The application of such article to the world of football was determined by the trial of the Bosman case in which it was questioned the legality of clubs requiring and receiving payment of transfer fee upon the transfer of players to new clubs after the termination of the contract. When analyzing the case, the Court of Justice of the European Union stated that professional football constitutes an economic activity and therefore is subject to community law and obliged to adhere to basic legal principles such as the right of free movement for employees. On 2001, FIFA introduced on its Regulations on the Status and Transfer of Players – RSTP rules compliant with EU Law, in specific extinguishing the retain and transfer system¹.

Having established that, on what ground would unilateral extension clauses stand? In order to develop this subject, the cases of Panathinaikos FC v Sotirios Kyrgiakos and Club Atlético Peñarol v Héber Bueno Suárez & Cristian Gabriel Rodríguez are analyzed.

On the Greek dispute², a contract with an initial term of two years was signed in 2001. Such contract contained unilateral options granting the club the right to extend the contract up to another three years, maintaining the bond until June 2006. In 2003, the club exercised one of the two unilateral options, extending the contract until June 2005. In January 2005, the player was loaned to a Scottish club for six months and on June 2005, the Greek club exercised its last unilateral option, extending the contract until June 2006. The player refused to return to Greece saying that the extension was invalid.

The FIFA Players’ Statute Committee saw the extension clause as problematic, arguing that it restricted the freedom of the player who could not make use of the same condition. In addition to that, according to the committee, unilateral options, in principle, do not match with the general principles of labor law. The case was taken to the Court of Arbitration for Sports – CAS. There, it was analyzed that if the unilateral options were exercised the contract would be valid for five years, which would be in literal accordance with the Article 18 of FIFA’s RSTP. In addition to that, in exchange for the extensions, the contract clearly stated that the player would receive benefits, being paid twice the initial wage in the fifth year of contract. CAS also stressed that the player did not complain when the first extension option was exercised and only did so when a job offer was presented by the Scottish club. In conclusion, the award focused on the principle “pacta sunt servanda” which determines the need of respect towards the contract and its stability that makes law between the signing parties.

On the South American case³, the players were under contract until December 2004 and the Uruguayan Association awarded the clubs the option to extend it at the end of the season. When the club tried to exercise such option, the players refused to sign which led to sanctions from the Uruguayan Association. When analyzing the dispute, both FIFA and CAS determined that the extension option did not provide better conditions for the players. The only demand for the extension was that the salary of the player should be adjusted by the Consumer Price Index. In conclusion, the sport jurisdiction determined that a contract that allows a club to unilaterally extend the duration of a player’s contract with only a minimum adjustment to the player’s salary is incompatible with FIFA Regulations in regard to contracts, since these should always have a fixed duration and stipulate the player’s salary and other benefits.

From the analysis of the mentioned cases, it can be seen that there is no uniform answer in relation to the legality of unilateral extension clauses. In order to deal with that matter on a case-by-case basis, Professor Wolfgang Portmann established the following criteria⁴ for the validity of unilateral extension options: i. the potential maximal duration of the labor relationship shall not be excessive; ii. the option shall be exercised within an acceptable deadline before the expiry of the current contract; iii. the salary reward deriving from the option right has to be defined in the original contract; iv. one party shall not be at the mercy of the other party with regard to the contents of the employment contract; and iv. the option shall be clearly established and emphasized in the original contract so that the player is conscious of it at the moment of signing the contract.

In conclusion, having Portmann’s criteria in mind, specially in accordance with the limit of five years for the contract and the existence of mutual benefits, unilateral extension clauses can be in harmony with article 45 of the TFEU. The mentioned situations may conciliate because the player will only be expected to fulfill his/her contract for a predetermined duration, being free after that, and he/she will adhere to such clauses only if they are in his/her best interest.

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1 Antoine Duval. The FIFA Regulations on the Status and Transfer of Players: Transnational Law-Making in the Shadow of Bosman. In: A. Duval & B. Van Rompuy (eds) The Legacy of Bosman: Revisiting the Relationship between EU Law and Sport ASSER International Sports Law Series. ASSER PRESS, The Hague, The Netherlands, and the authors 2016. p. 89

2 Jean-Samuel Leuba, Robert Fox, Juan de Dios Crespo Pérez, Gerardo Luis Acosta Perez and Frans M. de Weger. Contractual Stability: Unilateral Options. In: A. Wild (ed.), CAS and Football: Landmark Cases, ASSER International Sports Law Series. ASSER PRESS, The Hague, The Netherlands, and the authors 2012, p. 108-115

3 Op. cit. p. 116-124

4 Op. cit. p. 138

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*André Gribel de Castro Minervino is post graduate in Material and Procedural Labor Law in Instituto Brasiliense de Direito Público - IDP and master's degree in Instituto Superior de Derecho y Economia - ISDE Madrid.