The supply of shipping services
The freedom to provide services is one of the European Union’s basic principles. However, the maritime transport sector sometimes finds that non-EU countries impose restrictions and conditions, such as cargo-sharing. These substantially increase transport costs and can damage overall EU trade.
It confirms that the freedom to provide services applies to maritime transport within the European Union and between EU and non-EU countries. It sets out the conditions under which this principle applies. It gradually abolishes earlier restrictions and prevents new ones being introduced.
KEY POINTS
EU maritime transport companies may carry passengers or freight to any port or off-shore installation (such as oil or gas platforms) within or outside the EU.
The same right applies to companies based outside the EU provided they are owned by an EU national and registered in the EU.
Unilateral national restrictions in force before 1 July 1986 were to be phased out between 31 December 1989 and 1 January 1993.
Cargo-sharing arrangements in bilateral agreements between EU and non-EU countries must be phased out or readjusted.
EU governments had to report to the European Commission initially every 6 months and later on an annual basis on the changes being introduced to earlier agreements. An EU country having problems in adjusting an existing agreement must inform the Council of Ministers and the Commission.
Cargo-sharing arrangements in any future agreements with non-EU countries are not allowed unless, in exceptional circumstances, not having these arrangements would prevent an EU company from plying for the trade.
SINCE WHEN DOES THE REGULATION APPLY?
1 January 1987.
ACTS
Council Regulation (EEC) No 4055/86 of 22 December 1986 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries
Regulation (EEC) No 4055/86
Regulation (EEC) No 3573/90
Council Regulation (EEC) No 4058/86 of 22 December 1986 concerning coordinated action to safeguard free access to cargoes in ocean trades (OJ L 378, 31.12.1986, pp. 21-23)
Sea transport — supply of services, competition, unfair pricing and access to ocean trade
Regulation (EEC) No 4055/86 applying the principle of freedom to provide services to maritime transport between EU countries and with non-EU countries
Regulation (EEC) No 4057/86 on unfair pricing practices in maritime transport
Regulation (EEC) No 4058/86 on coordinated action to safeguard free access to cargoes in ocean trades
Regulation (EC) No 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty
Regulation (EC) No 246/2009 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia)
Regulation (EC) No 906/2009 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia)
They aim to organise maritime transport in accordance with the basic principles of EU law to provide services, competition, and free access to the market in sea transport.
Freedom to provide services
Regulation No 4055/86:
grants EU-country nationals (and non-EU shipping companies using ships registered in an EU country and controlled by EU nationals) the right to carry passengers or goods by sea between any port of an EU country and any port or offshore installation of another EU country or of a non-EU country;
requires any national restrictions which reserve the carriage of goods to vessels flying the national flag to be phased out or adjusted, and prevents the introduction of new restrictions;
sets out a procedure for cases where EU-country shipping companies have no effective opportunity to carry goods to and from a particular non-EU country;
extends the benefits of the regulation to non-EU nationals established in the EU.
Regulation No 3577/92/EEC deals specifically with freedom to provide services in sea transport within EU countries (‘maritime cabotage’*).
Unfair pricing in maritime transport
Regulation No 4057/86:
authorises the EU to apply redressive duties in order to protect shipowners in EU countries from unfair pricing practices on the part of non-EU shipowners. These redressive duties can be imposed after an investigation which demonstrates that injury has been caused by unfair pricing and that the interests of the EU make intervention necessary;
concerning the examination of injury, lays down the appropriate factors or indicators to be taken into consideration, e.g. a reduction in the shipowner’s market share or profits, or the effect on employment;
lays down a procedure for complaints, consultations and subsequent investigations.
Free access to ocean trades
Regulation No 4058/86:
applies when action by a non-EU country or by its agents restricts free access to the transport of liner cargoes, bulk cargoes or other cargoes by shipping companies of EU countries or by ships registered in an EU country (except where such action is taken in conformity with the United Nations liner code);
allows for coordinated action by the EU following a request made by an EU country to the European Commission. Such action might include diplomatic representation to non-EU countries and countermeasures directed at the shipping companies concerned;
permits similar coordinated action to be taken at the request of another country belonging to the Organisation for Economic Cooperation and Development with which a reciprocal arrangement has been concluded.
Competition rules
General EU competition laws laid down in Regulation (EC) No 1/2003 also apply to the EU maritime transport sector. However, in accordance with Council Regulation (EC) No 246/2009, the Commission may make exceptions for certain types of cooperation between liner shipping* companies (consortia*). The Commission accordingly adopted Regulation (EC) No 906/2009, which allows these exceptions, and extended it until 25 April 2020 by Regulation (EU) No 697/2014.
FROM WHEN DO THE REGULATIONS APPLY?
Council Regulation (EEC) No 4055/86 has applied since 1 January 1987.
Council Regulations (EEC) No 4057/86 and 4058/86 have applied since 1 July 1987.
Council Regulation (EC) No 1/2003 has applied since 1 May 2004.
Council Regulation (EC) No 246/2009 has applied since 14 April 2009.
Commission Regulation (EC) No 906/2009 has applied since 26 April 2010.
KEY TERMS
Cabotage: where a company which transports goods, registered in one EU country, carries out national transport in another EU country.
Liner shipping: regular transport of goods on a particular route or routes between ports, at previously advertised dates and times, and available to any paying transport user, even if on an occasional basis.
Consortia: agreements (or sets of agreements) between 2 or more shipping carriers which provide international liner shipping services solely for carrying cargo relating to one or more trades. Their purpose is to provide a joint maritime transport service which is better than the service that each of its members could have offered individually (i.e. without the consortium).
DOCUMENTS
Council Regulation (EEC) No 4055/86 of 22 December 1986 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries (OJ L 378, 31.12.1986, pp. 1–3)
Successive amendments to Regulation (EEC) No 4055/86 have been incorporated in to the original document. This consolidated version is of documentary value only.
Council Regulation (EEC) No 4057/86 of 22 December 1986 on unfair pricing practices in maritime transport (OJ L 378, 31.12.1986, pp. 14–20)
Council Regulation (EEC) No 4058/86 of 22 December 1986 concerning coordinated action to safeguard free access to cargoes in ocean trades (OJ L 378, 31.12.1986, pp. 21–23)
Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ L 1, 4.1.2003, pp. 1–25)
Council Regulation (EC) No 246/2009 of 26 February 2009 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia) (Codified version) (OJ L 79, 25.3.2009, pp. 1-4)
Commission Regulation (EC) No 906/2009 of 28 September 2009 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia) (OJ L 256, 29.9.2009, pp. 31–34)
Freedom to provide services within the EU (ocean trade)
The aim of this Regulation is to eliminate restrictions on the freedom to provide maritime transport services within the European Union (EU).
Council Regulation (EEC) No 3577/92 of 7 December 1992 applying the principle of freedom to provide services to maritime transport within Member States (maritime cabotage).
Scope
This law ensures that, within a given EU country, shipping companies or nationals based in other EU countries have the right to offer maritime transport services (known as maritime cabotage) provided they comply with all the conditions for carrying out cabotage within that country. Shipping companies based in countries outside the EU, but controlled by EU nationals, may also offer such services.
The regulation defines ‘maritime transport services within an EU country (maritime cabotage)’, ‘Community shipowners’, ‘public service contract’, ‘public service obligations’, and ‘serious disturbance of the internal transport market’.
Manning
Depending on the kind of transport service, matters relating to manning are the responsibility either of the EU country of registration (flag State) or of the country in which the cabotage service is performed (host State).
Public service
EU countries may make the right to provide transport services subject to public service obligations or may conclude public service contracts in the interests of maintaining adequate cabotage services between the mainland and its islands and between the islands themselves.
Safeguard measures
Where the market’s opening up to cabotage results in problems (such as the serious excess of supply over demand) that threaten the financial survival of shipping companies, the Commission may introduce safeguard measures. These may include the temporary exclusion of the area concerned from the scope of the regulation.
Non-discrimination
Persons providing maritime transport services in an EU country other than their own may do so temporarily on the same terms as those applied by that country to its own nationals.
Timetable
Maritime cabotage was liberalised on 1 January 1993. For France, Italy, Greece, Portugal and Spain, mainland cabotage was gradually liberalised according to a specific timetable for each type of transport service. Mainland-island and inter-island cabotage for these countries was liberalised in 1999. This exemption was extended for Greece until 2004 for scheduled passenger and lighter services and services involving vessels of less than 650 gross tonnes (gt). Exemptions were granted to Croatia till 31 December 2016 for existing public service contracts and for cruise services between Croatian ports by ships smaller than 650 gt, which are reserved for Croatian ships till 31 December 2014.
REFERENCES
Regulation (EEC) No 3577/92
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the interpretation of Council Regulation (EEC) No 3577/92 applying the principle of freedom to provide services to maritime transport within Member States (maritime cabotage) ( COM(2003) 595 final – Not published in the Official Journal).
Decision 93/125/EEC on Spain’s request for adoption by the Commission of safeguard measures under Article 5 of Council Regulation (EEC) No 3577/92 against applying the principle of freedom to provide services to maritime transport within Member States (maritime cabotage) – (Official Journal L 49 of 27.02.1993).
This Decision authorises Spain to exclude the Spanish mainland, for six months from the date of notification of this Decision, from the scope of Regulation (EEC) No 3577/92. The exclusion does not apply to feeder services. If no Spanish vessel is available to meet the demand for cabotage transport services, other EU countries’ vessels will be allowed to offer such services.
Report from the Commission to the Council: Fifth report on the implementation of Council Regulation (EEC) No 3577/92 applying the principle of freedom to provide services to maritime cabotage (2001-2010) (COM(2014) 231 final of 22.4.2014 – not published in the Official Journal).
This report is divided into 4 chapters:
1. Recent case-law and legislative developments in EU and EFTA countries;
2. Market trends in EU and EFTA countries;
3. The available data on employment in maritime cabotage (due to the lack of reliable and conclusive data this part no longer contains the statistics on the crew costs).
4. Conclusion: the Regulation is fit for purpose and does not require revision. Some issues raised in the consultation suggest there are problems of interpretation and implementation. These have been addressed in the communication on maritime cabotage (see next entry).
Communication from the Commission on the interpretation of Council Regulation (EEC) No 3577/92 applying the principle of freedom to provide services to maritime transport within Member States (maritime cabotage) [ COM(2014) 232 final of 22.4.2014 – not published in the Official Journal].
Drawing on over 20 years’ experience of the practical application of Regulation (EEC) No 3577/92, in the interests of transparency and legal certainty, the Commission has decided to update and amend its interpretation of the provisions of the Regulation.
This Communication amends and replaces previous Commission’s interpretative communications of 2003 and 2006. It is for information purposes only, to help explain the Regulation and indicates how the Commission intends to apply the Regulation. It does not set out either to revise the Regulation or to encroach on the Court of Justice’s jurisdiction in matters of interpretation.
It starts by specifying the scope of the freedom to provide services in the maritime cabotage sector. It indicates who enjoys that freedom and recalls which services the Regulation covers.
It goes on to describe the extent of the three derogations to the freedom to provide services, as provided for in the regulation:
EU countries can impose manning rules on board ships smaller than 650 gt and vessels performing island cabotage services between two ports on their territory.
EU countries may impose public service obligations and conclude public service contracts in order to ensure an adequate scheduled transport service to, from and between islands.
EU countries may ask the Commission to adopt safeguard measures to remedy a serious disturbance of the internal market.
Lastly, it provides guidance on the application of Regulation (EC) No 1370/2007 on public passenger transport services by rail and by road to maritime cabotage services.
State aid — maritime transport
Communication C(2004) 43 — Community guidelines on State aid to maritime transport
Communication updating the annex to Communication C(2004) 43 — Community guidelines on State aid to maritime transport
They aim at further ensuring a favourable tax environment for ship owners to counter international competition by open registers* and flags of convenience*.
Scope
The guidelines:
cover all aid given to maritime transport by EU countries or via public monies:
includes all financial benefits, in whatever form, funded by the public authorities, extending to public companies and state-controlled banks;
do not cover aid granted to shipyards;
confirm that State aid may only be granted for ships registered in EU countries.
The communication updating the annex updates the list of ship registers located in EU countries.
Objectives
The guidelines are designed to ensure that the companies and individuals are aware of their rights and obligations and to clarify what State aid schemes may be introduced in order to support the EU maritime interest, with the aim of:
improving a safe, efficient, secure and environmentally friendly maritime transport;
encouraging the flagging or re-flagging of ships to EU registers;
contributing to the consolidation of the maritime cluster established in EU countries while maintaining an overall competitive fleet on world markets;
maintaining and improving seafaring know-how and protecting and promoting employment for European seafarers.
Taxation of shipping companies
To combat tax incentives offered by several non-EU countries, a number of EU countries have taken steps to make their tax environment more attractive to shipping companies. Such tax abatements are considered to be State aid.
To comply with the aim of boosting the competitiveness of EU fleets in the world market for sea transport services, any tax concession must be:
linked with the flag of an EU country; and
restricted to maritime transport activities.
Salary costs
Cutting labour costs for maritime transport may be considered compatible with the common market as long as it supports the aim of reducing the costs and tax burdens borne by EU ship owners and seafarers to levels comparable with those in the rest of the world.
In this respect, the European Commission advocates authorising a reduction in:
social contributions made by EU seafarers working on board ships flying an EU country flag;
income tax paid by EU seafarers working on board ships flying an EU country flag.
Investment aid
Investment in new vessels must obey the rules that apply to shipbuilding. Other forms of investment aid may be authorised in accordance with EU policy on safety at sea where it is a matter of:
improving on-board equipment;
promoting the use of reliable, non-polluting ships.
Public service obligations and contracts
Compensation for the operating losses directly incurred by meeting certain public service obligations does not constitute aid within the meaning of Article 107(1) of the Treaty on the Functioning of the European Union (TFEU). Notification under Article 108(1) TFEU is therefore not necessary if:
there has been a public invitation to tender;
the call for tenders was accompanied by adequate publicity;
there has been no over-compensation or cross-subsidy.
Restrictions on aid
The current approach lays down a maximum aid level corresponding to:
the calculation of the tax and social charges applying to seafarers;
the cancellation of the tax on shipping company turnover.
To avoid any distortion of competition it should not be possible for greater benefits to be conferred by means of other aid systems.
DOCUMENTS
Commission communication C(2004) 43 — Community guidelines on State aid to maritime transport (OJ C 13, 17.1.2004, pp. 3-12)
Communication from the Commission — Updating the annex to Commission Communication C(2004) 43 — Community guidelines on State aid to maritime transport (OJ C 120, 13.4.2017, pp. 10-11)
Consolidated version of the Treaty on the Functioning of the European Union — Part Three — Union policies and internal actions — Title VII — Common rules on competition, taxation and approximation of laws — Chapter 1 — Rules on competition — Section 1 — Rules applying to undertakings — Article 106 (ex Article 86 TEC) (OJ C 202, 7.6.2016, pp. 90-91)
Consolidated version of the Treaty on the Functioning of the European Union — Part Three — Union policies and internal actions — Title VII — Common rules on competition, taxation and approximation of laws — Chapter 1 — Rules on competition — Section 2 — Aids granted by states — Article 107 (ex Article 87 TEC) (OJ C 202, 7.6.2016, pp. 91-92)
Statistical returns in respect of carriage of goods and passengers by sea
Directive 2009/42/EC — statistical returns in respect of carriage of goods and passengers calling at EU ports
It sets out how European Union (EU) countries should compile statistics on the carriage of goods and passengers by sea calling at EU ports.
The data
These statistical data relate to cargo and passenger information and to information on the vessel itself. The annexes to this directive specify the characteristics of the data collection, including:
gross weight and description of goods;
reporting port;
type of cargo classification;
number of passengers;
type and size of vessels.
Vessels with a gross tonnage of under 100 tonnes may be excluded from the data collection.
Collection
The European Commission is responsible for drawing up a list of all EU ports for which summary data are to be provided. In addition, each EU country must select from this list any port which:
handles more than one million tonnes of goods; or
records more than 200,000 passenger movements annually.
These selected ports are then subject to a more detailed data collection.
Transmitting the data
EU countries must transmit the results of the collection to the Commission (Eurostat):
within 5 months of the end of the period of observation for data collected quarterly;
within 8 months for data collected annually.
EU countries must inform Eurostat of the methods used to compile the data, as well as details of any substantial changes in the methods used. Eurostat must then publish the appropriate statistics collected.
The directive was amended by Regulation (EU) No 1090/2010 in order to bring data collection on goods transported by seagoing vessels into line with other modes of transport.
Decision 2010/216/EU amended some technical characteristics in relation to the data collection, including the codes to be used for the nationality of the registration of vessels and the structure for data sets.
Decision 2012/186/EU amended some of the statistical variables used in the data collection and clarified some definitions and types of cargo classification.
Directive 2009/42/EC has applied since 26 June 2009. It is a recast version of Directive 95/64/EC — and its subsequent amendments — which had to be incorporated into national law by 31 December 1996.
DOCUMENTS
Directive 2009/42/EC of the European Parliament and of the Council of 6 May 2009 on statistical returns in respect of carriage of goods and passengers by sea (recast) (OJ L 141, 6.6.2009, pp. 29-47)
Successive amendments to Directive 2009/42/EC have been incorporated into the basic text. This consolidated version is of documentary value only.
Report from the Commission to the European Parliament and the Council on the exercise of the power to adopt delegated acts conferred on the Commission pursuant to Regulation (EU) No 1090/2010 of the European Parliament and of the Council amending Directive 2009/42/EC on statistical returns in respect of carriage of goods and passengers by sea (COM(2015) 362 final, 28.7.2015)
The insurance of shipowners for maritime claims
This Directive establishes a legal framework applicable to the insurance of shipowners for maritime claims in order to make economic operators act more responsibly and to improve the quality of merchant shipping.
Directive 2009/20/EC of the European Parliament and of the Council of 23 April 2009 on the insurance of shipowners for maritime claims.
This Directive creates a harmonised legal framework applicable to the insurance of shipowners for maritime claims.
Scope
This Directive applies to ships of 300 gross tonnage or more. Warships, auxiliary warships or other State owned or operated ships used for a non commercial public service are excluded from its scope.
Obligations on shipowners
Member States shall impose the following:
ships flying the flag of Member States shall be insured by their owners *;
ships not flying the flag of Member States are to be insured when they enter ports under Member States’ jurisdiction.
In compliance with international law, Member States may require that ships that are in transit through their territorial waters fulfil this obligation.
Insurance * shall cover claims which are subject to limitation pursuant to the 1996 convention * and shall provide cover up to the liability limitation thresholds laid down in that Convention.
Access to ports
Member States shall ensure that ships anchored in ports under their jurisdiction have a certificate of insurance. Without prejudice to the provisions of Directive 2009/16/EC allowing ships to be detained for safety reasons, this Directive allows the competent authority to make a decision regarding the expulsion of the ship. This decision shall be sent to the Commission and to the other Member States. Once the decision has been pronounced, the ship is prohibited from entering any port in the European Union (EU) until a certificate has been presented by its owner.
Insurance certificates
Insurance certificate(s) shall include the following information:
name of ship, its registration number and port of registry;
shipowner’s name and principal place of business;
type and duration of the insurance;
the address of the main insurance provider.
The text of the certificate shall be translated into English, French or Spanish if it has not been drawn up in any of these three languages.
Penalties
Member States shall establish a system of effective, proportionate and dissuasive penalties for the breach of national provisions laid down pursuant to this Directive.
Context
This Directive forms part of the policy of the European Union and the International Maritime Organization (IMO) to make economic operators act more responsibly and thus improve the quality of merchant shipping.
Key terms of the Act
shipowner: the registered owner of a seagoing ship, or any other person such as the bareboat charterer who is responsible for the operation of the ship;
insurance: insurance with or without deductibles, and comprising, for example, indemnity insurance of the type currently provided by members of the International Group of P & I Clubs, and other effective forms of insurance (including proved self insurance) and financial security offering similar conditions of cover;
1996 Convention: the consolidated text of the 1976 Convention on Limitation of Liability for Maritime Claims, adopted by the International Maritime Organization (IMO), as amended by the 1996 Protocol.
References
Act
Directive 2009/20/EC