EU Changes Cabotage Contract Guidance

The European Commission has given new guidance on the interpretation of EU cabotage regulation, which allows contracts of up to 12 years instead of the current six years, according to trade organisation Maritime London.

The EC statement explains: “With the new guidance competent authorities will have more legal certainty when awarding public service contracts and imposing public service obligations. Shipowners will also benefit from more legal clarity, allowing them to better organise their business in Europe.”

It says that the updated guidelines provide further clarifications on:

• The scope of the freedom to provide services in the maritime cabotage sector (who enjoys that freedom and which services the regulation covers)


• The award procedure for public service contracts and the duration of these contracts


• The manning rules on vessels providing maritime cabotage

• Transitional arrangements for Croatia

According to the statement, the main change in the Commission's interpretation relates to the duration of public service contracts. It says that public service contracts should have a limited duration in order to allow regular and open prospecting of the market. With a view to complying with the principle of proportionality in any market intervention, member states should choose the least 'distortional' means to meet essential maritime transport needs.

It adds: “In its interpretative Communication of 2003 the Commission allowed public service contracts of up to six years. However, the Commission's experience since 2003 has shown that in some cases the six years limit puts shipowners off bidding as they consider this duration to be too short to recoup the investments in the operation of the service. Likewise, contracts of short duration might discourage shipowners from making more substantial investments, thus hampering innovation and possible improvements in the quality of the service.”

The new guidelines say that public service contracts lasting up to 12 years can “meet the proportionality requirement provided that they are justified by objective criteria, such as the need to recoup the investments made in operating the maritime cabotage service under normal operating conditions (e.g. investments in vessels or infrastructure)”.

Source: Maritime London