The European Union's top court said Friday that some FIFA rules on player transfers can conflict with European Union legislation relating to competition and freedom of movement.
The court's ruling came after former France international Lassana Diarra legally challenged FIFA rules following a dispute with a club dating back to a decade ago.
Diarra had signed a four-year contract with Lokomotiv Moscow in 2013. The deal was terminated a year later after Diarra was unhappy with alleged pay cuts.
Lokomotiv Moscow applied to the FIFA dispute resolution chamber for compensation and the player submitted a counterclaim seeking compensation for unpaid wages.
The Court of Arbitration for Sport found the Russian club terminated the contract with Diarra 'with just cause' and the player was ordered to pay 10.5 million euros ($11.2 million).
Diarra claimed his search for a new club was hampered by FIFA rules stipulating that any new side would be jointly responsible with him for paying compensation to Lokomotiv.
'The rules in question are such as to impede the free movement of professional footballers wishing to develop their activity by going to work for a new club,' the court said in a statement.
The former Real Madrid player also argued that a potential deal with Belgian club Charleroi fell through because of the FIFA rules, and sued FIFA and the Belgian federation at a Belgian court for damages and loss of earnings of six million euros ($7 million).
With the lawsuit still going through Belgian courts, the case was referred to the European Court of Justice for a ruling.
The Diarra case, which is supported by the global players' union FIFPro, went through FIFA judicial bodies before the 2016 election of FIFA president Gianni Infantino, who has made it a priority to modernize transfer market rules.
In a statement FIFA insisted that the ruling did not have wide-reaching implications and only pertained a specific aspect of the governing body's transfer regulations.
It read: 'FIFA is satisfied that the legality of key principles of the transfer system have been re-confirmed...
'The ruling only puts in question two paragraphs of two articles of the FIFA Regulations on the Status and Transfer of Players, which the national court is now invited to consider.'
The case has been compared to the landmark ruling involving Belgian midfielder Jean-Marc Bosman in 1995.
His judicial challenge of transfer rules had a transformative effect on the way in which footballers are employed, allowing players to move freely between clubs upon the expiry of their contracts.
After beginning his career in his native France with Le Havre, Diarra's potential saw him scooped up by reigning Premier League champions Chelsea as a long-term successor to compatriot Claude Makelele for the Blues.
First team opportunities proved hard to come by however, and he spent time at Arsenal and Portsmouth before joining Real Madrid where he was later reunited with Jose Mourinho.
Diarra found himself on the periphery in the Spanish capital before joining Anzhi Makhachkala followed by his ill-fated move to Lokomotiv Moscow.
Diarra was handed a ban from FIFA at the end of his time at Lokomotiv and spent the entirety of the 2014-15 campaign on the sidelines before returning to football with Marseille.