President Raymond Kennedy says he is disappointed after the Court of Arbitration for Sport rejected IFA attempts to prevent players from switching allegiance to the Republic of Ireland.
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The Court of Arbitration for Sport in Lausanne rejected an appeal by the Irish FA against FIFA and the Football Association of Ireland allowing Belfast-born Daniel Kearns to play for the Republic.
Kearns, 18, represented Northern Ireland at under-17 level but switched to play for the Republic this year and played in two European Under-19 Championship matches.
"I am disappointed by today's decision but we will continue to develop our very successful and wide range of 'Football for All' and community programmes in the areas of grassroots, domestic and International football to ensure that anyone available to play for Northern Ireland will want to do so," Mr Kennedy said on Friday.
A statement from CAS said: "The CAS panel dismissed the appeal and confirmed the decision issued by the single judge of the FIFA players' status committee, which recognised that Daniel Kearns was eligible to play for the national team of the FAI."
Under the Good Friday Agreement, Irish passports can be held by Irish citizens born on either side of the border.
However the IFA have been trying to prevent a talent drain of players and have been arguing that players born in Northern Ireland without family links to the south should not be allowed to play for the Republic.
Kearns, who was released by West Ham at the end of last season, joined the likes of Manchester United's Darron Gibson and Portsmouth's Marc Wilson in switching allegiance from Northern Ireland to the Republic.
FIFA's players' status committee had ruled that Kearns fulfilled the requirements in that he had never represented Northern Ireland in an official competition at senior international level.
In a statement, the FAI said the "landmark ruling vindicates the FAI and FIFA position that players born within the island of Ireland are eligible to play for FAI international teams and provides complete and final clarity on the matter."
Sinn Fein Chairperson of the Department of Culture, Arts and Leisure committee Barry McElduff also welcomed the ruling, branding the case "stupid".
"It will come as no surprise that the Court of Arbitration for Sport has thrown out this stupid case taken by the IFA. It was a blatant attempt to deny Irish citizens in the six counties their full rights as Irish passport holders and was doomed to failure from the start", he said.
"Given the reliance of the IFA on public funds and in the wake of the scandal around the sacking of Howard Wells we now need a clear statement from them on how much money has been wasted on this latest pointless legal expedition."
The SDLP Culture, Arts and Leisure spokesman Thomas Burns has also welcomed the decision.
The Irish Football Association has wished Daniel Kearns "the best of luck in his future footballing career."
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