Introduction
The EU Regulation applies from 24 March 2019. It is binding in its entirety and directly applicable in all EU Member States meaning that it automatically applies at national level without Member States needing to incorporate it. It applies to all maritime ports of the trans-European transport network. The purpose of the EU Regulation is to establish a framework for the provision of port services and financial transparency. This is intended to facilitate access to the port services market which would improve the service provided to port users and encourage investment in ports. Ultimately, this will help to reduce costs for transport users and contribute to the promotion of short sea shipping and a better integration of maritime transport with rail, inland waterway and road transport. Key principles underlying the regulation are transparency, fairness and non-discrimination. The EU Regulation does not impose a specific model for the management of maritime ports nor should it limit the managing body in setting up its charging system.
The PSR applies to maritime ports in the UK to which the EU Regulation applies. It is a complementary legislation and deals with matters such as complaints handling, enforcement and remedial measures at national level. It sets out provisions in respect of which there would be enforcement action for failure to comply. It therefore needs to be read carefully with the EU Regulation.
There has been some opposition to the EU Regulation in the UK. For example, the British Ports Association strongly opposed the EU Regulation as the rules would have a different effect in the UK as most of Britain's ports are owned by private companies as opposed to those in mainland Europe which are nearly all owned by public sector authorities. The legislation nevertheless came into force and ports should ensure familiarity and compliance with its provisions.
This is a note on key provisions to provide an indication of the issues that the EU Regulation seeks to address. The EU Regulation is very prescriptive so this is by no means a comprehensive review. Given the recent legislation, there is very limited commentary available about its application and interpretation. We encourage ports to obtain appropriate legal advice to ensure compliance.
Application
The EU Regulation applies to all maritime ports of the trans-European transport network. "Small Ports" (in brief, those that handle less than 0.1% of the total EU freight) have certain provisions applicable to them and we recommend that they obtain specific advice on the application of the EU Regulation/PSR.
The regulation applies to the following port services: bunkering, cargo-handling, mooring, passenger services, collection of ship-generated waste and cargo residues, pilotage and towage. Dredging is also relevant in certain sections. The EU Regulation expressly excludes deep-sea pilotage services. Article 2 of the EU Regulation defines each of these services, providing further guidance about their scope if required.
The EU Regulation does not apply to port service contracts (excluding cargo-handling, passenger services and pilotage) which were concluded before 15 February 2017 and which are limited in time. Port service contracts concluded before that date and which are not limited in time must be amended for compliance by 1 July 2025. Given the UK's anticipated withdrawal from the EU, we do not recommend that ports take any steps to specifically update port service contracts at this stage as the cost of transitional measures could potentially be avoided.
Provision of port services (Chapter II)
Chapter II of the EU Regulation deals with the provision of port services. It expressly does not apply to cargo handling, passenger services or pilotage. Article 3(1) sets out some general measures that ports can adopt with regard to the organisation of port services, in accordance with the Regulation. These cover (a) minimum requirements for the provision of port services; (b) limitations on the number of providers; (c) public service obligations; and (d) restrictions related to internal operators. These appear to be optional and Member States can decide not to impose any of these. Further, there is no reference in the PSR to these conditions (except in respect of small ports) although we discuss their application further below. In contrast, Article 3(3) of the EU Regulation contains a mandatory provision, stating that the terms of access to facilities, installations and equipment of the port must be fair, reasonable and non-discriminatory. As a result, we recommend that ports carry out a review of these categories and keep a record of their outcome. An example is to ensure that these are accessible for those with physical limitations.
Article 4 of the EU Regulation provides that the managing body of the port may require providers of port services, including subcontractors, to comply with minimum requirements for the performance of those services (further to Article 3(1)(a)). The EU Regulation is prescriptive of the requirements that can be set, and these must fall within the scope detailed in Article 4(2) and 4(5), relating to matters such as professional qualifications, financial capacity, equipment and availability. These are intended to contribute to the high quality of port services and should not introduce market barriers. The minimum requirements must be transparent, objective, non-discriminatory, proportionate and relevant to the category and nature of the port service concerned. The article also details further requirements to publish minimum requirements and the procedure for granting the right to provide port services. The application of this provision will depend on the criteria and processes that each port adopts for the appointment of port service providers. If a port does impose minimum requirements on its existing providers (for example, as part of a tender process), we suggest that it reviews these requirements to ensure that they fall within the requirements of this article.
Article 5 of the EU Regulation deals with the procedure to ensure compliance with the minimum requirements. Relevant ports are required to treat providers of port services in a transparent, objective, non-discriminatory and proportionate manner. They must grant or refuse the right to provide port services based on minimum requirements within a reasonable period (not exceeding 4 months). The reason for refusal must be justified based on the minimum requirements. Any limitation or termination of the right to provide a port service must also be justified and be transparent, objective, non-discriminatory and proportionate. For completeness, in respect of this and other provisions, where appropriate, we recommend that ports document their decision-making processes thoroughly and keep records to demonstrate compliance.
Article 6 provides that the managing body of a port may limit the number of providers of port services for a given port service for certain reasons which are set out in that article. For example, it may be that the characteristics of the port infrastructure or the nature of the port traffic is such that the operations of multiple providers of port services in the port would not be possible. In such instances, the port should publish any proposals to limit the number of port service providers in advance of the adoption of that decision. This allows interested parties to submit any comments, and should include details including the selection procedure, deadlines, the relevant award criteria and access to relevant applicant documents. Where a decision has been made to limit the number of providers of a port service, the managing body is required to follow a selection procedure which is open to all interested parties, non-discriminatory and transparent. It is unclear whether ports should take any action with regard to existing providers. We recommend that ports review their decisions with regard to the appointment of existing service providers for the relevant services, specifically whether they have made a conscious decision to limit the number of these. If so, they should ensure that the reason for limiting these falls within one of the reasons listed in Article 6(1). Where a port has made a decision to limit its port services providers, our suggestion would be for the port to update its website (or any other publishing means that the port uses) accordingly to reflect any such decisions. Ports should also ensure that they follow the requirements of Article 6 upon renewal of each contract.
Article 6(6) provides that where the managing body of a port provides port services itself or through a legally distinct entity which it directly or indirectly controls, the Member State shall take such measures as are necessary to avoid conflicts of interests. In the absence of such measures, the number of providers shall not be fewer than two, unless one or more of the reasons listed in paragraph 1 justifies limitation to a single provider. We are not aware of any action that relevant UK authorities have taken, particularly as the legislation is fairly new. In the absence of any such action, where services are provided by the port itself or entities that the port owns, the port must ensure that it can justify this limitation under one of the criteria listed in Article 6(1) (NB. as mentioned above, this does not apply to cargo-handling, passenger services or pilotage).
Article 7 of the EU Regulation deals with Public Service Obligations. These are defined as "a requirement defined or determined in order to ensure the provision of those port services or activities of general interest that an operator, if it were considering its own commercial interests, would not assume or would not assume to the same extent or under the same conditions." Our assessment is that it generally describes those port services or activities of general interest. The UK is allowed to impose obligations on the managing body (or on all maritime ports) to achieve certain objectives such as the availability of the service to all users on equal terms and to ensure the safety, security or environmental sustainability of port operations. We are not aware of any such obligations that the UK has imposed; however, ports should check this with the relevant body.
Article 8 details further provisions relating to internal operators and is without prejudice to Article 6(6), discussed above. Article 8(1) provides that the managing body of a port may decide to either provide a port service itself or through a legally distinct entity over which it exercises a "degree of control" provided that Article 4 (minimum requirements for the provision of port services) applies equally to all operators providing the port service concerned. The purpose of this, we assume, is to ensure that the port or connected entities are suitable to provide the service in question, as compared with other operators. In cases where there is a limitation on the number of port services providers under Article 6(1), the internal operator shall be limited to performing the assigned port service only in the port(s) attributed to it in the assessment to provide the port service.
Article 9 of the EU Regulation deals with the safeguarding of employees' rights. Ports must require the designated provider of port services to grant staff working conditions in accordance with applicable obligations in social and labour law and to comply with social standards as set out in Union law, national law or collective agreements. Ports should review their contracts to ensure that these requirements are met (NB. this may not be relevant for certain contracts entered into before 15 February 2017).
Financial Transparency and Autonomy (Chapter III)
Chapter III of the EU Regulation deals with financial transparency and autonomy which is intended to encourage investment in port facilities. It applies to all of the listed services.
Article 11 deals specifically with the handling of public funds. Financial relations between public authorities and a managing body of a port (or another entity that provides port services on its behalf) in receipt of public funds should be reflected in a transparent way in the accounting system which shows the amount of public funds and the use of those funds. Ports must keep separate accounts for those activities which are publicly funded, including dredging. All financial information relating to public funds should be kept by ports, or those that provide port services on its behalf, for 5 years. The information should be presented to the relevant authority in the event of a formal complaint and upon request.
Article 12(1) of the EU Regulation provides that the charges for the services provided by an internal operator under a public service obligation, the charges for pilotage services that are not exposed to effective competition and the charges levied by providers of port services, referred to in point (b) of Article 6(1) (regarding limiting the number of providers), must be set in a transparent, objective and non-discriminatory way and should be proportionate to the cost of the service provided. As a result, ports should review their charging structure for the above services to ensure they meet these requirements. Under Article 12(2), payment of port service charges may be integrated into other payments, but must remain easily identifiable by the user of the port service.
Article 6 of PSR provides that the managing body of a port must ensure that a port infrastructure charge (as referred to in Article 13 of the EU Regulation) is levied in such a way as to benefit that managing body directly or indirectly. We refer to Article 13 for specific guidance about port infrastructure charges which must be levied, which includes requirements such as ensuring that charges remain easily identifiable when integrated with other payments, and port users being kept informed about the nature and level of the charges.
General and final provisions (Chapter IV)
Providers of port services must ensure that employees receive the necessary training to acquire the knowledge which is essential for their work, with particular emphasis on health and safety aspects, and that training requirements are regularly updated to meet the challenges of technological innovation (Article 14). Ports should make sure that staff are appropriately trained.
Article 15(1) requires managing bodies to consult port users on its charging policy. The consultation should include any substantial changes to port infrastructure charges and port service charges in cases where internal operators provide port services under public service obligations. Article 15(2) requires ports, in accordance with national law, to consult port users and other stakeholders on essential matters within their competence, including the coordination of port services within the port area and environmental matters. The providers of port services are required to make available to port users adequate information about the nature and level of port service charges (Article 15(3)). Ports are required to respect the confidentiality of commercially sensitive information when carrying out their obligations under this Article.
Article 7 of the PSR requires the managing body of a port to provide readily accessible details of the relevant authorities referred to in Articles 11(5), 12(3) and 13(6) of the EU Regulation on its website.
Conclusion
The EU Regulation applies to all Member States and is enforced in the UK through the provisions of PSR. The EU Regulation requires ports to look at their practices to ensure these are transparent, fair, objective and non-discriminatory. These specifically relate to the appointment/selection of port service providers, the presentation of accounts and port charges, including ensuring that port users are consulted. The purpose is to ensure access to the market for port service providers and transparency in terms of funds.
In order to ensure compliance with the EU Regulation, ports should review their procedures alongside the provisions of the legislation to determine whether these meet the prescribed requirements. If not, the port should make changes to meet the objectives.
Contact
If you require any further guidance on the application of this legislation, including additional information on which provisions are mandatory and/or advice on changes that may need to be made, please contact Jonathan Moss on 020 7280 8875 or Jonathan.Moss@dwf.law.
