Compliance of Rail Border Agreements

Colin Buchanan and Partners Introduction
COLIN
BUCHANAN
AND PARTNERS
Planning, Transport,
Economics
Software, Market Research
European Commission
A study on the
compliance of rail
border traffic
agreements with EU rail
and competition
legislation
Project No: 78621

June 2005
Newcombe House, 45 Notting Hill Gate

London W11 3PB
Telephone: 020 7309 7000

Fax: 020 7309 0906
email: CBP@CBUCHANAN.CO.UK
Study on Compliance of Rail Border Agreements with EU Rail & Competition Legislation
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Important note
In January 2004, the Directorate-General for Energy and Transport of the

European Commission appointed a consortium led by Colin Buchanan
and Partners in association with Pegasus Transconsult Ltd to undertake a
study on compliance of agreements on cross-border rail transport with
Community rail and competition legislation. The consortium presented
the final report in June 2005.
It should be underlined that there is now a wealth of Community

legislation in force or in preparation which intends to establish a
European Single Market for rail transport services. However, the
Community legal framework is still in a transitory period until all the
common rules on market access, interoperability and safety will be fully
implemented and practically operational.
The study takes stock of the existing agreements as of July 2004 with
some updates until January 2005 and can hence not take into account
regulatory evolutions and events occurring after that date or having an
effect on the market at a later stage.
Thus, many problems related to the application of border crossing

agreements identified by the Buchanan study are likely to vanish once the
final European legislative regime is fully in place. However some of the
recommended follow-up actions are still relevant during the transitory
phase or are likely to remain relevant even after the implementation of a
completed EU legal framework.
The opinions expressed in the report are entirely those of the consortium
and do not commit the European Commission.
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CONTENTS
1. EXECUTIVE SUMMARY 1-1
1.1 Overview 1-1
1.2 Purpose of the study 1-1
1.3 Scope of the study 1-1
1.4 Changing patterns of operation 1-2
1.5 Multilateral treaties 1-2
1.6 Bilateral treaties 1-3
1.7 Multilateral inter-railway agreements 1-3
1.8 Bi-lateral inter-railway agreements 1-4
1.9 Projection of services 1-4
1.10 Compliance with other aspects of EU law 1-5
1.11 Remedies 1-5
2. INTRODUCTION 2-1
2.1 Authority & brief 2-1
2.2 Scope of the study 2-2
2.3 The study team 2-2
2.4 Background 2-3
2.5 Study methodology 2-7
2.6 Assistance provided 2-7
2.7 Structure of the report 2-7
3. CONTEXT & STRUCTURE OF AGREEMENTS 3-1
3.1 The environment in which frontier and handover agreements
operate 3-1
3.2 EU Legislative background 3-4
3.3 Changes in the way railway undertakings interrelate 3-8
3.4 Implications of these changes on agreements between railway
undertakings 3-12
3.5 Legal issues 3-1
4. MULTILATERAL INTERGOVERNMENTAL
AGREEMENTS 4-1
4.1 An overview 4-1
4.2 Agreements managed by the UNECE 4-2
4.3 Technical Unity 4-8
4.4 Convention concerning International Carriage by Rail
(COTIF) 4-9
4.5 Organisation for the Co-operation of Railways and the
agreements it manages 4-14
4.6 The Simplified Procedure for Transit by Rail (Customs) 4-23
4.7 Recommendations 4-27
5. OTHER MULTILATERAL AGREEMENTS 5-1
5.1 Introduction 5-1
5.2 Other multilateral – railway trade associations 5-1
5.3 Other multilateral – The International Union of Railways
(UIC) 5-2
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5.4 Other multilateral – Brussels Clearing Centre 5-10

5.5 The Community of European railways and Infrastructure
Companies 5-12
5.6 The European Association of Infrastructure Managers (EIM) 5-12
5.7 RailNetEurope (RNE) 5-13
5.8 Forum Train Europe (FTE) 5-14
5.9 International Passenger Routing Agreement (ВМПС) 5-15
5.10 International Rail Transport Committee (CIT) 5-15
5.11 Other multilateral – RIC and RIV 5-26
5.12 PPW 5-35
6. BILATERAL INTERGOVERNMENTAL AGREEMENTS 6-1
6.1 Overview 6-1
6.2 Clauses in bilateral treaties 6-6
6.3 Rights and obligations placed on railway organisations 6-17
7. OTHER BILATERAL AGREEMENTS 7-1
7.1 Overview 7-1
7.2 Hierarchy of law 7-3
7.3 Classic agreements between railways 7-4
7.4 Classic agreements between railways – problem areas 7-16
7.5 Rewriting of the agreements between railway undertakings 7-18
7.6 Rewriting of agreements between infrastructure managers 7-24
8. TECHNICAL AND OPERATIONAL PROBLEMS AT
FRONTIERS 8-1
8.1 Overview 8-1
8.2 Practical issues for new entrants 8-3
8.3 Technical issues 8-3
8.4 Safety issues 8-5
8.5 Operational issues 8-5
8.6 Taxation issues 8-6
9. COMPARISONS 9-1
9.1 Overview 9-1
9.2 Other industries 9-3
9.3 Lessons to be drawn 9-6
10. WHAT AGREEMENTS MUST CONTAIN 10-1
10.1 Overview 10-1
10.2 General elements in treaties 10-2
10.3 Treaties for the construction of a railway 10-3
10.4 Treaties for the award of a concession 10-4
10.5 Treaties for the operation of a railway 10-4
10.6 Agreements between railway undertakings 10-6
10.7 Agreements between infrastructure managers 10-7
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10.8 Role of safety authorities for international sections of line 10-8

10.9 Relationships between infrastructure managers and
international users of the infrastructure 10-9
10.10 Action to be taken by states 10-9
11. RECOMMENDATIONS 11
11.1 Preliminary observation 11
11.2 Recommendations for no action 11
11.3 Recommendations for the Commission 11
11.4 Recommendations for Member States 13
APPENDICES
Appendix A Commission’s Specification for the Study
Appendix B List of Frontier Points
Appendix C Table of Memberships of International Treaties
Appendix D Table of Memberships of Railway Agreements
Appendix E Table of Agreements between States and between the

Railway Undertakings
Appendix F Respondents
Appendix G UIC Leaflets mentioned in the text
Appendix H Glossary and Abbreviations
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1. EXECUTIVE SUMMARY
1.1 Overview
1.1.1 In January 2004 a consortium led by Colin Buchanan and Partners

(CBP) in association with Pegasus Transconsult Ltd (PTC) was
appointed by the Directorate-General for Energy and Transport of the
European Commission (the Commission) to undertake a study into
Compliance of rail border agreements with EU rail and competition
legislation (Contract Number ETU/B27040B/E2/SO7.28268/2003 ) (the
study).
1.1.2 This executive summary reviews the principal findings of the

study.
1.2 Purpose of the study
1.2.1 The purpose of the study was to carry out a survey of the treaties
and agreements for cross-frontier rail traffic currently in force at EU
internal and external frontiers. The emphasis of the study was on
operation of the Single Market within the rail mode, with a particular
focus on compliance with EU legislation and policy objectives. In
essence the study was to identify failings in market access and in
compliance with other aspects of Community law.
1.3 Scope of the study
1.3.1 The study looked at all treaties between states which concerned
rail frontier operations, whether they were multilateral (such as COTIF)
or bilateral such as the various frontier traffic agreements. The study did
not examine agreements which simply concerned policing and similar
activities in any detail.
1.3.2 The study examined all the agreements managed by railway trade
associations and which concerned frontier operations in some detail. In
doing so, it was necessary to look in some detail at the total activity of
the trade associations themselves. The study also looked at the
agreements between railway undertakings such as they are currently and
the manner in which they are transforming.
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1.3.3 The study did not however look at general agreements between
railway undertakings which did not concern cross border activities per se.
1.3.4 Agreements between railway undertakings concerning frontier

issues implies handover of traffic and so the study did not look at long
distance penetration by railway undertakings in any depth; as will be
explained below, this exclusion is of less importance than might be
imagined.
1.4 Changing patterns of operation
1.4.1 As a backdrop, it might be useful to examine how railway

undertakings have interfaced at frontiers and how that might develop in
the future.
1.4.2 In the classic relationship an integrated railway owned

infrastructure up to the state frontier and trains transferred from being a
train of one railway to being a train of the other on crossing the frontier.
Revenue and safety responsibilities transferred at the same point.
Operating and safety issues were resolved by mutual assurances.
Operation across the frontier between two equal status frontier stations
was shared. This model has clear deficiencies in a liberalised context
(and perhaps always did have).
1.4.3 In more modern agreements, the location of handover is less likely

to be at the frontier, each undertaking has its own safety relationship with
the infrastructure manager and so handover represents a real transfer,
commercial and operating responsibility transfer on handover and there is
no sharing of operations.
1.4.4 Railway undertakings have been forming groupings for some time,
the best known perhaps being Railion with group members in three
countries, a subsidiary in a fourth and an alliance in a fifth. It is not
alone, new entrant companies are also forming subsidiaries. These
subsidiaries allow seamless transport but allow national railway
undertakings to have national safety authorisations, simpler accounts and
simpler regulatory arrangements. Whilst it may be implicit rather than
explicit, such an arrangement involves handover between two railway
undertakings at or near a frontier.
1.5 Multilateral treaties
1.5.1 The Consortium looked at a range of transport treaties. Many have

been overtaken by events, some indeed (such as Technical Unity) are
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now so out of date as to be an embarrassment and should be abrogated.

The principal multilateral treaty which the study looked at was COTIF.
COTIF does not in fact say much about frontier arrangements but it did
seem to the study team that the Commission would do well to exploit its
coming accession to COTIF to align COTIF and Community law.
1.6 Bilateral treaties
1.6.1 There would seem to be two schools of thought, many states left
the treaties dating from the construction of the respective railways in
place, others, particularly in central Europe, revised treaties so that the
majority date between 1950 and 1995. The earlier treaties tend to be
simple and lay down few expectations of railway undertakings. More
recent treaties tend to deal with interstate issues but empower and require
railway undertakings to make agreements with other undertakings on
railway operating questions. The study team were not persuaded that
states need treaties between themselves to regulate a steady-state rail link
(and some states did not have one). Treaties for construction are quite
different and the report suggests some issues that might figure in a treaty
for construction. Many states regard treaties as needing to be interpreted
dynamically in accordance with developing circumstances rather than
literally, this approach allows for liberalisation within the mode. Where
treaties are interpreted in accordance with EU law, the study sees no
overwhelming need for such treaties to be formally amended or
abrogated but there may be circumstances in which states would do well
to make a formal amendment to recognise that treaty provisions are out
of line with Community requirements.
1.7 Multilateral inter-railway agreements
1.7.1 There are a number of explicit multi-lateral inter-railway

agreements, such as those for the mutual use of rolling stock and other
practices, principles and understandings that arise from the membership
of railway trade associations.
1.7.2 The study identified some deficiencies in the agreements for the
mutual use of rolling stock in that insufficient scope for competitive
forces in the supply of vehicles was allowed. In addition, these
agreements appeared to be the mechanism for a large number of
specifications (on loading, for example) and standing industry data. It
seemed to the study team that better ways to manage industry
specifications and data should be found.
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1.7.3 Agreements and practices that followed from membership of

industry bodies were not always appropriate for new entrants. Some
trade bodies are in the process of reconstituting themselves as specialist
advisors to actors in the European rail market, it is appropriate that their
advice does not contain implicit bias. One trade body held the rights to
essential documentation for freight traffic. It is important that access to
such documentation is available on non-discriminatory terms.
1.8 Bi-lateral inter-railway agreements
1.8.1 The classic inter-railway agreements which the treaties mentioned

above postulate are agreements between integrated railway
administrations. They all followed models proposed by the UIC which
may have been appropriate at the time but which are now seriously
anomalous. There was evidence that some railway undertakings were
reticent to sign agreements and had thus limited competition. There was
also evidence that all over Europe it had been recognised that these
agreements are no longer appropriate. In some cases that was
accompanied by a change in operating practices so that both the
agreements and inherited handover practices were being changed.
1.8.2 Instead railway undertakings are starting to make agreements with

each other on a modern basis. This process has not yet gone very far but
has started almost everywhere. The agreements by their nature presume
a commercial agreement to handover traffic. The agreements are
concluded in a spirit of co-operation. The study team believe therefore
that competition is not likely to be restricted by what is provided for in
the agreement itself, but rather restricted by any refusal to handover at
all. Railway undertakings were not able to point to agreements being
made with other than historic partners. Competition within the mode is
increasing but it is tending to become competition between international
groupings each with national subsidiaries. This is a significant finding.
1.9 Projection of services
1.9.1 Whilst agreement between railway undertakings imply a

preparedness to make facilities available, the study team felt that a
railway undertaking that projected its service could find the provision of
facilities a problem. EU law defines the facilities to be provided by
infrastructure managers but where those facilities, fuelling points, shelter
for waiting train-crew etc are controlled by competing railway
undertakings, a problem could arise.
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1.10 Compliance with other aspects of EU law
1.10.1 The study team found some examples of conflicts with EC

competition and railway law, a few were related to technical
specifications or safety arrangements.
1.11 Remedies
1.11.1 It has been difficult for some new entrant railway undertakings to
assert rights. Many have had to go to law and some to spend not
inconsiderable sums. Precedents have already been set but it seemed to
the study team that national governments need to make national
competition authorities more aware of the potential for abuse.
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2. INTRODUCTION
2.1 Authority & brief
2.1.1 In January 2004 a consortium led by Colin Buchanan and Partners

(CBP) in association with Pegasus Transconsult Ltd (PTC) was
appointed by the Directorate-General for Energy and Transport of the
European Commission (the Commission) to undertake a study into
Compliance of rail border agreements with EU rail and competition
legislation (Contract Number ETU/B27040B/E2/SO7.28268/2003 ) (the
study).
2.1.2 The study’s purpose was to carry out a survey on agreements for
cross-frontier rail traffic currently in force in the EU fifteen original
Member States, in the eight new Member States with railway systems, and
in Switzerland and Norway. The emphasis of the study is on operation of
the Single Market within the rail mode, with a particular focus on
compliance with EU legislation and policy objectives.
2.1.3 In essence, the main tasks identified by the Commission were to:
• document the agreements, distinguishing between inter-governmental
agreements, agreements between railway undertakings implementing an
inter-governmental agreement, or an agreement going beyond the latter;
• summarise the main provisions and the related services intended to be
covered by the agreements briefly (such as access to service facilities,
traction, etc.);
• identify provisions that appear to be at variance with EU legislation
applying to the railway sector (and in particular those related to market
access, safety and interoperability) or with competition and internal
market rules, and the reason for this;
• evaluate the Community dimension of legal problems caused by border
traffic agreements (specifically intergovernmental agreements and
bilateral agreements between railway undertakings) and other relevant
documents;
• make suggestions to bring non-compliant agreements and associated
documents into line with EU existing legislation in a coherent and
comprehensive manner.
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2.2 Scope of the study
2.2.1 The Commission’s specification for the study is included as

Appendix A to this report. It provides a full description of its
requirements.
2.2.2 The Consortium did not examine agreements between railway

undertakings that were outside the scope of handover or frontier
agreements (for example, general agreements for the provision of traction
such as the German - Austrian agreement of 1973) (as distinct from
cross-frontier traction)). The Consortium consider that they fall outside
the scope of “border traffic agreements” defined in the invitation to
tender. On the other hand agreements to provide or share the provision
of traction over cross border sections come within the study remit.
2.2.3 Likewise the operation of end to end services by a single carrier

and therefore without handover agreements was regarded as being
outside the scope of the study.
2.2.4 Agreements on marketing international passenger traffic (such as

the Franco-Swiss Lyria or the Franco-Italian Alésia) were likewise
regarded as being outside the scope of a study on frontier traffic
agreements even though they may raise valid questions of access to the
market.
2.2.5 Agreements between railway undertakings that refer to traffic links

that are not continuous (such as ferry links) have not been considered.
2.3 The study team
2.3.1 The Consortium consisted of the following members:

• Colin Buchanan & Partners;
• Pegasus Transconsult Ltd;
• Logistik und Transport-Consult GmbH;
• Jeremy Scholes.
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2.4 Background
Rail’s position in the market
2.4.1 In a European Single Market where traditional state boundaries

have diminishing relevance to personal mobility patterns, a greater
orientation towards international traffic is required. Rail has shown a
disappointing performance on international journeys despite the
disproportionate increase in the number of international journeys in the
market as a whole. If rail is to succeed it needs to develop services that
achieve a mix of commercial speed, price and service quality that
responds to the market and is competitive with the offer from other
modes. For international markets this implies operations which are
specifically international rather than the linking of national operations.
That in turn raises the issues of eliminating the effects of frontiers.
EU policy background
2.4.2 The Commission’s transport policy, defined in the White Paper

European transport policy for 2010: a time to decide1, is to make the best
use of the Community’s transport arteries to allow economic growth
without insupportable congestion. The Gothenburg European Council
placed shifting the balance between modes of transport at the heart of the
sustainable development strategy. This policy requires the railway
industry to make a much more substantial contribution than it has
hitherto.
2.4.3 The Commission has identified commercial and operational

sclerosis within the traditional national railway organisations as a
significant barrier to development of traffic and one which can only be
resolved by competition in the provision of transport services. Indeed the
White Paper specifically comments:
“Rail transport is literally the strategic sector, on which the success of

the efforts to shift the balance will depend, particularly in the case of
goods. Revitalising this sector means competition between the
railway companies themselves. The arrival of new railway
undertakings could help to bolster competition in this sector and
should be accompanied by measures to encourage company
restructuring that take account of social aspects and work conditions.
The priority is to open up the markets, not only for international
services, as decided in December 2000, but also for cabotage on the
national markets (to avoid trains running empty) and for international
passenger services. This opening-up of the markets must be
1
COM(2001)370, European transport policy for 2010: time to decide.
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accompanied by further harmonisation in the fields of interoperability

and safety.”
2.4.4 The White Paper specifically points to the role of competition

policy to achieve these objectives “taking consistent measures in the
context of … competition policy to ensure that opening-up of the market,
especially in the rail sector, is not held back by dominant companies
already operating on the market”.
2.4.5 ERFA (the European Rail Freight Association) goes further and
says “competition and the emergence of private companies are probably
the last chance for the emergence of rail freight in Europe”2.
The creation of rail frontiers
2.4.6 It is normal for governments to become involved in frontier

interfaces. At the beginning of the railway era these agreements were
highly specific, but they soon became standardised. It was normal to lay
down the responsibilities of the various parties and in doing so, state
railways were nominated as beneficiaries of the rights to operate trains.
These frontier agreements laid down not only details of the rights to
operate trains but also such details as the immigration regime for staff,
police powers on international trains and many other issues. Under
modern conditions these rights to operate trains must be widened, and in
particular there must be no explicit or implicit restrictions on the opening
of the market to provide rail services. This therefore does not only mean
that the right to operate trains may not be circumscribed but also that
formal agreements must not limit access to essential facilities (see below)
or limit the ability to provide ancillary services (such as customs
clearance).
2.4.7 The UNECE paper (W/TRANS/285 of 14 March 1961) cited in

the Tender Specifications gives details of treaties going as far back as
1846 (between Prussia and the Netherlands on the Aachen – Maastricht
railway (the study identified however that it was abrogated in 1966)).
Many, however, are a consequence of the peace treaties and the creation
of a number of new states following the First World War. The Treaty of
Versailles contains a complete section on railway and port issues (Part
XII). Many treaties have lost their practical importance in so far as
general agreements on policing of the frontiers, customs arrangements,
railway technology and so on (in particular made under the aegis of the
European Community) have overtaken them.
2.4.8 The crux of the Commission’s policy is to drive efficiencies into

the railway industry. Where these efficiencies can be derived from
2
Klaus Meyer quoted in The Railway Gazette, Sept 2004.
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‘through’ operation on an international scale, effectively paying no

regard to frontiers, then there must be no barriers to through operation.
The existence of agreements specifically governing operations at frontier
points however may frustrate this objective if the agreements are not
revised. It is therefore crucial that institutional restrictions linked to
frontiers are minimised and comply with EU legislation.
2.4.9 Where railway undertakings wish to hand-over traffic en route (to

avoid linguistic problems or fiscal issues for example) then this too must
be facilitated. To encourage competition it is important that any
agreements on traffic arrangements at hand-over points do not
deliberately or unintentionally discriminate against new, different or new
entrant undertakings. In this connection, it is notable that during the
preparation of this report, Rail4Chem and Short Lines announced
arrangements to hand over traffic as successive carriers.
2.4.10 Railway undertakings must have the freedom to decide how to

operate their services, freed from the limitations of industry agreements
and subject only to valid technical and safety limitations. In this way the
disjunctions within the industry will evolve from being between at state
frontiers to being interfaces between regulatory and technical
environments. The continuing work being done to harmonise regulatory
and technical standards should provide an ever more uniform “railway
area” to allow competition on the basis of service and price.
2.4.11 There are a number of factors which impede free passage over
frontiers. These factors may be considered as being of four types:
technical, operations, legal and administrative and attitudinal.
2.4.12 Technical limitations are linked mainly to interoperability of

vehicles. The free passage of trains across frontiers is often limited by
technical limitations on locomotives. Locomotives only suitable for a
single electrification system are clearly limited but even diesel
locomotives (extensively used by new entrant railway undertakings) may
be severely constrained by a lack of track-train signalling equipment.
The reluctance of infrastructure managers and approval bodies to
authorise cross frontier operation have been described in the NERA
report3 on safety regulations. Some new entrant passenger operators told
the Consortium that they avoid these difficulties by changing traction
before the normal frontier stop and getting their partner to supply cross
frontier traction. This is a neat solution but comes at the expense of a
stop at a station which may not be a traffic point. It is not likely to be
suitable for freight where lay-by sidings are normally only found on one
side of the frontier. Whilst technical limitations fall outside the strict
scope of the remit for this report, it is clear that technical issues have had
3
Safety Regulations and Standards for European Railways, a report for the European
Commission, NERA February 2000.
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a profound effect on the development of international services. They are

therefore considered further in section 7 below.
2.4.13 The second issue principally concerns effective deployment of

staff. Train crew are normally changed at frontier stations. There are a
number of reasons for the change of staff, some well founded on
economic or other grounds, others less justifiable.. Amongst the reasons
for changing are staff certification, linguistic issues, employment
conditions, effective use of staff out and home etc. The Atkins report4 on
staffing however found that the almost systematic changing of staff at the
frontier was artificial and imposed limitations on the effective use of
staff. Staffing constraints however come outside the scope of this report
and will not be considered further.
2.4.14 The third issue is legal and administrative. In this area come (for
example) problems which new entrant railway undertakings may have
because of agreements made between incumbent railway undertakings
which have a restrictive effect. These agreements are central to this
report.
2.4.15 The last issue is attitudinal. Some new entrant railway

undertakings told the Consortium that incumbent railway undertakings
were reluctant to accept hand-over from new entrant undertakings,
declaring they did not want to upset their relationship with their principal
partner.
2.4.16 These two grounds, the reduction of restrictions specifically

linked to frontiers and the elimination of restrictions linked to hand-over
between railway undertakings (wherever that might be) both justify a
study of agreements designed to govern frontier operations and on
handing over traffic. Identifying these restrictions is the first step in
removing them or verifying they are at least non-discriminatory.
2.4.17 Some restrictions follow from intergovernmental treaties, some

from inter-railway agreements, others may be the consequence of
conventional railway practices designed for the needs of integrated
railways. These latter agreements often date from the epoch before
liberalisation and are not specifically intended to restrict competition but
nevertheless have that effect. An objective of this study has therefore
been to identify the areas in which agreements on frontier processing do
not comply with existing (and proposed) EU legislation and to propose
ways in which compliance may be achieved.
4
Training and Staff requirements for railway staff in cross-border operations, a report for the
European Commission, Atkins Denmark December 2002.
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2.5 Study methodology
2.5.1 The study was undertaken in nine stages as follows:

1. collection of information;
2. collation of information;
3. assessment of scope, provisions and effects of each
agreement, its practices and processes;
4. summary and comparison of the information collected;
5. assessment of the extent to which the agreements comply
with existing (and proposed) EU legislation, competition
and internal market rules;
6. consideration of the Community dimension;
7. comparative studies;
8. development of recommendations; and
9. reporting.
2.6 Assistance provided
2.6.1 The Consortium would like to formally record their gratitude to all
those who assisted them in the course of the study. A list of these parties
can be found in Appendix F to this report
2.7 Structure of the report
2.7.1 This report is structured in ten sections as follows:

1. Introduction
2. Context and structure of agreements – the environment
within which the agreements operate and how the agreements
fit together within this.
3. Multilateral intergovernmental agreements – the agreements
that currently exist, with a description of the most important.
4. Other multilateral agreements, principally those between
railway undertakings, – the rights that they confer, how well
they work, their openness/whether there is any apparent bias,
and whether they are considered as complying with EU
legislation and policy objectives.
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5. Bilateral intergovernmental agreements – agreements

between states, reasons for them, provisions in detail,
compliance with EU law.
6. Other bilateral agreements, principally those between railway
undertakings - the rights that they confer, how well they
work, their openness/whether there is any apparent bias, and
whether they are considered to be compliant with EU
legislation and policy objectives.
7. Technical and operational problems at frontiers – other
problems at frontiers.
8. Comparisons – what happens in other parts of the World and
in other modes?
9 What agreements must contain – what it is considered that
the agreements should include.
10. Recommendations
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Colin Buchanan and Partners Context & Structure of Agreements
3. CONTEXT & STRUCTURE OF AGREEMENTS
3.1 The environment in which frontier and handover agreements

operate
Frontier tasks
3.1.1 A number of frontier tasks may be identified. Some of these are

sovereign tasks of the state; others have to do with hand-over processing
between railway undertakings (whether or not it takes place at a frontier):
• sovereign tasks of the state:
- immigration and police control of passengers;
- control of import and export prohibitions;
- customs controls on goods and passengers;
- plant and animal health controls on goods
- health controls on passengers;
• railway tasks:
- planning the frontier operation;
- checking the acceptability of vehicles;
- checking the loading and securing of goods;
- handing over and accepting freight traffic for commercial
purposes;
- handing over and accepting responsibilities for vehicles;
- providing and processing data on trains and consignments.
Sovereign tasks of the state
3.1.2 These tasks essentially consist of policing the physical and fiscal
frontiers of the state. They are undertaken directly by officials of the
state. The status of a number of integrated national railways’ staffs as
civil servants meant that some rail staff could undertake parastatal tasks.
In fact few powers were ever extended to rail staff, immigration controls,
for example, have always been in specialist hands. On the other hand,
freight controls were sometimes shared with rail staff, particularly where
they took place away from the frontier. Rail staff sometimes had
delegated powers to clear passengers’ registered luggage for custom’s
purposes for example. These examples have all but disappeared as the
3-1
processes themselves have disappeared (the internal market and the

disappearance of registered luggage).
Treaties to regulate these activities
3.1.3 The impetus to negotiate bilateral intergovernmental treaties

concerning railways has tended to be the result of a fairly limited set of
circumstances. Amongst these have been:
• the construction of a railway;
• new circumstances across a frontier, such as the conclusion of peace
treaties, perhaps creating new states;
• the creation of new states as a result of the fusion or division of
earlier states;
• a change of regime (most particularly as a result of the political
changes that have occurred in Eastern and Central Europe since
1989);
• changes in frontier regimes, normally in empowering ‘juxtaposition’,
where permission is given to carry out police or customs formalities
on the territory of another state.
3.1.4 Multilateral intergovernmental treaties have sought to standardise

frontier processes, to facilitate equipment and staff working across
frontiers, to minimise delays to trains at frontiers, to harmonise standards
for equipment and to standardise legal relationships. Treaties therefore:
• set down technical parameters for rolling stock,
• set down standards for frontier processes (for example that customs
etc formalities should be co-ordinated)
• set down standard conditions of carriage for passengers and freight

and set down acceptance conditions for dangerous goods.
Railway tasks
3.1.5 Frontiers are classic hand-over points and whilst the abolition of
customs and similar frontier controls has reduced the logic for carrying
out rail processes in parallel at frontiers, examples of hand-over at other
locations still remain comparatively rare. The details are described
below but it is important to remember they are normally, but not
necessarily, linked to frontiers. The study identified two cases of the
converse, incumbent international (integrated) railways where the
frontier played no railway role whatever, GySEV between Austria and
Hungary and IR/NIR in Ireland. In both cases the railway was well
3-2
established before the frontier was created and no facilities had

subsequently been created to accommodate it.
3.1.6 Whilst it is the norm for frontier sections to be owned by national

infrastructure managers right up to the frontier and for the railway
undertakings exchanging traffic to share cross frontier working, it is
interesting that this is a comparatively recent development. The earliest
treaties specifically provided for single organisation operation and hand-
over within a frontier station. This practice has been replaced by through
working and in fact the concept of the joint station is rapidly being
abandoned.
3.1.7 More recently, major international links such as the Channel

Tunnel or Øresund bridge have been built as independently financed and
owned structures, sometimes quite separate from the pattern of
ownership and operation in the adjacent states (as in the case of
Eurotunnel), sometimes just acting as an independent infrastructure
manager as in the Øresund bridge.
3.1.8 Five unconventional types of frontier were distinguished.
• Incursions of a through line with a single infrastructure manager and

through services into the territory of another state without
intermediate stations (as between Tende and Ventimiglia).
• Incursions of a though line with a single infrastructure manager and

through services into the territory of another state with intermediate
stations in that state (as between Schaffhausen and Zürich).
• Incursions of a through line with a change of infrastructure manager

but through services and no intermediate stations (such as between
Bischofswerda and Zittau).
• “Proper” frontiers where the infrastructure owner owns the

infrastructure on both sides of the frontier and railway operations
ignore the frontier (such as Pamhagen).
• Lastly extra-territorial lines (of which the Vennbahn (Belgian

territory in Germany) is the only example).
3.1.9 Slightly more conventional but nevertheless requiring special

arrangements are the various “corridor” arrangements in which passage
of passengers and freight between two stations in the same state through
a second is allowed. The Schengen agreement and the Single Market
have reduced the importance of these agreements within the Community
but there remain some examples on the external frontier.
3-3
3.1.10 The logic of frontier handover is in part the result of inertia, in

part because facilities for hand-over exist at frontiers, in part because of
the inability of most traction equipment to operate in the adjacent state
and in part because interpenetration can give rise to issues of staff
competence. For example BLS told the Consortium that even though
their locomotives could run to Mannheim, they chose to change crews in
Basel.
3.1.11 The rail mode has enormous advantages in its control of frontier
facilities. In no other mode is control of frontier installations, traffic
control, management of the means of transport and commercial
operations so concentrated. The management of a sea port, air traffic
control or port customs clearance agencies all have quite tenuous
relationships with carriers; the same parallels may not be valid within the
rail industry. This represents a significant issue in the context of open-
access.
3.2 EU Legislative background
EU transport policy & legislation
3.2.1 As explained above, the tenor of the Commission’s policies is to

enforce Single Market rights and to open up the industry to competition.
3.2.2 This in turn implies the creation of wide ranging rights for new
operators to operate international trains. The first steps in this process
were taken in Directive 91/440/EEC (on the development of the
Community’s railways) which gave very limited rights of open access.
Subsequent Directives provided for fair means of allocating
infrastructure and charging for its use (95/19/EC, on the allocation of
railway infrastructure capacity and the charging of infrastructure fees):
and a licensing system for railway undertakings taking advantage of
Directive 91/440/EEC (95/18/EC, on the licensing of railway
undertakings).
3.2.3 It was clear however, that the rights of access provided under
91/440/EC would not be sufficient to meet the Community’s objectives.
A further set of Directives (the infrastructure package comprising
Directives 2001/12/EC, 2001/13/EC and 2001/14/EC) were therefore
enacted to widen rights of access and deepen the mechanisms which
ensure that those rights are fairly allocated and that railway undertakings
are properly qualified, as follows:
• 2001/12/EC, amending Directive 91/440/EEC on the development of
the Community’s railways;
3-4
• 2001/13/EC, on the licensing of railway undertakings;

• 2001/14/EC, on the allocation of railway infrastructure capacity and
the levying of charges for use and safety certification.
3.2.4 After compromises on the implementation date for open access for
freight traffic, the Second Railway Package has now been enacted. This
package includes the following legislation:
• Regulation 881/2004 of 29 April 2004 establishing a European
Railway Agency;
• Directive 2004/49/EC of 29 April 2004 on safety on the Community's
railways and amending Council Directive 95/18/EC on the licensing
of railway undertakings and Directive 2001/14/EC on the allocation
of railway infrastructure capacity and the levying of charges for the
use of railway infrastructure and safety certification;
• Directive 2004/50/EC of 29 April 2004 amending Council Directive
96/48/EC and Directive 2001/16/EC on the interoperability of the
trans-European rail system;
• Directive 2004/51/EC of 29 April 2004 amending Council directive
91/440/EEC on the development of the Community’s railways;
(The texts of these legal instruments were reissued as corrigenda on 21
June 2004 in OJ L220).
3.2.5 The Commission negotiated terms to join COTIF as part of the

Second Railway Package in June 2003. The terms negotiated were set
down in:
• Commission document COM(2003) 696 of 17 November 2003 on the

conclusion by the European Community of the Agreement on the
Accession of the European Community to the Convention concerning
International Carriage by Rail (COTIF) of 9 May 1980, as amended
by the Vilnius Protocol of 3 June 1999.
These terms were passed to the Council and Parliament on 17 November

2003, they were accepted by Parliament on 10 March 2004.
3.2.6 Further proposals have been made as part of the Third Railway
Package (RP III), which was proposed on 3 March 2004. It contains the
following legislative proposals:
• Directive on the certification of locomotive and train drivers engaged
in the carriage of passengers and goods in the Community;
• Regulation on international rail passengers' rights;
3-5
• Directive on opening up the market for international rail passenger

transport services by 1st January 2010;
• Regulation on the quality of rail freight services.
These proposals continue the process of encouraging the opening of the
market and of railway operation on a European scale.
3.2.7 The Directives which entered into force in 2001 and 2004 (and
indeed those proposed) whilst not primarily being ‘competition’
Directives, can nevertheless be considered as having the objective of
widening the market by facilitating and promoting competition.
EU competition policy & legislation
3.2.8 The Commission’s general competition policy (set down in

Articles 81 and 82 of the Treaty establishing the European Community)
was laid down to support the industrial policy of the Community: to
“harness the competitive dynamic of the Single Market to improve
European Union industrial performance"5.
3.2.9 Article 81 of the Treaty establishing the European Community

prohibits restrictive practices. Article 81 reads:
1. The following shall be prohibited as incompatible with the

common market: all agreements between undertakings, decisions by
associations of undertakings and concerted practices which may affect
trade between Member States and which have as their object or effect the
prevention, restriction or distortion of competition within the common
market, and in particular those which:
a) directly or indirectly fix purchase or selling prices or any other

trading conditions;
b) limit or control production, markets, technical development, or

investment;
c) share markets or sources of supply;
d) apply dissimilar conditions to equivalent transactions with other

trading parties, thereby placing them at a competitive disadvantage;
e) make the conclusion of contracts subject to acceptance by the other

parties of supplementary obligations which, by their nature or
5
Jovanovic: European Economic Integration, 1997
3-6
according to commercial usage, have no connection with the subject

of such contracts.
2. Any agreements or decisions prohibited pursuant to this article

shall be automatically void.
3. The provisions of paragraph 1 may, however, be declared

inapplicable in the case of:
- any agreement or category of agreements between undertakings,
- any decision or category of decisions by associations of

undertakings,
- any concerted practice or category of concerted practices,
which contributes to improving the production or distribution of goods or

to promoting technical or economic progress, while allowing consumers
a fair share of the resulting benefit, and which does not:
a) impose on the undertakings concerned restrictions which are not

indispensable to the attainment of these objectives;
b) afford such undertakings the possibility of eliminating competition in

respect of a substantial part of the products in question.
3.2.10 Article 82 of the Treaty establishing the European Community

prohibits abuse of dominant position. Article 82 reads:
Any abuse by one or more undertakings of a dominant position within the

common market or in a substantial part of it shall be prohibited as
incompatible with the common market in so far as it may affect trade
between Member States.
Such abuse may, in particular, consist in:
a) directly or indirectly imposing unfair purchase or selling prices or

other unfair trading conditions;
b) limiting production, markets or technical development to the

prejudice of consumers;
c) applying dissimilar conditions to equivalent transactions with other

trading parties, thereby placing them at a competitive disadvantage;
3-7
d) making the conclusion of contracts subject to acceptance by the other

parties of supplementary obligations which, by their nature or
according to commercial usage, have no connection with the subject
of such contracts.
3.2.11 In the context of this study, the incumbent operators are

emphatically dominant, section 4 of the report therefore considers
individual inter-railway undertaking agreements to see if they give rise to
questions under Article 81.
3.2.12 In accordance with Article 83 (1), competition policy was

extended to land transport in 1968 (by Regulation (EEC) 1017/686). This
was itself significantly revised in 2002 in effect to allow the Treaty
establishing the European Community to apply directly and consistently7.
The current text of Regulation 1017/68 is available as a consolidated text
dated 1 May 20048.
3.2.13 Regulation 1017/68 provides for exceptions to the prohibitions in

the Treaty to cover technical agreements in the field of transport by rail.
The Regulation allows railway undertakings to provide services in co-
operation, to agree through timetables, operate through trains with staff
that travel through and to fix end to end prices. Case law however
indicates that the exceptions which the Regulation provides for are to be
construed narrowly.
3.2.14 It is important to note that the exemptions defined in Articles 3 &

4 of Regulation 1017/68 only refer to Article 81 (1) of the Treaty
(restrictive practices). The Requirements of Article 82 of the Treaty
(abuse of dominant position) therefore apply in full.
3.3 Changes in the way railway undertakings interrelate
Definitions
3.3.1 There is a need to make a distinction between the status of a

railway undertaking, its acquired rights, etc. and the role it exercises in
the market in question. These markets might be defined in terms of the
type of traffic moved or geographically. For example, Freightliner, in the
6
Regulation (EEC) 1017/68 of 19 July 1968 applying rules of competition to transport by rail,
road and inland waterway, consolidated version dated 1 May 2004.
7
Council Regulation (EC) No 1/2003 of 16 1017/68 of 19 July 1968 applying rules of
competition to transport by rail, road and inland waterway, consolidated version dated 1 May
2004.
7
Council Regulation (EC) December 2002 on the implementation of the rules on competition
laid down in Articles 81 and 82 of the Treaty
8
http://www.europa.eu.int/eur-lex/en/consleg/pdf/1968/en_1968R1017_do_001.pdf
3-8
United Kingdom is a railway undertaking of long-standing and thus can

be regarded as an incumbent. In its core market, the movement of
containers, it is emphatically the dominant undertaking. However it has
set up subsidiaries to address other British freight markets, heavy haul
(principally of imported coal) and infrastructure service trains. In these
markets it is a “new entrant” addressing a market hitherto dominated by
EWS, another incumbent carrier. Similar distinctions can be seen in
Continental Europe in which incumbent regional railway undertakings
have expanded to bid for freight traffic over other routes using rights
under Directive 2001/12/EC or similar national rights. As examples, the
regional Ferrovie Nord Milano, a long established regional Italian
railway grouping, has recently started to operate international freight
services (through a subsidiary), and similarly in the case of the
Regentalbahn in Germany in respect of national services. This gives rise
to certain problems of terminology.
3.3.2 In this report, the term incumbent railway undertaking has been
used to mean a railway undertaking established before the start of
liberalisation and normally with a dominant position. The phrase
includes railway undertakings which are privately owned (such as EWS
in the UK). Railway undertakings which make use of rights under
Directive 2001/12/EC (or national law) to start or extend rail operations
in particular market segments are referred to as “new entrants” although
they may be incumbent railway undertakings, and indeed dominant, in
other markets. The Consortium have attempted to add explanations
where this distinction is not entirely clear.
3.3.3 These distinctions between incumbent and new entrant are quite
distinct from the concepts of successive carriage, with handover from one
railway undertaking to another along the route and end to end carriage
where one carrier provides all the transport. End to end, as a new
concept, is associated with “new entrant”, but successive carriage may
also be associated with new entrants (where new entrants only have a
safety certificate for one state, or prefer to limit their operations, for
example).
Classic operations
3.3.4 Europe’s railways have traditionally been organised on entirely

national lines. For the half century leading up to the 1990s, integrated
national railways had an effective monopoly of operation within a state
with a few minor exceptions. This meant that single bodies represented
the railway industry on each side of the frontier, in some cases as
governmental departments and in others as state owned corporations.
Relationships between the railways were therefore simple, if not always
harmonious. As trains ran across frontiers, their legal, commercial and
operational status changed from being a train operated by railway A to
one operated by railway B. Responsibility for the train and the
3-9
generation of revenue passed from one organisation to the next, even

though there was no change to the train itself.
Freight market segments
3.3.5 In the market for the movement of freight, a number of sub-

markets may be identified;
• the market for the movement of block trains from origin to

destination, particularly where the consignor and consignee have
private sidings. This market is very competitive and the
characteristics of the movements facilitate end to end operation by a
single carrier.
• the market for intermodal traffic is similarly competitive. It requires

access to loading and unloading terminals although UK experience
demonstrates that use of a single terminal by a number of railway
undertakings is feasible (Felixstowe, where three railway
undertakings use a terminal). This market also facilitates end to end
operation by a single carrier.
• the disaggregated wagonload market however requires a substantial

investment by the railway undertaking in facilities for marshalling
and a high operating cost threshold for the local distribution services.
Wagonload railway undertakings are (almost by definition) always
dominant in that market. The scale of the operation has so far meant
that international wagonload operation has always followed the
successive carriage model. The wagonload market is therefore most
likely to raise competitive concerns.
Development of the market
3.3.6 The market for rail services is developing as a result of

liberalisation. In some states (notably Germany, Sweden and the UK) a
number of independent railway undertakings provide both passenger and
freight services. For passenger services the competition is normally for
the contract to provide the services although in some cases (such as the
services run by the Nord Ostsee Bahn between Hamburg and Padborg)
there is also competition for the passengers themselves. These
undertakings often have a rail background in that they previously
operated local services or have a background in wagon ownership or
freight forwarding. To the extent that they are permitted, they operate
services within the state and some exchange traffic with incumbent or
other independent railway undertakings. Companies such as Rail4Chem
have started to operate international point to point services without
exchanging traffic.
3-10
3.3.7 There have been four types of response from the incumbent
railway undertakings:
• The creation of an international holding company to hold interests

in individual national railway undertakings. This has been
particularly a feature of states in which there are a number of
railway undertakings. Thus a number of state owned freight
companies joined to form Railion (Denmark, Germany and the
Netherlands, the companies are jointly owned by a single holding
company but each retains its national legal identity (and licences,
safety certificates, access rights, etc.)). These companies appear
to intend to improve operational efficiency partially through
organising cross frontier operations more efficiently. So far they
have kept to their collective home territory (for example, Railion
does not operate within Sweden (although it has a Swedish safety
certificate)).
• Alliances, such as that between Railion Deutschland and BLS

which have fallen short of mergers.
• Incumbent railway undertakings have created subsidiaries in

adjacent states often by buying all or part of an independent
railway undertaking. In this way, SBB has an interest in
Germany (SBB Cargo Deutschland) and a subsidiary in Italy
(SBB Cargo Italia) and Railion Deutschland has bought a 95%
share of Strade Ferrate del Mediterraneo in Northern Italy. In this
way SBB Cargo for example recently started moving oil from
Italy to a destination near Zürich. (New entrants have created
subsidiaries too as the creation of Rail4Chem BV in the
Netherlands demonstrates.)
• Incumbent railway undertakings are showing signs of wanting to

operate into adjacent states on their own account. SNCB and
CFL have applied for French safety certificates and SNCF for a
Belgian certificate. It is not yet clear if this is for limited
operations (such as for SNCB serving Lille) or for longer
projections such as for SNCB running throughout from
Zeebrugge to Basel. Development of cross frontier operations by
incumbents has not yet become widespread, and it is not clear if
incumbent undertakings are deliberately withholding competition
in order not to have to face it themselves.
3.3.8 Where access to the market has been ensured, as in Germany this
brings market disciplines to the rail services. The effect of the formation
of groupings to carry international traffic is less clear. Even when they
are a response to other groupings along the same axis there is a risk of
creating an oligopoly and imperfect competition (a point not lost on the
3-11
Court of First Instance in its consideration of the ENS9 case). It is

possible that groupings will be able to reduce operational inefficiencies
provided they are subject to sufficient competitive pressure (and certainly
railway undertakings claim this will be the case10). Where incumbent rail
undertakings collaborate to provide international services this leads to a
risk of foreclosure of the market. Even when incumbent railway
undertakings individually project services into neighbouring states, there
are also risks of a similar oligopolistic situation.
3.3.9 Although incumbent railway undertakings assert that origin to

destination operation by a single carrier is likely to become the dominant
business model in future11, it seems more likely that the reality will not
be a single carrier but rather a series of national partners within a
grouping and in consequence not dissimilar to the classic successive
carriage model, with everything that implies. The creation of European
Bulls would tend to support that view (although the Consortium
understands that the typical relationship in European Bulls will be sub-
contracting rather than successive).
3.4 Implications of these changes on agreements between railway

undertakings
3.4.1 Under the classic model up to the time the new 1999 COTIF
comes into force, there is an obligation to accept traffic on consignment
and an obligation to accept traffic on handover (although in the practical
case the price at which such traffics are accepted can be prohibitively
high) (see COTIF 1980 CIV Article 4 and CIM Article 3).
3.4.2 Under this classic successive carrier handover situation, a train

“belongs” to the receiving railway undertaking directly it crosses the
frontier. The logic of the classic situation is that the receiving railway
undertaking holds all the permissions to operate and access rights and
ensures safety standards by means of agreements with its upstream
partner. The view of the Consortium is that this approach has lost much
of its logic on separation of infrastructure and train operation: there is
little logic in a train belonging to the receiving railway undertaking when
9
Judgment of the Court of First Instance (Second Chamber) of 15 September 1998. The Court
held (inter alia) “The examination of conditions of competition is based not only on existing
competition between undertakings already present on the relevant market but also on potential
competition, in order to ascertain whether, in the light of the structure of the market and the
economic and legal context within which it functions, there are real concrete possibilities for the
undertakings concerned to compete among themselves or for a new competitor to penetrate the
relevant market and compete with the undertakings already established”.
10
Speech by Klaus Kremper of Railion to the UIP Annual Meeting September 2004 claiming
significant reductions in costs and increased efficiency over the Brenner.
11 Comment made by Klaus Kremper, chairman of the board of Railion Deutschland at the UIP
meeting in September 2004
3-12
it is not responsible for forming it, may not be responsible for hauling it
and the receiving railway undertaking does not own the infrastructure.
Nevertheless incumbent railway undertakings to which the Consortium
spoke were insistent that the relationship continued to be appropriate. It
is shown in the table below as partially liberalised.
3.4.3 In this classic successive situation, responsibility for the train and
the benefit of the revenue both transfer at the frontier. This presupposes
a “contract of co-operation” (express or implicit) between the two
railway undertakings to co-operate in offering through international
transport. All the incumbent railway undertakings’ basic arrangements
follow this model even though in practice physical handover may be
distant from the frontier. These co-operative arrangements imply a
certain willingness to make appropriate facilities available.
3.4.4 The classic model therefore circumscribes the nature of the

agreement, it is necessarily about a handover at or near a frontier with
significant mutuality. Classic relationships might be summarised as an
obligation to make an agreement but containing a restriction on the scope
of that agreement (see CIM Article 35).
3.4.5 There have always been local cross frontier operations in which
one railway undertaking performed services on the “other” side of the
frontier. (Near Simbach, for example, where Railion Deutschland serves
Austrian sidings). These were done however on behalf of and for the
account of the national railway of the state on which the traffic was
situated.
3.4.6 Under the new liberalised model in which there is no longer an

obligation to accept traffic, there is no longer an obligation to sign
agreements with neighbouring railway undertakings, instead voluntary
agreements may be made on a commercial basis. Liberalisation thus
allows the additional option of projection of a service beyond the frontier
for the account of the operating railway undertaking and handover
internally. In this case the operating undertaking needs its own safety
certificates and access rights in the state in question. Handover may take
place anywhere where there are appropriate facilities. Handover still
implies a co-operative relationship.
3.4.7 Handover agreements are therefore no longer circumscribed, they

may provide for arrangements which are quite different to the classic
frontier handover and make use of quite different resources. The
question now becomes what legal obligation does competition law place
on a railway undertaking to sign such a co-operation contract.
3.4.8 Traffic may also be carried to destination by a single carrier

without handover. The Consortium learned during the course of the
3-13
study, for example, that SNCB is serving customers in the Netherlands

(in Limburg) on its own account, having previously done so on the
Railion Nederland account. To do so, SNCB has had to get a full set of
permits and authorisations for its Dutch operation. No handover takes
place and there is therefore no co-operative relationship or handover
agreement. Competition law may nevertheless still have a role in
defining the facilities to be provided to end to end carriers. These
relationships are shown in table 1, following.
3-14
Table 1: Table of classic and new relationships within the rail industry
Type of Point of Point of Change of Change of Infrastructure Structure of Potential problem

operation change of change of traction train staff agreements agreements issues
operating revenue between railway
responsibility allocation undertakings
Classic At state At state As agreed, As agreed, Each railway Agreement likely No competition
European frontier, safety frontier normally at normally at undertaking to resemble UIC within the
handover certificates handover handover with its own leaflet 471-1 industry
relationship held by station station national
national infrastructure
railway manager only
undertakings
North At agreed As agreed, As agreed, As agreed, Integrated. Agreement to Competition for
American point likely to be the normally at normally at Where handover the market but not
handover same point as handover handover trackage rights implicit, many within the mode
arrangement the change of station station apply, conditions
operating operating dictated by AAR.
responsibility railroad with Commercial
track owner details agreed
between
railroads
3-1

Partially At state At state As agreed, As agreed, Each railway Agreement to May be
liberalised frontier, safety frontier normally at normally at undertaking exchange traffic unwillingness in
European certificates handover handover with its own in principle principle to
handover held by local station station national required. Details handover, if there
relationship railway infrastructure of exchange need is an agreement to
undertakings manager only defining exchange traffic
in principle, the
most likely
difference of view
is over the
division of the
throughout
revenue
3-2

Handover under As agreed As agreed, As agreed As agreed Each railway Agreement to May be
liberalised likely to be the undertaking exchange traffic unwillingness in
circumstances same point as with the in principle principle to
between the change of infrastructure required. Details handover, if there
independent operating managers of exchange need is an agreement to
railway responsibility whose track he defining. exchange traffic
undertakings runs over Relationship may in principle, the
be successive or most likely
sub-contract. difference of view
is over the
division of the
throughout
revenue
3-3

Handover under As agreed As agreed, but As agreed As agreed Each railway Agreement to Risk of creation of
liberalised not material undertaking exchange traffic oligarchies
circumstances with the implicit, details
between infrastructure of the exchange
associated managers irrelevant except
railway whose track he insofar as
undertakings runs over required by
national law or
insurance etc.
Relationship may
be successive or
sub-contract.
Limited No handover No handover Traction As decided Operating No agreements Operating railway
projection may by the railway undertaking may
under change as a railway undertaking require to use
liberalised function of undertaking with the facilities in the
circumstances technical (note BLS infrastructure “other” state
conditions example) managers controlled by a
whose track he potential
runs over competitor
3-4

End to end No handover No handover Traction As decided Operating No agreements Operating railway
operation by a may by the railway undertaking may
single carrier change as a railway undertaking require to use
function of undertaking with the facilities
technical (note BLS infrastructure controlled by a
conditions example) managers potential
whose track he competitor
runs over
3-5
3.5 Legal issues
Acceptance of traffic on handover
3.5.1 Up to the time the new 1999 COTIF comes into force, railway
undertakings have an obligation to accept traffic on consignment and an
obligation to accept traffic on handover. This applies to both passenger
and freight traffic. The 1999 COTIF sweeps away that limitation and
there will be no obligation under the international law of carriage by rail
to accept traffic either on consignment or handover.
3.5.2 However under European law there may be limitations on the

room for manoeuvre of incumbent railway undertakings. Many of these
hold a dominant position in the market for railway services although their
market share in the overall transport market is often small.
3.5.3 The test of dominance, that given in the United Brands12 case, “a
position of economic strength enjoyed by an undertaking which enables it
to prevent effective competition being maintained on the relevant market
by giving it the power to behave to an appreciable extent independently
of its competitors, customers and ultimately of its consumers” is a test
that most incumbent railway undertakings would satisfy in all the market
segments both for freight and passengers moved by rail. The section on
definitions, above, discusses the issue of the various markets further.
3.5.4 It is clear that co-operation between dominant railway

undertakings operating under the successive carriage model has the
potential to foreclose the market whatever the nature of their handover
agreements. The mere fact that they are dominant and co-operate is
enough. It may be possible for a new entrant to offer successive carriage
by co-operating with another new entrant, (and German – Dutch and
German – Polish examples have been identified elsewhere in this report)
but it is highly likely that the successive model will require the co-
operation of one of the dominant railway undertakings and will therefore
require that railway undertaking to co-operate with a new partner. There
is ample evidence that dominant railway undertakings are reluctant to co-
operate with new partners as a question of principle. In addition there
may well be a question of the equivalence of conditions.
3.5.5 If railway undertakings are in a dominant position, then Article 82

of the Treaty requires them not to abuse that position. In particular they
are prohibited from imposing unfair conditions or applying dissimilar
conditions to trading partners. For example, for such an undertaking to
12
United Brands Continental BV v Commission 27/76, [1978] ECR 207, [1978] 1 CMLR 429
3-1
refuse to accept traffic from one other undertaking when it does accept it
from others might leave it open to claims of abuse. This might be of
particular application in the wagonload market where a refusal without
objective reasons would amount to depriving the new entrant of the
possibility of competing in the market. To the extent that such dominant
undertakings already have trading relationships with other railway
undertakings these requirements could constrain their actions within the
successive carriage model.
3.5.6 The same principle applies to international groupings where there

is already case law. In the GVG-FS case13, it was only possible to
operate the intended service through the creation of an international
grouping since that was the only way to get passenger access rights in
Italy. FS was the only undertaking with which GVG could form such a
grouping and therefore its refusal would have prevented the offer of the
new service.
3.5.7 There remain therefore constraints on dominant railway

undertakings which may require them not to refuse a relationship with a
new entrant without an objective reason where their refusal would limit
competition in the market in question. In a like manner, the terms of the
relationship may be required to be fair in the circumstances of the case.
Facilities where there is no handover
3.5.8 End to end operation by railway undertakings without handover

and therefore without handover agreements comes outside the scope of a
study on rail border agreements. This brief summary of the issues is
included for completeness.
3.5.9 Where new entrants seek to operate origin to destination services

without handover, the doctrine of essential facilities may apply. In
addition to the services laid down in Annex II to Directive 2001/14/EC
which new entrants obtain from the infrastructure manager, new entrants
may require access to fuelling and servicing points for locomotives,
shelter for train crew waiting to take over trains, maintenance services
and supplies of all types from wagon maintenance to spare tail lamps,
etc. from other sources. In practice these may be controlled by the
dominant railway undertaking. In some cases it may be possible, if not
always economic, for a new entrant to duplicate the supply, in other cases
(shelter for train crew and fuelling perhaps) it may be impossible to
provide realistic alternative arrangements.
3.5.10 Case law (Sealink 1992) makes it clear that essential facilities of
this type “a facility or infrastructure without access to which
13
XXXIIIrd Report on Competition Policy – 2003, SEC(2004)658 final Brussels, 04.06.2004.
3-2
competitors cannot provide services to their customers” are to be

provided by a dominant undertakings to its competitors.
3.5.11 The criterion of “essential” is a practical test, it is unlikely for

example that particular freight rolling stock will come into that category,
many different types of freight rolling stock are freely available and can
be substituted for each other. The Bronner case14 however made it clear
that facilities which can be replicated but only at an uneconomic cost are
not “essential facilities”. The criterion for access to a facility is therefore
whether in practical terms it can be replicated (whether there is a viable
alternative in the words of the ENS case), access to a facility or resources
cannot be demanded simply because the alternative is uneconomic. The
criterion of no practical alternative must be satisfied.
3.5.12 These resources need not be physical (although traction,

exchange sidings, railway telephones, etc. are the most likely), they may
also be systems or intellectual property and the example of the
consignment note is used later in the report.. Within the context of the
study, the provision of these resources or facilities for cross frontier
traffics is considered below.
3.5.13 It must be recognised that there are limits to the essential

facilities doctrine since there is an element of expropriation and requiring
access to assets created by an undertaking may discourage future
investment. There is a much stronger case where an undertaking has
benefited by an accident of history for example inheriting assets from the
state or a state owned enterprise. Equally there can be much more
compelling reasons where physical replication of an asset is impossible
due, for example, to physical constraints.
3.5.14 Traction is the prime example of a necessary element to operate a

rail service. New entrant railway undertakings have not always enjoyed
the financial resources to invest in new equipment and so frequently have
to look to existing equipment owners for resources. This has not been
easy, incumbents have typically said that traction provision for third
parties does not form part of their business model and that there is no
traction spare.
3.5.15 In the present state of the European railway industry, there is no

market for spot hire of traction. There is a market for long-term lease of
locomotives, but only basic locomotives approved for use in a limited
number of states. It is likely that the market for the supply of traction
will become more fluid, in Great Britain for example there is a market for
short term hire of traction between railway undertakings and one railway
14
Oscar Bronner v Mediaprint Zeitung- und Zeitschriftenverlag GmbH and others Case C-7-97,
[1998] ECR I-7817, [1999] 4 CMLR 112 [Oscar Bronner]
3-3
undertaking15 for which it is the core of the business. In the meantime,

where there is no realistic alternative supply of traction, a dominant
undertaking may be required to make it available.
3.5.16 Each case must be taken on its merits and it may be, by analogy
with the British Midland case16, that the obligation for a dominant
undertaking to supply a competitor with the input to offer a competitive
service may only be enforced for a limited period.
3.5.17 The Consortium recommends that the Commission clarify that

the obligation contained in Article 5 of Directive 2001/14/EC to make
facilities available is clarified as applying to railway undertakings when
railway undertakings control the facilities in question. It should also be
noted that the requirements of Article 82 of the Treaty go beyond the
specifics of Annex II of Directive 2001/14/EC.
Classic inter-railway agreements
3.5.18 A number of issues are governed by inter-railway agreements.

Amongst these are:
3.5.19 Infrastructure issues. In the past integrated railways made

agreements with their neighbours which typically included agreements
on maintenance responsibility, signalling and electrification systems etc.
3.5.20 Operations planning. The planning of hand-over operations takes

place within the context of the RailNetEurope, the infrastructure
managers’ capacity sale and timetable body.
3.5.21 Current operations. Current operations are normally the subject

of agreements made within the format of UIC leaflets 470 and 471.
These leaflets provide general principles. They are intended to act as an
aide-mémoire and to provide some model clauses designed to be fair and
balanced. The relevance of leaflets to non-members is treated in the
section on UIC leaflets below.
3.5.22 Traffic hand-over. Practical implementation instructions for

handover of traffic and for a wide range of railway administration
procedures both freight and passengers are defined by the CIT,
considered below.
3.5.23 Use of traction over the cross-frontier section. The right to

approve the use of traction over cross frontier sections is rapidly moving
out of the hands of railway undertakings and infrastructure managers.
15
Fragonset Group www.fragonset.co.uk.
16
Official Journal L96 of 10 April 1992
3-4
3.5.24 Certification of staff competence over the cross-frontier section.

Likewise the right to certify staff competence is being reviewed within
context of ensuring a level playing field for new entrants.
3.5.25 In addition, inter-railway agreements such as the RIC and RIV

lay down principles for the hand-over of vehicles. Significant changes to
the RIV and RIC have been proposed to address concerns over their
compliance with EU Competition law, these are dealt with in section 4
below.
3.5.26 Problems may arise at frontiers and hand-over points which are
quite outside the scope of agreements and treaties.
3-5
4. MULTILATERAL INTERGOVERNMENTAL
AGREEMENTS
4.1 An overview
Report structure
4.1.1 This section of the report deals with multilateral intergovernmental

treaties and conventions. For each group of agreements it examines the
content and considers the implications in terms of EU law, noting
particularly provisions in the areas of market access, safety and
interoperability which appear to be at variance with community law.
4.1.2 Treaties which are open to all states have been treated as
“multilateral”, those individually negotiated have been treated as
"bilateral" even when there are more than two signatories.
4.1.3 The table in Appendix C shows the major multilateral treaties and
which states covered in the study are members.
Relationship between EU and international law
4.1.4 Before considering the individual agreements, the European

context in which they have effect needs to be evaluated. The major issue
in this area is the interface between EU law and other international (and
national) law.
4.1.5 An important issue, which applies to all the legislation and treaties
examined in this report (but particularly in the case of COTIF and the
OSZhD treaties), is the issue of legislative competence. The external
competence of the Community is its capacity to act separately from its
Member States internationally: in particular, to negotiate and conclude
binding international agreements and to belong to, and participate in,
international organisations. (Whilst the powers exist today, the concept
is most clearly set down in Article III 225 of the recently signed Treaty
establishing a Constitution for Europe17.) The Community's external
competence may be either exclusive to the Community or non-exclusive
and thus shared with the Member States. There may also be areas
where the Community is not competent, and which therefore remain
matters for the Member States alone.
17
Official Journal C310 of 16 December 2004
4-1
4.1.6 If therefore, any part of a treaty comes within the scope of

exclusive external community competence, then the Commission will
take over responsibility for all policy and act to ensure community law is
not affected. Member States are required to disregard any obligations
which are contrary to community law18, they are not however required to
renegotiate such treaties. In the case of shared external competence the
position is more complex. Member States try to reach a common position
by consensus, but if that is impossible then the Member States will be
free in the last resort to express national views on matters within national
competence and to exercise their national powers.
4.1.7 External competence exists when an international agreement could

affect Community internal measures (i.e. Directives and Regulations).
Shared competence exists where the Community has the power to adopt
internal rules but has not yet done so; or where the Community has
legislated but has set minimum rules only, allowing the Member States to
adopt additional rules. Given that “in the Common Transport Policy any
appropriate provision may be enacted (Article 75 (1) EC)”19, it is clear
that even where the Community does not have exclusive competence, it
has shared competence on all aspects of international transport treaties.
4.2 Agreements managed by the UNECE
Overview
4.2.1 In line with its role to promote trade in Europe, the United Nations
Economic Commission for Europe (UNECE) and the League of Nations
before it has facilitated the development of a number of inter-
governmental treaties and agreements to promote trade. For transport,
the process is managed by the UNECE Transport Division. The
signatories are not limited to European states and in many areas (for
example, the movement of containers) it is important that there is wider
agreement. These treaties include :
Three conventions on rail frontier processes:

• Convention on the International Régime of Railways (1923)
• International Convention to Facilitate the Crossing of Frontiers for
Passengers and Baggage Carried by Rail (1952)
• International Convention to Facilitate the Crossing of Frontiers for
Goods Carried by Rail (1952)
18
Judgment of the Court of Justice of 27 February 1962 in Case 10/61 Commission v Italy
[1962] ECR 1
19
The ABC of Community Law, European Commission 1999
4-2
Five conventions on customs and related issues:

• Customs Convention concerning Spare Parts used for repairing Europ
Wagons (1958)
• European Convention on Customs Treatment of Pallets used in
International Transport (1960)
• Customs Convention on Containers (1972)
• International Convention on the Harmonization of Frontier controls
of Goods (1982)
• Convention on Customs Treatment of Pool Containers used in
International Transport (1994)
Two intergovernmental agreements on infrastructure issues:

• European Agreement on Main International Railway Lines (AGC)
(1985)
• The European Agreement on Important International Combined
Transport Lines (AGTC) (1991)
Each of these conventions is discussed below.
4.2.2 The text of all of these conventions and agreements (except that
for the “international regime”) is available on the UNECE website in
English and French at www.unece.org/trans/conventn/legalinst.html.
The website also includes a full list of the signatories of the various
treaties.
Convention on the International Régime of Railways.
4.2.3 This agreement was signed on 9 December 1923 and came into
force on 23 March 1926. The English and French texts are authentic. A
list of EU Member States that have ratified the convention may be found
in Appendix C. All the European ratifications were before 1940 and
some states have profoundly changed since then so there must be some
doubt about the nature of the commitment of some states. (Ratifications
outside Europe continue however, e.g. Zimbabwe in 1998.)
4.2.4 The convention lays down general duties on states to facilitate

international traffic. These include the need to provide reasonable
facilities for passengers and freight, to limit the effect of controls, to
ensure that state railways use compatible equipment and co-operate, (co-
operation in the design of equipment is specifically mentioned). The
framework for a standard contract for passengers and for freight is laid
down. Conditions for the application of tariffs are laid down. A
framework is also laid down for financial relations between railway
4-3
administrations and between them and their states, particular in the case
of currency controls. The text of this convention is not on the UNECE
website but may be found in French, German and Italian on the Swiss
Government website under the reference 0.742.101.1. It is available in
English under League of Nations reference 1129.
International Convention to Facilitate the Crossing of Frontiers for

Passengers and Baggage Carried by Rail.
4.2.5 This convention was signed on 10 January 1952 and came into
force on 1 April 1953. The English and French texts are authentic. A list
of EU Member States that have ratified the convention may be found in
Appendix C. The convention sets out general principles for customs and
immigration formalities at rail frontiers, examination on a moving train is
presumed, where that is not possible, a single station should be
designated and extra-territorial examinations arranged (still on train).
Stops must not exceed forty minutes. Arrangements for examination of
hand luggage and registered luggage are laid down.
4.2.6 Within the Single Market only prohibited imports (such as drugs)
have any customs significance and to that extent the convention has little
importance. The majority of members of the convention are Schengen
states or have immigration agreements with adjoining states.
International Convention to Facilitate the Crossing of Frontiers for

Goods Carried by Rail.
4.2.7 This Agreement was signed on 10 January 1952 and came into
force on 1 April 1953. The English and French texts are authentic. A list
of EU Member States that have ratified the convention may be found in
Appendix C. The convention sets out general principles for customs
formalities at rail frontiers and is largely parallel to the passenger
convention above. It recommends a single frontier station, single
facilities, it recommends special arrangements for transit traffic.
4.2.8 Within the Single Market in principle customs controls at frontiers

have been all but abolished; to that extent the convention has lost its
importance.
Customs Convention concerning Spare Parts used for repairing Europ

Wagons.
4.2.9 This convention was signed in Geneva on 15 January 1958 and

came into effect 1 January 1961. The disappearance of the Europ wagon
pool makes it strictly irrelevant although its principles have been adopted
for other pool agreements. These principles provided for free import of
4-4
parts for the repair of wagons on the basis that the wagons themselves
had been temporarily imported.
4.2.10 Given that the treaty no longer has an object, it would be

appropriate for the Contracting States to abrogate it.
European Convention on Customs Treatment of Pallets used in

International Transport.
4.2.11 This Agreement was signed in Geneva on 9 December 1960 and

came into force on 12 June 1962. A list of EU Member States that have
ratified the convention may be found in Appendix C. The convention
provides for pallets to be imported without paying import duties provided
they, or the same number of other pallets is exported. In principle this
greatly simplifies the use of pallets. It has to be recognised however that
the europallet is only used extensively in Europe and that in much of
Europe, within the Single Market, there is free movement of all goods.
This convention has therefore lost much of its former importance.
Customs Convention on Containers.
4.2.12 This convention was signed in Geneva on 2 December 1972 and

came into force 6 December 1975. Essentially it provides for containers
being used to carry goods to be imported freely provided they are not
used for cabotage and are exported promptly. A list of EU Member
States that have ratified the convention may be found in Appendix C.
The United States, Japan and Australia are also members. For containers
based inside the Single Market even more liberal conditions apply and to
a some extent the Convention on Pool Containers (see below) has
overtaken this convention for third country containers..
International Convention on the Harmonization of Frontier controls of

Goods
4.2.13 This agreement was signed on 21 October 1982 and came into
force on 15 October 1985. The English, French, Russian and Spanish
texts are authentic. The convention permits regional economic
organisations to join and the European Community is a member.
Norway and Switzerland have also acceded to/ratified it. The convention
sets out general principles for frontier formalities. It defines the
processes, customs, plant health, animal health etc. It encourages states
to share facilities, encourages them to co-ordinate opening times, etc. and
encourages standardised documentation. There is a general duty to adopt
reasonable measures. The convention recommends rather than mandates
and there are no sanctions for non compliance
4-5
4.2.14 Within the Single Market in principle customs measures are very
limited and to that extent the convention has lost its importance.
Convention on Customs Treatment of Pool Containers used in

International Transport.
4.2.15 This convention was signed in Geneva on 21 January 1994 and

came into force on 17 January 1998. Texts in Arabic, Chinese, English,
French, Russian and Spanish are authentic. The convention permits
regional economic organisations to join and the European Community is
a member. Norway is not a member and Switzerland has signed but not
ratified the convention. It aims to facilitate the common use of
containers within a pool, essentially by waiving customs controls
provided that the number of containers in use in each state roughly
matches the number supplied from that state. No attempt is thus made to
follow individual containers. This greatly facilitates container use
without distorting the duties paid on the containers when new. The
convention also has application outside Europe but in fact few states
outside Europe are members.
European Agreement on Main International Railway Lines (AGC).
4.2.16 This Agreement was signed in Geneva on 31 May 1985 and came
into force on 27 April 1989. Signatories are wider than just the EU and
include an number of 1520mm states. A list of EU Member States that
have ratified the agreement may be found in Appendix C. The agreement
is intended to make systematic plans for the creation of infrastructure
“the international E-network of main lines” for the movement of
international traffic by rail. It therefore defines lines which are
considered “of major international importance”. Annex II defines
expectations of the standards which it is expected lines will be brought
up to. These “will be brought into conformity … in future improvement
work to be carried out in conformity with national programmes”, a
slightly less than binding requirement. Authentic texts are English,
French and Russian. The agreement pre-dates the work done on TEN-T
routes by the Community20.
The European Agreement on Important International Combined

Transport Lines (AGTC).
4.2.17 This agreement was signed in Geneva on 1 February 1991and

came into force 20 October 1993. Signatories are wider than just the EU
and include an number of 1520mm states. A list of EU Member States
that have ratified the agreement may be found in Appendix C. The
agreement is intended to make systematic plans for the creation of
20
See Decision No 1692/96/EC of the European Parliament and of the Council of 23 July 1996
on Community guidelines for the development of the trans-European transport network
4-6
infrastructure for the movement of intermodal traffic by rail. It therefore

defines lines and terminals which are considered “important”. Annex III
defines expectations of the standards which it is expected lines will be
brought up to, and annex IV the performance standards, these “will be
brought into conformity … in future improvement work to be carried out
in conformity with national programmes”, a slightly less than binding
requirement. Authentic texts are English, French and Russian.
4.2.18 A number of bilateral treaties have been concluded specifically to

put the multilateral AGC and AGTC treaties into effect. Typical of these
is the German Polish treaty of 30 April 2003 on the Berlin - Warsaw and
Dresden - Wroclaw axis. Other treaties in the late 1990’s have followed
the same approach to aspire to improve trunk lines without specifically
citing AGC or AGTC, sometimes involving an aspiration to build a new
high-speed international line. These treaties include North South routes
though Switzerland, the Berlin - Vienna axis and Paris to South West
Germany.
The nature of the conventions
4.2.19 These UNECE conventions fall into three groups, frontier

facilitation, customs conventions and infrastructure agreements. Of these
the customs conventions are essentially technical and the infrastructure
conventions are essentially about aspirations for investment in
infrastructure, they will not be considered further. The conventions on
frontier facilitation however are of some interest.
Frontier facilitation conventions
4.2.20 All of these frontier facilitation conventions are more than fifty
years old and they all have a background in a Europe of rigid frontiers
with strict immigration and customs controls, a world which has long
passed. They presume a railway with an effective monopoly of
international traffic and a full service railway offering registered baggage
and the movement of livestock. The character of the conventions is
strong on exhortation, weak on prescription. Many of the
recommendations have been made part of international law by other
conventions (COTIF for the content of consignment notes, for example)
other parts (such as the obligation to co-operate) will be part of the third
railway package. Other aspirations, such as co-operating in the
preparation of standard technical standards have been addressed in other
ways. The conventions do not conflict with Community law on market
access, safety or interoperability. They would not seem to constrain
competition.
4.2.21 Whilst these conventions remain part of international law, the

Consortium consider they no longer perform any real function within
4-7
Europe, they no longer provide any effective stimulus to frontier

facilitation. It is possible they have a continuing role outside Europe and
accordingly the Consortium recommends no action should be taken. (It
should be noted that they are not incompatible with subsequent
legislation).
4.3 Technical Unity
4.3.1 In the late Nineteenth Century, it became evident that railway

technical standards needed to be standardised for the benefit of
international operations. Railways even in the nineteenth century were
subject to governmental safety regulation and so it was natural that
governments took the initiative to negotiate the first agreement on
standards. Thus on 15 May 1886 the International Convention on the
Technical Unity of Railways (normally referred to as TU) was signed. It
came into force 1 April 1887. This regulated basic criteria such as the
distance between buffers, height of buffers, etc. It gave rise to concepts
still referred to by rail staff as ‘Berne’, the Berne gauge (for the basic
international loading gauge); the Berne key (the standard carriage key);
the Berne rectangle (the space within the buffers where staff can stand
during coupling movements).
4.3.2 The agreement has been updated three times, the most recent
updates were in 1914 and in 1938. Belgium, Bulgaria. Czechoslovakia,
Denmark, France, Germany, Greece, Hungary, Italy, Luxembourg,
Netherlands, Norway, Poland, Romania, Sweden, Switzerland, Turkey,
Yugoslavia were signatories to the 1938 edition and the agreement came
into force on 1 January 1939. Austria joined in 1950. The annexes to the
1938 agreement, which contain the technical specifications themselves
include stipulations for track gauge, conditions under which vehicles
must be accepted for exchange, vehicle construction standards,
maintenance standards, loading standards and customs requirements. In
an interesting parallel to present circumstances, the TU was a
governmental agreement which governments undertook to enforce, it was
not a ‘gentlemen’s agreement’ between railways although the technical
requirements for the current (1938) edition were in fact drawn up by the
UIC.
4.3.3 TU stipulations have been incorporated into appropriate UIC

leaflets and (in the case of loading and loading gauge issues) into the
RIV. They form the basis of appropriate leaflets and in many cases UIC
leaflets go further (for example in requiring vehicles to be designed to
incorporate a centre-coupler as well as a draw-hook). UIC leaflets and
RIV appendices do not distinguish between TU stipulations (which have
the force of law in Member States) and UIC/RIV recommendations
which do not.
4-8
4.3.4 When the 1999 revision to COTIF comes into force, the TU will
be abrogated (APTU Article 10). If the APTU is not adopted in EU
States because of the issue of Community competence (see below), then
the TU will continue. The principles of Community competence would
however require EU Members States to ignore any TU obligations which
are incompatible with those of the Interoperability Directives (there are a
very limited number of minor points (e.g. on the marking of vehicles)
which conflict).
4.3.5 The text of the latest Technical Unity is available in French,

German and Italian on the Swiss Government website at the internet
address http://www.admin.ch/ch/f/gg/cr/1938/19380076.html.
4.3.6 Despite being nominally part of international law, the Treaty on

Technical Unity has not been relevant in any real sense for half a century.
The Consortium recommends that for the sake of clarity it is abrogated
once the provisions for technical interoperability have been introduced.
This report will not consider TU further.
4.4 Convention concerning International Carriage by Rail (COTIF)
Overview & Development
4.4.1 COTIF had its origins in the nineteenth century in Central Europe;
it was created essentially to address problems which were starting to arise
in international freight traffic. Although international freight traffic was
operating, the contractual structures had not kept pace with the
development of traffic. Where a through movement was the subject of a
number of national contracts, freight customers found it impossible to
prove where loss or damage had occurred and hence could take no legal
action. Even where there was proof, customers found it impractical to
sue in foreign courts. Likewise individual railways had limited ability to
claim against customers for the consequences of, for example, poor
loading.
4.4.2 A number of states therefore agreed a convention, Das

internationale Übereinkommen über den Eisenbahnfrachtverkehr
[International Convention concerning Freight Traffic by Rail] signed on
14 October 1890 to cover these problems. This in due course became
COTIF. To begin with, the convention only included freight traffic and
only legislated for freight contractual terms. International passenger
traffic by contrast could and did continue for many years as the subject of
a succession of national contracts; it was normally clear where death or
injury occurred and the legal problems were therefore less acute. This
deficiency was made good in the twentieth century; passenger contractual
terms were added to COTIF in 1924 (these are still absent from the
4-9
SMPS q.v.). The most contentious issue, that of minimum liability limits
for death and injury to passengers, was only incorporated into the
convention in 1956.
4.4.3 A new COTIF is in the process of ratification, and the new version
is expected to come into force in 2005. For this reason the remarks
below all apply to the new, 1999, version of the convention. The new
COTIF includes a base convention with appendices covering individual
areas. The base convention lays down rules for the management of the
convention itself, rules for amending it and the obligations and powers of
Member States. The appendices are: the contractual terms for
international passenger and freight traffics (CIV and CIM); a
freestanding appendix on the movement of dangerous goods (RID); rules
for the use of rolling stock (CUV); rules for drawing up contracts for the
use of infrastructure (CUI) and rules for the adoption and enforcement of
international standards for railway equipment (APTU and ATMF).
4.4.4 As outlined in section 2, the Commission will exercise its option to

join COTIF as a regional economic integration organisation under Article
38 of the revised COTIF. After it has joined (probably in 2005) it will
hold 23 of the 43 votes and thus a simple majority. It will be close to
having the two thirds majority required to transfer attributions to other
intergovernmental organisations (such as, for example, the European Rail
Agency {Article 14 (2h)}).
Scope of agreement
4.4.5 COTIF applies in all the signatory states, currently all the
contiguous standard gauge states in Western Europe and the Middle East,
the Maghreb states of North Africa and Western European broad gauge
railways. There are forty-two Member States in all. All EU Member
States with railways are members of COTIF currently with the exception
of Estonia. Estonia applied for accession on 19 January 2005.
Switzerland and Norway are also members.
4.4.6 This new 1999 COTIF was drawn up to reflect the liberalisation of
the railway industry, in particular the initiatives of the European
Commission. It therefore (by contrast with the preceding 1980 version)
gives railway undertakings freedom to refuse traffic and much more
flexibility in the contractual arrangements they can make to carry it. It
should be noted that a railway and its customer only have freedom to
modify these contractual terms to the extent that COTIF itself allows.
There are therefore constraints on the contractual freedom of railway
undertakings.
4.4.7 The 1999 COTIF follows the practice of its predecessor in

allowing states and carriers to agree supplementary provisions. The
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supplementary provisions may not derogate from the CIV or CIM. This
provision was not much used in the 1980 COTIF, the only notable
example is the Agreement of 22 – 26 November 1993 to take account of
the separation of infrastructure management and railway operation in the
CIM and CIV. Despite the provision in the new COTIF, the CIT (the
association which draws up standard terms on behalf of the carriers (see
below)) are on record as saying they believe that standard terms and
conditions are a much more satisfactory way to set down legal
relationships than supplementary provisions.
4.4.8 It should also be noted that Article 5 of COTIF 1999 requires

Member States “to adopt measures in order to facilitate and accelerate
international rail traffic”. The Convention sets up the Rail Facilitation
Committee to help achieve this task. The duties of the Committee (set
down in Article 19) to “give its opinion” and to “recommend” do not
however suggest a particularly active or strong leadership. All Member
States (and in due course the Commission) will be able to take part. The
quorum will be a third of the Member States.
4.4.9 A number of railway organisations, the CIT in particular, draw up

implementation provisions for COTIF and propose standard forms of
contract. See section 4 for details.
4.4.10 The text of COTIF, the overarching convention and the

appendices may be found in English, French and German on the OTIF
website, www.otif.org.
The COTIF appendices
Rules for carriage of passengers and freight (CIV and CIM)
4.4.11 The CIM and CIV define the relationship between railway
undertakings and their customer. The CIM and CIV are mandatory for
any international rail transport (with a few trivial exceptions). They go
further (in Title V) in defining the relationship between railway
undertakings in executing the contract of carriage. Unlike the 1980 CIM
and CIV however, the new COTIF does not define relations on handover
between railway undertakings. Railway undertakings may exchange
traffic freely or elect not to do so. For this reason the CIM and CIV (in
themselves) are not explored further in this report.
Rules for the adoption and enforcement of international standards for

railway equipment (APTU and ATMF)
4.4.12 The APTU and ATMF have major areas of conflict with the
Interoperability Directives since they set down ways to set up and
enforce international standards for the rail industry which conflict with
4-11
those of the Interoperability Directives. The APTU and ATMF are

therefore unlikely to be applied within the EU. However, it is unclear to
what extent they will be applied in the COTIF states that remain outside
the EU. Further examination of this area lies outside the scope of this
report.
Rules for drawing up contracts for the use of infrastructure (CUI)
4.4.13 There are common areas between the CUI (on the use of
infrastructure) and Directive 2001/14/EC, but at the same time the broad
thrust of the two items of legislation is different. The Directive deals
with fair allocation of capacity and charging for it21, the CUI deals with
liability22. The broader issue of access to infrastructure however lies
outside the scope of this study.
Rules for the use of rolling stock (CUV)
4.4.14 The CUV which essentially sets down contractual terms which
apply to the use of vehicles should nothing else be agreed, is not matched
by any community legislation. It replaces prescriptive legislation (the
RIP23) for the use of wagons. Its structure has been deliberately designed
to allow free negotiation of terms and conditions but to provide a
backstop to prevent the stronger party (normally the railway undertaking)
imposing unreasonable terms. It has been accepted by wagon owners24.
4.4.15 Implementation problems have arisen within the industry, the

logic of the liberalisation is to allow contracts to be freely negotiated, but
yet a multitude of differing contracts between owners and railway
undertakings would be difficult to manage. (It could leave owners with
different contracts for each undertaking and undertakings with different
contracts for each owner, which would be impractical to execute at
ground level (conditions for operation might all be different)). Attempts
are being made to create a standardised contractual structure to regulate
the contractual framework between owner and railway undertaking.
Further exploration of this issue lies outside the scope of this study.
Community competence
4.4.16 This issue is examined in outline above, it is of some importance

for COTIF. Although (like other treaty obligations of EU Member
21
Items 5 – 8 in the preamble to the Directive
22
Item 2 in the section of the Rapport de l’office central relative à la revision de la Convention
relative aux transports internationaux ferroviarires (COTIF) du 9 mai 1980 dealing with the
CUV
23
Regulations concerning the International Haulage of Private Owners’ Wagons by Rail Annex
II to the CIM COTIF 1980.
24
Speeches to German Wagon Owners’ Association 4 June 2004
4-12
States), EU Member States are required to give EU legislation and policy

precedence over their COTIF obligations (see the text on Community
competence above in this section), Article 3 § 2 specifically lays down
that “the obligations … for the Member States, which are at the same
time Members of the European Communities or States parties to the
European Economic Area Agreement, shall not prevail over their
obligations as Members of the European Communities or States parties to
the European Economic Area Agreement”
4.4.17 Member States are therefore required to follow Community

policies at the expense of COTIF commitments. States outside the EU,
and in particular applicant states, are left in an uncertain position,
committed to a convention which they expect will be overtaken. Given
the Community’s intention to accede to the new COTIF and its
immediate effective majority, there will be an opportunity to consider
how the legal position can be resolved to the benefit of the mode and the
states which are not members of the EU.
4.4.18 COTIF was specifically drafted to accommodate the process of

liberalisation and OCTI’s25 report on the drafting notes “competition
aspects must be dealt with and governed at state level in an impartial and
non-discriminatory manner”26. This is a strong statement in favour of a
liberalised market although it is surprising that given the international
focus of COTIF and the fact that its architects were aware that
competition policy had a Community dimension, no role appears to have
been identified for international organisations or international law.
4.4.19 Despite attempts being made by OTIF to align COTIF with its
perception of Commission aspirations, this was conspicuously not
achieved (the 1999 convention includes the APTU and ATMF which
conflict fundamentally with EU policy). The decision that the
Community will accede to the Convention will create the opportunity for
more effective alignment in the future.
4.4.20 The areas of overlap in which COTIF appendices do not align

with EU law have been identified above. It is likely that elements of
COTIF will also not be aligned with the Third Railway Package. At the
time the package is debated however, it is likely that the Community will
be a Member of COTIF and that it will be possible to reconcile
differences.
4.4.21 The Consortium therefore recommend that the Commission make

use of their membership of COTIF to resolve the question of the future of
the ATMF and APTU, to reconcile the CUI and infrastructure packages
25
OCTI Office central des transports ferroviaires, the COTIF secretariat
26
Rapport de l’office central relative à la revision de la Convention relative aux transports
internationaux ferroviarires (COTIF) du 9 mai 1980.
4-13
and to consider what Community law might be desirable in the area of

vehicle operation. It is assumed that the process of considering COTIF
law in the context of the third railway package will continue.
4.5 Organisation for the Co-operation of Railways and the

agreements it manages
The organisation
4.5.1 The Organisation for the Cooperation of Railways, (Организация

Сотрудничества Железных Дорог) was the Soviet bloc’s response to
OTIF and the UIC; it is referred to in this report as the OSZhD27.
Intergovernmental nature of the agreement
4.5.2 This sub-section, which considers the OSZhD, is within the

intergovernmental treaty section because that is the formal nature of the
agreement. However, its content parallels many inter-railway
agreements in Western Europe, this should be borne in mind in making
comparisons.
4.5.3 The OSZhD, the Organisation for the Co-operation of Railways

headquartered in Warsaw manages the former Soviet block equivalent to
COTIF. After the partition of Europe in the late 1940’s, rather than to
adhere to COTIF, Soviet block states set up their own convention.
Because these national railways were departments of state, they represent
their states within the OSZhD. As a result the OSZhD has a mixture of
tasks which in the West would be undertaken by separate bodies. Thus it
takes the role of OTIF, in that it decides transport conventions, something
of the role of the UIC, because it considers technical issues, something of
the RIV because it sets down loading standards and loading gauges, etc,
etc. It is therefore much more of a one-stop-shop than its Western
counterparts. It should be noted that membership is not clear cut, a
number of EU states are members of both COTIF and the OSZhD, a
number of railway undertakings are represented at the OSZhD and at the
UIC (see below).
27
Note that varying transliteration conventions for the Cyrillic characters make the organisation
OSShD, OSJD and OSZhD, in its own published material it makes use of more than one
abbreviation, (sometimes in the same document). OSShD is the most common, but English
language transliteration rules would prefer OSZhD, this aligns with the accepted abbreviation
for its largest member RZD, the Russian Railway.
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Origins of the OSZhD
4.5.4 Russia had been a member of COTIF before the First World War
but after the 1917 October Revolution it did not rejoin OTIF (or
subsequently the UIC). The reasons for this were partly political.
Almost certainly practical issues also played a part, since subscriptions to
these bodies were heavily dependent on length of line and with an
enormous network, little exchange traffic and little interest in common
standards, the decision seems logical. After 1945, whilst the Soviet
satellite states with standard gauge railways were members of COTIF,
the UIC and all the other railway associations, the Soviet Union itself
remained separate.
4.5.5 There was a need at least, for conventions for through consignment
of freight and for passenger traffic between the Comecon states. The first
step was the negotiation and signature of conventions for the
international carriage of passengers and freight, the SMGS and SMPS.
The SMGS came into effect between the Soviet Union and its European
and Asian satellites on 1 November 1951, the SMPS came into effect on
1 January 1951. The SMGS and SMPS were inspired by the CIM and
CIV and demonstrate significant similarities. The texts have been
revised several times since and the most recent edition of the SMGS is
1 Jan 2004. The most recent published edition of the SMPS is
30 May 1999. See below for further details of these conventions.
4.5.6 The SMGS and SMPS Member States decided that something
more than the simple transport conventions was required and decided to
set up a co-operative organisation. Accordingly on 28 June 1956 the
Soviet Union, China, Albania, Bulgaria, Czechoslovakia, German
Democratic Republic, Hungary, Mongolia, North Korea, Poland,
Romania, and Vietnam agreed in Sofia to set up the OSZhD. The
organisation started work on 1 September 1957. Unlike COTIF, the
OSZhD, SMGS and SMPS are each free-standing so that membership of
the OSZhD does not imply application of the SMGS and SMPS (and the
Czech Republic, for example, does not).
4.5.7 The SMPS and SMGS represent the totality of the multilateral
agreements (there is no equivalent to the CIT for example) and therefore
provide for (but do not publish) instructions to staff on the handling of
traffic including at hand-over between railway undertakings. The more
detailed issue of whether the OSZhD regime represents an infringement
of EU law is considered below.
4.5.8 The official languages of the OSZhD are Russian and Chinese.
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Membership of the OSZhD
4.5.9 All the states of the Soviet bloc joined the OSZhD and it therefore
represented a diverse selection of railways: standard gauge Central and
Eastern European railways using UIC technical standards and operating
practices; the railways of the former Soviet Union with their own
practices; the standard gauge railways of China and Korea; and the
former colonial metre gauge railways in Indo-China. Cuba was also a
member at one time. Questions of technical and operating harmonisation
will have presented particular challenges.
4.5.10 When the former Soviet Union broke up, all the successor states
took up membership of the OSZhD and of the former satellite states only
Germany (Democratic Republic) resigned its membership. Iran also
became a member in 1997 and the Consortium understands that Turkey
has also considered membership. Finland, which shares the 1520mm
gauge is not and never has been a member of OSZhD, although it has
observer status. The Czech Republic, Hungary, Latvia, Lithuania,
Poland, Slovakia (and Iran) have membership of both COTIF and
OSZhD.
4.5.11 In recent years OSZhD has introduced an associate class of

membership to which approximately twenty companies, mainly in the
railway equipment supply industry belong.
4.5.12 Within its own terms, the OSZhD was in many ways a more
logical organisation than the variety of organisations set up in Western
Europe. Since railways were arms of the state, no differentiation was
made between railways themselves and their states, so there was no need
for separate governmental and railway organisations. Likewise as there
was only one railway body, it produced and published all railway
documentation, there was therefore no need for the UIC, CIT, RIV, RIC,
etc. The organisation does now differentiate between railways and their
states, but only to a limited extent, as the organisational diagram below
makes clear:
4-16
4.5.13 The OSZhD manages and publishes the SMGS and SMPS
(Соглашение о международном железнодорожном грузовом
сообщении and Соглашение о международном пассажирском
сообщении) roughly equivalent to the CIM and CIV, although as
explained above more comprehensive in that they include such issues as
completion of the consignment note (which would be a CIT issue in the
West), loading gauges (which would be an RIV issue in the West) and
seat reservations (which would be a UIC issue in the West). The OSZhD
also acts as a standards organisation for its members, standards are
published in the form of leaflets similar to those of the UIC. The UIC
and OSZhD have a formal programme for joint liaison and some
standards (particularly those for coding and numbering) are joint.
4.5.14 The OSZhD also manages internal agreements, the principal one
from the viewpoint of this study is the Regulations for the Use of
Vehicles (in International Traffic) (PPW), because of its similarity to the
RIV it is treated with the RIV below.
4.5.15 The OSZhD also “co-ordinates tariffs between members”. This

might take a number of forms, from standardisation of layouts, through
4-17
standardising categorisation of categories, to agreements on prices. In

this context it is understood that the 1993 tariff agreement between the
CIS and the Baltic states was deliberately designed to provide for low
price tariffs. It is clear that some of these activities raise issues in
competition law and are discussed further in Section 4.
Current objectives of the OSZhD
4.5.16 The principal tasks that the OSZhD has currently set itself have
been to try to:
• co-operate with member government aspirations to provide transport
links for strategic territorial development (major new international
lines are being built in Central Asia, the OSZhD is the
intergovernmental vehicle in which to negotiate them);
• to help members adopt modern technology to face the competition
they are all starting to experience (the Trans-Siberia railway now has
an all-weather road paralleling it for example);
• to develop solutions to change of gauge problems, progress has been
made: for example through trains operate between Poland and
Lithuania with gauge change equipment, similar initiatives are being
mounted in Central Asia, but these are outside the scope of this study.
4.5.17 Railway liberalisation is now firmly on the OSZhD agenda.

Seven Member States are part of the EU and in its (overwhelmingly)
biggest Member State, Russia, liberalisation is being pushed forward
“The Government of the Russian Federation has embarked on a
determined programme of regulatory reform and restructuring of its
railways”28.
The “traffic” conventions, SMPS and SMGS
Current use of the conventions
4.5.18 In their commercial relationships, the standard gauge railway

undertakings of Central and Eastern Europe that are members of OSZhD
use the CIM and CIV for traffics between themselves and to the West.
OSZhD protocols are only used for traffics to the former Soviet bloc,
convention dictates that the SMGS and SMPS are used only for journeys
involving the broad gauge railways. Likewise the RIV/RIC and UIC
practices follow the use of the CIM/CIV. (Note that the membership of
the OSZhD and the SMGS/SMPS is not identical, the Czech Republic,
Hungary and Slovakia are not a members of the SMGS/SMPS.)
28
ECMT Regulatory Reform of Railways in Russia OECD 2004
4-18
The SMPS
4.5.19 Copies of the SMPS may be downloaded in their Russian

versions from the internet address
http://www.gibdd.ru/id38/id46/994.gpml. When the DDR was a member
of the OSZhD, German was an official language and a translation of the
SMPS clearly existed, but this would not appear to have been maintained.
No translation into English is known to exist.
4.5.20 The SMPS has all the imperfections of the 1980 CIV, in that it
makes no provision for market forces or any freedom of contract. It lays
down an obligation to carry, (Article 3 (1)) and therefore an obligation to
accept on handover. It presumes railways to be integrated and makes no
distinction between the traffic movement and infrastructure function. It
prescribes procedures (for example for seat reservation (Article 6), or
what constitutes a domestic animal(Article 12)) in great detail in a way
that is not consistent with alternative providers offering distinctive
services. This detail does not accommodate alternative providers (for
example Article 4, tickets, makes no provision for the name of the
carriers). It provides no redress for death or injury.
4.5.21 The degree of prescription and the failure to accommodate

alternative carriers formally, makes the SMPS incompatible with the
principles of liberalisation enshrined in European railway law. For
movements wholly within the European Union COTIF 1999 will be
available (once that version comes into force and Estonia accedes). For
movements between the new Member States and the CIS however only
the SMPS will be available, this will limit the ability of liberalised
railway undertakings in the new Member States offering differentiated
through services via the external frontiers even once enforceable rights
exist. No short term solution to this issue can be envisaged without
action at an inter-governmental level.
The SMGS
4.5.22 Copies of the SMGS may be downloaded in their Russian

versions from the internet address
http://www.1520mm.com/r/o/osjd/smgs/ (not the latest version). An
official translation of the SMGS into French was made by OCTI in 1960
(Bulletin Transactions Chemin de fer 7/8). Logotrans, a member of the
Consortium produces an unofficial translation of the SMGS in German
(the latest version is that of 1 January 2004). Other than a limited
translation of the most crucial sections by Europe Rail Consultancy no
translation into English is known to exist.
4.5.23 The SMGS has all the imperfections of the 1980 CIM, in that it
makes no provision for market forces or any freedom of contract. It lays
4-19
down an obligation to carry, (Article 3 (1)) and therefore an obligation to

accept on handover. It presumes railways to be integrated and makes no
distinction between the traffic movement and infrastructure function
(and, for example, specifies the axle-load limits in Bulgaria in the middle
of what is intended to be contract of carriage (Article 8)). It is unduly
prescriptive, (defining for example the acceptable wastage in transit
differentially for a wide variety of fruit and vegetables (in Article 24)).
4.5.24 The degree of prescription and the failure to accommodate

alternative carriers formally, makes the SMGS incompatible with the
principles of liberalisation enshrined in European railway law. For
movements wholly within the European Union COTIF 1999 will be
available (once that version comes into force and Estonia accedes). For
movements between the new Member States and the CIS however it
seems likely that only the SMGS will be available, this will limit the
ability of liberalised railway undertakings in the new Member States
offering differentiated through services via the external frontiers. This
issue is explored further below.
Conflicts between the conventions
4.5.25 It is important to consider the EU dimension. After Estonia has

acceded to the convention, both COTIF and the SMGS/SMPS
conventions will lay claim to traffic between their Member States
(Article 1 of the CIM and CIV and Article 2 of the SMGS and SMPS
require the agreement to apply to all traffics). Baltic States’
Governments contacted by the Consortium supposed that given the two
conventions, customers of international traffics entirely within the Baltic
states would have a choice of convention. With that exception, COTIF
will apply to all traffic entirely within the EU. It is therefore possible
that in practice within the EU, the SMGS and SMPS will atrophy, or at
least not be used. Traffic moving to and from states outside the EU is
quite different however. SMGS and SMPS conditions will continue to
apply to traffics to and from the CIS. The vast majority of the traffic of
the Baltic states’ traffic is transit traffic from Russia.
4.5.26 Given that the COTIF convention is otherwise standard within

the EU and that it provides better protection for consumers (for example
for injury to passengers); the Consortium recommends that after the EU
accession to COTIF, after the new COTIF comes into force, COTIF
becomes the presumption for all international traffic entirely within the
EU. This will require EU Member States that are also Member States of
the OSZhD to make directives under the terms of Articles 3.3 of the
SMGS and SMPS.
4-20
Through traffic and the alignment of the conventions
4.5.27 The collapse of the Soviet Union and the increased interest in
trade with the former Soviet bloc has spawned a number of new
initiatives. Some of these have been ad-hoc initiatives, for example
agreements to run direct intermodal trains from Germany to Moscow;
others have been systematic attempts to reduce interface issues between
the two systems. In the latter category are the current initiatives to create
a common CIM/SMGS consignment note and consignment conditions,
and initiatives to create common customs transit documentation.
4.5.28 Attempts have been made to align the SMGS and CIM. In the
mid 1980’s a number of provisions in the two conventions were aligned.
More recently, in 2001 (UNECE Working Party on Rail Transport) it was
decided that the two conventions could not be entirely aligned because of
“the disparate interests of the individual States involved”29.
4.5.29 Instead, initiatives led by OCTI and OSZhD with the help of the
UIC and CIT and active support of the European Commission and the
Russian Government, are currently underway to introduce through
documentation and reduce customs issues at the CIM/SMGS interface.
Other initiatives such as alignment of the dangerous goods regulations
(RID and Annex 1 to SMGS) (on the basis of UN rules) have already
taken place.
4.5.30 When revising COTIF in the 1999 revision, the COTIF states
provided for the CIM and CIV to be applicable to journeys into and from
OSZhD states, provided the parties to the contract agreed. This will
require the full co-operation of all the contracting parties but it is not
clear that the CIS’s state railways would accept the burden of managing a
second convention with the implications of training staff and translating
documentation. It would seem that further alignment of the two systems
(as described above) is a more likely outcome.
4.5.31 To the extent that these initiatives are successful it might be

asked whether the Baltic States should retain membership of OSZhD.
Membership of OSZhD however provides more than conventions for
carriage (SMGS and SMPS), it provides the technical specifications for
equipment, it provides a basic wagon use convention and numerous basic
agreements for the prime traffic axes of the Baltic railways. (It should be
noted that by comparison with the CIS railways, the Baltic states
railways are very small).
29
UNECE TRANS/SC.2/2001/1/Add.1 of 1 February 2001
4-21
Compliance of OSZhD regulations with EU law
Interoperability
4.5.32 Not only are the track gauge and loading gauge significantly
different on 1520mm railways, but a number of other technical aspects
fundamentally differ from those on Europe’s standard gauge network
(centre couplers rather than side buffers for example).
4.5.33 OSZhD manages technical standards for the 1520mm gauge

railways, however interoperability standards are mandated in the
Interoperability Directives. For example, high speed lines are required to
be standard gauge30.
4.5.34 In this role there is an overlap with the work of EU standards

bodies (the European Rail Agency in particular) over standards to be
adopted on 1520mm railways. It might be thought desirable for
standards for 1520mm railways to be unified (as they were in the Soviet
era). However whilst three states with 1520mm railways will be subject
to EU law, the vast majority of the 1520mm network will be outside the
EU for the foreseeable future.
Access to the market
4.5.35 The issues raised by the SMGS and SMPS have been treated
above and those raised by the PPW are discussed below. In addition the
OSZhD currently preside over a system typified by rigid price structures
and a lack of competition. This is about to change rapidly, at least in
Russia, the largest state. OSZhD procedures must change with it (and
indeed the continuing role of the OSZhD itself is not clear).
4.5.36 It is noted that there are new entrant railway undertakings and a
process of liberalisation in Russia, indeed the ECMT report on
Regulatory Reform of Railways in Russia31 reports that nine carriers had
obtained licences by November 2003.
4.5.37 This raises the problem of the consistency of OSZhD practices

and agreements with EU law. The Commission is understood to want to
encourage East West traffic and it may be that many of these potential
problems can be avoided. Particularly interesting in this regard will be
the regulations proposed under the Third Railway Package which, in
part, have been modelled on COTIF but in the Baltic States may be
superimposed on SMGS and SMPS contracts.
30
Point 4.1.3 of Decision 2002/732/EC.
31
Regulatory Reform of Railways in Russia ECMT 2004 ISBN 92 821 2309 X.
4-22
Community competence
4.5.38 The issue of Community competence is of crucial importance for

the conventions managed by the OSZhD. Unlike the COTIF convention,
there is no provision in OSZhD agreements for the participation of
Regional Economic Integration Organisations. EU States do not have a
majority in the OSZhD (EU States have 7 of 25 votes within the
OSZhD). Should there be a conflict between OSZhD provisions and EU
law, there may therefore something of a problem, incumbent and new
entrant railway undertakings may be faced with two sets of incompatible
law, mandatory EU law and OSZhD transport law. This is a problem for
the railway undertakings of the Baltic States whose traffic is
predominantly transit freight from the CIS. The reality of their situation
is therefore that all the OSZhD agreements, standards and practices have
a business and operational logic. In following EU law as those states and
carriers are obliged to do, they may complicate or jeopardise the
relationships with their customer base and their operational and
commercial partners in the provision of the transport.
4.5.39 The Consortium therefore recommend that the Commission open

discussions with the OSZhD to attempt to resolve the issues that this
report identifies as problematic.
4.6 The Simplified Procedure for Transit by Rail (Customs)
4.6.1 This sub-section represents an exception to the general exclusion

of agreements on customs issues from this report. The Simplified
Procedure for Transit by Rail (RSP) has been set up under powers
contained in Article 97 of Council Regulation (EEC) No 2913/92 of 12
October 1992 establishing the Community Customs Code. The
implementing regulations are contained in Commission Regulation
(EEC) No 2454/93 of 2 July 1993, the consolidated version of which is
available at the internet address http://www.europa.eu.int/eur-
lex/en/consleg/main/1993/en_1993R2454_index.html). Whilst the
procedure itself is simple, the background and reasons for its significance
are complex. This report therefore oversimplifies some of the issues in
order to bring out those which are important for EU rail liberalisation. It
should also be noted that the Customs Code is itself in the middle of a
revision process, although no changes to the arrangements outlined
below are proposed.
4.6.2 The Simplified Procedure applies not only within the EU but also
to signatories of the EC/EFTA Convention on a Common Transit
Procedure (for the purposes of this report, just Norway and Switzerland).
4-23
4.6.3 Customs authorities worldwide generally insist that goods moving

with customs duty suspended do so in such a way that duty may be
recovered if the goods ‘escape’ into consumption without being properly
accounted for. Within the EU, the control process is normally within the
New Computerised Transit System (NCTS) in which a computer record is
made of the despatch of the goods and another of their arrival. These
records are reconciled in the computerised system to ‘write off’ the
goods. During the journey, customs authorities have access to details of
the goods and can supervise the movement. A paper accompanying
document contains the movement reference number (MRN) which relates
to individual consignments and facilitates reconciliation. Whilst the core
NCTS system is continuously available, technical and procedural issues
in Member States mean that access to the system is not available 24/7 in
all Member States, this imposes practical limitations on the ability of
railway undertakings to accept traffic, one new entrant railway
undertaking instanced it specifically as a limitation.
4.6.4 Under the NCTS procedure, the principal, the person accepting
final responsibility for the integrity of the procedure and the duties, is
required to provide some sort of guarantee to customs. For high value
goods, such as cigarettes, this guarantee must be for 100% of the duty;
for other goods, Member States may waive the guarantee amounts down
to zero. It will be seen that the process involves a certain amount of
administration and may involve buying a bank guarantee (charges vary,
but 0.5% of the value of the goods is typical). The costs of a bank
guarantee can therefore be a significant burden on carriers. Member
States practices on waiving guarantees vary, but long-standing railway
undertakings are more likely to be seen as creditworthy. Whilst the
reasons for this policy are evident, it will be apparent that it
disadvantages new entrants.
4.6.5 The Simplified Procedure for Transit by Rail allows railway

undertakings to use a CIM consignment note or an equivalent intermodal
document as the travelling documentation. (The SMGS consignment
note is not recognised under the simplified procedure). No guarantee is
required. Railway audit procedures are used to check that goods have
arrived and the railway consignment note (or equivalent document) is
specially stamped to show its dual role. Railway undertakings are
required to accept joint and several liability for the duty and to provide an
audit trail for the goods. Subject to these factors, railway undertakings
act as if the external frontiers to the EU did not exist. The procedure also
allows de-staffing of frontiers by customs staff.
4.6.6 The use of the CIM consignment note (or equivalent note
intermodal documentation) presupposes approval of the documentation
by the Commission and customs authorities outside the EU which are
party to the convention on simplified transit (also see para. 5.10.18).
4-24
4.6.7 The primary advantage of the simplified procedure is thus

avoiding having to provide a guarantee, in addition the process is
administratively simpler in the field and there is no dependence on NCTS
(which may not be constantly available).
4.6.8 Rail, air and sea carriers and pipelines all currently enjoy
simplified procedures because they are able to demonstrate audit systems
to satisfy customs authorities that goods cannot go missing without trace
and that they have adequate financial resources. Carriers by road have
not been able to demonstrate either of these qualities and no international
simplifications are available to road carriers although national customs
administrations may however allow carriers by road some domestic
simplifications.
4.6.9 The significance of the Simplified Procedure for Transit by Rail

has greatly reduced since the enlargement of the EU, but it is still
important in three cases
• for moving goods in transit across Switzerland,
• moving non-Community goods (e.g. deep sea containers, etc.) from

North Sea and Channel ports inland before customs clearance,
• and the import or export of excise goods to and from the EU without
reconsignment (movement entirely within the EU is covered by
another procedure (see 4.6.18 below)).
In each of these cases the movement takes place with duty suspended.
(These cases are not exhaustive, they are merely the most significant
examples of traffics which benefit from the procedure).
4.6.10 Incumbent national railway undertakings have established rights

to the procedure. Other railway undertakings including new entrants may
have rights to it if they accept the joint and several obligation (which is
quite onerous) and provide an audit system. BLS, SBB Cargo
Deutschland, Strade Ferrate del Mediterraneo, SBB Cargo Italia and
FNME have in this way become authorised to use the procedure.
4.6.11 It should be noted that customs authorities insist on handover of

traffic en-route as being a necessary part of the audit process. By the
nature of the movement the Simplified Procedure for Transit by Rail may
not therefore be used for end-to-end operations by a single carrier even if
he is authorised to use the procedure for successive carriage. The
Commission and national customs authorities have insisted on that
limitation.
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4.6.12 Even where a new entrant railway undertaking does hand over
traffic, there may be implicit constraints on its becoming authorised. A
condition is the use of an audit system for consignment notes. UIC
railways use a system defined in UIC leaflet 304 (Accountancy
regulations applicable to international freight and express parcels
traffic). Non-UIC railways may use this system or another (DG TAXUD
has said categorically that another system with the same functionality
would be acceptable). There is no requirement for settlement in any
particular way. Customs authorities have been very firm on requiring a
rigorous audit as a condition of access to RSP.
4.6.13 Nevertheless, although not formally stated as a condition of use

of the procedure, it is apparent to the Consortium that there is a
reluctance on the part of some customs authorities to allow small railway
undertakings access to a procedure which removes the need for financial
guarantees. This frustrates competition.
4.6.14 The principal use of the procedure is for transit across

Switzerland. As part of an initiative under the programme to encourage
rail traffics, the governments of the Netherlands, Germany, Switzerland
and Italy have agreed to recognise railway consignment notes from
approved carriers from those states as customs documents under the
Swiss Corridor initiative. The procedure has the status of a Swiss
national transit procedure. It is only available for “community goods”
moving between the contracting states, it requires the carrier to be
authorised by his local customs authority and not to be vetoed by any
other. Consignment notes must be marked with the authorisation number
and copies of consignment notes must be faxed to Swiss Customs in
advance. The contracting carrier acts as principal to the movement and is
responsible for the duty on the goods. Details of the procedure are
available at the internet address http://www.zoll.de/b0_zoll_und_
steuern/a0_zoelle/i1_versandverfahren/b0_gemeins_gemeinsch_versand/
c0_transportwege/c0_schienenverkehr/korridorverfahren/index.html.
The requirements are therefore less onerous than those of the RSP, the
procedures are slightly heavier but it does represent a step forward to
facilitating movements by new entrant railway undertakings. This
simplification came into effect on 1 September 2004. It is important to
note that this procedure is also available to end-to-end carriers in the way
that the RSP is not.
4.6.15 Given that this facility helps to open up the market, the
Consortium recommends that further states sign up to it. Austria and
France as frontier states as a first step and then further states.
4.6.16 The remaining traffics using the RSP are not significant in
volume although the movement of deep sea containers represents a niche
market. Nevertheless it is clear that in authorising carriers to use the
procedure Members State's customs authorities must be even handed.
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The Consortium therefore recommends that access to the procedure

should be given to all rail carriers that satisfy an objective set of criteria.
Given that Article 7 of Directive 95/18/EC has a requirement for
adequate financial resources, the Consortium recommends that the
implementing provisions for the new Customs Code contain a
presumption that railway undertakings will be authorised to use the
procedure unless there is good reason to refuse. This change presumes
the agreement of the Commission (DG TAXUD) and the Member States’
customs authorities. It will go a long way to resolve the question of
opening the market in respect of successive carriage.
4.6.17 There remains the issue of a simplified procedure for use by

railway undertakings providing through origin to destination services.
The NCTS (outlined above) is not an attractive option and the
Consortium therefore recommend that DG TAXUD be invited to
consider alternative means of auditing the movement of traffic moving
from origin to destination with a single carrier, perhaps by using the
infrastructure managers’ traffic records.
4.6.18 There is a procedure similar to the transit procedure for the

movement of excise goods within the EU (except that it is not yet
computerised). Railway undertakings do not enjoy any simplifications
and so this system will not be considered within the study.
4.7 Recommendations
4.7.1 ECE agreements on frontier facilitation have no continuing role

within the Single Market, states outside the European Union are members
in some cases and it is possible they have a continuing role outside
Europe. Accordingly the Consortium recommends no action should be
taken (from 4.2.21).
4.7.2 There are significant incompatibilities between the 1999 COTIF

and existing EU law, particularly in the area of standards and approval
systems for equipment. The Consortium therefore recommend that the
Commission make use of their membership of COTIF to resolve the
question of the future of the ATMF and APTU, to reconcile the CUI and
infrastructure packages and to consider what Community law might be
desirable in the area of vehicle operation (from 4.4.21).
4.7.3 In a number of areas, OSZhD agreements fail to comply with EU

competition law, rather they are similar to the classic model of exclusive
agreements between integrated national railways. Resolving these
differences will take time. The Consortium therefore recommend that the
Commission open discussions with the OSZhD to attempt to resolve the
issues that this report identifies as problematic (from 4.5.39).
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4.7.4 Entitlement to use the Simplified Procedure for Transit by Rail for
successive carriage is still subject to national criteria and smaller
undertakings find it more difficult to become authorised. The
Consortium therefore recommends that access to the procedure should be
given to all rail carriers that satisfy an objective set of criteria. Given that
Article 7 of Directive 95/18/EC has a requirement for adequate financial
resources, the Consortium recommends that the implementing provisions
for the new Customs Code contain a presumption that railway
undertakings will be authorised to use the procedure unless there is good
reason to refuse (from 4.6.16).
4.7.5 The Simplified Procedure for Transit by Rail is not by its nature
available for movements from origin to destination using a single carrier,
the Consortium therefore recommend that DG TAXUD consider
alternative simplified procedures, perhaps by using the infrastructure
managers’ traffic records for audit purposes (from 4.6.17).
4.7.6 The Technical Unity agreement will be overtaken once the

provisions for technical interoperability have been introduced. The
Consortium recommends that for the sake of clarity it is then abrogated
(from 4.3.6).
4.7.7 Both COTIF and the SMGS and SMPS have the potential to apply
in EU Member States which are members of both conventions. The
Consortium recommends that after the EU accession to COTIF, after the
new COTIF comes into force, COTIF becomes the presumption for all
international traffic entirely within the EU and that the Member States of
the SMGS and SMPS make specific reservations against those
conventions (from 4.5.26).
4.7.8 Given that the Swiss corridor facility helps to open up the market,
particularly by allowing end to end carriers access to simplified customs
arrangements, the Consortium recommends that further states sign up to
it. Austria and France as frontier states as a first step and then further
states (from 4.6.15).
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5. OTHER MULTILATERAL AGREEMENTS
5.1 Introduction
5.1.1 Agreements between railway undertakings have been taken as

those that follow from membership of a trade association, those that
follow from joining a particular convention and those that are specifically
agreed between individual undertakings. Agreements between railway
undertakings which follow from membership of a trade association or a
standing agreement have been taken as being “multilateral” and this
section, covering “other multilateral agreements”, therefore treats those
agreements which follow from the membership of trade bodies or the
adherence to specific standing agreements.
5.1.2 Other multilateral inter-railway agreements can be disaggregated

into two types; albeit slightly arbitrarily. The first section covers railway
associations whose membership conditions require the adoption of
particular agreements. In this group come the UIC and a number of
bodies which might be considered as subsidiary to it, and the CIT, RNE,
FTE etc. In the second section come specific agreements which are free-
standing such as the RIV and RIC. It should be remembered that in
many respects the OSZhD acts as if it were an inter-railway group.
5.1.3 Those agreements that have been made on an ad hoc basis have
been treated as ”bilateral” no matter how many parties are signatories.
Railway documents on the internet
5.1.4 Agreements and documents concluded by railway organisations

are often on the internet and made available to members by a password
system. This is the case for the UIC (but only partially) and the CIT.
The only documents in the public areas of these sites are those intended
for rail customer use (such as various “customer charters”).
5.2 Other multilateral – railway trade associations
Overview
5.2.1 To a great extent, multilateral agreements follow from membership

of trade associations. In some cases the rights and obligations follow
from membership (such as the UIC); in other cases, access to the rights
and obligations is the sole reason for joining the association (this would
be the case for the RIV and RIC). In both cases the rights devolve from
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membership. It is appropriate therefore to look at the common features

before examining individual associations in turn.
5.2.2 There is some evidence to suggest that there is a relationship

between the size and complexity of a passenger or freight business and
membership of trade bodies / adoption of their procedures. ERFA stated
that most of its members, new entrant railway undertakings, regarded the
UIC as an association for large undertakings and not therefore relevant to
their needs. On the other hand one significant operator of open access
passenger services said he regarded UIC and CIT membership as offering
value for money by providing a lot of practical assistance, assistance that
would be disproportionally expensive for a small railway undertaking to
get another way.
5.2.3 As businesses continue to evolve it is likely that railway

undertakings that see their activities as being niche operations will
question membership of comprehensive bodies whilst those that see their
businesses as becoming more complex will want to join bodies which
reflect their activities. Connex' joining the UIC and the CER and
CargoNet Norway's withdrawal from them may be seen in that context.
5.2.4 The railway trade associations have formal statutes, defined areas
of activity and agree formally to work together although there are clear
areas of overlap, for example in the representation of infrastructure
managers where the EIM, RNE and CER all claim a role (see below).
5.3 Other multilateral – The International Union of Railways (UIC)
Origins of the UIC
5.3.1 The UIC can be considered to be the senior of the European

railway trade-associations. It was set up in 1922 as a result of
governmental initiatives following the international conferences of
Genoa and Portoroz in 1921. Effectively all European standard gauge
incumbent railway undertakings and infrastructure managers are
members, although with differing degrees of participation. The standard
gauge incumbent railways of the Middle East and North Africa are also
members as are the broad gauge railways of Western Europe.
5.3.2 The International Union of Railways is an association under the

French law of 1 July 1901 (as subsequently amended).
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Scope & objectives of the UIC
5.3.3 Essentially the purpose of the UIC is to “enable members to

improve their business”. Amongst the items within the formal purpose is
the phrase “develop regulations and guidelines” (Article 2 of the
Statutes). The UIC publishes numerous leaflets setting down
specifications and recommendations for all aspects of railways. These
leaflets may be mandatory or recommended (see below).
5.3.4 An organisation diagram for the UIC is shown below (but note the
comments below about reorganisation at the end of 2004):
Membership & membership criteria
5.3.5 Membership of the UIC is open to railway undertakings and

infrastructure managers. A minimum size bar is applied below which
active membership is only available if it is “of particular benefit for the
UIC”. This bar is set at 1 000 units where units are made up of km of
track, millions of passenger km and millions of freight tonne km.
Associate membership is available when active membership is not
available. Associate membership does not offer voting rights, in practice
however, the UIC is an organisation that values consensus, voting is rare
(and decision making is not always transparent).
5.3.6 Few newly established new entrant railway undertakings have

become members of the UIC, although Connex joined in November 2003
as an active member and the Georg Verkehrsorganisation is an associate
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member. However the categories “old railway” and “new railway” are
becoming less distinct, a number of smaller longstanding members of the
UIC (such as Ferrovie Nord-Milano Esercizio S.p.A) have transformed
themselves from regional railways into active “new entrant” railway
undertakings in new markets to handle international business. CargoNet
Norway, the state-owned freight railway undertaking in Norway, and
inheritor of the NSB freight operation withdrew from the UIC (and most
other international organisations) at the beginning of 2004 following its
withdrawal from wagonload freight operations. CargoNet said that it felt
that continued membership was not relevant to its business model
(operating shuttle container trains).
5.3.7 Membership fees are typically 100 000 euro even for a modest
sized railway, this has been regarded by many railways as being high and
there has been considerable pressure for a reduction in fees (indeed one
respondent said he would be happier to pay a large once-off fee to close
the UIC than to pay the annual fee!) Linked inevitably to the pressure for
a reduction in fees has been pressure to review and prioritise the scope of
the UIC’s activities, particularly given the loss of some of its historic
roles to other organisations. (This issue is considered below).
UIC leaflets
5.3.8 This section of the report discusses UIC leaflets in general.

Leaflets which have acted as templates for frontier agreements are dealt
with in detail below in the section on other bilateral agreements.
5.3.9 The UIC, throughout most of its life, has been concerned to
develop specifications to standardise railway practices across Europe.
These specifications have concerned technical issues (over a wide range
from ticket layout to axle-box construction), operating practices and
commercial practices (mainly concerning the structure of pricing rather
than the prices themselves).
5.3.10 UIC specifications may be mandatory or recommended. (There

is a further category, rarely used, for information.) Mandatory
specifications are intended to create a certainty of certain basic standards
for the benefit of all railway undertakings.
5.3.11 In so far as traffic is handed over on an international journey

(although it seems likely that this will be less common in future), railway
organisations are forced to adopt practices which their partners will
accept. Accordingly, the nature of UIC leaflets is to set down general
principles but enable railway undertakings to agree alternatives where
there is good reason. Leaflets dealing with technical specifications are
by their nature more specific and prescriptive than those dealing with
process; they are more likely to be mandatory. Because of the ethos of
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the organisation, to seek consensus, the specifications in leaflets are

lowest common denominators or statements of principle with a large
number of "get out" clauses. Even the mandatory leaflets which deal
with process allow considerable flexibility (leaflet 471-1, below,
provides a number of examples of this). A comparison between the UIC
and the quite different arrangements in North America is to be found in
Section 5.
5.3.12 UIC leaflets are drawn up by committees of member railways.

These tend to be the larger and central railways although Committee
Chairmen try to ensure that groups drawing up leaflets are representative
of the membership. Non-members do not participate in the drafting
process.
5.3.13 Leaflets are sponsored by subject committees and are approved

by functional Commissions (see organisation chart). Since the leaflets
are prepared through consensus, objections are rare. (The decision
processes of the UIC fall outside the remit of this study, however.)
5.3.14 UIC specifications are in practice enforced by peer pressure. The

obligation to comply with UIC provisions is not particularly clearly
expressed, and perhaps that in itself is revealing. Article 3 states “the
UIC shall cover matters of common interest, referred to as being of
“general application” i.e. those concerning all members except those
which for technical reasons or owing to special circumstances are
unconcerned by them.” Article 70 cross refers to this: “Provisions laid
down regarding matters of common interest which are of general
application may be mandatory or recommendatory”. Article 71 takes
this further: “members must be advised at the highest level (…) that it is
planned to give the particular provision mandatory status. The person
thus informed shall advise the UIC Chief Executive and the Chairman of
the body concerned of his/her comments, both on the fundamental issue
itself and on the mandatory status envisaged. He/she shall also indicate
if the member does not have sole authority to apply the provision
proposed because, in its country the matter falls in the legislative sphere
or is the prerogative of its supervising authority.” Subsequent articles
set down limitations on the power to make provisions mandatory and
provide for exemptions for railways whose circumstances make it
impossible for them to apply the mandatory rules. There is no categoric
requirement to comply. The closest the UIC statutes come to a
mandatory requirement to comply is in Article 12 “Members shall be
bound to … comply with provisions of the Statutes and implement
provisions made in accordance with the Statutes.”
5.3.15 Every member in fact fails to respect at least some mandatory

specifications. In practice, in a world still largely composed of national
railways within their own frontiers and owned by states, no mechanism
for enforcement exists. The UIC is essentially a weak organisation.
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5.3.16 Members receive one copy of each leaflet free of charge. It is not
normal for copies of leaflets to be distributed beyond the headquarters
departments of members.
5.3.17 Leaflets are available to non-members without restriction

(although they cannot be described as cheap (e.g. leaflet 471-1 (see
below) which has 41 pages costs € 183.00 plus postage). Non-members
are free to adopt them in their operations. Many safety authorities (such
as the EBA in their Verwaltungsvorschriften) prescribe UIC technical
standards as national standards for the activity in question. It is to be
expected however that in so far as standards impinge on safety issues, the
role of working parties drawn up under the terms of Article 3 of
Regulation 881/200432 will take on an increasing role in establishing
principles for safety.
5.3.18 It is likewise possible that more standards will fall to be drawn up

within a CEN, CENELEC or ETSI framework33.
5.3.19 Whilst UIC members are constrained to some extent by

mandatory leaflets, it is clearly possible for new entrant railway
undertakings to agree ways to arrange relationships between themselves
which are different to the UIC model. They may wish to do that because
the UIC model is inappropriate for their equipment or staffing or reflects
a different business model (new entrant railway undertakings for example
are often managed by mobile telephone contact between drivers and a
control centre, drivers are also encouraged to speak directly to customers,
conventional railway undertakings have a hierarchical structure). This
may be more difficult to achieve where a new entrant wants to exchange
traffic with an incumbent, the incumbent may be less ready to move
away from a formula with which it feels comfortable.
The Changing Role of the UIC
5.3.20 In recent years, a number of changes have taken place, many but
by no means all, linked to the process of liberalisation. The role of
having railway specifications for everything (even a UIC franc as a
currency) was abandoned as European standards started to be developed.
No less than 53 leaflets were discontinued in 2004 (continuing a process
that has continued over some years). The UIC’s continuing role is still
anything but clear, however. It remains the only European body with
membership from all parties in the railway industry and so provides a
forum for “whole-industry” debate, on such issues as the rail-wheel
interface for example and it also claims a worldwide industry
32
Regulation 881/2004 establishing the European Railway Agency.
33
European standards organisations, CEN, European Committee for Standardization
CENELEC, European Committee for Electrotechnical Standardization ETSI, European
Telecommunications Standards Institute.
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competence. Nevertheless, recent years have seen the establishment and

growth of more focused organisations, such as the ERFA, for freight
carriers, and RNE and EIM for infrastructure managers.
5.3.21 The UIC has made a number of attempts to define a clear and
logical role in the climate of demands for reduced membership fees. In
June 2004 a further review was announced “the Executive Committee is
currently giving thought to the role and organisation of UIC. The central
idea is to refocus the Association around its technical work. Four key
fields of competence have been defined: interoperability, infrastructure,
standardisation and major technical questions. Discussions are also
focusing on how to position the UIC in relation to other international
railway bodies both external (ERA) and internal (EIM, CER, ERFA,
etc.)34”. A plan to achieve this refocusing by reorganisation and cost
reduction was put to members in December 2004. It would appear that
UIC sees its future as supporting the European Railway Agency and
similar bodies in providing specialist technical services “how the UIC
can most effectively meet the Agency’s expectations”35. The UIC also
points out the interoperability is not simply a technical issue. “In
November it highlighted the need to accelerate “technical, operational,
regulatory and commercial interoperability”. Here it is referring to
“soft” items such as information and reservation systems, where rail
operators often lag behind their airline competitors”36.
5.3.22 It is clear that membership of the UIC is not a necessary

condition for operating international rail services as is shown by the
numerous successful railway undertakings which are not members
(Rail4Chem, for example). Nevertheless the role played by the
organisation can lead to some competition concerns. To the extent that
the UIC creates rules or recommendations which if implemented may
impact adversely on the ability of (non UIC) new entrants to operate on
substantially the same terms as the traditional railway, then these rules
and recommendations may raise questions under Article 81 EC. The
decision making arrangements within the UIC are not particularly
transparent and some influence derives from the ability to nominate
chairmen of working groups and to a lesser extent to second staff to its
headquarters.
5.3.23 The question also arises of whether some of the subjects which
the UIC still deals with should be specified by active participants within
the industry rather than by national governments or at European level.
Questioning the attribution of competence has already led, for example,
to the establishment of TSIs and the European Rail Agency. It is not
34
Briefing to members, June 2004.
35
Reported in the Railway Gazette January 2005
36
Quote from the Railway Gazette January 2005
5-7
clear that all the tasks still undertaken by the UIC are appropriate to its
status.
5.3.24 Given the UIC’s apparent adoption of a role as a specialist

advisor on industry questions, it would be appropriate for the European
Railway Agency or the Commission to assure itself of the independence
of the advice it receives. Investigation of membership criteria and the
rules and practices for the conduct of the business of the association to
assess their effect on competition within the industry might therefore be
appropriate.
UIC leaflets
5.3.25 In the context of this study the UIC publishes four leaflets setting
out the process for running frontier operations. These leaflets were
prepared at the time that international traffic was necessarily handed over
en route and there was an obligation to carry. Those assumptions are
implicit in the drawing up of the leaflets.
• leaflet 470 General arrangements concerning the financing and
operating of frontier stations;
• leaflet 471-1 Regulations covering the operating of lines crossing
frontiers and the use of locomotives and multiple-unit trains in
international traffic;
• leaflet 471-2 Technical inspections at and inland from frontiers for
the exchange of wagons in international traffic;
• leaflet 471-3 Inspections of dangerous goods consignments in
international traffic.
Leaflets in the 404 series determine some of the activities on handover.
• leaflet 404-2 Compendium of wagonload consignment data
exchanged between railways in international traffic;
• leaflet 404-4 Regulations governing inter-railway exchanges of data
on the conveyance of goods in trainloads/through trains in
international traffic.
Leaflet 502 has a slight influence over the handover operation.
• leaflet 502 Special consignments - Provisions concerning the
preparation and conveyance of special consignments
These leaflets are dealt with in more detail in Section 6.3 below.
5-8
Use of UIC procedures – general issues
5.3.26 UIC procedures have been designed by large national railways

for use by large national railways. Full membership of the UIC is only
open to larger railway undertakings (and infrastructure managers). The
procedures thus standardised may not be the most appropriate for smaller
railway undertakings and for new entrant railway undertakings.
Although there may be no anti-competitive intent in this, it may in fact
hamper new entrants and thus impede competition.
5.3.27 New entrant railway undertakings contacted for this study varied
in their views. All thought the technical specifications were relevant but
of the “process” leaflets, one prominent new entrant railway undertaking
saw them as industry standards to be followed by all railway
undertakings, another prominent railway undertaking thought that many
were implicit and did not need to be stated but the view of ERFA that
most of its members saw them as not relevant to their operations was
more common.
5.3.28 In theory UIC leaflets might favour large railway ways of doing
things. On the other hand, the disparate interests involved normally
mean that provisions are at the lowest common denominator level. The
Consortium found that new entrant railway undertakings ignored UIC
leaflets and provisions which were not appropriate to their activities. The
Consortium noted with interest that one new entrant railway undertaking
had no handover agreement at all with an incumbent to which it handed
over traffic.
5.3.29 In some areas UIC leaflets indisputably represent accepted

practice, UIC standards for example for rail sections are accepted as
industry standard without reserve (and the UIC specifications are
included as Annex L of the infrastructure TSI). In the specific area of the
frontier leaflets the Consortium are not persuaded that the leaflets in their
entirety remain good practice.
5.3.30 The second question, are UIC railways imposing these conditions
on actual or potential competitors. There is also evidence that even
recently, incumbent railway undertakings have attempted to impose the
classic form of the agreements on new entrant railway undertakings.
5.3.31 A “liberated incumbent railway undertaking” said it found great

difficulties in negotiating individual contracts outside the framework of
standard UIC arrangements and suspected anti-competitive intent as well
as commercial conservatism. It is clear that the UIC members do
represent dominant railway undertakings in most markets. It is also clear
that there has been some misuse of the agreements, further details are
given below in the section on other multilateral agreements.
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5.3.32 It is the view of the Consortium that some parts of the leaflets no
longer represent good practice and there have been attempts by some
dominant railway undertakings to impose them.
5.4 Other multilateral – Brussels Clearing Centre
Overview
5.4.1 Before dealing with the BCC it would be sensible to describe how
railway accounting works.
5.4.2 Conventional practice in railway accounts is for the allocation of

receipts to the railway undertakings which should receive them to be
made by the railway undertaking that sells the ticket in passenger traffic,
whereas freight receipts are allocated by the destination railway
undertaking (charges may not be known until delivery). For freight
consignments, the railway undertaking making the allocation may thus
not be the one billing the customer (and in due course receiving the
receipts). The freight allocation process involves an analysis of the
charges on the consignment note, in most cases centralised charging
makes these allocations automatically on the basis of splits agreed when
the rates were negotiated between the railway undertakings concerned.
5.4.3 Both freight and passenger accounting provide for an audit

function so that every railway undertaking can be satisfied that the
processes guarantee their shares will be paid. These audit processes are
defined in UIC leaflets 301 and 304 and are undertaken by the railway
undertakings themselves. Audit is an essential part of financial
management. These multilateral audits are really only required for
railway undertakings having diverse traffics. New entrant railway
undertakings may well manage with much simpler systems. These audit
processes are entirely separate from the process of settlement. Non-
members of the UIC are specifically permitted to use the inter-railway
audit procedure and a specimen contract is laid down in the leaflets. Use
of the UIC audit procedure does not commit users to settle through the
BCC although it is “recommended”.
Scope & objectives of the BCC
5.4.4 The BCC is essentially a clearing house for settling debts between
national railways in an efficient way. In this way its role is not dissimilar
to the IATA clearing house (International Air Transport Association, an
association of carriers), and like it, had some of its origins in helping
railway undertakings in states with weak or controlled currencies settle
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their debts. It is constituted as a co-operative company with limited

liability under Belgian law.
Membership of the BCC
5.4.5 Membership is restricted to members of the UIC except that non-

members may join if the General Assembly agrees to it by an eighty
percent majority. Members contribute to the capital of the company.
Other railway undertakings or infrastructure managers may join as
associates if the Annual General Meeting agree by a majority of two-
thirds. In fact there have never been associates and no fee structure has
been worked out for them. In both cases there is a probationary period.
5.4.6 Following the process of calculating the balances between the

railways undertakings, the larger undertakings settle through the BCC. It
should be emphasised that the BCC is just a clearing house, it performs
no transport related activities. Membership is justified (or not) solely on
the basis of the efficiency of the financial transactions.
5.4.7 The clearing process makes a monthly settlement, it operates by

members paying in the total amounts they owe other members and laying
claim to amounts they are owed. In-payments in theory are in a variety
of currencies. The clearing process then attempts to pay each railway
undertaking what it is owed in its own currency. The arrival of the euro
has simplified the process of settlement considerably, but the common
currency has not changed the initial process, that of reconciling the
claims to funds. A process for resolving differences is provided.
5.4.8 Charges are made for the process. The BCC stated that charges
are related to the number of transactions but that it is difficult to make a
comparison with those of the banking system (the reconciliation process
is not one that a bank would provide).
5.4.9 It is perhaps significant that the IATA clearing house is made

available to members of the association without charge, a modest charge
is made to non-members. The operations of the clearing house itself are
self-financing.
5.4.10 The advantage of the BCC is that it settles over a large number of
undertakings. For a large undertaking with many relationships this
outsourcing represents a significant benefit. The same may not be true of
a new entrant railway undertaking with a limited number of relationships
and it is not clear that there is a great clamour to join the organisation.
5.4.11 Membership of the BCC is not a necessary part of any transport

or accountancy process, alternatives such as joint current accounts are
specifically provided for in railway protocols. It therefore cannot be
5-11
considered an essential facility. Only economic reasons justify the use of

the BCC. Membership would seem to be open, although UIC members
have a right of membership. It is clear that the BCC is run by railway
undertakings with a dominant position, it requires therefore to satisfy the
criteria of access to trade associations. The terms offered for
membership therefore need to be applied consistently, but the
Consortium is satisfied that the terms offered for the settlement process
itself do not amount to any type of discrimination.
5.4.12 The choice of whether membership of the BCC is worthwhile

seems very much a function of the complexity of traffic patterns. There
must be some doubt about its attractiveness to new entrant railway
undertakings with few trading partners. Membership (or not) of the BCC
is not a crucial factor in access to the market, for most open access
operation it is irrelevant. The Consortium recommends no action is
taken.
5.5 The Community of European railways and Infrastructure

Companies
5.5.1 The Community of European railways (CER) is an association of

railways under Belgian law. Membership is restricted to active members
of the UIC and in practice, despite the name change agreed in May 2004,
it is composed of railway undertakings, (infrastructure managers have
their own associations, see below). The association is essentially a
lobbying and representational group for the larger EU railway
undertakings. The overwhelming majority of members are state owned.
Its “principle objective is to contribute to the improvement and
development of the world of rail transport in general". This will be done
by “participating in all the issues relating to written documents and
initiatives from the European Union which concern transport on behalf
of the railway industry and secondly to analyse the problems linked to
these questions and as far as possible investigate solutions and follow up
their implementation.”37. Accordingly, membership does not imply any
commitment to any particular frontier processing and the CER will not be
considered further.
5.6 The European Association of Infrastructure Managers (EIM)
5.6.1 The European Association of Infrastructure Managers is an

association of infrastructure managers under Belgian law. Its role is
essentially as a lobbying group. The association has as its objectives “to
37
Article 3 of the Statutes of the CER
5-12
ensure that their views on how present and future developments will
impact on their activities are promoted/communicated effectively to the
European/national authorities”38. Accordingly, membership does not
imply any commitment to any particular frontier processing and the EIM
will not be considered further.
5.7 RailNetEurope (RNE)
5.7.1 RailNetEurope is an association of infrastructure managers under

Austrian law. Members of RNE include the infrastructure managers
from Denmark, Finland, France, Germany, Great Britain, the
Netherlands, Portugal, Sweden and Norway; integrated railways from
Austria, Belgium, Eurotunnel, Greece, Luxembourg, Poland, Slovakia,
Spain and Switzerland, and railway undertakings from the Czech
Republic and France. It is understood that the Hungarian infrastructure
manager is about to join. It is to be noted that there is significant railway
undertaking representation within the RNE.
5.7.2 RNE was set up to market infrastructure capacity for international

services. The association has the common sale of infrastructure capacity
as its objective. In selling infrastructure capacity, RNE is developing
common procedures, common standards and common contracts. Work
on developing a standard infrastructure contract was originally
undertaken by the CIT and UIC who attempted to produce a contract
which balanced the interests of all the parties in a way which appeared
fair to them. On its creation however RNE decided to develop its own
template contract and together with the remodelling of the CIT this is
leading to a contract being jointly negotiated between the RNE
representing the interests of its members and the CIT those of the
carriers. The contracts are being designed to comply with COTIF and
with EU law.
5.7.3 With effect from 2005, RNE will inherit the work of allocating
paths for all international train services from Forum Train Europe (see
below). Part of the process involves reserving through international
freight paths by the RNE group to provide for late or mid-timetable “one-
stop-shop” applications. These arrangements are intended to be neutral
as between incumbent and open-access railway undertakings (to accord
with Article 14 of Directive 2001/14/EC).
5.7.4 Whilst a detailed study of relationships within the RNE falls

outside the scope of the study, it is clear that there could be a conflict of
interest in that some members of RNE are railway undertakings with
potentially divided loyalties. This situation will not be resolved unless
38
EIM Memorandum of Understanding.
5-13
and until there is full separation of railway operation from infrastructure

management.
5.7.5 It is also apparent that in packaging and selling the infrastructure

capacity of its members, the RNE is offering alternative and potentially
competitive products (for example French and German infrastructure
managers both offer capacity for traffic between the North Sea ports and
Italy). Whilst as yet there may be no competition on the basis of price
for these traffics it is apparent that the relationship between the
infrastructure managers is a competitive one. The Consortium
understand from one railway undertaking along this axis that
infrastructure managers are well aware of the competitive effects of
access charges. The Consortium therefore recommend that further study
is made of the competitive relationships implicit within RNE.
5.8 Forum Train Europe (FTE)
5.8.1 Forum Train Europe is the successor of the former timetable

conferences. The process is currently in two parts: firstly, to allow
railway undertakings operating in the classic successive relationship to
coordinate their requirements for capacity at an international level
(defining the characteristics of the trains they want to run). At this first
stage new entrant railway undertakings may also make their bids. In the
second stage, currently within the FTE, infrastructure managers
coordinate train paths to satisfy the totality of the requests they receive or
to make a rational selection from amongst competing claims on
infrastructure. Currently both these parts are handled by different arms
of the FTE in separate meetings.
5.8.2 In so far as EU states are concerned this process is heavily

regulated by the requirements of Directive 2001/14/EC on the allocation
of railway infrastructure capacity and the levying of charges for the use
of railway infrastructure. Following concern from the Commission, the
two parts of the process are to be undertaken by different bodies with
effect from 2005. The FTE will continue to co-ordinate requirements for
capacity and become a organisation solely for railway undertakings. The
work of allocating paths will fall to the RNE (q.v.).
5.8.3 Without a more profound study of the mechanisms of the FTE

(which was outside the study), it is impossible to say if the relationships
and processes which arise from railway undertakings preparing
competing bids to run competing services under the umbrella of a single
organisation raise issues in competition law. The Consortium therefore
recommend that further study is made of the competitive relationships
implicit within the FTE.
5-14
5.9 International Passenger Routing Agreement (ВМПС)
5.9.1 Within the former Soviet block and still relevant to the Baltic
States is the very similar process adopted under the OSZhD, where the
«Своде маршрутов вагонов прямого международного
пассажирского сообщения (ВМПС)» [International Passenger Routing
Agreement] agree the (passenger) train services to be run in a similar
way to the FTE. There is no equivalent to the RNE to allocate paths.
The comments on potential competitive complications outlined above,
apply to the ВМПС.
5.10 International Rail Transport Committee (CIT)
Scope & objectives of the CIT
5.10.1 The CIT is a railway trade-association with the formal objective

of “the transposition of the law of international carriage by rail and in
particular the Convention concerning International Carriage by Rail
(COTIF) and its consistent application”39. In practice this means that the
CIT draws up standard practical instructions for the railway industry to
comply with COTIF law. Proposals to take the implications of EU law
into account have been accepted, this should mean that all the work will
build on parameters set by Community law. It was similarly decided also
to consider the implications of OSZhD law on COTIF law. The CIT is
formally constituted as a non-profit making organisation under Swiss
law.
5.10.2 Membership of the CIT is quite widely dispersed, a membership

of about a hundred carriers is claimed and the organisation has a policy
of encouraging membership of small and new entrant undertakings (such
as members of ERFA). This marks a contrast with the UIC which has
only been joined by a few. The CIT says that the costs of membership
are affordable to the smallest organisations and quotes membership fees
being in a range between 15 000 and 1 300 euro. The voting structure
gives each member equal weight. Infrastructure managers are entitled to
be Associate Members of the CIT but with limited voting rights. The
Consortium understand, however, that following the CIT refocus on
representing the interests of railway undertakings, many infrastructure
managers will resign existing memberships.
5.10.3 The CIT has a more focussed role than the UIC and there tends to
be a greater congruity of view, decision making processes are therefore
simpler. Ad hoc committees are set up to consider issues and decisions
then made by means of postal votes. This may allow smaller members to
39
Statutes of the CIT
5-15
have more say in decisions. Since all members have equal voting
powers, the incumbent railways can in practice be outvoted, an
unthinkable outcome at the UIC.
5.10.4 The roles of the CIT are thus to draw up standard instructions, to
prepare template agreements, to produce standard documentation, to
manage agreements on the allocation of compensation and to publish a
number of standard guides (listed below). In addition they provide
training and legal advice to members.
5.10.5 The CIT prepare template terms and conditions for the
relationships both between the railway industry and its customers and
within the railway industry. The objective of this work is to provide a
well understood and certain legal foundation to standard relationships,
such as that between for example between customer and carrier.
Relationships between the railway industry & its customers
5.10.6 The CIT prepare General Terms and Conditions to act as the
carrier’s conditions in accordance with Article 3 c of the CIM and CIV.
These enhance the basis terms of the CIM and CIV. Both national and
European consumers’ associations and competition authorities have been
concerned to prevent railway undertakings abusing their contractual
strength by acting unreasonably, since constraints previously placed on
railway undertakings by COTIF (for example to offer child fares) are
now open to commercial choice. In preparing template terms and
conditions, the issue of equity is crucial. The Commission has been
involved in this work, however the relationship between railway
undertakings and their customers lies outside the scope of this study.
Relationships within the railway industry
5.10.7 These relationships form the core of this study. The CIT have
drawn up a series of standard agreements (“co-operation contracts”)
intended to be the default terms of agreements. Template agreements
have been drawn up for both passenger and freight operations (they are
almost identical) for:
• the relationship between carriers40 in the classic successive carrier
relationship (joint contracting);
• the relationship between a contractual carrier and a railway
undertaking accepting the legal responsibilities of a carrier (sub-
contracting carrier);
40
In this context the word carrier has the meaning defined in COTIF, (the contractual carrier
who concluded the contract, or a successive carrier liable on the basis of the contract).
5-16
• the relationship between a contractual carrier and a railway

undertaking not accepting the legal responsibilities of a carrier
(traction provider);
• the relationship between a contractual carrier and a provider of a
locomotive (hire of a locomotive);
• the relationship between a contractual carrier and a provider of
miscellaneous services (provision of services) (freight only).
5.10.8 The template agreements have been drawn up to allow the parties
to have a standard legal basis of common terms and conditions from
which they can start their commercial negotiations. The objective is
firstly to cover “non-contentious” issues, (such as duration of the
contract, jurisdiction which applies, language, etc.) and secondly to lay
down some basic principles for issues that might otherwise be
overlooked (such as basic liability provisions) so the parties can know
that these aspects are on a firm footing before they negotiate the
substance of the contract, such as price and service. The standard terms
are intended to be clear but to be sufficiently general to command wide
acceptance. In that way the CIT hope that they will become the industry
standard on merit.
5.10.9 The standard templates presume that signatories will be bound by

"the regulations published by the international organisations competent
for railway issues". This is qualified by “unless the application of such a
usage would be unreasonable”.
5.10.10 Where new entrants work with established railway undertakings

(rather than in parallel) they may well, at least at first, take on subservient
roles. They should not be disadvantaged by doing so. The contracts
which they are most likely to encounter, those for sub-contracting,
traction provision and miscellaneous services should therefore not be
unfavourable to their interests. Representatives of ERFA, representing
smaller railway undertakings and new entrants did not consider the
template agreements objectionable.
5.10.11 The Statutes of the CIT provide that “Members shall undertake
to respect the decisions of the Association” but the CIT are on record as
saying that standards must be “generally accepted not simply because
they are a condition of membership but on their merits"41. The
association thus sees its role as being to propose rather than mandate..
5.10.12 The CIT specifically recommends adoption of its standard

contractual structure (for example for sub-contracting) throughout the
41
CIT Info June 2002
5-17
industry. Their recommendation is therefore also addressed to non-

members.
5.10.13 General terms and conditions which contribute to efficiency in

contractual relationships are not in principle anti-competitive, however
each such agreement must be examined on its merits to see if it has anti-
competitive effects. The Consortium do not consider that the general
terms and conditions published by the CIT are themselves anti-
competitive, the Consortium therefore believe that the use of such
agreements as industry standards would not distort the market. This also
appears to be the view of trade associations representing customers and
new entrant railway undertakings42.
Standard documentation and procedures
5.10.14 In its work of standardising relationships, the CIT also produces

the industry standard stationery and sets out industry standard
procedures. It is thus responsible in particular for producing the standard
consignment note and the standard ticket formats. Other stationery is
also designed, but the two contractual documents are much the most
important. These designs are copyrighted. Electronic consignment note
and ticket protocols are not copyrighted but any printouts from them
might be. The right to make use of the copyrighted documents is given
freely to members and the CIT propose to make the rights to use them
available to non-members for a fee. The Consortium understand that so
far there have been no such agreements.
Consignment notes and tickets
5.10.15 There is no legal requirement to use any particular stationery for

international passenger traffic. At the most basic level, a passenger
operation can be run without industry stationery, indeed one new entrant
passenger international grouping runs its service as a ticketless operation.
Railway undertakings may choose to use their own formats for tickets (or
use airline formats for example). Nevertheless passenger railway
undertakings are likely to want to issue tickets to cover connecting
services as well as their own service. New entrants will need to issue
change of carrier tickets as appropriate, for more sophisticated operations
a whole range of reservation, change of class and group tickets are
needed. These need to be recognisable. Such railway undertakings will
need to be able to use industry documentation and the instruction
manuals and training.
5.10.16 For freight the issue is more acute, CIM requires the contract of
carriage to “be confirmed by a consignment note which accords with a
42
Discussions with ERFA 2004
5-18
uniform model”43. A number of ancillary processes, for example the use

of the consignment note as a status and transit document under the
customs transit procedures, or the use of the consignment note for
documentary credits, require a consignment note in a recognisable form.
COTIF recognises the role of “associations of carriers” to “establish
uniform model consignment notes”44 but is silent on the rights of any
carrier to make use of them.
5.10.17 The CIT point out that the right given to international
associations of carriers to design the consignment note in Article 6 of the
CIM is not exclusive to the CIT and (for example) ERFA could also
produce a consignment note. In any event the requirement laid down in
CIM Article 6 for consultation and for customs authorities to have a veto
over the design of the document (because of its use in the Rail Simplified
Transit Procedure) would need to be respected. It is also true that in
successive carriage supply of consignment documentation could be
centralised on a single CIT member.
5.10.18 The requirement for a “uniform model” was specifically

inserted in the CIM to take account of the requirements of customs
authorities. During the negotiations for COTIF 1999, at one time it was
proposed that OTIF designed the consignment note and that it would
have been annexed to the CIM. This solution was supported by the
Commission and interestingly is the solution adopted by the OSZhD.
The solution was rejected because of the difficulty of making changes to
the documents.
5.10.19 A comparison with other modes might be instructive. A

document of carriage or an air waybill are necessary for air traffic45.
Other means may be substituted for tickets, but where physical tickets are
not used, the carrier is required to offer passengers a written statement of
the information they would contain. ICAO, the International Civil
Aviation Organization (a UN body), takes no part in the design of these
documents. Design is by IATA (the International Air Transport
Association, a body of carriers) but the IATA design is not mandatory on
carriers, they may choose their own. IATA, although reserving its rights,
encourages use of its documentation in the overall interests of the
industry, requiring neither membership nor fees from users.
5.10.20 A document is necessary for international movements by road,

but no requirements for its design are laid down. For sea movements,
there are a number of different conventions under which traffic may be
consigned and carriers tend to have their own bills of lading.
43
CIM Article 6 (8)
44
CIM Article 6 (8)
45
Articles 3 & 7 Montreal Convention 1999
5-19
5.10.21 In all modes it would seem reasonable for carriers to take the
lead in designing contractual stationery and in writing the instructions for
its use. This allows changes to respond to events to be made quickly
(during the life of the 1980 COTIF, the consignment note was redesigned
twice) and for the stationery to be designed to be handled efficiently.
5.10.22 Nevertheless in practical terms use of a privately copyrighted

document is a necessary condition of access to the market. Intellectual
property law is clear on this issue, entry to the market being dependent
on the intellectual property of a single private organisation is not in itself
an infringement of competition law. Abuse of this position, however,
would be. The requirements are clear. The intellectual property must be
made available to all the players in the market on equal and not
unreasonable terms.
5.10.23 In this case the Consortium is satisfied that the CIT does make
its documentation available to all carriers. The statutes of the
organisation however give the Executive Committee power to fix the fees
for licensing the documentation. The Executive Committee, composed
of carrier’s representatives, must ensure that the fees they fix are
reasonable and consistent given the circumstances of the case. It would
be desirable that these fees were fixed and published in advance so that
there could be transparency and openness and the assurance of fairness.
5.10.24 The Consortium considers that since the passenger ticket is not
an mandatory document, there can be no presumption that it must be
made freely available, it would be desirable if it were, however. The
comments made above on the freight documentation apply. (The SMPS
prescribes the design of the ticket and it is therefore available to all
carriers).
Standard instructions
5.10.25 The standard instructions themselves are concerned with the

minutiae of administrative procedure, precision in the use of particular
boxes on forms and date stamps. The process of drawing-up standard
instructions is undertaken by volunteer members and inevitably this tends
to be larger members (but see above for comments on the decision
making process).
5.10.26 These standard instructions are being revised for the 1999
COTIF and will include for passenger traffic:
• International Passenger Manual (instructions to railway undertakings
for the issue of all types of tickets, inspection and cancellation of
tickets, refunds, processing of claims, etc.);
5-20
• International Rail Ticket Design Manual (instructions to railway

undertakings on the format of tickets, printing specifications, security
techniques, etc.);
and for freight:

• CIM Consignment Note Manual (information for customers on how
to fill out consignment notes, procedures for electronic exchange of
information between customer and railway, procedures for disruption
during transit, etc.);
• CIM Consignment Note Manual for Combined Transport
(information for customers on how to fill out intermodal consignment
notes, etc.);
• CIM Freight Traffic Manual (information for railway undertakings
on the procedures on consignment, handover of traffic and delivery,
including procedures to apply when carriage is disrupted;)
• CIM/SMGS Traffic Manual (instructions for through CIM-SMGS
traffics).
5.10.27 The consignment note manuals are intended as public

documents for customers, the other publications are intended for railway
undertaking use. Some of these procedural documents are for use in the
field, others intended for use by headquarters departments. The texts are
made available electronically without charge for members to print.
5.10.28 The Consortium regards the manuals produced by the CIT as

being an entirely appropriate activity for an association of carriers and
sees no conflict between those documents being copyright and
competition law. It is to be noted that IATA charges for training and for
instruction manuals, the instruction manual for ticketing for example is
USD 70.
5.10.29 The CIT also manage a number of agreements and documents in

the legal and administrative area. Two, the AIM and AIV, are of
particular interest to the study.
Sharing of the costs of claims
5.10.30 The AIM46 is an agreement managed by the CIT to which its

members are expected by default to agree. It is also open to other
carriers. In effect it institutionalises CIM Article 50 (although relying on
the powers given by Article 52). It sets up a fall-back regime of ‘no-
blame, knock for knock’ sharing of the costs of loss and damage of
46
Agreement on the Relationships between Carriers in respect of International Freight Traffic
by Rail
5-21
freight consignments. Whilst the CIT manages the agreement, it takes no

part in settlement. (Settlement is via the BCC q.v. or for non-BCC
members in some other way.). As in all of these procedures however, the
CIT does provide expert advice about transport law and a mediation
service.
5.10.31 Under the AIM which will be introduced with the new COTIF,
where a carrier is responsible for an incident, it pays its costs. This
corresponds to the normal presumption that carriers are responsible for
managing their own risks and should accept liability when they are at
fault. In this way costs fall to the careless and negligent, and those with
proper systems benefit.
5.10.32 The AIM goes beyond that however, in providing for those
cases where responsibility is not clear. It provides for an allocation of
the compensation between all the carriers who might have been
implicated. The basis of the allocation is by default, kilometric, but
could be pro rata to income or some other basis. This solution is largely
that mandated by COTIF, but the CIT asserts that the costs of setting up
systems implied by the last part of Article 50 (c) to identify the origin of
loss and damage would be significant, without any certainty that the
claims record would improve. New entrants are free to join this system
without fee, or to stay with the basic COTIF system under which they
have a right to prove they were not responsible.
5.10.33 The passenger counterpart to the AIM, the AIV47 is much

simpler because liability for most passenger claims is clear. Claims for
death and personal injury are not shared, (CIV Article 26 (5)). However,
the AIV has also become the vehicle for sharing the costs of
compensation for passenger delays under COTIF and under the
UIC/CER/CIT Passenger Charter in a simple way. The procedures are
appropriate and proportional. There is a presumption that CIT members
will be bound by the AIV.
5.10.34 This option to join the AIM without charge or stay out of it
suggests there are no issues of access to the market involved. The
presumption that CIT members will be bound by the AIV does not seem
to the Consortium to be a material element in access to the market..
CIT database (BD-CIT)
5.10.35 The CIT is currently engaged in the design of a database to

replace the remaining publications which it manages. This database will
replace the LIF, the Liste générale des points frontières et les restrictions
47
Agreement on the Relationships between Carriers in respect of International Passenger Traffic
by Rail.
5-22
en vigeur en trafic international ferroviaire des marchandises48

(currently only published only in French and German) and the ARV and
ARM, the Accord concernant la notification des restrictions de trafic en
service international ferroviaire des marchandises/voyageurs49
(currently only published only in French and German).
5.10.36 The current LIF is designed for integrated railways, it defines

frontier points open for traffic and the restrictions which apply to them.
It is compiled from information supplied by railway undertakings and
includes:
• the name of the frontier;
• the states it connects;
• codified information about the restrictions applicable.
5.10.37 These restrictions may take a number of forms, either permanent

or semi-permanent (such as the frontier is closed to all (freight) traffic),
and restrictions on the type of traffic which may be handed over. These
restrictions may be a function of a number of factors: closure by the
infrastructure manager (e.g. because of the condition of the track),
restrictions imposed by national governments on the movement of traffic
(e.g. nuclear materials in Belgium), restrictions imposed by national or
international authorities for modal reasons (e.g. restrictions on movement
by sea in the Baltic), or limitations imposed by a lack of facilities
(customs, veterinary, etc.). Railway undertakings themselves may also
impose limitations on what they are prepared to accept on exchange at
particular frontiers. These railway undertaking limitations are a function
of the acceptance arrangements of individual undertakings, they may
include, for example, an absolute refusal of livestock. Railway
undertakings may also only accept traffic via a particular frontier point
for stations in its immediate hinterland for operating reasons, this limit is
based on Article 3 § 5 of the 1980 CIM (seventeen frontiers have this
latter limit currently). Likewise (using the same provision) railway
undertakings may currently declare in the LIF that traffic is moved
flexibly between two states and not necessarily via the frontier that the
customer specifies. No attempt is made to include restrictions imposed
on both freight and passenger traffic flows for temporary problems such
as strikes and natural phenomena.
5.10.38 The information does not duplicate the information in

infrastructure managers' network statements; it is traffic based rather than
48
General List of Frontier Points and the restrictions in force for international freight traffic by
rail.
49
Agreement concerning the Notification of Traffic Restrictions for International
Freight/Passenger Traffic by Rail.
5-23
based on network parameters (such as signalling systems and axle-loads)

and more specific (essentially referring to individual frontiers).
5.10.39 The current LIF is intended for the practical use of railway
undertakings, principally in the wagonload freight business, in helping
station staff to liaise with customers over the choice of routes. In
passing, there must be some doubt about the relevance of a printed
document updated annually for such a purpose; many railway
undertakings keep such data in standing data files and use them to
validate requests for freight rates and set up consignment options.
5.10.40 Likewise the current ARV and ARM lay down a procedure for
integrated railways to advise each other of inability to accept traffic for
example because of strike or weather conditions (by particular routes, to
particular stations, or overall). The system is formalised, to avoid
language difficulties, and a standard list of railways to contact is laid
down. The list of railways only includes CIT members.
5.10.41 A number of problems arise in modifying these three

publications for liberalised circumstances and indeed rationalising the
whole concept. The CIT concept is that of a distributed database centred
on their own website the BD-CIT50. The CIT would provide facilities for
members to input and update railway undertaking information (such
issues as permanent limitation on the traffic they were prepared to accept
together with temporary limitations due to congestion, strikes etc). This
information would then be available to other members of the association.
Details of restrictions imposed by carriers would continue to be supplied
by those carriers but be specifically identified as applying only to their
services. Links would also be provided to infrastructure managers’
websites (initially probably only to the network statement) but in due
course to whatever data the infrastructure member put on its website on
permanent and temporary access to its network.
5.10.42 Whilst the concept is still in its early stages of development, it is

likely that the data on railway undertaking imposed limitations provided
by CIT members on the CIT website would only be available to CIT
members whereas the links would merely facilitate access to public data
supplied by infrastructure managers (in the spirit of Directive
2001/14/EC)
5.10.43 It has to be recognised however that the network statements are

not designed for giving details of limitations at frontiers. They are
general, not dynamic and often only available in national languages (for
example, only those for Austria, France, Germany, Great Britain, the
50
Base de données CIT [CIT data base].
5-24
Netherlands, Norway, Poland, Portugal, Slovenia and Sweden are

available in English on the internet).
5.10.44 The Consortium understand that the RNE’s “Business Process

Re-engineering Group” is considering ways in which to facilitate their
customers’ access to standing information about networks and how
transient information can be distributed.
5.10.45 The collation of data for members is a quite proper service for a
trade association and it is not unreasonable to restrict access. In the view
of the Consortium, access to such data is not a necessary component of
running international services, indeed a number of open-access carriers
manage without it. It is clear however that as a service provided to
members, the conditions for membership or paid access to the site must
be transparent and non-discriminatory. The means of achieving this have
been described above.
5.10.46 An alternative solution might be postulated, that of an

infrastructure access database which would define permanent
infrastructure parameters such as axle loads and loading gauges (taking
these over from the RIV), permanent restrictions on traffic, facilities at
border points (taking these from the CIT), semi-permanent issues such as
frontier opening times and allow for ephemeral restrictions (due for
example to weather strikes or congestion). The only body which could
conceivably manage this type of database would be an association of
infrastructure managers with a mandate for an active role, such as RNE.
It would be for consideration whether such a database should also have a
master list of stations (lists of stations also involve a commercial aspect,
a station building cannot imply that a service must be provided). The
RNE Business Process Re-engineering Group is understood to be
considering the issue.
5.10.47 The Consortium recommends that the stakeholders (to include at

least the EIM, ERFA, CER, CIT, RNE and UIC) be invited to propose
agreed solutions for the ownership, supply and updating of industry data
which are suitable for liberalised circumstances. If appropriate such
debate could be conducted under independent chairmanship.
Summary
5.10.48 The work of the CIT does not concern the areas of safety or
technical interoperability. In the area of market access the Consortium
finds that CIT activities could frustrate the ambitions of potential new
entrants and accordingly recommends further investigation by the
Commission.
5-25
5.11 Other multilateral – RIC and RIV
Common features
5.11.1 These two agreements are agreements between railway

undertakings governing the use of hauled rolling stock. They are treated
together because they have a number of similarities. The OSZhD
equivalent of these agreements, the PPW is treated below. This area is
changing rapidly, it is important to recognise therefore that the
information given here represents something of a snapshot.
5.11.2 Railway undertakings join the RIC and RIV because they provide
legal certainty. The relationships are explicit, certain and tested. A
railway undertaking can be certain how its vehicle will be treated and
how it should treat another undertaking’s vehicle. Membership of both
organisations is open to any railway undertaking with rolling stock, a
carrier without rolling stock cannot join, (this therefore would exclude
some new entrant railway undertakings). Membership by new entrant
railway undertakings is considered below.
5.11.3 RIC and RIV practices are industry-standard practices.

Derogations are specifically permitted provided they do not infringe the
rights of third parties. Membership is not a necessary condition of
observing the provisions of the agreements but it is an efficient way of
making them a mutual commitment between railway undertakings.
RIV Agreement governing the exchange and use of wagons between

railway undertakings
5.11.4 The RIV51 is an agreement on the use of wagons with wide

ramifications. Forty-one railway undertakings are members, but
membership is open only to railway undertakings and is strictly separate
from the UIC (although in fact almost all RIV members are UIC
members). Three new entrant railway undertakings are members (Del
Fungo Giera Servizi Ferroviari from Italy and two from Romania). The
RIV secretariat stated that there had been no other applications, but there
was the presumption of acceptance if any had applied. Membership of
the UIC is not a pre-condition of membership of the RIV. In theory the
management of the agreement is also separate from the UIC, but in
practice is subsumed within the UIC structure and the more important
decisions are taken by the UIC Freight Commission. New entrant freight
railway undertakings can operate and do exchange traffic without being
members of the RIV. In doing so however, they normally have to reach
agreements with their partners on handover arrangements; discussions
51
Regolamento Internazionale Veicoli, but always known as RIV, even by Italian rail staff.
5-26
with new entrant railway undertakings suggest that they tend to adopt the
provisions of the RIV on handover without joining the agreement.
5.11.5 Membership fees for the RIV itself are modest, typically of the
order of 10 000 euro for a medium sized freight railway. The costs of
RIV documentation and of RIV processes however fall entirely to the
members (unlike the UIC and CIT where document supply is a bundled
service). RIV documentation is supplied and updated as hard copy and
by its nature much of the documentation must be supplied to staff on the
ground. A not insubstantial charge is made for documentation.
5.11.6 The RIV is essentially an agreement on the mutual exchange and

use of wagons. Originally it referred only to railway owned wagons and
was limited in effect to setting down the rules for the use of and payment
for other member railways’ wagons. However the scope of the
agreement was extended over the years, since it formed a suitable vehicle
for a number of inter-railway issues. It now includes:
• criteria for acceptability of wagons at handover points (RIV
Appendix III). This extends to the technical criteria for all freight
vehicles to be accepted on handover (RIV Appendix XII) (but see
below) and criteria loads have to meet on handover to be considered
safe (RIV Appendix II). The fact that these criteria are defined for
handover points led to them becoming general criteria for all
purposes, (including domestic operation) for most railway systems.
The RIV technical criteria therefore have been de facto wagon
maintenance standards;
• arrangements for maintenance and repair of wagons;
• the criteria for loads, including questions of securing of loads, axle-
loads and loading gauge; (Appendix II)
• rules for the markings and symbols on wagons;
• rules for re-use of other railways’ wagons, arrangements for
reloading and return in the context of the hire and use arrangements;
• arrangements for wagons with exchangeable axles (RIV Appendices
V and VI)
• a ‘rag-bag’ of other operating standards such as criteria for using train
ferries (RIV Appendix IV) and for sealing wagons.
The RIV is therefore a comprehensive agreement and almost every facet
of wagon use is determined by it.
5.11.7 The whole of the current RIV applies to railway owned wagons,
but only the technical parts apply to privately owned wagons. A clear
distinction is made between them.
5-27
5.11.8 EU legislation has replaced parts of the RIV within the territory
of the Community (for example vehicle acceptance conditions and other
technical design provisions replaced by provisions in TSI wagons); it is
clear that this process will continue.
5.11.9 Under the “classic” pre-2000 RIV, all railway owned wagons
were treated as being equivalent, hire charges were standardised by
groups of wagons. The railway undertaking holding a (railway owned)
wagon decided what to do with it. That railway undertaking could send
it straight back or send it to another station for reloading subject to
constraints on where it could be loaded to. That standard system made
no attempt to account internally for the costs of redeploying railway
owned wagons, instead railway owned wagons moving empty were
treated as a charge to be borne by the business. Railway owned wagons
were neither consigned nor labelled on return, rather they flowed back to
their owning railway, available for loading en route.
5.11.10 The logic of the system was that common use of a common
resource allowed wagons that would otherwise have returned empty to be
returned loaded. The whole industry would thus benefit from the more
efficient use of resources. The members of the RIV were therefore keen
to defend the system. Deeper examination of the issues showed that this
logic could be faulty because more journeys a year were often possible
by immediate return for reloading, rather than staging to find a return
load. The RIV concentration on improving the ratio of loaded to empty
journeys paradoxically could have the effect of reducing vehicle
productivity.
5.11.11 A second point was that in practice the agreement simply did
not work in this ideal manner, railway undertakings often returned empty
wagons directly rather than look for loads, the logic of the agreement was
thus not underpinned by reality.
5.11.12 At the same time, many railways which had invested heavily in
wagons to support domestic customers believed their wagons were
making diverse international journeys around Europe rather than being
intensively used to support their customer base. This was an exaggerated
viewpoint, but the perception fed the decision.
5.11.13 Thus the classic pre-2000 RIV was a clear case of a restriction
of competition under Article 81 (1) of the Treaty in the sense that it gave
railway undertakings no scope to compete for the right to supply wagons
on the basis of either price or quality, hire charges were fixed. The
factors outlined above on its failing in practice to create the economies
which were once believed it held, meant it was ineligible for an
exemption under Article 81 (3) and none was sought.
5-28
5.11.14 Accordingly two steps were taken in 2000 and 2003. As a first
stage, the rules were amended to allow an owning railway undertaking to
control its wagons when away from the owning undertaking. In this way,
high value assets could be kept under control (although comparatively
little use was made of this provision). In 2003, the hire charges,
previously cost based and standard between railway undertakings,
became market based and in principle differed between railway
undertakings.
5.11.15 However the difference between railway owned and privately

owned wagons remained. Privately owned wagons remained under the
control of their owners. Owners paid for all movements both loaded and
empty, although the charge for empty movement was typically only 40%
of that for the loaded movement. A standard reduction of 9% on loaded
tariffs was allowed when private wagons were used to take account of the
costs of wagon provision.
5.11.16 Although this conscious attempt was made to provide balanced

treatment to avoid the criticism that the RIV as a whole discriminated
against private wagons and therefore fundamentally infringed Article
81 (1); it was clear that there was a difference in the conditions of use
between railway owned and privately owned wagons which the members
of the RIV found increasingly difficult to justify, particularly in the
context of railway owned wagons being returned direct just as privately
owned ones were.
5.11.17 Pressure from the Commission was decisive in forcing a further

review of the system (although it was apparent to many railway
undertakings that the status quo was not in their own interests).
5.11.18 Accordingly decisions were taken in June 2004 (by the UIC
Freight Commission) to follow the clear logic of a single wagon status,
with exactly the same conditions for railway owned and privately owned
wagons.
5.11.19 Thus all wagons will be controlled by their owners wherever

they are, all wagons will be consigned when empty and will pay for
empty journeys. Hire charges will be set by owners for the use of
wagons of every type. Railway undertakings will have to set up systems
for tracing and redeploying their wagons when away from their home
state just as private owners have done for years. Most owners have their
own IT systems fed with a greater or lesser efficiency from railway data.
5.11.20 These changes will take time to implement, considerable

changes in particular to information technology systems to allow for
consignment of empty wagons will be needed. No date has yet been set
for the change to be complete. To the extent that a single common status
5-29
with privately owned wagons will be created, an agreement with the

owners of privately owned wagons will be will have to be found. At the
time of writing discussions with owners are in hand.
5.11.21 Creation of a single status for wagons will remove one of the
most egregious examples of discrimination in the railway industry. The
rules at present forming part of the RIV agreement will have to be
rewritten to provide for these changes. This will call many aspects of the
nature of the RIV into question. Since the parts that will remain will be
those concerning standards for accepting rolling stock on handover, axle-
load and loading gauge information and loading recommendations, the
question of whether they should be left in an agreement between railway
undertakings will arise. No alternative proposals have yet been made.
5.11.22 Whilst there are quite evident advantages in having all the
material dealing with use of wagons and the use of coaches in one place
there are also quite serious problems of responsibility and accountability.
Both the RIC and RIV are organisations of carriers yet much of both
agreements overlaps the interface between carriers and infrastructure
managers.
5.11.23 The RIV axle-load and loading gauge information is a good

example of this, the management of the RIC and RIV has taken steps to
ensure that the information is properly supplied, collated and updated but
yet it is fundamentally unsound for an organisation of carriers to publish
infrastructure managers’ information in this way. It would be logical for
the supply of axle load and loading gauge information (which is clear
cut) to be taken on by an infrastructure body perhaps using a database run
by the RNE. The RNE stated that their Business Re-engineering Process
Group was examining that question.
5.11.24 Specific appendices to the RIV lay down the arrangements for
loading wagons on the basis that this is a condition of exchange. RIV
loading regulations are phrased as general recommendations. Whilst
there are general standards of accepted good loading, different operating
practices in differing states, however, mean that universal stipulations are
inappropriate. For example some railway organisations do not allow
loose shunting of motor vehicles so that their practices for securing motor
vehicles are undemanding; conversely where loose shunting of long
lengths of steel is permitted, much more effective securing is required.
The RIV reflects this by setting down general principles and supplying
examples of good practice. These differences do however give rise to
problems at frontiers and load adjustment is necessary, resolution has
been through bilateral liaison and agreement. The loading principles
apply to all and there should be no question of differential treatment.
5-30
5.11.25 The loading recommendations in the RIV bridge the areas of

competence and expertise of railway undertakings and infrastructure
managers. It is a railway undertaking's responsibility to ensure loads are
safe, yet any specific rules are imposed by the infrastructure manager or
safety authority The approach adopted in Great Britain might be
appropriate. In Great Britain railway undertakings set their own loading
standards but within the framework of a Group Standard. The Group
Standard is an industry standard produced by representatives from all
parts of the industry and approved by them all. It has no statutory
authority as such but in practice is approved by safety authorities as
meeting their requirements. Extrapolated to an international dimension,
this might mean that infrastructure managers and representatives of
railway undertakings set down principles, it would be for individual
railway undertakings to adopt stricter standards and ensure their trading
partners knew they had done so.
5.11.26 Currently technical issues (such as technical conditions for

vehicles to satisfy on exchange) form part of the RIV. A second
appendix sets down the technical conditions for acceptance of wagons,
on the basis that this is a condition of exchange. Again this document
tends to be something of a compromise since track standards (and
therefore optimum vehicle standards) differ across the EU. It is
inappropriate for an agreement between railway undertakings to set down
technical criteria of this of this type, it would more appropriate to
consider them as being part of access or approval conditions. The view
of the architects of COTIF who considered this issue, was that “operating
rules” (on the acceptance of vehicles) were not part of the approval
system, although closely linked52. It is clear however that the condition
of vehicles is one of the conditions for access to the network;
infrastructure managers network statements make specific reference to it.
It would be desirable for standard parameters for acceptance to be laid
down as part of the interoperability standards.
5.11.27 It is likewise evident that the process of marking vehicles with

operational and other attributes will have to be reviewed. Some
attributes are associated with safety (such as tare weight) others are
wholly commercial (such as the class of a coach). Whilst reflecting the
fact that the regulatory markings need dealing with appropriately, it
would be desirable to keep some coherent process to coordinate other
markings. Whilst the CUV lays down a process (the contract of use53) to
place an obligation on the owners of vehicles to mark them, no process is
laid down in the CUV to standardise the markings themselves.
5.11.28 Whilst a policy and course of action which would remove

discrimination between railway owned and privately owned vehicles has
52
Report of the Central Office, note on Article 9 of the ATMF
53
CUV Article 3
5-31
been identified, it would be appropriate for the Commission to remind

railway undertakings of their obligations to achieve the single status for
freight vehicles as soon as possible. Even after a single status has been
achieved, it would be appropriate for the Commission to keep a watching
brief on the use of vehicles, since even with a single status, there can be
distortions in the supply of vehicles arising from the fact that some are
owned by railway undertakings.
5.11.29 There is merit in having infrastructure information collated and

although supply of infrastructure information to their customers via a
trade association does not appear to raise serious competitive issues, it
does seem anomalous. No proposals for change have been made but the
Commission should support initiatives to create a logical coordinated
supply of infrastructure information to railway undertakings.
5.11.30 There is a need for an agreement between railway undertakings

on the hand over of freight vehicles, such an agreement may include
common standards and practices.
5.11.31 The RIV and arrangements for privately owned wagons (in UIC
leaflet 433 Standard general conditions for the introduction into service
and operation of privately owned wagons) have for some time been
under review by the signatories, a number of whom have themselves
expressed doubts about the compatibility of current arrangements with
competition law. The proposals which have been put forward in the RIV
and UIC (with the support of private wagon owners) would appear to
move towards making them compliant.
5.11.32 The Consortium recommends the Commission invite the UIC to

review the ownership of freight standards (standards which wagons must
meet on handover, loading standards, axle-loads, loading gauge, etc.) in
conjunction with other stakeholders and produce agreed proposals to
allocate responsibilities to prepare, update and publish the standards in a
way which best meets the needs of the liberalised industry. If appropriate
the Commission might suggest a working group with neutral
chairmanship.
RIC54 - Agreement governing the exchange and use of coaches in

international traffic
5.11.33 The RIC is an agreement between railway undertakings, it

provides for privately owned vehicles, but they are in effect subsumed
into being railway controlled vehicles. Twenty-eight railway
undertakings are members, no new entrant carriers have applied for
54
Regolamento Internazionale Carozze
5-32
membership. The only new entrant railway undertaking to have

expressed interest decided it was not appropriate to its operation.
5.11.34 The RIC only covers hauled vehicles, it specifically suggests

analogous agreements for multiple units but in practice they tend to be
treated as traction units with specific agreements for specific routes (to
cover issues such as compatibility).
5.11.35 Unlike wagons, coaches move in controlled circuits and are

normally individually controlled (a coach may represent an investment of
a million euro). Much of the complexity of the RIV on return and
charging arrangements is therefore unnecessary. The RIC provides
instead for preplanning of coach use diagrams and a balancing of coach
use on the basis of equalising axle-km. Specific provisions apply to
provision and exchange of vehicles, positioning of trains, treatment of
irregularities, compensation and accounting arrangements for services
provided and settlement (settlement in kind is preferred), technical
arrangements, markings on vehicles, notices, marking of reserved seats,
destination boards and number plates.
5.11.36 Unlike the current RIV, the RIC sets down standard charges for
the use of vehicles, these charges vary by type of vehicle but not between
providers.
5.11.37 Medium distance point to point international trains are

frequently supplied as complete trains, one by each party (for example
between Tallinn and Moscow). Long distance international trains with
many sections may have vehicles from a number of different railway
undertakings. It is desirable that the vehicles return to their owning
railway undertakings frequently for maintenance (servicing is undertaken
by a number of undertakings along the route). In both cases the logic of
the supply of vehicles by a number of organisations in controlled circuits
would therefore seem to be specifically provided for under Article 3 (1) b
of Regulation 1017/68 and therefore not prohibited.
5.11.38 The generality of the RIC, setting down common arrangements

for the cleaning of vehicles, the return of defective vehicles and common
seat reservation and coach labelling conventions etc. would seem to come
within the permitted scope of Article 3 of Regulation 1017/68 in its
application of technical co-operation to a successive transport operation.
The operation of the agreement provides benefits to passengers.
5.11.39 The issue of payment for the use of vehicles may however not
be quite so clear. In presuming a mutual solution or payment at standard
rates per axle km, the RIC excludes the possibility of low cost railway
undertakings being able to make use of their competitive advantage by
supplying rolling stock beyond their quota and being paid for it.
5-33
Likewise it excludes the possibility that particularly well equipped

vehicles can be supplied for premium payments. This seems a very clear
infringement of Article 81 (1)a of the treaty, fixing of the price of inputs.
The Consortium therefore recommend that the RIC be modified to move
to a system of generalising payment for the use of vehicles and in
requiring owners to set their own schedules for hire charges. Sections 14
and 15 would need amending to reverse the presumption and set up the
mechanics of charging.
5.11.40 There is also a question of a wider market for the provision of

vehicles; in short, does the RIC frustrate the development of a leasing
market for passenger vehicles (in the way that there is for freight stock).
Under current circumstances, the customers of such a leasing market
would be railway undertakings themselves; the RIC does not put any
barriers in front of the railway undertakings sourcing vehicles in this
way. Under current circumstances, therefore the RIC does not frustrate a
leasing market; it is conceivable however that other means of sourcing
vehicles may arise and so the Consortium recommends this question be
kept under review.
5.11.41 In other respects, the issues of interface with infrastructure

managers are much less acute than those raised by the RIV, issues of
loading standards do not arise and those of loading gauge hardly arise.
Instead the issues that arise are those of compatibility with other rolling
stock in trains, heating and ventilation systems, databuses etc. These
issues come within the ambit of railway undertakings. Nevertheless in
undertaking a review of the ownership of freight standards, opportunity
should be taken to review those for passenger traffic.
5.11.42 There is a need for some agreement between railway

undertakings on the operation of passenger vehicles and that such an
agreement may include common standards and practices. Nevertheless
the common charging arrangements are clearly in need of reform. It is
the view of the Consortium that this reform cannot be accommodated by
agreements to derogate, wholesale reform is required. It will also be
necessary to review those parts of the RIC which deal with technical
standards (section VI) when the conventional interoperability standards
are published. The RIC does not raise any issues of safety.
5.11.43 The Consortium recommends the Commission investigate the

RIC to check its compliance with competition law and as appropriate
require the UIC to restructure the it in such a way as to make it compliant
so as to bring competitive forces into the supply of vehicles. The
Consortium recommends that the study of freight standards, outlined
about, be paralleled by a similar one for passenger standards.
5-34
5.12 PPW
5.12.1 The PPW (Правила полъзование вагонами)55 is the OSZhD

equivalent to the Western European RIV and RIC. It is very similar to
the RIV and RIC in their unreconstructed forms. The most recent edition
dates from 1 June 2004.
5.12.2 It applies to all wagons, coaches, containers and pallets, whether

privately or railway owned (Section 1).
5.12.3 Passenger vehicle allocation follows the same principle as that in

the RIC, carrier conferences which decide vehicle circuits. The
agreement lays down the technical conditions which coaches must meet
to be accepted on exchange (Section 2), procedures for the allocation of
coaches to duties (Section 3), handover of coaches (Section 4),
conditions for the use of coaches (Section 5), detachment of coaches
from trains (Section 6), payment for the use of coaches (by axle
kilometre) (Section 7), movement of empty coaches (Section 8),
operation of coaches (Section 9), internal equipment in coaches (Section
10), cleaning of coaches (Section 11), servicing and repair of coaches
(Section 12) and compensation for lost coaches (Section 13).
5.12.4 For wagons the PPW lays down the technical conditions which
wagons must meet to be accepted on exchange (Section 14), procedures
for the handover of wagons (Section 15), conditions for the use of
wagons (Section 16), conditions for the return of wagons (Section 17),
serving and repair of wagons and supply and payment for spare parts
(Section 18), compensation for lost wagons (Section 19) and payment for
the use of wagons (on a standardised basis) (Section 20). The agreement
provides for privately owned wagons, this part of the agreement covers
the status of privately owned wagons (Section 21), conditions for
exchange (Section 22) and repair of privately owned wagons (Section
23). The agreement defines how the standard per diem charges for
groups of vehicle are calculated (on the basis of an averaged cost over all
the member railways).
5.12.5 Other parts of the agreement which cover containers and loading
tackle are of less interest.
5.12.6 There are quite serious competition issues which are the same as
in the classic RIV and RIC. The fixing of standard hire charges for
freight wagons prevents railway undertakings operating on the 1520 mm
network from competing for the supply of vehicles on the basis of either
price or quality and prevents users of vehicles from obtaining the benefits
of competition in that supply.
55
Regulations for the use of vehicles (in international traffic)
5-35
5.12.7 Likewise the differential arrangements between railway owned

and privately owned vehicles represent a playing field which is not level.
In many of the specialised markets in which private wagon owners
operate, the wagon owners are the prime suppliers of vehicles (tank
wagons, for example); nevertheless the fact that the railway undertakings
are the prime suppliers of transport makes them the more powerful party.
5.12.8 The Consortium therefore recommend that the Commission

investigate the PPW to check its compliance with competition law
following which EU Member States that are also members of the PPW
should be encouraged to reform the agreement from within, possibly
encouraging a change process such as that adopted for the RIV. There is
no doubt that this will be a long process. The Latvia railways point out
for example that they account for less than 1% of the 1520 mm wagon
fleet. In the meantime the Baltic railway undertakings have the problem
of being involved in a regime deeply embedded in their business
relationships but which raises competitive concerns.
5.12.9 The Consortium recommends that in their discussions with the

OSZhD, the Commission press for a liberalisation of the PPW to bring
competitive forces into play. The Commission should also offer to
provide logistic support. In addition and in parallel the Commission
should invite the EU states which apply the PPW to develop
arrangements between themselves which derogate from the PPW (under
the terms of clause 1.6.4 ) to set up competitive arrangements between
themselves. This might in time provide a model for wider
implementation.
5.13 Recommendations
5.13.1 Membership (or not) of the Brussels Clearing Centre is not a

crucial factor in access to the market, for most open access operation it is
irrelevant. The Consortium recommends no action is taken (from
5.4.12).
5.13.2 The PPW, the OSZhD vehicle use agreement, does not appear to
be compliant with competition law. The Consortium therefore
recommend that the Commission investigate the PPW to check its
compliance with competition law (from 5.12.8).
5.13.3 The Consortium recommends that in their discussions with the

OSZhD, the Commission press for a liberalisation of the PPW to bring
competitive forces into play (from 5.12.9).
5-36
5.13.4 RailNetEurope packages and markets a variety of competing

products, the Consortium therefore recommend that the Commission
make further study of the competitive relationships implicit within RNE
(from 5.7.5).
5.13.5 Common rail industry data (such as permitted axle loads) is held
in a variety of differing databases without logical ownership and
updating responsibilities. The Consortium recommends that the
Commission invite the stakeholders (to include at least the EIM, ERFA,
CER, CIT, RNE and UIC) to propose agreed solutions for the ownership,
supply and updating of industry data which are suitable for liberalised
circumstances (from 5.10.47).
5.13.6 The Consortium recommends the Commission invite the UIC to

review the ownership of freight standards (standards which wagons must
meet on handover, loading standards, axle-loads, loading gauge, etc.) in
conjunction with other stakeholders and produce agreed proposals to
allocate responsibilities to prepare, update and publish the standards in a
way which best meets the needs of the liberalised industry (from
5.11.32).
5.13.7 The International Rail Transport Committee (CIT) hold the

copyright to essential documentation for the movement of freight. The
Consortium therefore finds that that CIT activities could frustrate the
ambitions of potential new entrants and accordingly recommends further
investigation by the Commission (from 5.10.48).
5.13.8 The RIC does not allow competitive forces to operate in the
market for the provision of passenger vehicles. The Consortium
recommends the Commission investigate the RIC to check its compliance
with competition law and as appropriate require the UIC to restructure
the it in such a way as to make it compliant so as to bring competitive
forces into the supply of vehicles. The Consortium recommends that the
study of freight standards, outlined about, be paralleled by a similar one
for passenger standards (from 5.11.43).
5.13.9 Under current circumstances, the RIC does not frustrate railway
undertakings seeking competitive long-term leases for passenger vehicles
and the development of a leasing market; it is conceivable however that
other means of sourcing vehicles may arise and so the Consortium
recommends this question be kept under review by the Commission
(from 5.11.40).
5-37
6. BILATERAL INTERGOVERNMENTAL
AGREEMENTS
6.1 Overview
Competence and successor states
6.1.1 It should be noted that whilst treaties are normally made by states,
this is not always the case. The German Grundgesetz (Constitution) for
example allows the federal Länder to conclude treaties (Article 30). The
Länder have in fact concluded some eighty treaties with neighbouring
states since 1949 mostly about frontier issues. Likewise latitude (but a
little less) is allowed to cantons in Switzerland. The study identified a
convention between Basel Stadt and the Grand Duchy of Baden, still in
force, various recent agreements between Lorraine and Luxembourg
were also identified.
6.1.2 The concept of succession complicated the study. Where, for

example, Austria had a frontier treaty with the Czechoslovak Socialist
Republic, does that treaty still bind the new state of Slovakia? There
were in fact treaties, which were seemingly still valid, but in which both
parties had been replaced by successor states; treaties between the
Austro-Hungarian Empire and Prussia concerning frontiers on what is
now the Czech–Polish border, for example. One source pointed out that
at the Kirbatai – Nesterov frontier, Russian territory formerly to the West
of the frontier point, was now to the East of the same frontier point.
There are general principles for these questions, notably the Vienna
Convention of the Succession of States in respect of Treaties, 1978.
Certainty is only achieved however by confirming relationships, in 1996
for example, both the Czech Republic and Slovakia re-registered their
reservations to the COTIF passenger liability limits as successor states to
Czechoslovakia.
6.1.3 A common-sense view was taken of treaties signed by Austria-

Hungary, when the issue concerned Austria they were recorded as
Austrian and v.v. A few treaties clearly concerned both halves of the
empire.
6.1.4 The position is slightly more complex where a state is absorbed

and (for example) the Federal Republic of Germany re-negotiated the
former GDR frontier treaties with Poland and the Czech Republic.
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Treaties considered
6.1.5 In this study, the word “treaty” has been treated as including all
agreements from formal treaties through to exchanges of letters. This is
consistent with Article 2 1 (a) of the Vienna Convention56 ““treaty”
means an international agreement concluded between States in written
form and governed by international law, whether embodied in a single
instrument or in two or more related instruments and whatever its
particular designation”. The scope of the study has necessarily been
limited to what is recorded in public documents or reported by
respondents, but the approach taken by the consortium has been to report
all agreements regardless of form.
6.1.6 Only one case was found of a frontier which had no treaty
concerning railway activities; on the land frontier between the UK and
Ireland.
6.1.7 Only treaties between adjacent states or groups of states have been
considered as coming within the remit of the study. Thus an agreement
between Austria and Poland to promote freight traffic (of 19 August
1993) has not been considered, whereas an essentially similar one
between Austria and Hungary (17 August 1993) has.
6.1.8 Agreements to finance lines have in general not been recorded or

analysed.
6.1.9 Treaties which referred to lines which have since closed have not
been recorded or analysed; these treaties were quite numerous. Treaties
which referred to lines which have not been built were also not normally
recorded.
6.1.10 Treaties that referred to rail links that are not continuous (such as
ferry links) were also regarded as being outside the scope of the study.
6.1.11 Treaties which merely fixed or confirmed frontiers have not been
recorded.
6.1.12 Many treaties are simply enabling treaties, in which the two (or
more) states authorise their plenipotentiaries to agree (for example) the
route of a new railway (as an example, the treaty of 1 July 1863 between
France and Belgium on a railway between Lille and Tournay). The treaty
itself does not set down any detail, that is elsewhere and in many cases
not in an accessible form.
56
Vienna Convention on the Law of Treaties 1980.
6-2
6.1.13 There were only two examples of a state specifically making an

agreement between railways into an agreement between states. In one
case , the treaty legitimised what the railway had already done (close a
Franco-Belgian line whose local transport function had been destroyed
by post war movement restrictions); in the other, the (Austro-Czech)
treaty was all about inter-railway frontier arrangements.
6.1.14 A number of international treaties concerning railways are relics

of Empire, particularly in the case of the former Austro-Hungarian
Empire, the Austrian Government made a number of treaties on the issue
of staff pensions for the former Austrian State Railway staff in former
parts of its Empire. Likewise there were issues of the guarantees
provided to bondholders who had helped to finance the extension of
railways inherited by those states. (These treaties continued to be signed
right up to 1962.) Similar treaties were made by the French Government
but normally with states outside Europe. These treaties have nothing to
do with the handover of traffic and have been ignored in this study.
6.1.15 Likewise treaties on customs, immigration police, plant and

animal health issues have generally been ignored, except insofar as it
appears that there is potential issue in competition law, or on the traffic
or operations of particular railway undertakings.
6.1.16 Treaties on customs, etc. issues do not normally refer to the

formalities themselves. This is because customs formalities are not
normally negotiable but are rather statements of where and how they are
to be carried out. These treaties therefore refer to states giving powers to
other states (normally on a mutual basis) to exercise sovereign powers
extra-territorially. In this way Basel Badischer Bahnhof, is regarded as
being in Germany although in fact it is in Switzerland. There is no
German station in the area which can realistically undertake these tasks.
The agreements do not therefore normally impinge on individual
railways directly, nor on their traffics, but are agreements between states
to ease and facilitate sovereign processes. In point of fact, particularly
within the European Community, customs agreements have all but
ceased to have a practical effect since the creation of the internal market.
Likewise through much of the “old Community”, the Schengen
Agreement has reduced the effect of police and immigration agreements.
6.1.17 This policy of ignoring customs treaties has been continually

reviewed by the study team, those treaties which might in fact have a
bearing on traffic or the operations of particular railway undertakings
have been retained. In general, conventions on on-train customs
procedures have been retained. In addition, a sub-section has been
included above on the operation of the Simplified Procedure for transit
by Rail.
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6.1.18 The construction of high-speed lines has provided reasons to

negotiate further treaties concerning the construction of international
railways and as this report was being written, negotiations on a Franco-
Italian agreement were in progress.
6.1.19 Community initiatives have overtaken the provisions of large

numbers of existing agreements. These include:
• rights of employment for the citizens of the states involved (which

has become a fundamental freedom);
• offering the same tariffs and service quality to citizens of the states
involved (overtaken by Competition Law);
• provisions on standardisation of equipment (overtaken by
interoperability);
• agreements on fiscal arrangements (overtaken by more
comprehensive arrangements for international businesses);
• cooperation between law and order agencies (overtaken by the co-
operative arrangements laid down in the Treaty establishing the
Community).
6.1.20 Given the large numbers of these agreements, it has not been
possible to provide detailed comments on them all, instead they have
been tabulated in Appendix E; general themes are drawn out below;
within each theme examples are dealt with in detail to expose current
problems. The general themes include, authorising the construction of a
railway, setting out terms for the operation of a railway, setting down
arrangements for frontier controls (only considered exceptionally).
Particular issues are considered in sections after the treatment of general
issues.
6.1.21 231 bilateral intergovernment treaties have been identified (this

figure must be treated with some care, some treaties in the Baltic states
were more akin to inter-railway agreements). Of those, 174 were treaties
concerning internal frontiers and 57 external frontiers of the European
Union (again these figures are indicative, a few tri-partite and multi-
partite treaties covered both). The Consortium estimates that a further
thirty treaties may exist without a public record.
Competence
6.1.22 The concept of competence is once again important. Community

competence applies to treaties made between states. Put simply,
Community law takes precedence over treaty law and agreements that
conflict with Community law are void “in matters governed by the EEC
Treaty, that Treaty takes precedence over agreements concluded between
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Member States before its entry into force"57. Community law does not
however require states to abrogate treaties or parts of treaties which
conflict with Community law, it only requires those treaty obligations to
be disregarded. The general rules on amendment of treaties contained in
the Vienna Convention58, however require that states notify each other
before disregarding treaty obligations.
6.1.23 This may perhaps be illustrated by an example. The treaty

between France and Italy concerning the line from Nice to Cuneo signed
24 June 1970 gives specific rights to SNCF and the Italian State Railway.
If a new entrant railway undertaking were to want to make use of powers
granted under Community law (for example under Directive
2001/14/EC) then the rights under Community law will take precedence
over those granted to the national railways by the treaty.
Pertinence
6.1.24 The other issue that requires consideration is that of pertinence,

many treaties studied are in theory still valid but in practice have been
overtaken by events and are in practice ignored. It must be remembered
that many of the “current” treaties are in fact old, the average date for the
17 Swiss frontier treaties for example was 1872 and none was later than
1909. Even where the treaties conflict with subsequent law (and insofar
as customs, immigration and the award of concessions is concerned, that
is quite frequent), the treaties have not (in the main) been abrogated but
are left to wither. The Netherlands Ministry of Transport, Public Works
and Water Management indeed said that “Our main conclusion is that
some provisions appear not to be conform to EU policies but the
concerned articles or treaties are no longer applied in practice, as far as
we can judge”. Comparing the replies of the various states to the
Consortium’s questionnaire suggests that the states themselves are
unaware of many of their commitments. In one case one state identified
thirteen treaties still valid along a common frontier, the other only six. It
would not be surprising if railway undertakings whether incumbent or
new entrant are even less aware of treaty commitments and cannot and
do not arrange their operations to take them into account.
Dynamic treatment of treaties
6.1.25 Linked to the issue of pertinence, whether the treaty is applicable

at all, is the issue of dynamic interpretation. Deutsche Bahn stated that
the German Government insisted on treaties being interpreted in
accordance with current circumstances, so that for example where a
treaty gave rights and obligations to the “German Railway
57
Judgment of the Court of Justice of 27 February 1962 in Case 10/61 Commission v Italy
[1962] ECR 1
58
Vienna Convention on the Law of Treaties 1980
6-5
Administration” that was to be interpreted as giving rights and

obligations to both Deutsche Bahn and its competitors where competitors
made use of German open access law. Deutsche Bahn could not
therefore claim that treaty rights were exclusive.
Requirement to renegotiate treaties to correspond to EU law
6.1.26 Where treaties or parts of them are not compatible with EU law,
there is no requirement to abrogate them, merely to disregard the
obligations which conflict with Community law. Treaty law requires
Contracting States to agree this with their partners (Articles 57 and 59 of
the Vienna Convention59 )
6.1.27 The Consortium recommends that Member States review the

treaties and agreements they have with neighbours to consider whether
they still reflect their current obligations. Where they do not, the
Consortium recommends that the contracting parties abrogate or revise
their treaties appropriately.
6.2 Clauses in bilateral treaties
Overview
6.2.1 Given that the issues to be resolved were standard, agreements

between states became highly standardised, not just within one state nor
even between pairs of countries but across Europe. They are
standardised not only at the conceptual level but in their very
phraseology. One example will make this clear, a comparison of article 4
of the treaty of 14 June 1881 between France and Switzerland compared
with article 4 of the treaty of 9 November 1867 between Belgium and the
Netherlands, both taken verbatim from the official texts:
Art. 4
Les deux gouvernements rechercheront les moyens d’obtenir que la
section comprise entre les stations frontières des deux chemins de fer
français et suisse, et située partie sur le territoire français et partie sur le
territoire suisse, soit exploitée par une seule compagnie ou
administration.
Ils permettront que les compagnies ou administrations chargées de
l’exploitation des lignes sur les deux territoires s’entendent à ce sujet. En
cas d’accord à cet égard, accord qui sera soumis à l’approbation des
hautes parties contractantes, les deux gouvernements se réservent de
s’entendre, en ce qui concerne cette exploitation, par voie de
correspondance
59
Vienna Convention on the Law of Treaties 1980.
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Art. 4
Les deux gouvernements rechercheront les moyens d’obtenir que la
section, comprise entre les stations frontières des ces chemins de fer et
située partie sur le territoire Néerlandais et partie sur le territoire Belge,
soit exploitée par une seule compagnie.
Ils permettront que les compagnies ou administrations chargées de
l’exploitation des lignes sur les deux territoires s’entendent à ce sujet. En
cas d’accord à cet égard, accord qui reste soumis à l’approbation des
Hautes Parties contractantes, les deux Gouvernements se réservent de
s’entendre, ultérieurement en ce qui concerne cette exploitation, par voie
de correspondance
The texts are all but identical.
6.2.2 Accordingly rather than look at a large number of essentially

repetitive treaties individually, this section looks at the clauses typically
found in bilateral treaties. The clauses are considered type by type,
clauses that do not follow the standard pattern are also considered. In
every case the clauses are analysed, commented on and areas in which
they do not comply with Community law, particularly in the fields of
safety, interoperability and market access are identified.
Commitment to co-operate
6.2.3 Many treaties start with an assertion of friendliness, sometimes in

the preamble rather than in the treaty itself. This takes the form of an
assertion of wanting to increase the co-operation between the countries in
question. Trade and the free movement of citizens are normally
mentioned in conjunction with this. Sometimes the rail treaty refers back
to a more general treaty between the states. This type of clause is not in
conflict with Community law.
Treaties authorising the construction of a railway
Definition of trace
6.2.4 Treaties for the construction of railways always mention the route,
either by saying it is defined in an annex to the treaty or follows the route
defined by a body of experts (which had already reported). The point at
which the route crossed the frontier however is almost always in the main
treaty, defined to the centimetre and sometimes to the millimetre. There
are no issues of Community law.
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Responsibility for works
6.2.5 The responsibility for which state or company was responsible for
the work is a key part of every treaty dealing with construction,
particularly where a structure (a bridge or tunnel) marked the frontier.
Definition of construction standards
6.2.6 It is rare to find construction standards defined in a treaty, many of

the earliest treaties make no mention of them, if there is mention, it is
often limited to the maximum gradients and maximum curves and the
distance between track centres. Issues such as axle-load and loading
gauge are not mentioned. Only in the late 1800's did any mention start to
be made of other standards and a few treaties started specifically to
mention the TU. It would be appropriate for modern treaties to
specifically mention that work is to be in accordance with the standards
prepared in accordance with the Interoperability Directives.
Supervision of construction
6.2.7 It is also rare to find any mention of supervision of construction,

either by the constructing state or by “other” state. Even when the
structures were such that approval of the structure would be required (for
major bridges and tunnels etc) this does not get mentioned. Mention of
approval processes is slightly more common when the railway was to be
let on concession. It would clearly be appropriate for a modern treaty to
deal with the issue of how the standards of construction are to be
ensured, probably jointly.
Timescales for construction
6.2.8 Treaties involving the awarding of concessions often include a

timescale for construction with provisions for non-compliance, otherwise
it is rare. There are no issues of Community law.
Allocation of costs
6.2.9 Treaties typically specify how the costs of joint works, such as
frontier bridges and joint stations are to be allocated. There are no issues
of Community law.
6-8
Aspects of treaties dealing with sovereign powers
Assertion of sovereignty
6.2.10 An assertion of national sovereignty can be found in most treaties

dealing with the operation of the railway, rather more rarely in the case
of construction. The assertion of sovereignty takes the form of clarifying
(typically) that operation of a joint station did not imply that the state in
question ceded any of its sovereign rights. In particular it was normal to
state that the employees of the railway working in the “foreign” state
were subject to its laws. Special arrangements were made for railways
(typically running along frontier rivers) which crossed for a short section
into the “other” state. Likewise temporary arrangements were sometimes
made for duration of the construction of a tunnel where the works were in
the territory of a state but in fact inaccessible from that state.
6.2.11 The assertion of sovereignty is often accompanied by the

assertion of specific rights to defend or police the national territory which
might compromise the operation of the railway. This included closure of
the railway.
National defence
6.2.12 Where the frontier is also a defensive feature, (such as rivers and
mountain ranges) rights to defensive works are often included in the
construction arrangements. This was usually a sensitive issue given the
implication that it was the signatories who would be the belligerents.
Where there is a commitment to a regular or continuous service, this is
often coupled with a right to suspend it in case of national need.
Police powers
6.2.13 The way states dealt with police powers varied. An undertaking
to co-operate was universal. Most treaties set down the principle that
national police powers apply in the national territory. A limited number
allowed foreign police appropriate powers (for example for immigration
or hot pursuit). Some treaties (but again not many) provide for a state to
be able to require foreign police to withdraw from its territory. The issue
of general co-operative arrangements has been taken over by title VI of
the Treaty establishing the Community. Other arrangements are not in
conflict with Community law.
Provision of accommodation
6.2.14 Treaties involving joint stations normally provide for

accommodation to be provided for police and for the basis for charging
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for the accommodation itself and for heating, lighting and cleaning it.
No conflict with Community law.
Aspects of treaties dealing with customs and immigration
Co-operation between agencies
The general duty of co-operation which most treaties laid down has been
overtaken by Titles X and VI of the Treaty establishing the Community.
Powers
6.2.15 Powers are normally defined as being slightly more restricted

than those that officials had in their home states. Officials are normally
required to be readily identifiable, wearing a uniform or a badge
(sometimes staff sent to supervise or audit the normal staff are absolved
from being readily identifiable).
Location of controls
6.2.16 Location of controls is dealt with in some detail in all the treaties
which mentioned customs and immigration. Most treaties (with the
singular exception of Eastern Europe) specify frontier controls should
take place on just one side of the frontier. In the twentieth century
passenger controls were increasingly specified as being on train and
specific powers given to immigration and customs staff to allow for this.
Offences were defined as having been committed at the frontier station.
The four freedoms of the Single Market and the Schengen Agreement
have largely overtaken customs and immigration processes but the terms
of the treaties are not in fact out of line with Community law. A right of
free transport across the frontier is normally allowed to state officials and
a specific right for customs officials to accompany sealed consignments.
Officials in uniform or carrying identity documents do not require
passports (although normally they do require identity documents).
Operation of the controls
6.2.17 Through the years the emphasis changes, the first treaties
involved states agreeing on the effectiveness of the controls, modern
treaties emphasise by contrast the fluidity of traffic. Community law
requires no impediment be placed on the movement of goods between
states.
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Provision of facilities
6.2.18 The carriers were always required to construct and provide free
accommodation for customs and immigration officials, a practice that
continues to this day. It does not conflict with Community law.
Arrangements for transit traffic
6.2.19 Some treaties specified arrangements for sealing transit traffic or

other means of simplifying procedures. These typically provided for
goods and luggage to be cleared inland provided that there was an inland
customs office. The Single Market has overtaken these provisions (but
see the section on the Simplified Transit Procedure by Rail where the
question of movement under customs control is considered).
Favourable treatment
6.2.20 Treaties typically require customs and immigration authorities to

treat the routes in question no less favourably than any other.
Aspects of treaties dealing with security
Liaison
6.2.21 Modern treaties provide for security issues. The treaty normally
facilitates the arrangements, allocating powers and responsibilities to the
states in the event of an incident, setting up joint committees and giving
them powers to advise and direct. Day to day liaison arrangements are
also formalised. Other than that, the committees were left with a free
hand. No conflict with Community law is involved. Carriers are
sometimes required to produce safety and security plans for the approval
of the authorities, this is consistent with Article 9 of the Railway Safety
Directive.
Aspects of treaties dealing with taxation
Local taxation and taxes on consumption
6.2.22 Treaties normally provided for the taxation regime of the frontier
section and frontier stations. Differences in treatment were interesting,
some states provided for their being taxed, others exempted them.
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Aspects of treaties dealing with award of concessions
Award of concessions
6.2.23 Private construction of railways was the exception rather than the
rule in Europe, nevertheless in France, Belgium, the Netherlands and
Switzerland for example there were privately owned international
railways (at least initially). The award of a concession to build and
operate an international railway was normally dealt with in an agreement
separate from the treaty itself but was nevertheless implicit in the treaty.
To the extent that the concession is interpreted as attaching to
infrastructure rather than operation problems do not arise.
Length of concessions
6.2.24 Where the details of the concession were given then so too was
its duration.
Arbitration
6.2.25 A few treaties defined an arbitration process, this was however

not common in the treaty proper (as distinct to the concession
agreement).
Nationalisation
6.2.26 The right to take back a concession and the compensation was
included in treaties when the arrangements for the concession itself were
given.
Separation of infrastructure and operation
6.2.27 Concessions were of course awarded to integrated railways. In

today’s circumstances, it would be sensible to see the concession as
attaching to the right to manage the infrastructure rather than the right to
operate trains. Whilst no Community law requires integrated railways to
be split up, Community law does require independence (e.g. Directive
2001/14/EC Article 14 (2)) given that the infrastructure manager has an
effective monopoly. This is less of a theoretical point than might be
apparent, for example both the Simplon and Channel Tunnel are
concessions awarded to integrated railways.
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Clauses setting out conditions for the operation of a railway
Declaration of status
6.2.28 Some treaties defined frontier routes as principle international

routes (although the choice did seem slightly arbitrary). This seemed not
in fact to have any practical implications.
Nomination of the operator
6.2.29 Treaties normally named the operator by implication if not by

name, e.g. the “German Railway Administration”, there were no
examples of a formula which would readily permit the interpretation of
open access operation. This issue has been addressed in some states, but
it is not clear that there is general acceptance of the principle of dynamic
interpretation. Proposals are given below.
Supervision of operation
6.2.30 It was in fact rare to find any definition of the way the operation
of a railway was to be supervised. Where there was a provision in effect
it defined the sphere of influence of each state. Definition of the national
safety rules and the lines to which they apply is implicit (but not explicit)
in Article 4 (3) of the Safety Directive. Again very rare was a specific
right for the management of a railway undertaking to cross the frontier to
supervise its operating staff in the “other” state, Within the EU, this right
is implicit in the four freedoms.
Joint operation
6.2.31 The break point between the two railways was defined insofar as
it was a joint station (such as Venlo) or the section of line operated
jointly (such as Antwerp to Roosendaal).
Responsibility for operation
6.2.32 (See below for rights and obligations under treaties). It was
normal for states to specify a single railway undertaking for the cross
frontier section but often the railway companies were given powers to
reach working agreements. In the case of the Franco Spanish frontier,
where lines of two gauges run parallel across the frontier special
arrangements were defined (changes have since been made, for example,
French trains no longer run to Puigcerdá). Likewise special
arrangements were made where railways crossed into and out of
countries (such as in the Roya valley) In most cases railways were
required to nominate an “extraterritorial” manager to whom all issues
could be directed. Rail staff in uniform or carrying a commission were
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exempted from the need for passports. Safe-conducts for rail staff were
offered in the event of the closure of the frontier.
Free services
6.2.33 A common requirement was to provide free transport for the

postal authorities over the frontier section. It is highly likely that these
clauses have been overtaken in practice, but the requirement to provide
free transport would of course be inconsistent with Article 5 of Directive
91/440/EEC.
Clauses setting out railway technical issues
Technical standards
6.2.34 It was in fact quite rare to have the technical standards defined in
treaties. Where concessions were being awarded it was more common,
but for state railways almost unknown. In fact to the extent the TU
applied, it may have been thought to have been unnecessary to restate an
existing obligation.
Infrastructure standards
6.2.35 It was normal for the infrastructure to be required to conform to

standards, these were rarely specified in any detail, often a simple
reference to “the normal standard” sufficed. Sometimes the requirement
was reversed with criterion being that the locomotive and rolling stock
were suitable to cross the frontier. For example the Dutch Belgian treaty
of 9 November 1867 lays down “Ils auront soin néanmoins que cette
construction ait lieu de manière que à ce que les locomotives, les voitures
et les wagons des deux pays puissant circuler sans aucune difficulté sur
tout le parcours de ces chemins de fer:” whereas the Swiss Italian treaty
of 23 December 1873 lays down “Le matériel de transport destiné au
transit doit être construit de manière à pouvoir, sans difficulté, passer
d’un réseau sur l’autre”.
Acceptance of rolling stock
6.2.36 Most treaties provided specifically that rolling stock that was
approved in the one state was thereby to be accepted in the other without
further formality. The development of standards, initially through
Technical Unity and the UIC and latterly through TSIs meant that this
rather demanding requirement was in fact achieved more simply that
might have been imagined, at least for hauled rolling stock.
6.2.37 Traction remains an exception and certainly in recent years

firstly national railways (when they did their own approvals) and latterly
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independent approval bodies have emphasized that they have exclusive

authority for approving the use of traction on the national infrastructure.
The NERA report, cited above, points out that there is a certain
reluctance by approval bodies to approve foreign traction and even in
some cases (as pointed out in section 7.3 below), an attempt to limit
approvals already given to existing users. Whilst the practices of
approval organisations fall outside the scope of this study, it is clear that
there is a need to ensure that approval work is not only non-
discriminatory but considers risk in context.
Aspects of treaties dealing with traffic issues
Continuity of operation
6.2.38 An obligation for a minimum service was a normal part of a

treaty. This minimum service was expressed both as a requirement for
being open every day and also to provide a minimum number of trains,
including where appropriate freight and parcels services. State definition
of a minimum service of course conflicts with the market freedom
required by Article 5 of Directive 91/440/EEC (except to the extent that
there is a public service obligation)
Connections
6.2.39 Consistent with the commitments for basic services were

obligations to ensure connections into and out of domestic trains. In
theory the imposition of traffic commitments is also in conflict with
Directive EEC/91/440, although there can hardly be an objection to
improvement of services.
Aspects of treaties dealing with subsidy
Conditions for the award and removal of subsidy
6.2.40 Provision of a subsidy was only an issue when the railway was to
be operated under a concession, it was in fact very rare, but a statement
of the level of the subsidy and the time it was to be paid is given in the
Simplon treaty.
Aspects of treaties dealing with tariff setting
“Most favoured” conditions
6.2.41 A common clause in a treaty was to commit the states to

guaranteeing that the tariff and other conditions via the frontier point in
question would be no less advantageous than any other. Treaties for
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frontier points on transit routes in particular used this formulation to

ensure that the route in question could get its fair share of the business.
To the extent that the clause implies state intervention in the pricing
policy of the railway undertaking, this type of clause is a clear
contravention of Article 5 of Directive EEC/91/440 which lays down
“railway undertakings shall, in particular, be free to control the supply
and marketing of services and fix the pricing thereof”. The clause could
of course be read as requiring the state not to interfere in pricing. The
latter interpretation would be fully in accord with Community law. Some
treaties went further than simply making a comparison between frontiers
by defining the tariffs as to be the domestic ones. (In today’s
circumstances, CIV fares are normally considerably higher than domestic
fares, since various “national” offers are inapplicable, freight tariffs are
subject to the same phenomenon, although less so).
Competitive conditions
6.2.42 The clause guaranteeing equal treatment was sometimes coupled

with one authorising reductions in competitive situations. This is fully in
accordance with the market approach of Community law.
Equality of treatment
6.2.43 Many treaties set down a formal requirement for equality of

treatment between citizens of the two countries, both in terms of the
prices charged and the quality of services delivered.
Setting of tariffs
6.2.44 If not actually laid down in the treaty itself, there was normally a
requirement for tariffs (both passenger and freight) to be approved by
government agencies. It is not clear if the requirement for approval of
tariffs has generally fallen into desuetude. A requirement for approval is
acceptable in the case of services provided under public service
obligations. Most international services are not however subject to
public service obligations so any continuing obligation to have tariffs
approved may raise questions of the management independence of the
railway undertaking under Article 5 of Directive EEC/91/440.
Aspects of treaties dealing with employment rights
Rights of engagement
6.2.45 It was normal for a railway when operating across the territory of
another state to be required to show no preference between the citizens of
the two states when engaging staff. This would currently come within
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the scope of the EU fundamental freedoms (Article 39 (2) of the Treaty

establishing the Community).
Deployment of staff
6.2.46 A clause banning the employment of staff with criminal records

from employment in the “other” state was quite often found (and
presumably mirrored a clause in national legislation banning the
employment of staff with criminal records inland). A ban on staff with
criminal records is not inconsistent with Community law (only
discrimination based on nationality is against community law (Article 39
of the Treaty establishing the Community)).
6.3 Rights and obligations placed on railway organisations
6.3.1 Treaties between states signed in the nineteenth century largely left
the question of the rights and obligations of railway organisations open.
In a few cases (such as the treaty of 19 February 1906) between Italy and
Switzerland the arrangements for operating the railway were specified in
a treaty between the states but with those exceptions the Consortium
found no early treaties which either empowered or placed obligations on
the railway organisation to set up a relationship with its partner.
6.3.2 In the frontier management treaties signed post 1950 however a

standard set of treaty terms were applied to railway organisations.
Typical of these treaties is the Franco German treaty of 18 April 1958.
Given its importance, the text of that part of this treaty is reproduced
below. (The texts of the Belgian German treaty of 15 May 1956, the
German Luxembourg Treaty of 16 February 1962, the Franco Belgian
treaty of 30 March 1962 and the German Danish treaty of 24 April 1967
are effectively identical).
“Special Provisions applying to Railway Administrations
Article 28
Each contracting party shall authorise those staff of the railway
administration of the adjacent state responsible for operations within the
framework of this convention to carry out their tasks on its territory.
Article 29
Joint stations shall remain the property of the administration of the
railway of the state of location and shall be constructed, maintained and
managed by that administration.
Article 30
1. The competent authorities of the state of location and in particular
the railway administration, shall take all the measures which are
necessary to allow the services of the adjacent state, the railways of that
6-17
state within joint stations and as appropriate within exchange stations to

function normally.
2. The railway administrations shall conclude agreements in which
the details of the equipment and operation of joint and exchange stations
and for the payment for services provided by one administration to the
other are set down.
3. The railway administrations shall designate exchange stations
jointly.
4. The railway administrations may conclude agreements on the
operation of cross-frontier sections.
Article 31
The railway administration of the adjacent state shall be authorised to
take the supervisory and monitoring measures necessary to ensure its
staff apply its own rules in joint and exchange stations.
Article 32
The provisions of articles 18, 23 and 25 shall be applicable mutatis
mutandis to the railway administration of the adjacent state. The
provisions of articles 21 and 22 shall apply likewise in so far as their
application conforms with the domestic law of the adjacent state.
Article 33
The railway administrations of the two countries may agree that the
staff of the railway administration of the adjacent state shall provide the
service in trains crossing the frontier beyond a joint or exchange station
on the territory of the state of location. The provisions of articles 11 to
16 and 19 are applicable mutatis mutandis to these staff.”
6.3.3 These treaties provided the framework for the formal agreements
between the integrated railways (such as those following UIC leaflet 470
or 471-1). Agreements between railways and their implications for
railway undertakings are considered below but it would be appropriate at
this juncture to consider the nature of the framework of these treaties.
6.3.4 In today’s terms Articles 28 and 30 -33 apply to the activities of

railway undertakings, only Article 29 could have any application to
infrastructure activity.
6.3.5 The essential question is whether treaties to provide for a

relationship either between infrastructure managers or between railway
undertakings are necessary or desirable. (The relationship between
railway undertakings and infrastructure managers is already provided for
in Community law). That no treaty commitment is absolutely essential is
demonstrated by the complete absence of any treaty between Ireland and
the United Kingdom and the substantial absence between Norway and
Sweden.
6.3.6 In a liberalised environment, the need for treaties to set a

framework for commercial undertakings within a single railway market
seems anomalous given overriding Community law. The single clause in
6-18
the treaties above that could have an application to infrastructure

management, to determine the working of joint stations, has been made
obsolete by the effective disappearance of joint stations.
6.3.7 The Consortium consider therefore that within the European

Union, for established frontiers, there is no requirement for treaties to
cover the operation of cross-frontier railways.
Note
6.3.8 As a matter of record, the earliest agreement identified by the

study was in 1846 and the latest 2004.
6.4 Recommendations
6.4.1 Although believing that treaties and agreements between Member

States to govern the operation of an established rail frontier within the
European Community are not necessary (since existing Community and
other international law provides sufficient framework); the Consortium
would not go as far as to say that that meant all existing agreements
should be abrogated. Rather existing agreements need to be clarified and
updated as necessary. In many cases that will lead to the recognition that
they perform no useful service.
6.4.2 The Consortium recommends that Member States review the

treaties and agreements they have with neighbours to consider whether
they still reflect their current obligations. Where they do not, the
Consortium recommends that the contracting parties abrogate or revise
their treaties appropriately (from 6.1.27).
6-19
7. OTHER BILATERAL AGREEMENTS
7.1 Overview
7.1.1 Inter-railway agreements may follow directly from powers granted

explicitly or implicitly to them by inter-state agreements (and this is the
approach followed by Haustein60 quoted in the Tender Specifications) or
those they choose to make for commercial, operational or technical
reasons. Haustein’s presumption is that railway organisations had
powers delegated to them by treaty and the railway undertakings then
made agreements within the terms of the treaty. The Consortium found
that the earliest treaties only rarely specifically empowered or required
railway organisations to make agreements between themselves and in no
case actually required them to do so. By contrast (and as explained in the
preceding section) treaties made in the twentieth century both
empowered and required railway organisations to make frontier
agreements. These treaties were in fact highly standardised. Partly in
consequence and partly because of the corporatism of the time the
agreements that railway organisations made between themselves were
standard agreements based on models recommended by the UIC. For the
purpose of this study that is a great advantage because the agreements
between integrated railways were all very similar (the norm is a straight
quotation of the relevant parts of the UIC formula.)
7.1.2 Agreements between railway undertakings have been taken as

those that follow as a consequence of membership of a trade association,
those that follow as the consequence of joining a particular convention
and those which are specifically agreed between individual undertakings.
7.1.3 The first two of those, essentially agreements that by their nature
are general, have been treated above under “Other multilateral
agreements”. This section, other bilateral agreements, treats those
agreements that have been made on an ad hoc basis no matter how many
parties are signatories.
7.1.4 Currently most incumbent railways have bilateral agreements with

their counterparts in adjacent states. These agreements date from the
days of integrated railways and cover all aspects of the interface. They
thus cover maintenance of track and signalling, appropriate safety rules,
use of staff and issues of traffic handover. This situation is however
changing rapidly.
60
Internationales Eisenbahnrecht, Quellensammlung, Frankfurt 1956
7-1
7.1.5 These agreements normally formally adopt UIC procedures and

specify any unique arrangements (for example if a train-ferry route
represents the frontier). As explained above, many inter-railway
processes have been designed within the UIC by its members. The
existence of a formal framework makes negotiation of the frontier
agreement simpler, particularly where railway undertakings on each side
of a hand-over point have a strained relationship (this is no longer the
problem it was, but in the period of the cold war, relations between
Eastern and Western railways could be frosty). The existence of a formal
agreement makes it possible to resolve issues directly rather than going
through a UIC arbitration procedure (or via diplomatic channels).
7.1.6 A distinction should be made between the classic successive

carrier handover situation in which a train “belongs” to the receiving
railway undertaking directly it crosses the frontier and the much more
flexible arrangements which liberalisation allows. The logic of the
classic situation is that the receiving railway undertaking holds all the
permissions to operate and access rights and ensures safety standards by
means of agreements with its upstream partner. The view of the
Consortium is that this approach lost much of its logic on separation of
infrastructure and train operation: there is little logic in a train belonging
to the receiving railway when it is not responsible for forming it, may not
be responsible for hauling it and the receiving railway does not own the
infrastructure. Nevertheless incumbent railways were insistent that the
relationship remained.
7.1.7 In this classic successive situation responsibility for the train and
the benefit of the revenue both transfer at the frontier. This presupposes
a “contract of co-operation” (express or implied) between the two
railway undertakings to co-operate in offering through international
services. All the incumbent railways’ basic arrangements follow this
model even though in practice physical handover made be distant from
the frontier. These co-operative arrangements imply a certain
willingness to make appropriate facilities available.
7.1.8 Liberalisation however allows a number of different options and

several railway undertakings told the Consortium that these all-purpose
agreements are being rewritten to reflect liberalisation. From the one
comprehensive agreement, a number of free-standing successor-
agreements will be created. In this way agreements between
infrastructure managers will be created to regulate such issues as track
maintenance, signalling and communications links. Hand-over
agreements between the (incumbent) passenger and freight railway
undertakings will be drawn up separately with their counterparts. These
agreements between railway undertakings will address issues such as
hand over of traffic and will only commit their signatories. Conformity
with Community law will be an important criterion in drawing them up.
This issue is explored below.
7-2
7.1.9 In the same way as for the inter-governmental agreements outlined

above, the agreements between railway undertakings have been tabulated
(in Appendix E). General themes will be explored and particular iconic
agreements will be examined in detail. Fifty seven such agreements have
been identified. The Consortium estimates that there may be a further
forty agreements which the railway undertakings questioned did not
mention.
7.2 Hierarchy of law
Legal issues
7.2.1 The concept of competence is once again important. Community

competence applies to international agreements made between
individuals and organisations. Put simply, Community law takes
precedence over national law and contracts and agreements that conflict
with Community law are void61. Accordingly agreements made under
the aegis of trade associations or in a similar way are overruled by
Community law where there is a conflict.
7.2.2 Thus if an agreement, perhaps made in good faith many years ago
conflicts with Community law, it cannot no longer have effect. Many
agreements made between incumbent railways which (for example)
purport to give them exclusive use of facilities are void to the extent that
they conflict with Community law. In this way many impediments to
open access operation may be successfully challenged in law.
7.2.3 The rights of access to infrastructure and ancillary services are

clearly laid down in Community law and accordingly rights for new
entrants to operate end to end services should not be difficult to assert.
7.2.4 In the case of potential successive operations and joint ventures

involving new entrants, the precedent of the Georg – FS case62 provides a
guide for national competition authorities. New entrant railway
undertakings should not therefore have to take legal action to get rights
enshrined in statute. In some EU Member States the “rail regulator”
(required by Article 30 of Directive 2001/14/EC) also exercises a role in
competition law (rather than competition authorities proper). It is also
clear that the Commission will be able to play a role in reminding
Member States of their duty to ensure the application of Community law.
The remark of Herr Georg, that success in his complaint against FS had
an effect on other railway undertakings, must also be borne in mind.
61
Costa – ENEL European Court of Justice 1962
62
XXXIIIrd Report on Competition Policy – 2003, SEC(2004)658 final Brussels, 04.06.2004
7-3
7.3 Classic agreements between railways
Overview
7.3.1 As explained above, the classic agreements between Western

European railways presume the classic successive carrier relationship.
These agreements are modelled on UIC leaflets. They therefore tend to
follow the same pattern, normally indeed taking the text of the UIC
leaflet verbatim.
The UIC leaflets in detail - 470 General arrangements concerning the

financing and operating of frontier stations
7.3.2 This leaflet is in part for information and in part recommendatory.

It was clearly written with passenger stations in mind but is not in fact
restricted to passenger facilities. The leaflet distinguishes between
international stations (stations on each side of a frontier but which are
separately operated and each party absorbs the cost of its own activities)
and joint stations which are shared by two (or more) railway
undertakings. It recommends that railway undertakings sharing a joint
station (which it specifically clarifies need not be a frontier station but
may be an internal handover point) should draw up an agreement to share
costs. This agreement should include:
• definition of facilities which are shared and those which are not
• services to be provided jointly
• costs of joint services and allocation key
• methods of allocating receipts
• liability for accidents, sharing of their costs
• operating arrangements.
7.3.3 A number of cost allocation keys (fixed, traffic based etc) are
suggested in the annex. The leaflet prefers that each of the parties
contributes in kind but recognises that might be difficult. It emphasises
that all the costs of the joint operation should come into the equation and
that joint stations should not be regarded as a profit centre. The costs of
traction (for shunting etc) may include amortisation. Traction current is
to be included but the leaflet is silent on the costs of overhead traction
equipment. Whilst this leaflet does not exclude new entrant railway
undertakings, and there are in fact a number which are the only operators
over frontier sections (Viamont and NVAG for example), this leaflet is
mainly addressed to incumbent railway undertakings.
7-4
7.3.4 Railway undertakings told the Consortium that there are now very
few joint stations, ÖBB for example said that it now had only two
(Salzburg and Passau). This is the result of a number of factors, amongst
them being changes in operating patterns and commercial circumstances
which have down-graded the roles of frontier stations (for example the
GONG freight trains (Güterzug ohne nennenswerter Grenzaufenthalt)
[freight train without significant stop at the frontier]). SNCF told the
Consortium that it now had no joint stations (from some 20) and the
previous arrangement in which SNCF effectively colonised foreign
infrastructure and operations up to a major station (such as Geneva or
Bâle) had now been replaced by more conventional arrangements. In
addition the institutional role of the station itself has changed in many
countries. Stations are often owned by the infrastructure manager and
the incumbent railway undertaking is (in theory) as much a tenant as a
new entrant railway undertaking.
7.3.5 The Consortium’s judgement however is that far from being an

essential facility, having facilities within a joint station is rather a
impediment to creating efficient operating arrangements, they
institutionalise sedentary rather than movement activities and emphasise
process rather than outcome. Nevertheless it is clear that infrastructure
managers (or railway undertakings themselves where they control the
station) must be required to make facilities available in any station which
railway undertakings choose to make joint on a non-discriminatory basis.
The UIC leaflets in detail - 471-1 Regulations covering the operating of

lines crossing frontiers and the use of locomotives and multiple-unit
trains in international traffic
7.3.6 The leaflet represents a response by the railways of the day to the
requirement laid down in frontier treaties (and the perception of a
requirement where no legal obligation was laid down.)
7.3.7 The current edition is the 5th edition which although dated
February 2001 was in fact last modified in October 1983 (and references
to steam locomotives suggest rather earlier origins). It is a part
mandatory, part recommended, leaflet although the force of that is
significantly blunted by its application being to lines "which are not
covered by special agreements”. It sets out principles for drawing up a
specific frontier agreement between one or more national railways to
manage their frontier operations. In practice, frontier agreements
between national railways all reflect its structure, except that high speed
lines in general have their own specific agreements. For that reason it is
one of the more important agreements treated in this report. Its nature is
rather more a set of instructions (“the railways will …”) than a
framework contract. In a number of areas it exposes an issue which
needs to be resolved, but leaves resolution to be by agreement.
7-5
7.3.8 It dates from the days of national railways and includes obligations
which would today devolve to both railway undertakings and
infrastructure managers. Slightly more subtly, it makes the classic
presumption that a train changes status as it crosses the frontier.
Responsibility for the train passes from one railway to the other (even
when traction and staffing may be projected well into the state in
question). Revenue and costs therefore are recalculated from frontiers. It
does not allow for alternative models, such as responsibility for revenue
and costs starting at an internal point. Likewise it deals with
relationships between railways without defining their status, integrated or
functionally separate, incumbent or new entrant. It could therefore apply
to both open-access and incumbent railway undertakings. Access to
facilities is specifically provided for.
7.3.9 In detail, the provisions are divided into the following headings:
General; Compensation for services performed; Operating; Rolling stock
- fixed installations; Accidents and operating incidents; Staff matters;
Accountancy regulations; Miscellaneous regulations.
7.3.10 The first section (0) defines the scope and terminology. The
scope covers the frontier sections between the last station and the
physical frontier, provision is also made however for interpenetration to
cover the section from the frontier to the furthest interior station. This
extends the scope (for example in the case of the SNCF agreement from
Saarbrücken to Metz, some 75 km). (Before the start of Thalys services,
indeed Paris to Brussels was operated non-stop by SNCF and SNCB
jointly). The first section sets down the requirement to have a formal
agreement. Local agreements are to be produced to define local
circumstances, local infrastructure and to define processes in detail.
Leaflet 471-1 also requires an agreement on the timetable (this obligation
should now pass to the infrastructure manager). It also requires each
railway to advise the other(s) of the characteristics of the infrastructure
on the “frontier section”, this too is an obligation which should pass to
the infrastructure manager.
7.3.11 Section 1 on Compensation for services performed is only

recommended. This section is crucial, it covers the provision of traction
and the operation of trains over the frontier section and as appropriate on
into the national territory. It presumes of course that there is an
agreement in principle to move the train. This agreement in principle is
implicit in the case of traffic moved “in co-operation” but cannot be
presumed otherwise. The German – Austrian agreement on the use of
each other’s traction is a variant on the UIC model and is briefly treated
below.
7.3.12 Section 1 lays down firstly, the definition of distances between

the various stations, hand-over points and the frontier point. Secondly, it
states that the traction, train staff and accompanying staff provided by
7-6
each railway undertaking are to be tabulated and as far as possible

balanced on the basis of kilometres travelled over accounting periods.
Settlement in cash is firmly avoided, only if settlement in kind cannot be
achieved over two years can a cash settlement be considered. The logic
of this approach is to avoid administrative expense (and perhaps unsaid
to avoid any risk of being overcharged). A more specific contract
charging specific prices for specific services is of course an alternative.
7.3.13 Most of section 2 on operating is mandatory. It lays down an

obligation to communicate and update the operating rules for the frontier
section. (This role has now moved to the infrastructure manager). The
requirement is much more detailed than a network statement would
provide, typically the definition would include line and signal diagrams.
The leaflet defines the obligation of staff to respect them. Timetables are
to respected, mechanisms for running special trains are to be agreed. It is
recommended that ancillary services which are implicit, such as attaching
a locomotive and testing brakes, are nevertheless defined. Where they
take less than fifteen minutes, it is recommended that no charge is made.
Obligations to move traffic in the case of a train failure are laid down.
7.3.14 Section 3 on Rolling stock and fixed installations is part

recommended and part mandatory. Traction must be properly approved
and maintained, the standards for other vehicles are recommended to be
those of the RIV and RIC (etc). A framework agreeing technical
inspection arrangements is recommended and it is to be noted that this
presumes examination at frontier hand-over points, a practice which has
substantially disappeared. It is recommended that each railway
undertaking has the use of the facilities of the other “Each Railway shall
allow the other Railway to use any of its installations as required for
operating the service in accordance with the prescribed conditions”.
This is a wide permission. The generality, however, is slightly weakened
in subsequent paragraphs when issues such as the right to use telephones
or send telegrams is defined. The approval process is not defined, nor is
the process of acceptance by the “other” state.
7.3.15 In section 4, the leaflet essentially lays down a requirement to co-

operate in the case of accidents and operating incidents. The co-
operation is limited to the question of providing resources and clearing
the line, although there is provision for legal support for staff involved in
an incident in the “other” state. They do not conflict with those of
Chapter V of Directive 2004/49/EC dealing with the investigation of
accidents.
7-7
7.3.16 The section on staff (5) is largely mandatory. It states that an

operating language must be chosen63. Staff are required to know the
regulations and their employer is responsible for the examination
procedure (this is not dissimilar to the processes defined in COM(2004)
142 final64). A clause limits the number of staff working in the “other”
state to those strictly necessary (this is clearly contrary to the principles
of the four freedoms). Staff must obey local laws. Pilot drivers are
required for interpenetration, except where staff have been able to
demonstrate adequate knowledge. It is recommended that train crew may
only drive traction of the ‘other’ railway if their own railway warrants
their competence. Arrangements for disciplinary measures are
recommended.
7.3.17 The section on Accountancy regulations (section 6) is merely

recommendatory and sets out the framework for calculating the costs
when cash is used to settle operating balances. The details of the
calculation method are left to an annex. Whilst railways are encouraged
to agree common costs, in theory higher costs could be used by one
railway than another. Traction current and amortisation of overhead line
equipment are not to be taken into account.
7.3.18 The annex defines costing methods. For locomotives, energy,

servicing, maintenance, amortisation and interest on capital is to be taken
into account. These are to be an average for the train type for the railway
undertaking. Staff costs are likewise to be averaged but take into account
additional payments for working outside the home state. Provision is
made for a managing railway in the case of multilateral agreements.
Provision is made for cost indexation.
7.3.19 The leaflet represents a model for railway organisation to use to

construct bilateral agreements. A diagram of the relationships has been
kindly provided by Deutsche Bahn:
63
Practical experience suggests that this can be a problem where is no tradition of speaking the
‘other’ language. Either train staff or station staff must be taught another language, the
numbers to be taught and the ownership of costs may become crucial issues.
64
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
7-8
In many respects UIC leaflet 471-1 acts as the “basic law” for
agreements between railways
The leaflet is complemented by bilateral agreements between the railways
FBA (operating agreement) with West European railways,
GBV (frontier operating agreement) with the East.
UIC leaflet 471-1 FBA, GBV → GÜV Local instructions

(applies to all UIC railways) (apply between two railways) (for individual frontiers)
Contents of the leaflet: Frontier A

• 1 General FBADB
FBA between
- SNCF (Flensburg - Padborg)
• 2 Compensation for services DB – von
DSB1984
dated 1991 14.10.1975
performed Based on the Frontier B
• 3 Operating individual (Niebüll - Tønder)
• 4 Rolling stock – fixed Articles of leaflet 28.05.1972
installations 471 - 1
• 5 Accidents and operating
incidents Agreements apply to
• 6 Staff matters the totality of cross
• 7 Accountancy regulations frontier traffic
• 8 Miscellaneous regulations
Deutsche Bahn AG • G.GRP • Oliver Hirschfeld Grenzüberschreitender Verkehr • Besprechung mit Herrn Dugdale • Berlin, 20.10.2004 11
7.3.20 A number of legal issues arise from agreements drawn up in

accordance with this leaflet. The agreements set up rights to operate and
implicit recognition of the standards of each incumbent railway
undertaking in the other state. This might have been appropriate at a
time when railways were their own approval bodies but now raises
questions about equality of treatment. For example, the presumption is
that staff are trained and examined by the employing undertaking, the
“other” state and its supervisory authority are not involved. Traction is
similar, the fundamental characteristics of the traction are not contested,
only differences (in train-track signalling for example) are scrutinised.
Incumbent railway undertakings continue to have the benefit of these
agreements but new railway undertakings normally have to satisfy
approval authorities in the “other” state with no presumption of basic
competence.
7.3.21 Railway undertakings contacted by the Consortium were

reluctant to provide copies of their agreements. The Consortium
however were able to assemble a set comprising agreements from CFL,
DB, DSB, NS, ÖBB, PKP, SNCB and SNCF. The Consortium believe
this to be a representative sample. These agreements are treated below
(but it is important to note that most are in the process of being
renegotiated).
7-9
Agreement of 1st January 1984 between CFL, DB, NS, SNCB and
SNCF on multilateral calculation and settlement of cross frontier
services performed reciprocally
7.3.22 This is very much the archetypical agreement. It involves the

largest railway undertakings of Western Europe and accounts for a large
proportion of cross frontier movements. The agreement is modelled on
UIC leaflet 471-1 and lays down common costs to be used to settle
traction imbalances. (471-1 prefers settlement in kind). The costs are
averages of the costs of individual railway undertakings weighted by the
kilometrage on other railway undertakings’ home networks. A standard
train crew is laid down. Costs are recalculated every two years and
indexed in the other year. An audit arrangement is provided for. The
Luxembourg Railway (CFL) is given the job of managing the agreement.
Settlement is annual. The result is thus simple rather than sophisticated
and gives each railway undertaking some incentive to keep its actual
costs below the average declared by other undertakings.
Agreement of 26th June 1993 between DR and PKP on the operation of

cross frontier services
7.3.23 This agreement was signed in the name of the Reichsbahn after
the fusion of the two German states but remains in force. It acts as
framework agreement, specific agreements for each frontier supplement
it to define local process in detail. Once again the agreement is modelled
on UIC 471-1 (indeed quoting references to the leaflet). It appears that
an absence of a similar agreement between PKP and a German new
entrant was used as a reason to refuse exchange.
Agreement of 8th March 1999 between ÖBB and CD on the operation

of cross frontier services
7.3.24 This agreement replaces that signed between the Austrian and
Czechoslovak railways. It acts as framework agreement, specific
agreements for each frontier supplement it to define local process in
detail. Once again the agreement is modelled on UIC 471-1 (indeed
quoting references to the leaflet).
Agreement of 8th August 1999 between ÖBB and ŽSR on the operation
of cross frontier services
7.3.25 This agreement replaces that signed between the Austrian and
Czechoslovak railways. It acts as framework agreement, specific
agreements for each frontier supplement it to define local process in
detail. Once again the agreement is modelled on UIC 471-1 (indeed
quoting references to the leaflet).
7-10
Local agreement between DB and DSB for railway operations between

Flensburg and Padborg dated 10 December 1996
7.3.26 This agreement is a local agreement within the meaning of

paragraph 0.4 of UIC 471-1. It defines operational procedures
(principally signalling) in some detail and includes details of the track
layouts etc. The agreements describes operating procedures, it does not
establish rights to operate. It is clear that local agreements of this type
form the basis for the agreements between infrastructure managers which
are being signed.
Local agreement between ÖBB and CD for railway operations between

Hohenau and Breclav dated 26 March 1997
7.3.27 This agreement is a local agreement within the meaning of

paragraph 0.4 of UIC 471-1. It defines operational procedures
(principally for handing over traffic) in some detail. The agreement
describes operating procedures, it does not establish rights to operate.
7.3.28 Although not able to obtain copies of the remaining agreements,

the Consortium understands that all other classic frontier agreements
follow the same format. The agreements are between nominated parties
and presume successive carriage. A precondition for a third party would
therefore be an agreement to exchange traffic with the railway
undertaking in question. As explained above, even if the agreement in
itself is not anti-competitive, insistence on having such an agreement
might be.
Agreement between DB and ÖBB for traction services using the

traction of one administration over the lines of the other of 10 April/15
May 1973
7.3.29 This agreement comes outside the scope of the study, but a short
review is included for the sake of completeness. In many respects it
might be regarded as a variant of the UIC frontier model. It provides for
the mutual and reciprocal use of the traction of one party by the other.
Unlike the UIC model, the agreement refers to traction without train crew
and unlike the UIC model the agreement provides for generalised use of
the other railway’s traction (subject to its being approved). The
agreement requires the use of the other railway’s traction to be by
agreement and pre-planned in the timetable, it does not provide for ad-
hoc use. It is a facilitating agreement rather than a commitment. The
agreement is clearly predicated on the classic model of successive
carriage but that is not laid down as a condition of the reciprocal use.
The principle of the agreement is reciprocity in the provision of traction,
in extremis, payment is provided for.
7-11
7.3.30 Accordingly in practice the agreement covers long distance

projection of traction on international trains (Austrian locomotives to
Frankfurt and German locomotives to Vienna for example) rather than
generalised use of traction. The advantage for the parties to the
agreement is a reduction in the assets required (and therefore lower
costs), there is a marginal customer benefit in that journeys are
accelerated by not having to change locomotives.
7.3.31 In the opinion of the Consortium, the existence of the agreement

does not imply that either railway undertaking has spare resources
available for hire. Whilst an incumbent operator with substantial traction
resources would find an agreement of this type easier to implement, it is
not difficult to see it might have a value to a new entrant operating under
the successive carriage model. The Consortium therefore recommends
that a study be made of the terms under which such an agreement could
be made generally available.
Agreements “in confidence”
7.3.32 A feature of recent years has been the instigation of ‘agreements

in confidence’ (an inadequate but official translation). These agreements
between railway undertakings are designed to reduce the number of
checks made on traffic on handover by relying on the checks already
made by the upstream railway undertaking. There are two such
agreements, on wagon technical examination (UIC leaflet 471-2) and on
dangerous goods (UIC leaflet 471-3). In each case the framework for
these agreements has been designed by UIC railways and the texts are
issued as UIC leaflets. Essentially however railway undertakings agree
on a bi- or multilateral basis to ensure that traffic arriving at the hand-
over point is fit to go on without inspection. The ‘confidence’
agreements are individually negotiated and given that the issues are
potentially safety critical, partner railway undertakings insist on a
significant evaluation of applicants’ controls before dismantling their
own. However the advantage in the process is enjoyed by the railway
undertaking that does the trusting, it can then save staff time and perhaps
avoid stopping at a frontier, so there is every incentive to trust the
upstream railway. Follow-up and audit systems protect the integrity of
these arrangements. These issues are explored in the next four
paragraphs.
7.3.33 Both leaflets give rise to the same issues in competition law. The
issues are examined below.
The UIC leaflets in detail: 471-2 Technical inspections at and inland

from frontiers for the exchange of wagons in international traffic
7-12
7.3.34 This leaflet is mandatory for those railways that subscribe to

“Agreements on the transfer of goods". Essentially the purpose is to
avoid protracted stops at hand-over points to check the technical
condition of wagons (that the brake blocks are thick enough to run from
the North Sea over the Alps to Italy for example). The origin railway
undertaking is required to check a defined set of points on behalf of all
the undertakings. The requirements defined are industry standard and
proportionate. Railway undertakings must agree bi- and multi-lateral
agreements with their neighbours before being bound by the terms of the
leaflet. There is no evidence to suggest that a new entrant railway
undertaking operating under the successive carriage model would be
discriminated against, indeed it is very much in the interests of the
accepting carrier to make this type of agreement and provide support (if
any were needed). There is no requirement to be a member of the UIC
before adhering to the agreement. The principal agreement has been
signed by CargoNet, CFL, DB, DSB, EWS, FS, GC (SJ), ÖBB, NS,
RENFE, SBB/CFF, SNCB, and SNCF but there are other bi-lateral
agreements (such as those between ÖBB and MÁV, ÖBB and SZ, and
ÖBB and ZSSK).
7.3.35 An audit system is defined to monitor the effectiveness of the

process.
The UIC leaflets in detail: 471-3 Inspections of dangerous goods

consignments in international traffic
7.3.36 Leaflet 471-3 on inspection of dangerous goods consignments

merely sets down two processes; firstly a process for examining
dangerous goods consignments (to check that labelling has been correctly
done and that tank valves are closed and sealed for example); and
secondly a process for making agreements to trust other railway
undertakings’ checks and not make further checks when taking over
traffic. The requirements defined are industry standard and
proportionate. Each agreement is individually negotiated and given the
process is safety critical, agreements are not lightly concluded. A large
incumbent railway was surprised to find agreements were not a formality.
There is no evidence to suggest that a new entrant railway undertaking
operating under the successive carriage model would be discriminated
against, indeed it is very much in the interests of the accepting carrier to
make this type of agreement and provide support (if any were needed).
There is no requirement to be a member of the UIC before adhering to
the agreement.
7.3.37 An audit system is defined to monitor the effectiveness of the

process.
7-13
7.3.38 Both leaflets raise the same issues in competition law. As has
been explained above, it would not seem that agreements made under the
terms of these two leaflets can be used to frustrate competition and that
there is an incentive to sign them whenever possible. Nevertheless as
agreements with a safety focus, the Consortium recommends that a study
be made under the aegis of the Railway Safety Agency on whether it is
appropriate that the practices laid down in the leaflet be made a
mandatory condition of successive carriage.
The UIC leaflets in detail: 404-2 Compendium of wagonload

consignment data exchanged between railways in international traffic
and: 404-4 Regulations governing inter-railway exchanges of data on the
conveyance of goods in trainloads/through trains in international traffic
7.3.39 These two leaflets may be treated together. They refer to the
supply of “consist” information on the handover of freight trains. The
theory of the process is that before handover of a train, technical
information on all its vehicles and for all its traffic is passed forward to
the next railway undertaking. This increases safety and operational
efficiency (since the information comes from source) and saves staff time
for the accepting railway. The process is sometimes less efficient than
the railway undertakings would like to believe (see the Strateco Study65).
7.3.40 The leaflets are technical leaflets that define data formats, they do
not set down the rights to send and receive messages. Rights to send and
receive messages are not in fact defined at all but given the benefits that
arise where railway undertakings exchange traffic then there must be an
implication that they are prepared to exchange information. New entrant
railway undertakings operating under the successive carriage model may
nevertheless face technical problems even where there is goodwill.
7.3.41 This issue is not directly related to the existence of frontier

agreements but rather to the fact that data formats designed some years
ago on data exchange failed to allow for open access. This omission was
not remarkable, whilst there was international operation by minor
railways, widespread international open access had not been discussed at
the time the first standards were written (in about 1980).
7.3.42 Whilst there is no formal exclusion of new entrant railway

undertakings operating under the successive carriage model from this
process, commercial, operational and technical difficulties militate
against their inclusion. The current formats of the messages giving
details of traffic being handed over at frontiers currently use code
structures which only permit incumbent railway undertakings to be
recognised and there is no mechanism to solve the problem of sorting
65
Report of the 'Strateco' study on the exchange of operational data of border-crossing freight
trains for the European Commission February 2001
7-14
messages between the various potential downstream railway

undertakings on hand-over.
The UIC leaflets in detail: 502 Special consignments - Provisions

concerning the preparation and conveyance of special consignments
7.3.43 Similar multilateral agreements set down in UIC leaflet 502

define the procedures for the exchange of exceptional loads. The leaflet
defines the process in which the railway undertakings propose the
consignment, liaise with their infrastructure manager and feed back
acceptance conditions. Specific processes take place on handover
between railway undertakings to verify that the consignment is safe to
continue under the operating conditions set by the infrastructure
manager. As part of the process, but outside the scope of the leaflet, the
railways assess the charges to be made for the movement. The leaflet
defines a technical process, it neither confers nor denies rights. New
entrant railway undertakings would have to go through the same process
to get conditions of passage from infrastructure managers and share them
with the lead carrier putting the package together for the customer (or go
to the customer themselves). There are no competitive issues arising
from this procedure, nor is it incompatible with safety or interoperability
provisions.
Use of UIC leaflets – the “frontier” leaflets
7.3.44 It was very clear to the Consortium that UIC leaflets 470 and
471-1 have outlived their usefulness. None of the respondents contacted
by the Consortium believed them to have any continuing relevance, none
of the respondents saw any role for the UIC in drawing up standard
frontier agreements for contemporary relationships.
7.3.45 By contrast, the leaflets dealing with handover “in confidence”

were strongly supported by railway undertakings. They allow long
distance projection of trains across frontiers and increase safety levels.
There is every logical reason to make such agreements and the
Consortium understand that they form part of the “new style” agreements
being negotiated between railway undertakings (see below).
7.3.46 Likewise the process of dealing with exceptional consignments

has a continuing role.
7-15
7.4 Classic agreements between railways – problem areas
Czech Republic – German and Slovak frontier
7.4.1 A short summary of the earlier problems in the Czech Republic

would be useful although the Consortium understands from the new
entrant railway undertaking, Viamont, that the issues have all now been
resolved. These problems certainly occurred between the Czech
Republic and Germany and Slovakia, it would be logical to suppose they
also occurred between the Czech Republic and Austria and Poland but no
record has been made. Whilst the Czech Republic had liberalised the
provision of rail services, Czech licences were not valid for the section
from the last Czech station to the actual frontier and accordingly new
entrant railway undertakings could not cross the border (Viamont was in
fact an exception since it controlled cross frontier infrastructure). Cesky
Drahy (CD) the state railway undertaking insisted on its exclusive right
to cross the frontier based on its UIC 471-1 agreement with DB.
7.4.2 In contrast to the Polish case (below) there was an inter-state

agreement on the rights and obligations of railways, but it spoke simply
of “the railway” and did not adequately accommodate liberalisation..
The state government took no action to enforce practical liberalisation.
Immediately after accession however, new entrant carriers started
operating cross frontier services and this de facto liberalisation was
recognised by a government decision in June 2004.
7.4.3 This was therefore rather a case of national legislation failing to go

far enough in defining the rights of liberalised railways (although the
Consortium understand that the incumbent railway was quite happy with
the status quo ante.)
German – Polish frontier
7.4.4 Appendix E shows the agreements in place between the German

and Polish authorities. It will be noted that agreement of 25 November
1971 on co-operation in the exchange of rail traffic has been abrogated
but continues to apply on a custom and practice basis. New general
frontier treaties were signed in 1992 but did not apply specifically to rail
traffics (an intergovernmental treaty to cover rail traffics is in course of
preparation). Accordingly there is no inter-state treaty that sets down the
rights and obligations of railways. The two state railways signed an
agreement on the operation of all their common frontier lines, the
Grenzbetriebsvereinbarung (GBV) in June 1993. This agreement closely
follows UIC leaflet 471-1. These 471-1 agreements as noted above set
down rights and obligations between the signatories, they do not confer
rights on third parties nor exclude them.
7-16
7.4.5 Both countries have opened their domestic markets to new entrant
railway undertakings. Following Poland’s accession to the EU, the
TERFN has been systematically opened to open access operation in
accordance with Directive 2001/12/EC and cross frontier trains operated
by new entrant railway undertakings have run. It is understood from
press reports for example, that Rail4Chem from Germany has exchanged
traffic with ChemTrans Logistik in Poland.
7.4.6 In these cases PKP has refused to hand over traffic other than to
DB (DR’s successor to the 1993 agreement). (Presumably the same
objections would apply to handover, for example to a Czech new entrant
railway undertaking.) Particularly effected by this have been EKO
Transport, (a wholly owned subsidiary of EKO Stahl) and Petro Carbo
Chem. Both these railway undertakings depended on the efficiencies of
direct handover (rather than via DB) to make the economics of their
activities work. Both railway undertakings had to engage lawyers to
assert their rights. It quickly became clear that the DB had no objection
(at least in principle) to direct handover from PKP. No progress has yet
been made with PKP. PKP have not been able to tell us the grounds for
their objections.
7.4.7 There are problems in asserting rights under the circumstances of

cross frontier operation. Involvement of the national competition
authority of the neighbouring state is the appropriate avenue but involves
linguistic issues (and perhaps organisational and legal difficulties and
expense). Given that new entrants are likely to be small, they are more
likely to look for other transport opportunities rather than persevere. In
this way the market may not be opened with the vigour required, despite
the precedents.
7.4.8 New frontier agreements to replace those modelled on UIC 471-1

will help clarify responsibilities and act as a stimulant to review the
relations with all railway undertakings.. In the meantime the German
trade association VDV66 is engaged in preparing a guide for the benefit
of German railway undertakings (although the Consortium understands
its production has been delayed).
7.4.9 It is clear that the agreements based on UIC leaflet 471-1 although
not anywhere committing their signatories to an exclusive relationship
have in fact been used by incumbent railway undertakings (on the
German - Polish and German - Czech frontiers for example) to claim that
a condition for handing over traffic is such an agreement and then failed
to negotiate an agreement in good faith. Behaviour in this way raises
some concerns. It might be that it would be contrary to Article 81. In
any case each individual case would merit further investigation by the
Commission and appropriate remedial action.
66 Verband Deutsche Verkehrsunternehmen [Association of German Carriers].
7-17
7.4.10 Both infrastructure managers and incumbent railway

undertakings are signing new agreements and reviewing their historic
agreements with their international partners. None of the respondents
contacted by the Consortium saw any role for the UIC in this process.
This issue is treated in more detail below.
Summary
7.4.11 The Consortium concludes that the leaflets do not suit every
circumstance of handover and certainly do not provide adequately for
open access. The Consortium finds attempts to impose the agreements
unreasonably by one (at least) carrier.
7.4.12 The Consortium therefore believes that given the fact that new
entrant railway undertakings sometimes find UIC practices inappropriate
that there should be no presumption of their adoption in relationships
with non-members. Where safety is concerned, national law and
standards prepared within the framework of the Safety Directive will
apply, where equipment standards are involved, then the standards in line
with the Interoperability Directives will increasingly apply. However for
handover practices outside the area of safety, non-member undertakings
must be free to negotiate an agreement which suits their circumstances.
7.4.13 The Consortium finds that agreements are beginning to be

renegotiated by railway undertakings on their own initiative.
Nevertheless the classic agreements based on UIC leaflet 471-1 are
wholly unsatisfactory and the Consortium recommends that the
Commission investigate further.
7.5 Rewriting of the agreements between railway undertakings
Overview
7.5.1 None of the railway undertakings contacted by the Consortium

considered that agreements based on UIC 471-1 leaflet were still
appropriate and the Consortium understand that that view is as much held
by railways in Central and Eastern Europe as in Western Europe. All
were therefore considering how to take the agreements forward although
in fact few had made much actual progress. This lack of progress
represents an opportunity to provide guidance and one railway
undertaking said it would be helpful if there were “guidance from
Brussels”. Interestingly and significantly none of the railway
undertakings considered that the UIC had a role in developing a new
standard agreement.
7-18
7.5.2 The new agreements are separate in the sense that each railway
undertaking will have handover agreements with the partners to which
and from which it hands over traffic. The infrastructure managers have
agreements with each other to regulate such questions as coordination of
maintenance and the exchange of train running information. Each
railway undertaking has an agreement with the infrastructure manager(s)
over whose tracks it runs. A diagram of the relationships has been kindly
provided by SBB.
New contracts between FS and SBB
FS Infra SBB Infra IM/IM Contract
Cooperation FS/SBB
Trenitalia Framework contract
Passenger RFI/SBB Pass./Cargo
SBB Pass’r Contract SBB Infra/

Trenitalia Regionale
Trenitalia
Regionale
Trenitalia
SBB Cargo
Cargo
It should be noted that the diagram refers to the fully liberated model (see
table 1 in section 2) in the sense that the railway undertakings have
agreements with out-of-state infrastructure managers. This allows
operating and commercial responsibility to continue to an agreed
handover point.
7.5.3 It would be instructive to look at the approach of two railway

undertakings, Deutsche Bahn and the SNCF, representing the two largest
incumbent railway undertakings and representing 16 national land
frontiers.
7.5.4 Austrian, Italian, Slovene and Swiss incumbent railway

undertakings have also or are also drawing up agreements with the
objective of creating transparent non-discriminatory relationships.
Copies of these have not been made available.
7-19
SNCF agreements
7.5.5 For SNCF the initiative to review frontier agreements came from
the sleeping car fire in Nancy on 6 November 2002. In this incident a
German vehicle operated by an Austrian service company caught fire
whilst on a French train. The enquiries made under the French legal
system caused SNCF to believe firstly that existing handover agreements
were not sufficiently rigorous and secondly that specific thought should
be given to exchanging traffic with new entrant railway undertakings.
The impetus was not therefore driven by competition law but rather by
safety considerations. In this respect the SNCF reaction was very much
that of an integrated railway.
7.5.6 SNCF explained that the agreements were linked to the exchange
of traffic, only if there was an agreement to exchange traffic would there
a handover agreement, but if there was an agreement to exchange traffic
then a handover agreement would be essential. There was therefore no
presumption that SNCF would sign an agreement with any given railway
undertaking but that SNCF had noted the Commission’s comments in the
two Georg cases.
7.5.7 Any new entrant railway undertakings in France which might in

the future operate independently of SNCF will not therefore have any
agreement with SNCF, the agreements are only relevant to handover.
7.5.8 The framework is set by the freight and passenger activities and
(given SNCF’s organisation) further agreements are being made by the
traction and the rolling stock functions to cover their activities. Separate
documents are produced by the freight and passenger businesses (FR-
0322 & VO-0441 respectively) but they are similar.
7.5.9 SNCF were not prepared to pass the Consortium copies of the
agreements but did provide copies of the freight framework directive
defining how they were to be set up. The new framework directive
“Prise en charge de la sécurité de la production assurée en coopération
avec d’autres Entreprises Ferroviaires” is being drawn up to replace an
earlier directive (“Prise en charge de la sécurité de la production assurée
en partenariat”). It specifically sets out (in bold) that it is a handover
agreement to cover handover in the context of a joint operation wherever
that handover might take place. It declares its rationale as being to create
a safety regime, particularly in the case where mutual arrangements have
eliminated or reduced stops at frontiers or handover points. Sub-
contracting the operation of services is provided for in separate
agreements.
7.5.10 The agreement clarifies that handover occurs at the point that the
access rights of one railway undertaking finish and those of the next start
7-20
(and in doing so removes a significant anomaly in classic agreements). It

requires a detailed agreement to be made between local SNCF operating,
traction, rolling stock and infrastructure(!) organisations and the other
railway undertaking for each handover point. This agreement, entitled
“Accord sur la sécurité de la production assurée en coopération entre la
SNCF et …” provides detailed rules for the safety aspects of the handover
operation.
7.5.11 The directive specifically mentions that an agreement to co-

operate also implies an agreement to allow a partner to provide traction
for a train run on SNCF’s account using SNCF’s access rights.
7.5.12 The directive defines the elements that agreements must include,
these include: a list of train paths, the class and characteristics of the
trains to be run, acceptable rolling stock (RIV), acceptable traction
(approved in both countries). The safety rules are defined, where a
derogation is required the directive provides for it to be passed forward
for agreement by the infrastructure manager(s) in question. A safety
management system is required, traffic must conform to acceptance and
loading standards (RID, UIC leaflet 502, RIV Appendix II). Wagon
examination is required where agreements in line with UIC leaflet 471-2
on wagon examination have not been signed. Systems are to be set up
for the exchange of consist information and documentation. Audit
systems are required to expose and remedy deficiencies. Liability is
defined as following existing international law. A system is defined to
address disputes.
7.5.13 A second directive produced by SNCF’s traction department sets

down the conditions for agreements with other railway undertakings to
provide for their drivers to drive trains under SNCF auspices in France.
These trains will have been or will be about to be handed over to or from
SNCF proper, and the directive applies to both freight and passenger
services. The directive is entitled “Conditions d’acceptation des
conducteurs des entreprises partenaires sur les lignes du réseau ferré
national TT-0518”. The directive sets down the terms for a one-way
agreement, SNCF conditions for drivers from elsewhere, the agreement is
between the undertakings and the expectation is that the other
undertaking will have the direct relationship with the drivers. It sets
down the criteria for the selection and training of drivers, and provides
for SNCF to train the training staff of the “other” railway undertaking.
Refresher training is to be provided. The directive requires an audit and
a feed-back system to identify problems and resolve them. Formal
review meetings are to be held annually. SNCF said that amongst other
agreements, agreements had been signed with BASF and various German
railway undertakings operating local passenger services over the Franco-
German frontier. Agreements have also been signed with private railway
undertakings in France (CFTA, a subsidiary of Connex, amongst others).
7-21
7.5.14 The SNCF directives are narrowly drawn, they do not address the
question of the technical approval of vehicles or access to infrastructure.
7.5.15 Although the Consortium were not given copies of the actual
agreements, the tenor of the directives defining what they must contain
suggests that there are no material differences in the agreements offered
to individual railway undertakings and that the arrangements are
proportionate to their purpose. The Consortium finds that agreements are
limited to safety issues but believes that a refusal on non objective
grounds to sign one or setting different terms might be anti-competitive.
SNCF said they had not refused on principle to sign any agreements.
The SNCF directives do not conflict with the requirements of the railway
safety directive.
7.5.16 SNCF said that the issue of the hire of traction to operate open-
access cross border trains had not arisen and so no policy or agreements
had been prepared. The absence of a policy does rather stretch credulity
but in the absence of a declared or implicit policy it is impossible to
evaluate it.
Deutsche Bahn agreements
7.5.17 DB said that Directive 91/440/EEC provided the opportunity to

revise their frontier agreements; the need to revise had become clear at a
corporate level following a number of legal challenges (in which they
were sometimes defendants, sometimes bystanders). DB therefore
decided at a corporate level to set up a project team led by a Beauftragter
der Kozernleitung [Headquarters project officer]. The European affairs
department was put in charge of the project and started work in
September 2004.
7.5.18 Their study of the status quo revealed that the various DB
activities (infrastructure, freight, passenger) had already started to
develop new contracts with their neighbours, particularly for freight (DB
provided a list which they asked to be kept confidential). DB’s team
intend to create template contracts for each of their activities and as a
first step were reviewing the existing agreements.
7.5.19 DB said that in reviewing the earlier UIC 471-1 agreements, they
had identified three important issues: the relationship between the
railway undertaking and the infrastructure manager (defined in European
law) was clear and required no interpretation; there was a requirement
clarify the acceptance rules for traction but that the existing principles for
“co-operation” (the provision of successive carriage) were sound and
required merely to be updated. Nevertheless some of the detail of the
earlier UIC 471-1 agreements (they instanced railway phones as a
particular problem) were difficult to map to new frontier agreements.
7-22
7.5.20 DB were unwilling to provide copies of any of the agreements

which had been signed but were able to provide a checklist for drawing
up frontier agreements. This provided for
• Each DB business signing its own agreement independently of other

businesses,
• Frontier agreements being signed within the framework set by state

treaties and agreements between administrations,
• Within each agreement:
- Definition of the scope of the agreement, geographical and

subject,
- Personnel issues, language, use of staff, liability for fault,
- Assurance that only approved vehicles approved for the

infrastructure in question would be used,
- Responsibility for resolution of disruption and for paying for it,
- Liability for incidents, means of dealing with third party liability,
- Accountancy, basis to be mutual exchange of services, rules for

cases where this is not possible,
- Duration of the agreement,
- Applicable law (to cover for example Regulation (EC)

44/200167),
- Disputes, the UIC dispute procedure is proposed,
- Special cases, particularly to cover operating issues.
7.5.21 The DB checklist covered agreements made by all the businesses,

and in consequence and without copies of the actual agreements it is
difficult to evaluate whether they are proportionate to the purpose to be
achieved. DB pointed out however that they had a
Wettbewerbsauftragter, a compliance manager specifically employed to
check compliance with competition law.
67
Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the
recognition and enforcement of judgments in civil and commercial matters
7-23
Lessons from these new agreements
7.5.22 There is a difference in emphasis between the SNCF and DB

approach, SNCF is essentially concerned about safety but DB looks for a
wider relationship. Some of differences (such as the responsibility for
resolving disruption) are likely to attach to the agreement between
infrastructure managers; other issues (such as the specification of
operating languages and detailed procedures) will be resolved under the
SNCF approach in local agreements.
7.5.23 On the basis of the principles set down by the two organisations
and in the absence of actual agreements, it would not seem that the
agreements in themselves are contrary to EU law. They are appropriate
to the purpose of setting up technical arrangements in the context of
successive carriage.
7.5.24 Whether or not agreements are objectionable in themselves, the

decision on whether to accept traffic from a potential partner (and then to
go on to sign an agreement) might raise issues in competition law. This
issue is dealt with in section 2.5.
7.5.25 The Consortium has not however recorded any case of an

incumbent agreeing to a new-style hand-over agreement with a new
entrant where the new entrant was not organisationally linked to the
incumbent and competed with the incumbent’s normal partner. Rather
the pattern seems to be that incumbents continue with their classic
relationships and form groupings and alliances whilst new entrants
parallel these relationships by setting up their own alliances and
subsidiaries.
7.6 Rewriting of agreements between infrastructure managers
Overview
7.6.1 Although strictly outside the remit of examining agreements

between railway undertakings, agreements between infrastructure
managers help to complete the picture. As was outlined above,
infrastructure managers in many countries are starting to take over
agreements not only for the maintenance of infrastructure but also for the
conduct of operations over the frontier sections. These agreements are
the successors to the local agreements defined in section 0.3 of UIC 471-
1 (and show clear parentage). A substantive agreement between SNCB
and ProRail and a draft one between ProRail and Deutsche Bahn were
examined. A similar agreement is that signed between the Danish
infrastructure manager Banestyrelsen (now Banedanmark) and the
7-24
integrated Nordfriesische Verkehrsbtriebe (NVAG)68 for the (Niebüll)

Süderlügum Tønder frontier. They are sufficiently similar to be treated
together.
7.6.2 The Belgo-Dutch agreement is a free-standing agreement for the

frontier in question but the draft Germano-Dutch one is a supplementary
agreement to the basic Fahrbetriebsabkommen (FBA) [operating
agreement] to detail the local operating peculiarities and local
instructions. The operating agreement as it name suggests concentrates
on how the infrastructure will be used rather than questions of
responsibility for the infrastructure itself.
7.6.3 The agreements set down clear rules for the applicability of the
agreement, arrangements for update, responsibility for distribution,
validity of the language versions. Basic principles are set down for the
languages to be used for operations and acceptability of traction (each of
the national approval bodies is responsible for his section (which implies
a full double approval)). Of particular interest in the NVAG (Tonder
Süderlügum) agreement is the specification of the operating language
(German) and the definition of German signal meanings in Danish. The
Dutch-German and Dutch-Belgian agreements have no provisions for
hauled rolling stock and no cross references to network statements. The
NVAG agreement has no stipulations on the approval of equipment
(rolling stock must however “be approved”).
7.6.4 The nature of the frontier section is described in outline, direction

of running, signalling principles, electrification system, axle-load,
operating handover points are defined (although it is by no means clear
what that means), change of electrification point is defined, frontier (=
administrative ) stations are defined. Timetabling responsibility is
defined. Level crossings are listed, telephones are listed.
7.6.5 The basic train despatch system is outlined. Means of informing

railway undertakings of speed restrictions are defined, Systems to advise
the other railway undertaking of work on the track are defined together
with the systems to ensure safety. Procedures for exceptional
consignments and for operations in “degraded” conditions are defined in
detail. The NVAG agreement also deals with dangerous goods.
7.6.6 Conditions for train formations are defined (length, brake effort
etc.)
7.6.7 Two paragraphs define maintenance responsibilities (but without

defining the standards (the speed for which the line is to be maintained,
for example).
68
The Nordfriesische Verkehrsbetriebe has since gone out of business, its assets have been
acquired by the Nord-Ostsee Bahn
7-25
7.6.8 Appendices show track layouts, provide examples of the stationery

to be used and the formal phrases to be used for signalling purposes.
7.6.9 In the NVAG agreement, staff qualifications are not set down as
such but route knowledge is specified as a requirement. Of particular
interest is a requirement for continuous updating, the agreement becomes
invalid if not updated at least every five years.
7.6.10 None of these agreements make any mention of the identity of

railway undertakings nor of rights to operate (even in the case of the
integrated NVAG). The terms of the agreements are appropriate to
purpose, even handed as between railway undertakings and therefore the
agreements would appear to raise no competitive issues. (Access to the
various routes would come under the provisions of Article 4 (2) of
Directive 2001/14/EC).
7.6.11 The Consortium also examined the new agreements between

SBB Netz and its infrastructure partners in Austria, France, Germany and
Italy. These agreements had a slightly different perspective being at a
much higher level and dealing with question of responsibility for various
infrastructure issues (it should be borne in mind that these agreements
covered the transfer of infrastructure responsibility from France to
Switzerland outlined above in para 6.3.4, the unique circumstances of the
Basel Verbindungsbahn and the extraterritorial operation of the line into
Buchs by ÖBB).
7.7 Recommendations
7.7.1 The (then) Austrian Federal Railway and German Federal Railway
have a wide ranging agreement for the mutual use of traction. The
benefits it brings should also be available to new entrant undertakings
also able to offer traction for mutual use. The Consortium therefore
recommends that a study be made by the Commission of the terms under
which such an agreement could be made generally available (from
7.3.31).
7.7.2 UIC leaflets 471-2 & 3 on handover arrangements have a bearing

on safety along a chain of successive carriers. The Consortium
recommends that a study be made under the aegis of the Railway Safety
Agency on whether it is appropriate that the practices laid down in the
leaflet be made a mandatory condition of successive carriage (from
7.3.38).
7.7.3 The Consortium finds that frontier agreements are beginning to be

renegotiated by railway undertakings on their own initiative.
7-26
Nevertheless the classic agreements based on UIC leaflet 471-1 are

wholly unsatisfactory and the Consortium recommends that the
Commission investigate further (from 7.4.13).
7-27
Colin Buchanan and Partners Analysis of Current Agreements
8. TECHNICAL AND OPERATIONAL PROBLEMS AT

FRONTIERS
8.1 Overview
8.1.1 A number of respondents described practical problems at frontiers

which impeded crossing the frontier (sometimes to the detriment of
incumbent railway undertakings) or impeded the process of opening the
market.
A short résumé of frontier infrastructure practices might be appropriate.

It is normal for signalling practices (fixed signals and track to train
equipment) to change at or very close to the frontier. By contrast past
practice and still the preponderant model has been for electrification
systems to go onto the nearest principal station where the station is either
double wired or specific tracks are wired with specific systems. This is
to avoid the expense of multi-system electric traction. In this way, in
Venlo (for example) specific tracks are wired with specific systems and
German locomotives are changed for Dutch locomotives within the
station. Following the decline in the comparative cost of multi-system
traction, changes of system other than in stations has become the norm
for new installations (as for example between Lille and Tournai). A
diagram of a typical frontier (at Bâle St Jean) kindly provided by SBB is
shown below to show how the physical frontier, the signalling frontier
and the electrification frontier can be arranged.
8-1
Layout
Frontière France/Suisse
SNCF 136,923 CFF
Saint-Louis Bâle
Saint-Jean Voyageurs Triage
Signaux Signaux Signaux Secteurs Poste Marchandises
Voie 2 C452 C454 A27 A28 A12 A13 A B OBZ
Voie 1 136,752
135,200 136,100 136,700 137,800 140,800 142,000 143,000
142,500
France Suisse
State frontier
SNCF CFF
Saint-Louis Bâle-Saint-Jean Bâle-Voyageurs
Voie 2
Voie 1
135,200 136,923 137,800
France Suisse
Maintenance responsibility
Limite de la maintenance des installations
Signaux A27 A28
Joints isolants
SNCF CFF
Frontière
Saint-Louis Bâle-Saint-Jean Bâle-Voyageurs

Voie 2
Voie 1
136,737
136,740
136.752
136.923
135,200 137,800
France Suisse
Change in signalling rules
SNCF SNCF+CFF CFF

Signaux Signaux A27 Signaux
Saint-Louis C452 C454 A28 Bâle-Saint-Jean A12 A13 Bâle-Voyageurs
136,150 136,737 Voie 2 Poste OBZ
Voie 1
135,200 136,148 136,740 136.923 137,800 140,800 143,000
France Suisse
8-2
Electrification frontier
SNCF 136,923 CFF
Saint-Louis Bâle
Saint-Jean Voyageurs Triage
Point de raccordement
Secteurs Poste Marchandises
Voie 2 A B OBZ
Voie 1 136,752
135,200 v2 : 137,053 137,800 142,000 143,000
v1 : 137,428 142,500
France Suisse
8.2 Practical issues for new entrants
8.2.1 A number of new entrant railway undertakings described the

problems linked to frontiers which they faced. The most significant
problems appeared to be technical. Frequently new entrant railway
undertakings only operate within a single state. Their locomotives are
sometimes old and not equipped to cross frontiers. For passenger railway
undertakings the solution is to hand over trains at the last station within
their own state, even if it is not a normal hand -over point. Freight
railway undertakings however have more difficulty, freight facilities are
normally found only on one side or the other and this option may not be
available (it is not usual to change locomotives and hand-over freight
trains on running lines, recovery time is normally built in at frontiers and
the hand-over process may be more complex). Railistics, a Germany
consultancy heavily involved in solving frontier problems said that the
situation was very different at each of the frontiers but a common feature
was a reluctance to approve locomotives and staff for cross border
operation (let alone a penetrating operation). Technical conservatism and
a reluctance to accept personal responsibility were the reasons cited in
the NERA report (q.v.).
8.2.2 One new entrant freight railway undertaking told the Consortium
that when operating off the TERFN, handover before the frontier or even
in a frontier yard was interpreted as making his operation national and
thus not yet available to new entrant railway undertakings. This can
influence choice of handover points (a French railway undertaking for
example may wish to operate just into Germany so that he gets a benefit
of international operation and his German partner the benefit of
liberalised domestic rules). This anomaly will be partly resolved by
Article 1 of Directive 2004/51/EC in 2006 and finally 2007.
8.3 Technical issues
8.3.1 New entrant railway undertakings expressed concern that many

equipment decisions were taken without due consideration for their
8-3
effects on open access. There was a continual pressure for more

sophisticated systems and equipment which new entrant railway
undertakings could not realistically finance (either because the traffic
receipts did not allow it at all or because they were unable to provide
collateral for bank finance). New entrant railway undertakings pointed
out that those constraints did not necessarily apply to incumbent railway
undertakings. ERFA for example complained that the Betuwe line had
been built with three different electrification systems, whereas new
entrant railway undertakings in practice often used second-hand less
sophisticated locomotives.
8.3.2 Respondents reported significant problems in the approval and use

of traction across cross frontier sections and believed that approval
processes were frequently illogical. The existence of “grandfather
rights” for existing traction tended to favour incumbent railway
undertakings, in some cases the traction used had not been formally
evaluated and approved but merely accepted. This uncontested
acceptance gave existing equipment and railway undertakings rights that
were not enjoyed by others. All railway undertakings found the
processes of introducing new equipment onerous. Respondents did not
accuse approval authorities of partiality but rather of slowness to
authorise equipment, a lack of logic and some timidity.
8.3.3 The Verband Deutsche Verkehrsunternehmen (VDV) for example

reported that all locomotives operated by DB and nominated on DB –
PKP agreements are permitted, using the grandfather rights of the DB, to
operate to Polish frontier stations without limit but the same types of
locomotives when operated by other parties are not. In this way the
Polish approval body Urząd Transportu Kolejowego (UTK) insisted on
class 228 locomotives, sold to a DB subsidiary, having full approval for
the whole Polish network. The Consortium is aware of similar problems
in the approval of Polish locomotives to run to German frontier stations
in which initially, the EBA insisted on full national approval.
8.3.4 VDV in conjunction with its Polish counterpart believed that all
locomotives authorised in one state should, ipso facto, be authorised to
run to the frontier stations of neighbouring countries limited only by
basic checks on issues such as axle-load and loading gauge. Any further
technical requirements should apply equally to all traction and every
railway undertaking; problem free acceptance of any type of traction
should be institutionalised and all locomotives of the type permitted for
limited cross frontier use.
8-4
8.4 Safety issues
8.4.1 On the frontier with France, cross frontier operations by the

Saarbahn (which operates a light rail commuter service) were made more
difficult by the safety requirements of the SNCF at Saarguemines. These
requirements were regarded by the German railway undertakings as
unreasonable given the nature of traffic.
8.4.2 The VDV pointed out that cross frontier local passenger operations
were difficult to create for a variety of organisational and technical
reasons, and said they needed to be given every encouragement rather
than have to surmount a high technical barrier. It has to be said that the
safety requirements at the interface between light rail and heavy rail are a
source of controversy all over Europe. Light rail is justified by its
lightness and freedom from heavy rail standards. Similar comments were
made about the safety requirements of the British authorities where the
Tyne and Wear (Newcastle) Metro runs over conventional infrastructure.
8.4.3 The “grandfather rights” to using accepted traction and the benefit
of the presumption of competent staff which these agreements provide
represents an advantage denied to other railway undertakings. This may
give rise to discriminatory or exclusionary effects and therefore raises
questions under Article 81 EC.
8.4.4 All railway undertakings should be handled equally, this should

mean that all railway undertakings with a national safety certificate and
nationally approved traction receive the benefit of the presumption that
their staff and equipment is fit for purpose and that only supplementary
checks are necessary. Current practice is rather different, incumbent
railway undertakings have “grandfather approval” over frontier sections,
new railway undertakings must demonstrate they are fully competent to
run to all points without any presumption of basic skills or approved
equipment. The Consortium therefore recommends that the Commission
looks further into this issue.
8.5 Operational issues
8.5.1 VDV reported similar problems in staff deployment. DB trains are

allowed to run to Szczecin using DB crews, HGK trains however are
required by UTK to have Polish conductors from Pasewalk on the
frontier. Similar problems were identified on the frontier with Denmark
at Padborg. These problems derive from the existence of inter-railway
agreements following UIC leaflet 471-1 which implicitly recognise
incumbent railways’ staff skills. New railway undertakings do not
benefit from this presumption and need to prove their abilities, an
onerous requirement.
8-5
8.5.2 VDV suggested a solution to the problem of driver certification

was the systematic extension of validity on national driver certification to
the first exchange point on every frontier.
8.5.3 The Consortium recommends that the systematic extension of

drivers’ national certification to the first exchange point at every frontier
be considered in the context of the proposal for the certification of train
crews69.
8.6 Taxation issues
8.6.1 Taxation issues do not strictly form part of a study on agreements

between states and between railways but it is very clear that taxation
issues can have competitive aspects and a number of respondents
specifically mentioned them.
Fuel
8.6.2 Traction diesel fuel is not taxed or only taxed at low rates in some
countries. Railway undertakings operating cross border services
therefore may have the option to fuel their locomotives at low rates. If
those locomotives are then used cyclically then some benefit from the
low tax purchase of diesel fuel might be had in using the locomotive in a
higher tax state. The benefit from this can be exaggerated, a typical loco
will need fuelling every second day and so not much benefit can be
derived. It is also true that this benefit is available to any railway
undertaking operating internationally and so in a market situation will be
factored into prices. This issue is of more significance in road haulage.
8.7 Recommendations
8.7.1 All railway undertakings with a national safety certificate and

nationally approved traction should receive the benefit of the
presumption that their staff and equipment is fit for purpose and that only
supplementary checks are necessary. Current practice is rather different,
incumbent railway undertakings have “grandfather approval” over
frontier sections, new railway undertakings must demonstrate they are
fully competent to run to all points without any presumption of basic
skills or approved equipment. The Consortium therefore recommends
that the Commission looks further into this issue. (from 8.4.4)
69
COM (2004) 142 final of 3 March 2004.
8-6
8.7.2 Driver’s certification is proposed to have a national component.

Simplifying the certification for cross frontier operations would do much
to facilitate cross frontier operations. The Consortium recommends that
the systematic extension of drivers’ national certification to the first
exchange point at every frontier be considered in the context of the
proposal for the certification of train crews (from 8.5.3).
8-7
Colin Buchanan and Partners Comparisons
9. COMPARISONS
9.1 Overview
9.1.1 Of the seven “network industries” (broadcasting, telecoms, post,

electricity, gas, airlines and rail) the Consortium considered that the
appropriate areas for comparison were other industries with international
operation and physical handover. These industries also have to address
questions of fair terms of physical handover between players in the
market and questions of the role of trade associations and the services
they provide. Accordingly the Consortium looked at the air transport and
postal market.
9.1.2 The Consortium did not however consider other network

industries, such as electricity or telecoms. They considered that whilst
the issue of access to the rail network had similarities with access to
electricity or telecoms, the issues of handover are quite different and
physical handover poses problems of quite a different order to those of
electricity or telecoms70.
9.1.3 The Consortium also considered rail operations in North America

in which competition law is well developed and in which handover of
traffic is a very normal part of rail transport (35% of traffic is interlined
between Class 1 railroads in the US, but handover to and from minor
lines can apply to all traffic).
Rail operations in North America
9.1.4 Railroads in North America are integrated, the same organisation

owns the infrastructure and runs trains. There are however significant
“trackage rights” in which nominated other railroads have rights to run
trains, normally in order to preserve competition following mergers.
These rights are therefore enshrined in a governmental framework rather
than merely contractual. Likewise Amtrak in the USA and Via Rail in
Canada have statutory rights to run passenger trains over privately owned
infrastructure (although Amtrak also has some of its own).
9.1.5 The industry trade association, the Association of American

Railroads, sets industry standards although the Federal Railroad
Administration (in the USA) and its Canadian and Mexican counterparts
have a regulatory role. The AAR in North America has a very much
stronger role than the UIC in Europe, to some extent this is because
70
This point is strongly underscored by Russell Pittman of the US Department of Justice,
Antitrust Division in his paper Railway Competition: Options for the Russian Federation
9-1
conditions in North America are more uniform, common economic

environment and objectives, similar legal systems and effectively a single
language make the “North American Railway Area” more uniform than
its European equivalent. Coupled with that is a much fiercer
standardisation of equipment, rolling stock, signalling systems, operating
practices, etc than in Europe (North American rolling stock from
locomotives through to freight cars is standard, there are no national
differences). The AAR is therefore a much more focussed, transparent
and active organisation than the UIC. It combines the functions of the
UIC, CER, CIT and EIM within North America. The FTE and RNE
have no equivalents.
9.1.6 The Staggers Rail Act of 1980 (US) liberalised freight rates and
some markets are now wholly free. In both the US and Canada rates and
services for agricultural products are still subject to control (the FRA
publishes an estimate of 16% of (US) rates being controlled in the mid
1990s).
9.1.7 The pattern of change of infrastructure ownership at state frontiers

has never been as marked in North America as in Europe and more
recently railway mergers (and particularly takeover of US railroads by
Canadian railroads) has produced common ownership across many
frontier sections.
9.1.8 Even where there is a change of infrastructure ownership, the

maintenance of the link implies a willingness to exchange traffic (North
American carriers in general have freedom of contract and may refuse
traffic). General principles are laid down in AAR manuals. Two
manuals are relevant to this study, the Office Manual of the AAR
Interchange Rules and the Field Manual of the AAR Interchange Rules.
These two manuals define the acceptance criteria for freight vehicles (the
field manual) and the standard cost allowances for remedial work (the
office manual). The field manual has much of the same role as the (now
withdrawn) UIC leaflet 579-2 Conditions for the technical transfer
inspection of wagons and relates only to technical issues not to the
principle or commercial arrangements for handover. No principles for
exchange itself or the operation of trains to and from exchange points (as
such) are laid down.
9.1.9 The Consortium were unable to identify any international treaty

relating to railway construction and operation. Instead the North
American pattern (even for quite substantial works such as the St Clair
frontier tunnel under the St Clair river) seems to be for separate but
linked national companies to get national permission for the works.
9.1.10 Where the frontier and handover are co-terminus, the standard
practice is for a handover point to be defined on one side of the frontier.
9-2
That point serves as handover for both operational and commercial

purposes, up to that point, trains run under the authority and for the
account of their operator using trackage rights in so far as the
infrastructure belongs to another railway. This differs from the classic
European model (but is more logical than the European model). Charges
are raised in one currency even for the cross frontier section. In effect,
the state frontier has no railway role (except for infrastructure
ownership).
9.1.11 North American practice shows that a competitive market is

wholly consistent with an absence of treaty measures. Railway
undertakings may be left to find their own solutions subject to a strong
legal regime enforcing competition.
9.2 Other industries
Airlines
9.2.1 Air transport within Europe is highly liberalised. Carriers neither

in law nor in practice have territorial monopolies, in every EU state
“open access” air carriers operate services. The relationships between
carriers follow the model agreements set down in the “Multilateral
Interline Traffic Agreements Manual” published by IATA. This manual
“contains the passenger and cargo Interline Agreements which spell out
the basic rules airlines follow when collecting money and issuing
documents for carriage on each others services. It also gives complete
information on which carrier interlines with another carrier on the basis
of Multilateral Agreements. This manual also includes all relevant
information concerning the Cargo Claims Procedures Agreement and the
Multilateral Interline Service Charge Agreements - Passenger and
Cargo.”
9.2.2 Interline agreements concentrate on sales and revenue allocation

issues and in particular set down the framework for representation as
“General Sales Agents” for freight and passenger traffic. These
relationships are normally reciprocal, each airline sells and issues tickets
on the behalf of the other. To an extent therefore they are exclusive,
airlines build up preferred relationships.
9.2.3 The agreements are commercial and there is no presumption of

being able to negotiate one with a particular carrier, he may have other
partners. Nevertheless traffic may be interlined without such an
agreement being signed and even interlined through non IATA airlines.
The agreements also define settlement arrangements (through the IATA
clearing house).
9-3
9.2.4 Handover of passengers and cargo is implicit but the manual is

silent on the procedures which are to be adopted. Instead agreements are
made in each airport which define procedures for that airport. Typically
cargo is handover with a handover manifest and the set of air waybills.
The manifests is signed by both parties and then forms the basis for
accountancy. Local arrangements were changed to reflect competitive
concerns (about standard prices being charged for airport handling).
9.2.5 The framework of the arrangement neither sets down rights to

exchange traffic nor provides rights to participate. In every case the
parties much reach a commercial decision. Within the airline market
however to a large extent there are no dominant undertakings. (There
may be dominant undertakings on some axes, note the Austrian Airlines
Lufthansa case.) Increasingly low cost and budget airlines are creating a
fluid and competitive market with an absence of dominant players.
Likewise in freight markets, there is a wide choice of competing carriers
and little opportunity to dominate a market.
Post
9.2.6 Exchange of post items between the incumbent postal

administrations is regulated by the Universal Postal Union (UPU)71.
Article 1 of the UPU Constitution provides that
“The countries adopting this Constitution shall comprise, under the title
of the Universal Postal Union, a single postal territory for the reciprocal
exchange of letter-post items. Freedom of transit shall be guaranteed
throughout the entire territory of the Union.”
It will be noted that this is an agreement between states speaking on

behalf of (state controlled) postal administrations with the implication of
postal monopolies and the obligation of a universal service. There is
nevertheless an obligation of free exchange and a right of transit.
9.2.7 The UPU provides for the origin state keeping all the postage
revenue from the its originating mail. Nevertheless “terminal dues” are
to be paid to the receiving administration. These terminal dues,
historically paid in the case of an imbalance in the volume of mail and
being progressively adjusted to reflect economic factors, firstly to reflect
“industrialisation” and then to be based on cost and market factors.
Quality of service will be a factor in the level of terminal dues.
9.2.8 The mechanics of handover between postal administrations are

defined in the UPU Letter Post Manual and Parcel Post Manual.
Chapter G of the Letter and Parcel Post Manuals, Procedures
71
Universal Postal Union, Weltpoststrasse, 3000 BERN.
9-4
concerning the transmission, routeing and receipt of items/parcels deals

with the mechanics of handover without going further into the rights to
participate in the process.
9.2.9 It will be noted that the assumptions behind this whole process are
very similar to those behind the 1980 COTIF, transport organisations
operating within national territories and with defined rights and
obligations to exchange traffic. Liberalisation however is becoming a
fact of life, not least because of Directive 97/67/EC72
9.2.10 The Directive sets down measures to liberalise the postal

services, in Article 7 it lays down
“To the extent necessary to ensure the maintenance of universal service,

Member States may continue to reserve services to universal service
provider(s). Those services shall be limited to the clearance, sorting,
transport and delivery of items of domestic correspondence and incoming
cross-border correspondence”.
It will be noted that this provides for outgoing international mail to be

liberalised, only incoming mail may be reserved to incumbent providers.
9.2.11 To ensure that a free market operates in this area, Article 13 lays
down
“In order to ensure the cross-border provision of the universal service,

Member States shall encourage their universal service providers to
arrange that in their agreements on terminal dues for intra-Community
cross-border mail, the following principles are respected:
- terminal dues shall be fixed in relation to the costs of processing and
delivering incoming cross-border mail,
- levels of remuneration shall be related to the quality of service
achieved,
- terminal dues shall be transparent and non-discriminatory”.
Whilst this “encouragement” falls short of a firm requirement it will be

apparent that the Directive seeks to provide a level playing field for open
competition for the collection and trunk movement stages, only the
delivery element may be reserved to incumbent providers.
72
Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 on
common rules for the development of the internal market of Community postal services and
the improvement of quality of service (OJ L 15, 21.1.1998, p. 14) as amended by Directive
2002/39/EC of the European Parliament and of the Council of 10 June 2002 and by
Regulation (EC) No 1882/2003 of the European Parliament and of the Council of 29
September 2003.
9-5
9.2.12 Significantly, within the postal business, the essential facilities

are not frontier and hand-over installations but rather the collection and
delivery networks. In the rail mode, local distribution services for
wagonload traffics might be analogous.
9.2.13 Outside the reserved market, the free market is characterised by

global carriers such as DHL, Fedex, TNT etc. (having developed from
incumbent postal operators in some cases) each with its own distinct
international network and with limited exchange with other networks.
None of the operators has a dominant position, certainly at international
level and probably even in individual countries. There is therefore no
question of any abuse of position.
9.2.14 Within the free market, relationships tend to be systems of

subcontracting or franchising to provide a local service in areas where the
global operator cannot himself provide cover. The relationship is
normally exclusive (because the subcontractor will be expected to feed
traffic to the principal as well as deliver), although non-exclusive
relationships or even the use of a rival to make local deliveries is not
unknown. The selling propositions of the free market are heavily
oriented towards quality and much of the traffic is subject to controls,
particularly for security reasons and so for any one operator supplier
contracts tend to be standardised with significant specification of process
and quality standards. By contrast the payment structures are market
based and may have a number of different bases.
9.2.15 In summary, the postal industry has a great deal of similarity with
the rail industry, in that competition within the industry is starting to
become effective (with different levels of effectiveness in the various
states). The formal machinery remains that of the incumbent operators
and many of the regulatory principles are still based on standards set by
the incumbent operators (the UPU concept of terminal dues is retained in
Directive 1997/67 for example).
9.2.16 By contrast the free market sector adopts freely negotiated

agreements outside the structure of the established conventions. In the
interface between “old operator” and “new” the conventions owe
something to both traditions but are to be based on transparency, non-
discrimination and based on costs. Rail liberalisation has gone further in
the sense that international traffic may be handled from end to end by one
carrier.
9.3 Lessons to be drawn
9.3.1 There appear to be few lessons from other network industries but a
number of lessons from North America. The North American model
9-6
firstly suggests that treaties between states are not necessary for the
continuing operation of a railway (and even that a cross frontier railway
may be built with private capital without an agreement between the states
concerned). Secondly it suggests that railway undertakings may be left
to find their own solutions subject to a strong legal regime enforcing
competition.
9.4 Recommendations
9.4.1 No recommendations arise from this chapter.
9-7
Colin Buchanan and Partners Required Content of Agreements
10. WHAT AGREEMENTS MUST CONTAIN
10.1 Overview
10.1.1 Even before the creation of the Single Market, two pairs of states
in the study (Norway and Sweden and the Irish Republic and the United
Kingdom) had either no treaty at all or a treaty with very limited
provisions. There would not appear to be treaties between the United
States and Canada for regulation of international rail operations. It is
therefore apparent that there is no absolute requirement for a treaty
between states to regulate the operation of a railway. Existing provisions
within the Community provide entirely adequately for such issues as the
right to deploy staff, the regulatory regime and commercial relationships
between railway undertakings, etc. Community law likewise provides
adequately for infrastructure management. The Consortium does not
believe therefore that agreements between states are necessary to regulate
the continuing operation of a railway within the Single Market.
Nevertheless states may decide to have treaties (or other agreements) to
regulate sovereign issues arising from the operation of a railway (such as
provision for frontier policing).
10.1.2 Construction of a railway is a different issue. Where private

infrastructure is concerned (for example the extension of an industrial
railway), there would appear to be no reason for states to become
involved in cross frontier extensions. (Nevertheless it seems they
normally are (see for example the agreement on the Szentgottard
industrial estate)). Where new railways are to be constructed to carry
public traffic, states are habitually involved as a function of the need for
rights to acquire land, arrangements for public financing, sovereignty
issues linked to operation, etc.
10.1.3 Likewise over the external frontiers of the EU where the

presumptions of free access for operating staff, recognition of
competence, security and safety regime to apply, etc. may not be
established, there is likely to be a need for a formal agreement between
the states to facilitate the operation of the railway.
10.1.4 The Consortium’s conclusion that treaties just to cover the

operation of existing cross frontier railways are not necessary, needs to
be borne in mind.
10-1
10.2 General elements in treaties
Layout of the section
10.2.1 This section makes outline suggestions for elements that treaties
and agreements should contain and is intended as a basis for discussion.
The elements are divided into two sections, the first setting down a list of
points that may need to be covered for treaties between states which are
members of the EU in so far as they are not laid down in any other treaty,
the second to cover treaties over the external frontier. The second section
therefore specifically includes rights which are guaranteed by basic
community law. The lists are intended to act as checklists of the
elements which need to be considered. Not all will be relevant, states
with land frontiers may already have agreements about cross border
policing for example, in other cases the sections on major works such as
international tunnels and bridges will only apply when they are to be
constructed.
Sovereignty issues
• Rights of national public authorities, extra territorial powers of

criminal police, immigration police, customs, public health and
similar officers. Definition of spaces in which powers apply. Liaison
arrangements must be defined. In particular the treaty should define
rights and obligations where the rights and obligations enjoyed by
each force are different (rights of arrest, right to bear arms, rights of
entry and search, etc),
• In this area may be security issues, particularly agreement of a

framework to discuss and agree a framework for appropriate contact
cooperation and appropriate measures,
• Provision of accommodation for public officials, including parking

for official vehicles,
• Principles for the use of national emergency forces, fire, ambulance

and as appropriate coastal protection and military resources,
• Payment of the costs of these frontier services,
For agreements over the external frontier there may be a need to add:
• National defence issues,
• Obligation to facilitate movement of persons and free trade.

Specification of the rights of officials cross the frontier including
access routes and their powers when outside their own state. System
to allow individual state employees to be declared persona non grata.
10-2
Arbitration
• Procedure for arbitration.
10.3 Treaties for the construction of a railway
• Objective of the treaty,
• Line of the railway and in particular where it will cross the frontier,
• Constructional standards, reference to standards to be adopted at least

for the cross frontier section if not for the wider networks it connects.
For new lines the constructional standards will be the TSI. Where
interoperability standards allow latitude or a full specification is
required then it should include: maximum gradient, minimum curve
radius, axle load, design speed, electrification system, overhead line
geometry, signalling system, train and track based equipment
specification. Arrangements for joint international specification and
or approval of installations and equipment. (All this may of course
be in a technical annex.),
• Acknowledgement that the treaty authorises construction or

specification of any further formalities which are necessary,
• Responsibility for construction, responsibility for approving and

letting tenders,
• Details and role of national approval authorities, scope of their

authority,
• Specification of cross frontier structures particularly when they can

only sensibly built by one contractor (bridges and tunnels etc.),
• Public and international consultation procedures,
• Timescales for construction,
• Supervision of construction,
• Allocation of costs of construction in general and of cross frontier

structures in particular,
• Financing mechanisms for the line,
• Ownership of the line together with any provisions for public-private-

partnerships, concessions, leasing arrangements, nationalisation,
10-3
• Definition of infrastructure manager(s), definition of breakpoint

between infrastructure managers for ownership, maintenance, legal
responsibility, signalling and safety, operating rules etc.,
• Authorities given to named individuals/office holders to alter

provisions with or without mutual agreement within defined
parameters,
• Provision for formal amendment of any of the foregoing using a

simplified procedure,
• Procedure for rescission.
10.4 Treaties for the award of a concession
• Definition of the concession, duration, financial terms, arbitration,

fall back, nationalisation, termination arrangements, obligations to
make good.
10.5 Treaties for the operation of a railway
Overarching issues
• Given the Consortium’s belief that established cross frontier routes

within the EU require not treaty to regulate their operation, this
applies to the regime for new lines or for lines across external
frontiers,
• Statement of the status of the railway (and any caveats about the
application of COTIF), nature of the services to be provided, rights of
access to the line, obligation for railway undertakings to exchange
traffic freely,
• Authorities given to named individuals/office holders to alter

provisions with or without mutual agreement within defined
parameters,
• Provision for formal amendment of aspects of the treaty using a

simplified procedure,
• Procedure for the closure of the railway.
10-4
Competent authorities
• Details and role of national approval authorities, scope of their

authority,
• Definition of the safety regime to apply. "Ownership" of the rules

and how they are to be decided and amended,
• Recognition of the qualifications of staff when operating between the

two frontier stations,
• Definition of any security regime to apply. Responsibility for the

regime and how it is to be decided and amended,
• Statement of means of delivering formal notices to railway

undertakings, particular those based in other states.
Fiscal issues
• Financial questions, taxation regime of the section of railway,

taxation of its customers, taxation of fuel to be used for international
trains,
Infrastructure issues
• Definition of who is to manage and maintain what sections of the

infrastructure,
• Mechanism for deciding maintenance standards (applicable speeds

and axle-loads etc.),
• Obligation for infrastructure managers to keep the infrastructure open

at particular times.
• Rights to cross the frontier to manage or maintain infrastructure and

in particular to help to clear blockages (these should avoid the need to
supply names of staff in advance in triplicate noted in one current
agreement),
• Definition of (or reference to) the relationship of the infrastructure

manager with users of the railway.
Railway undertaking issues
• Rights and obligations of staff employed by railway undertakings in

respect of activities subject to regulation, for example train crew,
10-5
• Structure for public service obligations,
• Rights and obligations of staff employed by railway undertakings to

cross the frontier to exercise their duties. Obligations under national
law in general.
Ancillary services
10.5.1 Rights and obligations of staff employed by railway service

providers to cross the frontier to exercise their functions (vehicle
maintenance etc), rights to import and export plant and equipment, tools
and vehicles etc.
10.5.2 Given that some of these issues may be fluid they may need to be
put in annex with a defined right and obligation to keep them up to date.
Existing treaties within the Single Market
10.5.3 As discussed in 5.1.20 above, agreements between Member

States which duplicate or even run contrary to community law need not
be abrogated. In the latter case however notification of an intention to
disregard the obligation is required. Member States and their treaty
partners may consider that abrogation or the conclusion of a new treaty is
a clearer and neater approach.
10.6 Agreements between railway undertakings
10.6.1 Railway undertakings throughout Europe are engaged in

negotiating new agreements. They have consciously avoided adopting a
standard model (for example one drawn up by a trade association).
Nevertheless a number of railway undertakings told the Consortium that
they would appreciate a clear indication of what was considered
acceptable and what unacceptable on legal grounds. The Consortium
recommends the Commission to investigate further.
10.6.2 It is not so much what agreements between railway undertakings

must contain as what they must not contain. Agreements must respect
EU law and national law on issues of safety; they must respect
mandatory standards and in particular the TSIs and mandatory European
standards. Agreements between railway undertakings may agree price
and service structures in the context of throughout transport concatenated
by several railway undertakings but must not in this or any other context
10-6
make agreements that would distort competition or impose unreasonable

conditions on other players.
10.6.3 Railway undertakings owning or operating essential frontier

facilities must likewise make the facilities they control available to all
railway undertakings on an equal basis consistent with the principles of
essential facilities. They must not be permitted to arrange their
operations artificially to frustrate other railway undertakings (for
example by arranging to have exchange sidings full at the time a second
railway undertaking needs to use them). In this context the list of
services facilities included as section 2 of Annex II to Directive
2001/14/EC provides an initial specification of facilities. The scope of
Article 82 of the Treaty is much more comprehensive however.
10.6.4 The Consortium recommends that the Commission clarify that

the obligation contained in Article 5 of Directive 2001/14 to make
facilities available is clarified as applying to railway undertakings when
railway undertakings control the facilities in question.
10.7 Agreements between infrastructure managers
10.7.1 Insofar as the treaty does not specify it or it is not determined by

the competent authority, infrastructure managers will agree with
neighbouring infrastructure managers:
• Point of change of ownership (which may not be at a state frontier),
• Nature of the infrastructure and standard to which it is to be

maintained (axle-load, ruling speed, electrification and signalling
system,
• Power supply and responsibility to pay for power,
• Change point between signalling systems,
• Change point between operating rules and any special operating rules
applying to the frontier section,
• Control systems and traffic movement liaison,
• Procedure for maintenance, advice of works,
• Procedure for advising of changes to the infrastructure, signalling

systems etc.,
10-7
• Change point between traction systems and any special rules which
apply,
10.7.2 Section 6.6 describes sample agreements being developed by

infrastructure managers.
10.8 Role of safety authorities for international sections of line
10.8.1 Between the stations used for frontier purposes on each cross
frontier section the railway operating rules, signalling systems (and even
the direction of running) can change. The stations used for frontier
purposes may not be the last stations in the state in question (Nickelsdorf,
for example, a minor station too small to be used for frontier purposes
but nevertheless the last station in Austria before the Hungarian frontier).
It may thus be that this cross frontier section is comparatively long,
perhaps 30km. The safety authorities in both countries have a interest in
equipment being suitable and staff being properly qualified. Neither has
an exclusive interest, their interests are joint.
10.8.2 It is desirable the safety authorities co-operate jointly in applying

EU rail safety rules to ensure safe operation of the cross frontier section
within the framework of the Railway Safety Directive and with the co-
operation of the infrastructure managers. In so far as the definition of the
characteristics of the line and the signalling system are concerned, this is
already done by the local statements prepared by infrastructure managers.
This infrastructure managers’ document may then serve as a basis for
staff training and evaluation in the context of the harmonised
complementary certificate defined in the train crew proposals. In respect
of equipment and particularly traction, a similar basic document defining
joint requirements would seem desirable. This would avoid double
approval and allow the additional requirements of the second state (and
any derogations) to be treated as marginal additions. This approach
would also be fair between railway undertakings, incumbent and new.
10.8.3 It may be that safety authorities and infrastructure managers are

able to agree simple procedures and significant derogations for short
cross frontier journeys which are not possible for longer penetrative
movements. Where traction and staff are projected much longer
distances in the interests of great efficiency, from Woippy and Basel to
Mannheim for example it may be that no change to the process of full
approval of equipment and certification of staff can be made.
10-8
10.9 Relationships between infrastructure managers and

international users of the infrastructure
10.9.1 There is a specific issue of ensuring that railway undertakings

have means of ensuring safe operation outside their home state and that
infrastructure managers have appropriate mechanisms to support them.
The safety certificate(s) required by EU law should be sufficient for
documenting the undertaking’s ability to operate rail services safely.
10.9.2 Each infrastructure manager must separately agree with those

railway undertakings holding rights to paths across the international
frontier how railway undertakings will be informed of the nature of the
infrastructure and how they will be kept up to date. In particular there
must be an agreed system for communicating details of work being done
(signals and points disconnected, maintenance staff working on the line,
etc.) on a short term basis.
10.9.3 Likewise each infrastructure manager must separately agree with

those railway undertakings holding rights to paths across the international
frontier how railway undertakings will be informed of the operating rules
which are applicable and how they will be kept up to date.
10.9.4 Railway undertakings must be able to demonstrate to safety

authorities how they keep their staff informed of the nature of the
infrastructure and the rules applicable and will agree appropriate means
of testing staff with safety critical roles.
10.10 Action to be taken by states
10.10.1 Only the most recent inter-state treaties provide for open access
operation and then only implicitly rather than explicitly. The question
then arises whether treaties need to be amended or new ones signed to
ensure new entrant railway undertakings are given specific rights.
10.10.2 Whilst EU law is clear, it is apparent that a number of railway

undertakings have not been able to assert their legitimate rights. This
situation is unsatisfactory. It is recommended therefore that states clarify
the rights of new entrant railway undertakings under competition law
(perhaps in the context of the Rail Transport Competition Network set up
by DG COMP) with neighbouring states to establish
• That railway undertakings with rights to run over infrastructure under

Article 1 of Directive 2004/51/EC and with approved rolling stock
(including traction in particular) shall not be discriminated against,
10-9
• Where states regulatory bodies’ powers allow, that the regulatory

bodies ensure that new entrant railway undertakings from other states
have access to essential facilities on an equitable basis,
10.10.3 Access to service facilities (such as fuelling points) might also

be a subject for discussion for the rail legislator (the Commission or
DERC etc.).
10.10.4 An appropriate forum within Member States might also clarify

the employment law to apply to staff employed on international trains.
10.10.5 Rail regulators have no powers to enforce market access under

European law although they do possess powers in some European states
(as in the United Kingdom). It is not yet possible therefore to postulate
that they be used to enforce market access although this would seem a
sensible extension of their powers.
10.11 Recommendations
10.11.1 A number of railway undertakings told the Consortium that they

would appreciate a clear indication of what was considered acceptable in
handover agreements and what unacceptable on legal grounds. The
Consortium recommends the Commission to investigate further (from
10.6.1).
10.11.2 Railway undertakings may control the facilities defined in

Annex II of Directive 2001/14/EC (such as fuelling points) The
Consortium recommends that the Commission clarify that the obligation
contained in Article 5 of Directive 2001/14 to make facilities available is
clarified as applying to railway undertakings when railway undertakings
control the facilities in question (from 10.6.4).
10.11.3 It is recommended therefore that states clarify the rights of new

entrant railway undertakings under competition law (perhaps in the
context of the Rail Transport Competition Network set up by DG COMP)
(from 10.10.2).
10-10
11. RECOMMENDATIONS
11.1 Preliminary observation
11.1.1 As a preliminary observation, it was clear to the Consortium that the liberalisation of
access has not yet led to incumbents and new entrants operating as partners in a market.
Incumbents continue to have agreements with other incumbents but not with new entrants,
new entrants hand over and receive traffic from other new entrants, but not incumbents (with
one exception). As long as this continues, the full benefits of open access will not be realised.
11.2 Recommendations for no action
11.2.1 ECE agreements on frontier facilitation have no continuing role within the Single
Market, states outside the European Union are members in some cases and it is possible they
have a continuing role outside Europe. Accordingly the Consortium recommends no action
should be taken (from 4.2.21).
11.2.2 Membership (or not) of the Brussels Clearing Centre is not a crucial factor in access to
the market, for most open access operation it is irrelevant. The Consortium recommends no
action is taken (from 5.4.12).
11.3 Recommendations for the Commission
11.3.1 There are significant incompatibilities between the 1999 COTIF and existing EU law,
particularly in the area of standards and approval systems for equipment. The Consortium
therefore recommend that the Commission make use of their membership of COTIF to
resolve the question of the future of the ATMF and APTU, to reconcile the CUI and
infrastructure packages and to consider what Community law might be desirable in the area of
vehicle operation (from 4.4.21).
11.3.2 In a number of areas, OSZhD agreements fail to comply with EU competition law,
rather they are similar to the classic model of exclusive agreements between integrated
national railways. Resolving these differences will take time. The Consortium therefore
recommend that the Commission open discussions with the OSZhD to attempt to resolve the
issues that this report identifies as problematic (from 4.5.39).
11.3.3 The PPW, the OSZhD vehicle use agreement, does not appear to be compliant with
competition law. The Consortium therefore recommend that the Commission investigate the
PPW to check its compliance with competition law (from 5.12.8).
11.3.4 The Consortium recommends that in their discussions with the OSZhD, the
Commission press for a liberalisation of the PPW to bring competitive forces into play (from
5.12.9).
11
11.3.5 Entitlement to use the Simplified Procedure for Transit by Rail for successive carriage
is still subject to national criteria and smaller undertakings find it more difficult to become
authorised. The Consortium therefore recommends that access to the procedure should be
given to all rail carriers that satisfy an objective set of criteria. Given that Article 7 of
Directive 95/18/EC has a requirement for adequate financial resources, the Consortium
recommends that the implementing provisions for the new Customs Code contain a
presumption that railway undertakings will be authorised to use the procedure unless there is
good reason to refuse (from 4.6.16).
11.3.6 The Simplified Procedure for Transit by Rail is not by its nature available for
movements from origin to destination using a single carrier, the Consortium therefore
recommend that DG TAXUD consider alternative simplified procedures, perhaps by using the
infrastructure managers’ traffic records for audit purposes (from 4.6.17).
11.3.7 RailNetEurope packages and markets a variety of competing products, the Consortium
therefore recommend that the Commission make further study of the competitive relationships
implicit within RNE (from 5.7.5).
11.3.8 Common rail industry data (such as permitted axle loads) is held in a variety of
differing databases without logical ownership and updating responsibilities. The Consortium
recommends that the Commission invite the stakeholders (to include at least the EIM, ERFA,
CER, CIT, RNE and UIC) to propose agreed solutions for the ownership, supply and updating
of industry data which are suitable for liberalised circumstances (from 5.10.47).
11.3.9 The Consortium recommends the Commission invite the UIC to review the ownership
of freight standards (standards which wagons must meet on handover, loading standards, axle-
loads, loading gauge, etc.) in conjunction with other stakeholders and produce agreed
proposals to allocate responsibilities to prepare, update and publish the standards in a way
which best meets the needs of the liberalised industry (from 5.11.32).
11.3.10 The International Rail Transport Committee (CIT) hold the copyright to essential
documentation for the movement of freight. The Consortium therefore finds that that CIT
activities could frustrate the ambitions of potential new entrants and accordingly recommends
further investigation by the Commission (from 5.10.48).
11.3.11 The RIC does not allow competitive forces to operate in the market for the provision
of passenger vehicles. The Consortium recommends the Commission investigate the RIC to
check its compliance with competition law and as appropriate require the UIC to restructure
the it in such a way as to make it compliant so as to bring competitive forces into the supply
of vehicles. The Consortium recommends that the study of freight standards, outlined about,
be paralleled by a similar one for passenger standards (from 5.11.43).
11.3.12 Under current circumstances, the RIC does not frustrate railway undertakings
seeking competitive long-term leases for passenger vehicles and the development of a leasing
market; it is conceivable however that other means of sourcing vehicles may arise and so the
Consortium recommends this question be kept under review by the Commission (from
5.11.40).
12
11.3.13 The (then) Austrian Federal Railway and German Federal Railway have a wide
ranging agreement for the mutual use of traction. The benefits it brings should also be
available to new entrant undertakings also able to offer traction for mutual use. The
Consortium therefore recommends that a study be made by the Commission of the terms
under which such an agreement could be made generally available (from 7.3.31).
11.3.14 UIC leaflets 471-2 & 3 on handover arrangements have a bearing on safety along a
chain of successive carriers. The Consortium recommends that a study be made under the
aegis of the Railway Safety Agency on whether it is appropriate that the practices laid down
in the leaflet be made a mandatory condition of successive carriage (from 7.3.38).
11.3.15 The Consortium finds that frontier agreements are beginning to be renegotiated by
railway undertakings on their own initiative. Nevertheless the classic agreements based on
UIC leaflet 471-1 are wholly unsatisfactory and the Consortium recommends that the
Commission investigate further (from 7.4.13).
11.3.16 All railway undertakings with a national safety certificate and nationally approved
traction should receive the benefit of the presumption that their staff and equipment is fit for
purpose and that only supplementary checks are necessary. Current practice is rather
different, incumbent railway undertakings have “grandfather approval” over frontier sections,
new railway undertakings must demonstrate they are fully competent to run to all points
without any presumption of basic skills or approved equipment. The Consortium therefore
recommends that the Commission looks further into this issue. (from 8.4.4)
11.3.17 Driver’s certification is proposed to have a national component. Simplifying the

certification for cross frontier operations would do much to facilitate cross frontier operations.
The Consortium recommends that the systematic extension of drivers’ national certification to
the first exchange point at every frontier be considered in the context of the proposal for the
certification of train crews (from 8.5.3).
11.3.18 A number of railway undertakings told the Consortium that they would appreciate a
clear indication of what was considered acceptable in handover agreements and what
unacceptable on legal grounds. The Consortium recommends the Commission to investigate
further (from 10.6.1).
11.3.19 Railway undertakings may control the facilities defined in Annex II of Directive
2001/14/EC (such as fuelling points) The Consortium recommends that the Commission
clarify that the obligation contained in Article 5 of Directive 2001/14 to make facilities
available is clarified as applying to railway undertakings when railway undertakings control
the facilities in question (from 10.6.4).
11.4 Recommendations for Member States
11.4.1 The Technical Unity agreement will be overtaken once the provisions for technical
interoperability have been introduced. The Consortium recommends that for the sake of
clarity it is then abrogated (from 4.3.6).
13
11.4.2 Both COTIF and the SMGS and SMPS have the potential to apply in EU Member
States which are members of both conventions. The Consortium recommends that after the
EU accession to COTIF, after the new COTIF comes into force, COTIF becomes the
presumption for all international traffic entirely within the EU and that the Member States of
the SMGS and SMPS make specific reservations against those conventions (from 4.5.26).
11.4.3 Given that the Swiss corridor facility helps to open up the market, particularly by
allowing end to end carriers access to simplified customs arrangements, the Consortium
recommends that further states sign up to it. Austria and France as frontier states as a first
step and then further states (from 4.6.15).
11.4.4 The Consortium recommends that Member States review the treaties and agreements
they have with neighbours to consider whether they still reflect their current obligations.
Where they do not, the Consortium recommends that the contracting parties abrogate or revise
their treaties appropriately (from 6.1.27).
11.4.5 It is recommended therefore that states clarify the rights of new entrant railway
undertakings under competition law (perhaps in the context of the Rail Transport Competition
Network set up by DG COMP) (from 10.10.2).
14

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Colin Buchanan and Partners Introduction

Project No: 78621

Newcombe House, 45 Notting Hill Gate

Telephone: 020 7309 7000

In January 2004, the Directorate-General for Energy and Transport of the

It should be underlined that there is now a wealth of Community

Thus, many problems related to the application of border crossing

5.4 Other multilateral – Brussels Clearing Centre 5-10

10.8 Role of safety authorities for international sections of line 10-8

Appendix A Commission’s Specification for the Study

Appendix B List of Frontier Points

Appendix C Table of Memberships of International Treaties

Appendix D Table of Memberships of Railway Agreements

Appendix E Table of Agreements between States and between the

Appendix G UIC Leaflets mentioned in the text

Appendix H Glossary and Abbreviations

1.1.1 In January 2004 a consortium led by Colin Buchanan and Partners

1.1.2 This executive summary reviews the principal findings of the

1.2 Purpose of the study

1.3 Scope of the study

1.3.4 Agreements between railway undertakings concerning frontier

1.4 Changing patterns of operation

1.4.1 As a backdrop, it might be useful to examine how railway

1.4.2 In the classic relationship an integrated railway owned

1.4.3 In more modern agreements, the location of handover is less likely

1.5 Multilateral treaties

1.5.1 The Consortium looked at a range of transport treaties. Many have

now so out of date as to be an embarrassment and should be abrogated.

1.6 Bilateral treaties

1.7 Multilateral inter-railway agreements

1.7.1 There are a number of explicit multi-lateral inter-railway

1.7.3 Agreements and practices that followed from membership of

1.8 Bi-lateral inter-railway agreements

1.8.1 The classic inter-railway agreements which the treaties mentioned

1.8.2 Instead railway undertakings are starting to make agreements with

1.9 Projection of services

1.9.1 Whilst agreement between railway undertakings imply a

1.10 Compliance with other aspects of EU law

1.10.1 The study team found some examples of conflicts with EC

2.1 Authority & brief

2.1.1 In January 2004 a consortium led by Colin Buchanan and Partners

2.2 Scope of the study

2.2.1 The Commission’s specification for the study is included as

2.2.2 The Consortium did not examine agreements between railway

2.2.3 Likewise the operation of end to end services by a single carrier

2.2.4 Agreements on marketing international passenger traffic (such as

2.2.5 Agreements between railway undertakings that refer to traffic links

2.3 The study team

2.3.1 The Consortium consisted of the following members:

Rail’s position in the market

2.4.1 In a European Single Market where traditional state boundaries

2.4.2 The Commission’s transport policy, defined in the White Paper

2.4.3 The Commission has identified commercial and operational

“Rail transport is literally the strategic sector, on which the success of

accompanied by further harmonisation in the fields of interoperability

2.4.4 The White Paper specifically points to the role of competition

The creation of rail frontiers

2.4.6 It is normal for governments to become involved in frontier

2.4.7 The UNECE paper (W/TRANS/285 of 14 March 1961) cited in

2.4.8 The crux of the Commission’s policy is to drive efficiencies into

‘through’ operation on an international scale, effectively paying no

2.4.9 Where railway undertakings wish to hand-over traffic en route (to

2.4.10 Railway undertakings must have the freedom to decide how to

2.4.12 Technical limitations are linked mainly to interoperability of