The rule as it currently stands is:
he following ‘handball’ situations, even if accidental, will be a free kick:
The ball goes into the goal after touching an attacking player’s hand/arm
A player gains control/possession of the ball after it has touches their hand/arm and then scores, or creates a goal-scoring opportunity
The ball touches a player’s hand/arm which has made their body unnaturally bigger
The ball touches a player’s hand/arm when it is above their shoulder (unless the player has deliberately played the ball which then touches their hand/arm)
The following will not usually be a free kick, unless they are one of the above situations:
The ball touches a player’s hand/arm directly from their own head/body/foot or the head/body/foot of another player who is close/near
The ball touches a player’s hand/arm which is close to their body and has not made their body unnaturally bigger
If a player is falling and the ball touches their hand/arm when it is between their body and the ground to support the body (but not extended to make the body bigger)
If the goalkeeper attempts to ‘clear’ (release into play) a throw-in or deliberate kick from a team-mate but the ‘clearance’ fails, the goalkeeper can then handle the ball
So I would suggest the referee on the field determined it hit his hand (no doubt there) and that his body was unnaturally bigger. Yes some allowance has to be made for him coming in to block, but his arm is a hell of a long way away from his body, and I can't see how it isn't making his body 'unnaturally larger' - irrespective of the leeway that needs to be given for the position he was taking. Remember as well it wasn't his arm below his body (which is really why the rule is drafted as it is - because its very hard to keep that out of the way) - but the one above. For mine, yes its a harsh call, but under the current handball rules, I think its a penalty every day of the week.
The VAR team obviously didn't buy the 2nd part of that however - but the biggest question is, was it a clear and obvious error on the part of the referee? They trot that line out every single time they need to defend not changing a call, but equally it should be challenged when they do change a call. I think one can mount a reasonable case of evidence to support the referees original decision - therefore, I can't see how it is ever so possibly a clear and obvious error in this case.
After all, one would argue in the Zaha challenge space earlier in the game, that is exactly what they did. One could see some fairly damning evidence to suggest that had it been called a penalty, they wouldn't have overturned it. Hence, one must assume they decided it wasn't a clear and obvious error on the part of the referee.
And we've seen how high the bar of evidence has to be at times - think the outrageous non penalty call on David Silva earlier in the season, when the guy (Accidentally albeit) stomped on his foot and took him out. Easy to understand how the referee missed it in real time, as clear and obvious an error as you'll see, yet they hid behind that to excuse not changing the decision. Its an outrageous 'get out' clause because they attempt at 'objectively' making decisions is still impacted hugely by subjectivity. A lot of that would go away imho if the referee on the pitch was made to look at the screen for any controversial decisions, and ultimately was the final decision maker, as it should be (Beyond blatantly obvious cases where its clear a completely wrong call has been made).
As others have said, they wouldn't turn that over at Klanfield if you ask me.