Hello, and welcome to the Pinsent Masons podcast, keeping you up to date with the most important developments in global business law every second Tuesday. I'm Matthew Magee and I'm a journalist here at Pinsent Masons. Two things have dominated the news this past couple of weeks, football and heat. So, we're going to tackle both, looking at new rules about how the most expensive footballers in the world are treated and thinking about how to navigate heat related disruption in the digital systems that govern most aspects of our lives. But first, here's some business law news from all over the world.

Australian government looks to double down on enforcement of social media age restrictions

US ruling raises fresh questions for EU-US data transfers, and

Extensive employment law reforms are planned in Germany

Social media platforms face increased pressure to demonstrate their efforts to crack down on underage access after the Australian government announced plans to double fines and increase enforcement powers for the eSafety Commissioner. The plans have been challenged in the Senate, which has referred them to a parliamentary inquiry to report back by the 25th of August, in response to concerns that they're premature and that there has been insufficient time for Australia's social media minimum age law to work in practice. Social media companies must take reasonable steps to prevent users under 16 from holding accounts and face fines if they don't. Privacy expert Veronica Scott said the proposed new information gathering powers would materially increase the risk of enforcement action. Enforcement depends on eSafety gathering sufficient evidence a platform has failed to take reasonable steps to prevent children under 16 from having an account, she said. Restricted social media platforms would need to be ready to demonstrate the measures they've implemented and their effectiveness, and industry age assurance providers can expect to be tested.

Businesses should reassess the risks of sending personal data from the EU to the US following a new ruling there, experts have said. The US Supreme Court has ruled that subordinates exercising the US president’s power are subject to removal by the president. The ruling came in a case in which a former commissioner of the Federal Trade Commission, Rebecca Slaughter, had challenged US President Donald Trump's decision to fire her. The decision has sparked discussion over whether EU-US data transfers will continue to be lawful because of questions the US ruling raises about the independence of the FTC and other US authorities. Privacy law expert Anna Flanagan said the ruling may deepen concerns in Europe that safeguards, particularly the independence of enforcement bodies, are less stable than assumed, making contingency planning for EU-US data transfers increasingly important.

Major reforms to employment laws in Germany have been backed by Germany's coalition government. The changes aim to make Germany a more attractive country to set up and operate a business in. The package is designed to reduce bureaucracy and make the labour market more flexible. The main changes concerned the way employment relationships are established and terminated, as well as the handling of sickness related absences. Employment law expert Sarah Klachin said at this stage these are still only political decisions which must now be translated into specific draft legislation. But the announcements already provide a clear indication of the direction employment law could take in the coming years.

Many of us around the world are still in the group of World Cup fever. I'm Scottish, so have been spared that indignity. But as new stars emerge and speculation about high profile offers from the world's most famous clubs rages wildly, the football business world is undergoing some pretty big changes. The rules that govern the hiring and firing of footballers are baroquely complex and unusual, so unusual that they sometimes conflict with actual law. That's what happened in the case of Lassana Diarra, a former French footballer who took football authorities to Europe's highest court and won. Manchester based Gabrielle Armstrong is a sports law expert and she started by explaining why world football governing body FIFA has different rules for footballers than exist for other employees.

Gabrielle Armstrong: Players themselves are not ordinary employees like me and you. They are essentially unique sporting assets both from a competition and a commercial perspective. These days they're seen as that. So essentially employment law in reality doesn't really provide adequate protection. The transfer system that FIFA have in place provides for things like training compensation and a solidarity mechanism, which basically means that it's like recognition for the sort of heavy investment that a lot of clubs will make, particularly at the youth level in youth development and in training and academies for youth players.

Another stand out reason is the transfer windows that we have in place, and they essentially operate to ensure that there's stability of squads because you can't really have players moving mid-season because that wouldn’t be for the benefit of the competition as a whole. Another important factor nowadays is that the market is global. When you have players move to different clubs, they're spanning in multiple jurisdictions and having a transfer system at FIFA's that is a single international framework really avoids that jurisdictional fragmentation that might cut across many different employment law systems. And so, it's an idea of harmonising all of that and sitting above what the sort of national law will provide.

Matthew Magee: This all makes sense, but football can't just pretend that competition law or laws about workers freedom of movement don't exist, so sometimes they clash.

Gabrielle: The transfer system has definitely been in constant tension with EU law and competition law and even in employment law and we've seen the clash for many years now. The system has clashed with EU law, particularly around freedom of movement and we saw that all the way back in 1995 with the Bosman decision, which essentially forced FIFA to abolish transfer fees for players who found themselves out of contract and that was it. That was a huge shake up at the time and forced many reforms of the system. And in terms of competition law, one decision in particular is Meca Medina in the early 2000s that essentially established that sporting rules must be proportionate to a legitimate objective. And that's so that it would basically ensure from a competition law scrutiny perspective that that would survive. We wouldn't necessarily have something that sits outside of that for reasons of ensure and fair competition.

Matthew: Just such a clash of laws involved Lassana Diarra, who found himself unable to play for a year because he was caught up in a row with his club, Lokomotiv Moscow, that also entangled other clubs that might want to hire him. It was legal by FIFA's rules, but he went all the way to the Court of Justice of the European Union to argue that it breached his right to freedom of movement and he won.

Gabrielle: He played for only a short time for Lokomotiv Moscow, and his contract was terminated by the club in 2014, allegedly for breach of contract on the grounds that he basically wasn't showing up for training. Diarra himself alleged that the club had proposed to cut his pay. So, there was a dispute and there was just tension between the player and the club. A claim was brought by the club to FIFA and then that was appealed to the Court of Arbitration for Sport, which then ultimately ordered that Diarra was to pay £10,000,000 in compensation and effectively by operation of the transfer rules he was blocked from signing elsewhere and what that meant for Diarra was that he was essentially out of work and not able to play for an entire season.

He eventually moved to and signed with Marseille and then he launched legal proceedings against FIFA on the basis that essentially the FIFA regulations were incompatible with EU law and that he had essentially lost €6,000,000 because he hadn't played for an entire season. Essentially that the transfer system and the way it operates reduced his mobility, basically his freedom of movement and that kind of goes back to the sort of tension between the transfer system itself and particularly European law. He was in a situation where not only would he be liable for compensation, but also any club that took him on after that point. And also, that he had to get the sort of the sanction to move and move clubs and he was blocked from being able to do that. So, he had an entire year where he was just unable to make the move.

Matthew: The CJEU ruled in 2024 that FIFA's rules were unlawful because they restrained Diarra's freedom of movement and distorted competition between clubs. Since then, FIFA has been reforming its player transfer rules to fall into line, work that Gabrielle said is ongoing.

Gabrielle: There have already been some interim reforms that have been brought in quite quickly after that decision, which were centred around just cause rules for termination and there are more objective compensation calculations now. There's also the reduced stability to block transfers in a particular way. In terms of the new reforms coming in, so, from the 1st of January 2027, we're going to see longer term reforms which will include things like mandatory release clauses in particular circumstances. So, a player could be released for a very specific or particular reason. You’ll see players that will receive a share, a minimal share, sort of less than 5% of transfer fees with more transparent compensation methods as well.

Matthew: This shifts the balance a little more in favour of players and away from clubs, but big clubs are still the ones with the clout and the money by and large. So, it's not a seismic change, but there are things that clubs should now do differently, says Gabrielle.

Gabrielle: Clubs might want to think about adjusting financial planning that account for possibly more of these player driven departures. In terms of investment in areas potentially in retention strategies, clubs might want to look at wages and conditions and how they might look to improve their club player relationships to an extent where they can retain talent as far as possible. If from a sort of strictly more legal perspective, maybe looking at drafting very clear provisions within contracts for their release clauses and very precise definitions of just cause scenarios so that contractually they're protected even beyond what potentially the transfer rules themselves might provide.

For Europeans, recently it's been hot. Really hot. Climate change is causing Europe to heat at a faster rate than any other continent, and in June and July that has been bracingly apparent. Record temperatures, wildfires, transport chaos and excess deaths have been the result. Also, disruption to services. Almost every aspect of our lives involves digital infrastructure, everything from banking to retail, healthcare to essential government services. And though they might feel all virtual and invisible to users, these services operate in the real world and are dramatically affected by heat. Infrastructure is where the digital gets physical, as London based technology law expert Laura Gallagher told me.

Laura Gallagher: So, I think it can be helpful to just get a mental picture of what IT infrastructure actually looks like, because people hear about the cloud and that sounds pretty abstract, like there is a hypothetical cloud in the sky somewhere holding all this information. But in reality, it's lots of physical infrastructure. If a customer visits your website, then multiple things are going to happen at the same time in a fraction of a second. So firstly, the customer is going to connect to the website through a third-party internet service provider that's going to travel across the telecoms network, which is made up of physical fibre optic cables, exchanges, routers, switches and then the website has to live somewhere. Most businesses rent power from cloud providers, and these cloud providers operate huge data centres around the world and they are basically highly secure warehouses which are full of thousands of servers in rows and rows of cabinets, each full of computers and that's where your website, your applications and your data actually live.

These data centres, they're dependent on other IT infrastructure. So that would be massive electricity supplies, backup generators, batteries, cooling systems and then all these services might be operating from different data centres, possibly in different countries, owned by various companies. So, a business is going to be relying on multiple suppliers without really thinking about it. And then your suppliers also have suppliers. So, if one part fails, everyone further up the chain will feel the effects. And that's why outages can affect thousands of businesses at the same time.

Matthew: These are real physical pieces of equipment then, susceptible as we all are to the laws of physics. So, what happens when it gets really hot?

Laura: Heat and heat waves can be a problem because heat can affect all these different layers. Your electricity, everyone turns on the air con, the grid becomes more stressed. Cooling is really important. So, you have to think you have thousands of these servers all sat on top of each other in a cabinet and all these running together can generate huge amounts of heat. With your telecom’s equipment, some of that sits in kind of roadside cabinets. An extreme temperature is going to affect that equipment too. Systems get too hot. They do try to protect themselves first. So, I think we've all felt our phones heating up on a hot day or when we're using it too much. The phone will detect that and sometimes it will even ask you to stop using it and it will cool down. And these systems do that as well. They might slow down, they might move workload somewhere cooler, or they might switch to backup systems. But if temperatures get too high, then equipment might have to shut down altogether to avoid permanent damage. So, from a user's point of view, it will often just look like systems are becoming slow or they're unavailable. You might not be able to access software, or websites might just stop responding. And obviously with IT being so interconnected where one system fails, that can quickly spread across lots of different services.

Matthew: When the equipment in data centres or road-side telecoms cabinets start to shut down, that's when organisations get into trouble.

Laura: The immediate impact will be operational, so staff won't be able to access systems, customers won't be able to use certain services and businesses might not be able to run operations normally. A business could lose revenue in sales or possibly being unable to deliver services to customers. There might be a customer impact. So, there can be contractual issues if you can't deliver what you've promised. There can be reputational harm, data can be lost, it can be corrupted and then in some sectors it can be even more serious. So, if you're talking about hospitals, transport, utilities and IT outages, it's not just inconvenient, but it can have real consequences for public safety.

Some businesses will be more affected than others, depending on the industry, their location, how dependent the business is on things like continuous power, the internet or electronic equipment. If you're thinking of typical office-based businesses in a developed economy like the UK, a heat wave is usually a bit of an inconvenience. So, your employees may work from home, and most firms can tolerate short interruptions. But if you're a business that depends on continuous operations, then that picture can look quite different. So, if you're a business that provides critical services like healthcare, financial services, transport, you're a telecoms network, then you're going to feel the impact much more because businesses like that can't really afford downtime. So even a few hours of outages can cost hundreds of thousands or even millions of pounds in lost revenue, in damaged inventory or reputational harm. Or, like we saw with the healthcare sector, it can even be a threat to public safety.

Matthew: We can't opt out of the weather, and the world isn't going to get colder anytime soon, so how can organisations prepare themselves for this disruption? The key, says Laura, is having better knowledge about what your systems are actually made up of and where the risk is greatest.

Laura: The first thing is understanding what you're actually dependent on. So, a lot of businesses know who their suppliers are, but they don't necessarily know where their data is hosted or by who and what sits behind those suppliers. So, knowing that will help businesses to assess contingency plans and alternative sourcing arrangements in the event that outages happen. And then businesses should be looking at their contracts with suppliers. So, do their suppliers have robust business continuity plans? Are responsibilities clear? If there is an outage, what are the relief mechanisms in place and who is contractually responsible? Doing regular contract reviews is important to consider whether business continuity plans are reflecting current threats and that service levels and relief mechanisms are appropriate. And then there's testing. So having business continuity and disaster recovery plans is one thing, but actually testing it is another. You don't want to be doing the first test during a heat wave.

Matthew: These plans are important, but disruption looks like it will be an inevitable and unavoidable part of business life. So, what should organisations do when the temperatures go up and the machines shut down?

Laura: The first priority is always getting the business running again, so you want to be activating your incident response plans, you want to be speaking to suppliers and understanding what's actually happened and how long the outage is going to last and what is being done to rectify it. Communication is really important too, so keeping customers and staff informed. People are generally much more understanding if they know what's going on. From a legal perspective, you want to be looking at your contractual obligations. Check that force majeure clause. Suppliers will want to be complying with notice requirements and taking steps to mitigate the impact of any outage. So, switching to backup generators, activating business continuity plans, using other sites. If it has had a serious impact on your business, then you might want to be looking into rights relating to relief or even termination.

It's also worth keeping good records, make a note of what's happened, when decisions were taken, what steps were taken to minimise the impact and that can be really helpful later if there are questions about liability or mitigation, whether contractual obligations were followed. And finally, use it as a lesson learned exercise so once things are back to normal, review what happened and ask whether there are changes you can make to mitigate this happening again.

Thank you for listening, thank you for your time. If you've sent it to colleagues or friends or reviewed it or rated it, thank you for that too. You can catch up with us every fortnight. Or if you're too impatient, you can find out what's happening in your area of business law every day from our international team of specialist reporters at pinsentmasons.com/out-law. Or you can get a weekly digest at pinsentmasons.com/newsletter tailored so you only get the things you're interested in. Thanks for spending time with us. Until next time, goodbye.

The Pinsent Masons Podcast was produced and presented by Matthew Magee for international law firm Pinsent Masons.