A legal first: Court of Justice of the European Union rules on liability questions under the CUI Uniform Rules
In a preliminary ruling of the Court of Justice of the European Union of 14 July 2022 (C‑500/20), a court has for the first time ever looked at the interpretation of the CUI and made a decision. The Court decided on its competence to interpret the CUI and after an affirmation, gave its statement on liability rules.
The request for a preliminary ruling concerns the interpretation of the Uniform Rules concerning the Contract of Use of Infrastructure in International Rail Traffic (“CUI Uniform Rules"), in particular Articles 4, 8 §1 b) and 19 §1. It was issued in the context of a dispute between ÖBB Infrastruktur AG (the infrastructure manager), and Lokomotion Gesellschaft für Schienentraktion mbH (a German railway undertaking), concerning a claim for damages resulting from an accident on the railway infrastructure of ÖBB Infrastruktur.
Facts of the case:
In December 2014, Lokomotion and ÖBB Infrastruktur concluded a contract for the use of railway infrastructure. That contract included a reference to ÖBB Infrastruktur’s General Terms and Conditions (‘the GTCs’). The GTCs provide that liability is to be governed by the Austrian ABGB, the Unternehmensgesetzbuch (Company Code), the Eisenbahn- und Kraftfahrzeughaftpflichtgesetz (Austrian Law on railway and motor vehicle third-party liability) and the CUI Uniform Rules (CUI), unless these run contrary to the GTCs.
In July 2015, a train consisting of six Lokomotion locomotives derailed in Austria, resulting in damage to two locomotives. The repair of the locomotives took several months, during which time Lokomotion leased two replacement locomotives, thereby incurring costs. Lokomotion claimed from ÖBB Infrastruktur the costs of leasing the replacement locomotives because of the accident. It claimed that the accident was caused by a shortcoming in the railway infrastructure provided by ÖBB Infrastruktur. The costs of leasing the replacement locomotives were, in its view, to be regarded as loss of or damage to property as referred to in Article 8 §1 lit. b of the CUI Uniform Rules. Conversely, ÖBB Infrastruktur claimed that the losses were of a pecuniary nature and consequently not eligible for compensation under Article 8 §1 lit. b of the CUI Uniform Rules.
The Oberster Gerichtshof in Austria (Supreme Court) decided to suspend proceedings and refer the following questions to the Court of Justice of the European Union (CJEU) for a preliminary ruling:
- Is the CJEU competent to interpret the CUI Uniform Rules?
- Is Article 8 §1 lit. b of the CUI Uniform Rules (“Liability of the manager”) to be interpreted such that the liability of the infrastructure manager for loss of or damage to property as codified therein also includes the costs incurred by the carrier because of having to lease locomotives to replace the existing ones due to damage caused to them?
- Are Articles 4 (“Mandatory law”) and 19 §1 (“Other actions”) of the CUI Uniform Rules to be interpreted to the effect that the parties to the contract may effectively assume greater liability by means of a blanket reference to national law if this means that, in derogation from strict liability in accordance with the CUI Uniform Rules, liability is conditional upon fault, even though the extent of liability is greater?
Decision of the CJEU:
- Concerning the Court’s competence to interpret the CUI UR:
In the context of the case at issue, the CUI Uniform Rules govern the contracts of use of railway infrastructure for the purpose of performing carriage, including the form and framework of such contracts. In particular, Art. 8 §1, Art. 4 and Art. 19 §1 of the CUI Uniform Rules, which are the subject of the questions to the Court of Justice, contain, inter alia, the rules on the liability of the infrastructure manager. The CUI thus relate to contract law in connection with international railway traffic. Thus, these provisions may concern, among other things, the legal regime applicable to agreements between railway undertakings and infrastructure managers for the use of the infrastructure. This matter falls within an area, namely that of transport, for which the European Union has shared competence under Article 4(2)(g) TFEU, which the EU exercised by adopting Directive 2012/34 establishing a single European railway area.
In addition, the CJEU mentioned that the legal provisions contained in the CUI, and in particular those of Articles 4, 8 §1 and 19 §1 concerning the liability of the infrastructure manager, may apply both to situations governed by national law and to situations governed by Union law, so that there is a clear interest in a uniform interpretation across the EU.
As a result, the Court ruled that it had jurisdiction to interpret Article 4, Article 8 §1 and Article 19 §1 of the CUI Uniform Rules.
- Concerning the question whether Article 8 §1 lit. b of the CUI Uniform Rules (“Liability of the manager”) would also include the costs of having to lease locomotives to replace existing locomotives due to damage caused to them:
The CJEU emphasised that this provision of Article 8 establishes strict liability of the infrastructure manager and must therefore be interpreted narrowly.
As regards the literal interpretation of Article 8 §1 lit. b of CUI UR, the use of the term "damage to property", followed by a reference in brackets to the destruction of or damage to movable or immovable property, indicates that the liability of the infrastructure manager is limited to damage caused to the actual substance of the damaged property and does not include damage caused by the unavailability of that property.
That interpretation was confirmed, it stated, by the context in which Article 8 §1 lit. b is placed, since Article 8 §1 lists the three types of damage to which the infrastructure manager's strict liability applies. The scope of this liability is therefore clearly delimited. It includes bodily loss or damage under Article 8 §1 lit. a, damage to property under Article 8 §1 lit. b, and pecuniary loss under Article 8 § 1 lit. c.
In view of the distinction made in Art. 8 §1 between the three types of damage mentioned, it must be assumed that these categories are mutually exclusive and that therefore the liability of the operator for damage to property within the meaning of Art. 8 § 1 lit. b does not include pecuniary loss.
The Court found that Art. 8 §4 of CUI also supported the view that Art. 8 §1 lit. b did not cover pecuniary loss, such as leasing costs, because this provision enables the parties to the contract to agree on whether and to what extent the infrastructure manager is liable for damage caused to the carrier/railway undertaking by delay or disruption. This may concern damage suffered by a railway undertaking as a result of not being able to use a damaged vehicle.
(Note from the CIT General Secretariat: no such agreement was concluded between the disputing parties).
As a result, the CJEU ruled that the costs of having to lease locomotives to replace existing locomotives due to damage caused to them were not to be subsumed under Art 8 §1 lit. b CUI and therefore not compensable for the benefit of Lokomotion.
- Concerning the question whether it is in line with Articles 4 (“Mandatory law”) and 19 §1 (“Other actions”) that the parties stipulate, by contract, greater liability by blanket reference to national law:
ÖBB Infrastruktur and Lokomotion agreed to include the General Terms and Conditions in their contract of use of railway infrastructure. These referred to a number of sources, including national law (the Austrian ABGB), which in turn – and unlike the CUI Uniform Rules – provides for fault as a requirement of liability on the one hand, but allows for a broader scope of claims, such as the leasing costs in the present case, on the other hand.
The question therefore arose if this reference to the national law meant greater liability and obligations more burdensome than those provided in the CUI Uniform Rules, which would be in line with Article 4 of the CUI Uniform Rules.
As a result, the CJEU ruled that Art. 4 CUI meant that the contracting parties can agree on an extension of their liability and include this in the contract. The parties have the contractual freedom to decide whether they want to formulate a clause in the contract itself that provides for such an extension of their liability or whether they want to refer to national law.
However, the CJEU said that it is now for the referring Austrian court to decide whether this reference to national law has the effect of extending the liability of at least one of the contracting parties without affecting the rights of the other contracting party deriving from the provisions of the CUI.