the FIFA Clearing House was the decision of the FIFA Football Stakeholders Committee 25 September 2018 to support the idea of a reform package of the transfer system, where a launch of the FIFA Clearing House would play an essential role. A month later, 26 October, the FIFA Council endorsed the recommendations agreed by the FIFA Football Stakeholders Committee. The FIFA Clearing House has since been postponed on several occasions, but is now expected to be launched in January 2022, subject to the FIFA Council passing the regulations, for FIFA to educate relevant stakeholders on the new system and the approvement of a bank licence application.
The FIFA Clearing House in a nutshell
When a professional football player completes an international transfer to a new club, the player’s new club is obliged to make payments in accordance with the principles set out in the FIFA transfer regulations, the Regulations on the Status and Transfer of Players (RSTP). Unless the player’s former contract has expired, the new club will normally pay a transfer fee. If a transfer fee is paid, the new club is also obliged to pay solidarity contribution to the clubs that trained the player between his 12th and 23rd birthday. If the player is 23 years old or younger, the new club will normally also be liable to pay training compensation to the player’s training clubs. If football agents or intermediaries have been engaged by the selling club, the buying club or the player, the party that has engaged the agent/intermediary will be obliged to pay for these services.
Statistics from the FIFA Global Market Transfer Report for 2020 show that only a fraction of the training compensation and solidarity contribution new cubs are required to pay, are actually paid. The same report unveils that FIFA, through its dispute resolution bodies, handled 1388 claims for solidarity contribution.
The main aims of the FIFA Clearing House is to increase the transparency of the transfer system, to protect its integrity and reinforce solidarity mechanisms for training clubs. These aims are sought to be reached by establishing a clearing house that centralise, process, and execute all payments related to transfers, hereunder transfer fees, solidarity contribution, training compensation and intermediaries/agents’ fees[1]. When an international transfer is completed and submitted by the involved clubs in the FIFA Transfer Matching System (TMS) all agreements related to the transfer should be submitted, including the agreement for a transfer fee and agreements for agents/intermediaries services. If the conditions for paying training compensation or solidarity payments are met, FIFA will calculate these fees based on the player passport. Once the fees have been calculated The FIFA Clearing House will request the new club to make the full payment and, when the payment is received, distribute the payment to the all the parties that are entitled to payments, i.e. the selling club, the training clubs and the agents/intermediaries.
Although FIFA will be responsible for the FIFA Clearing House, all payments will be processed through a separate legal entity which will operate within the European banking system.
FIFA Connect and Electronic Player Passports
Today, before the launch of the FIFA Clearing House, solidarity payments and training compensation is paid based on the player passport provided either by the selling club or by the training clubs. These player passports are normally created by the national associations, based on their domestic transfer systems. For FIFA to be able to calculate training compensation and solidarity contribution within the FIFA Clearing House system it is dependent on having access to information in the national associations’ domestic transfer systems with regards to which clubs the players’ have been registered with since the age of 12. FIFA’s solution to this issue is the introduction of FIFA Connect. In FIFA Circular no. 1679, issued 1 July 2019, FIFA informed that FIFA Connect had been implemented in the RSTP, and described FIFA Connect as “an information system designed and implemented by FIFA that provides the FIFA ID and the API that provides the technical interface between electronic domestic transfer systems, electronic player registration systems and TMS for the electronic exchange of information”. In the same circular FIFA stated that national associations were required to assign each player a FIFA ID and to have domestic electronic player registration systems that must be linked with the FIFA Connect System in order to exchange information electronically, hereunder registration information for all players from the age of 12.
Once FIFA Connect is fully integrated with national associations’ domestic electronic player registration systems, FIFA Connect will be able to create complete player passports. Based on these player passports the FIFA Clearing House can calculate training compensation and solidarity contribution.
FIFA Connect and data protection issues
When fully launched, FIFA Connect and its connected domestic electronic player registration systems will process a massive number of personal data, i.e. personal data of all footballers, worldwide, aged 12 years and older. Although FIFA Connect will seek to protect these personal data through encryption and strict access to the integrated systems, there is a risk that personal data can be used for other purposes than intended.
In particular data protection issues can be a challenge within the EU/EEA area, due to the strict data protection regulations set out in the General Data Protection Regulation (GDPR) which came into force in 2018. In short, pursuant to GDPR article 6, processing of personal data shall be lawful only if conditions in that article are met. FIFA has based the processing of personal data through FIFA Connect and its connected domestic electronic player registration systems on GDPR article 6 litra f, i.e. that the lawful basis for processing data is that it is necessary for the purpose of the legitimate interests pursued by FIFA and the national associations. The legitimate interests pursued by FIFA and the national associations in this regard, are first and foremost related to the possibility for its affiliated clubs to be fully paid their share of training compensation and solidarity payments. However, in accordance with the same article these interests must be weighed towards the interests or fundamental rights and freedoms of the involved footballers which require protection of personal data, in particular where the footballer is a child. As FIFA requires all footballers aged 12 years and older to be registered, a large number of footballers will be considered as a child. In this regard, it will be interesting to see if EU or domestic data protection authorities will accept processing of such a large number of personal data, in particular given that the vast majority of footballers never sign a professional contract with a foreign club, and as such will not be subject to payments of training compensation or solidarity contributions.
Moreover, it could be problematic for national associations within the EU/EEA to share personal data from its domestic electronic player registration systems with national associations from outside the EU/EEA and countries that the European Commission has determined to have established an adequate level of data protection in accordance with GDPR art. 45, i.e. Andorra, Argentina, Canada, Faroe Islands, Guernsey, Israel, Isle of Man, Japan, Jersey, New Zealand, Switzerland and Uruguay. Exchange of personal data outside the EU/EEA and the abovementioned exceptions, so-called third countries. For processing personal data with these third countries, the conditions in GDPR art. 46 apply. More specifically, transfer of personal data to third countries can only be done if “the controller or processor has provided appropriate safeguards, and on condition that enforceable data subject rights and effective legal remedies for data subjects are available”. As the Schrems II verdict showed, the conditions for transferring data to third countries should be applied strictly, and could prove to be a problem for national associations within the EU/EEA that want to share personal data within the FIFA Connect platform with national associations outside the EU/EEA or approved by EU.
Final thoughts
If the FIFA Clearing House will function as intended, it will undoubtedly be positive for clubs that train players who at some point become good enough to sign contracts as professional players. In such a case, clubs will automatically be awarded with the compensation they are entitled to. Clubs that today are reluctant to pay training compensation and solidarity contribution, will find this more difficult. As such, the FIFA Clearing House will contribute to a distribution of transfer fees that are in line with the intentions as set out in RSTP.
On the other hand, there is a risk that FIFA and the national associations, in particular those within the EU/EEA, are sanctioned for breaching data protection regulations. Further, the FIFA Clearing House would require FIFA to handle a significant number of cases in order to distribute the transfer fees, training compensation and solidarity payments correctly. The workload could potentially lead to long delays before the affected clubs can receive what they are owed.
[1] https://digitalhub.fifa.com/m/2144c701011eec8b/original/nwa4pef272hssbgcefpo-pdf.pdf FIFA Transfer Matching System (TMS)FIFA Circular no. 1679has determinedSchrems II verdict
