Compensation in cases of non-compliance with contractual quality requirements for rail freight services

Poor quality service is currently a major obstacle to the development of rail freight services in the Community. This low quality performance is largely due to the lack of economic and contractual incentives. It is difficult for most rail freight customers to conclude transport contracts on fair and satisfactory terms. A compensation scheme should therefore be established to cover losses and damage to transported goods, delays in delivery and cancellations as well as breaches of any other quality requirements laid down in the transport contract.

PROPOSAL

Proposal for a Regulation of the European Parliament and of the Council on compensation in cases of non-compliance with contractual quality requirements for rail freight services.

SUMMARY

Compensation schemes - context

The White Paper of 2001 and the Commission Communication "Towards an integrated European railway area " of 2002 underline the overriding importance of improving the performance of rail freight services in Europe in order to foster the development of rail freight and contribute to more balanced modal shares.

The current compensation scheme for rail freight customers is defined in the CIM appendix to the 1980 Berne Convention concerning International Carriage by Rail (COTIF).

In this context, the proposed Regulation will introduce minimum quality clauses in contracts between railway undertakings and their customers in connection with all national and international rail freight services in the Community.

Contractual quality requirements

Quality requirements for rail freight services must be based on an agreement between the parties, resulting in rights and obligations and taking into account the specific circumstances of the transport contract. The contract must define the following quality requirements:

• agreed hand-over times for goods, wagons or trains between the railway undertaking and the rail freight customer;
• arrival time and compensation for delays;
• compensation in the event of goods being lost or damaged;
• compensation in the event of a train being cancelled by the railway undertaking;
• compensation in the event of a train being cancelled by the rail freight customer;
• a quality monitoring system defined by the parties.

Principles of compensation in cases of non-compliance with contractual quality requirements by the railway undertaking and/or the rail freight customer

If the railway undertaking does not meet the contractual quality requirements according to the quality monitoring system defined in the transport contract, it must pay compensation to the rail freight customer. The railway undertaking is therefore responsible for:

• loss of or damage to the goods transported;
• failure to comply with the agreed times of arrival;
• cancellation of trains by the railway undertaking;
• any other failure to comply with contractual quality requirements defined by mutual agreement between the parties to the transport contract.

If the rail freight customer does not meet the contractual quality requirements according to the quality monitoring system defined in the transport contract, the rail freight customer must pay compensation to the railway undertaking. The rail freight customer is therefore responsible for:

• failure to comply with the agreed hand-over times;
• cancellation of trains by the rail freight customer.

Compensation in the event of losses of or damage to the goods transported

The amount of compensation for loss of or damage to the goods transported is EURO 75 per kilogram of gross mass short or damaged.

Compensation for delays

The amount of compensation for delays can be adapted according to the severity of the delay and the type of rail freight. For block trains (where the customer buys from the railway undertaking the traction for at least one train made up by the client and specifically scheduled and invoiced), the amount of the compensation must be not lower than 5% nor higher than 25% of the transport price.

For wagonloads (where the client buys from the railway undertaking the transport of at least one wagon within a train made up and scheduled by the railway undertaking and open to several clients), the amount of the compensation must be determined by mutual agreement between the parties to the transport contract, taking into account the specific nature of wagonload transport.

Compensation for lack of information about delays

If the railway undertaking does not make appropriate efforts to inform the rail freight customer about possible delays, the railway undertaking must pay the compensation specified in the transport contract that must be not lower than 5% of the transport price.

Compensation for consequential damages

If loss or damages occur as a result of the arrival time agreed in the transport contract being exceeded, the railway undertaking must pay compensation not exceeding four times the transport price, based on evidence of such losses or damages.

Compensation for cancellation of trains by the undertaking or by the rail freight customer

The parties must define in the transport contract, by mutual agreement, the amount of compensation payable in the event of the cancellation of a train by the railway undertaking or by the rail freight customer.

Exclusions of liability

Under the following conditions the compensation scheme does not apply:

• fault of the rail freight customer or the railway undertaking,
• fault of or any other act by a third person,
• force majeure,
• circumstances that the railway undertaking or the rail freight customer could not avoid.

Responsibility of the railway undertakings

The contracting railway undertaking, which has accepted goods for transport, is responsible for the transport over the entire route up to arrival, including handling and/or transhipments of the wagons or the trains. The railway undertaking is also liable for its servants and other persons, including infrastructure managers.

RELATED ACTS

Convention concerning International Carriage by Rail (COTIF) of 9 May 1980 [not published in the Official Journal].

Vilnius Protocol of 3 June 1999 for the modification of the Convention concerning International Carriage by Rail (COTIF) of 9 May 1980 [not published in the Official Journal].

Recommendation for a Council Decision authorising the Commission to negotiate the conditions for Community accession to the Convention concerning International Carriage by Rail (COTIF) of 9 May 1980, as amended by the Vilnius Protocol of 3 June 1999 [COM(2002) 24 final - not published in the Official Journal].

Communication from the Commission - Further integration of the European rail system: third railway package. [COM(2004) 140 final - not published in the Official Journal].

Proposal for a Directive of the European Parliament and of the Council amending Council Directive 91/440/EEC on the development of the Community's railways [COM(2004) 139 final - not published in the Official Journal].

Proposal for a Directive of the European Parliament and of the Council on the certification of train crews operating locomotives and trains on the Community's rail network [COM(2004) 142 final - not published in the Official Journal].

Proposal for a Regulation of the European Parliament and of the Council on international rail passengers' rights and obligations [COM(2004) 143 final - not published in the Official Journal].

Last updated: 16.05.2007