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European Court of Justice joined Cases C-161/25 and C-162/25 redefining the boundaries of national performance penalties in EU Railway Law
European Court of Justice joined Cases C-161/25 and C-162/25 redefining the boundaries of national performance penalties in EU Railway Law
The pending judgment of the Court of Justice of the European Union in joined cases C-161/25 and C-162/25 promises to be a defining moment for the legal framework governing railway infrastructure performance in the European Union. At its core, the dispute questions whether Member States may introduce additional national performance penalties - specifically those targeting delays at international border stations - without undermining the harmonised system established by Directive 2012/34/EU and the broader objectives of the Single European Railway Area (SERA).
The Conclusions of Advocate General M. A. Rantos, delivered on 16 April 2026, offer a nuanced interpretation that balances operational efficiency with the principles of market liberalisation. Historically, the CJEU follows the Advocate General’s conclusions in approximately 80% of its judgments and decisions, lending significant weight to Rantos’ reasoning in this case (8 from 10 cases).
Background of the case
The litigation stems from a controversial penalty system introduced by Rete Ferroviaria Italiana (RFI), Italy’s national infrastructure manager. This system imposes financial sanctions on freight trains that exceed authorised stopping times at key border stations connecting Italy with Switzerland, Austria, Germany, and Slovenia. The measures were challenged by a coalition of railway undertakings, including DB Cargo Italia, Captrain Italia, SBB Cargo Italia, Lokomotion, and Rail Cargo Carrier Italy, who argued that the penalties duplicated the EU performance scheme provided for under Article 35 of Directive 2012/34/EU. The operators contended that the Italian regime disproportionately burdened international freight services, distorted competition, and lacked the neutrality required by EU law, as RFI itself faced no equivalent financial consequences for delays caused by infrastructure deficiencies.
The Italian court considered, in particular, whether Article 35 of that Directive, which provides for penalties in the event of acts causing network failures, compensation for undertakings that are victims of such failures, and bonuses in the event of good performance exceeding forecasts, can be interpreted as meaning that such penalties, provided for by additional rules distinct from the general system established by the Network Statement, may be introduced, thereby resulting in the accumulation of penalties for the same incident (namely, a delay at a border station) and de facto extending the provisions of that system to breaches committed at border stations.
In the event that Article 35 of Directive 2012/34 were to permit the combination of several penalty schemes, such that a railway undertaking might be subject, for the same offence (e.g. a delay occurring at a border station) both to a penalty under the general scheme applicable to the entire network and to a specific penalty for a border station, it would be necessary to clarify the requirements governing such a combination. Specifically, two things would need to be determined: firstly, whether this provision requires the competent national authority – in this case, ART – to respect the principle of neutrality of the mechanism established, in particular by providing for bonuses for well-performing railway undertakings, compensation for affected undertakings and the imposition of penalties on the infrastructure manager where it is responsible for the delay; and secondly, whether, and if so to what extent, Article 35 of the directive requires the competent national authority to coordinate the general framework of the performance scheme and the specific framework for border penalties such that the two mechanisms contribute coherently to the objective of network performance without imposing a disproportionate burden on the railway undertakings required to pay border penalties.
Faced with these objections, the Italian Council of State referred a series of preliminary questions to the CJEU, seeking clarification on the compatibility of national performance mechanisms with EU railway legislation. The questions revolve around four central issues: the permissibility of supplementary national schemes, the legality of cumulative penalties, the legal requirements governing such measures (particularly proportionality, neutrality, and economic balance), and the role of national regulatory authorities in ensuring coordination between different performance mechanisms.
Conclusions of Advocate General M. A. Rantos: from a balanced approach to harmonisation
In his Conclusions, Advocate General Rantos adopts a pragmatic and principled stance, recognising that while Directive 2012/34/EU establishes a harmonised framework, it does not exhaust all possible incentive mechanisms for improving railway operations. He concludes that Member States retain the flexibility to introduce supplementary performance measures, provided these remain fully consistent with the objectives of EU railway legislation – namely, the creation of an efficient, integrated, and competitive European railway market.
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On specific penalties for border stations
First of all, the Advocate General wishes to make it clear from the outset that, having regard to Article 35 of Directive 2012/34/EU, insofar as it pursues the objective of promoting the optimal use of the network, a system of penalties applicable specifically to border stations falls within the scope of Article 35 of the Directive, provided that the basic conditions set out in Annex VI, point 2 of the Directive relating to the basic principles of the performance scheme are duly complied with.
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On the accumulation of penalties
One of the most closely-examined aspects of the Conclusions concerns the accumulation of penalties. The interesting question in this case is whether Article 35 of Directive 2012/34 is to be interpreted as allowing for the cumulative application of several penalty schemes, so that, for a single act, such as a delay at a border station, a railway undertaking may be subject both to the penalty provided for under the general scheme applicable to the entire network and to a specific penalty provided for in the event of a delay at a border station; and, if so, whether the regulatory body (in this case, ART) is required to ensure coordination between the two schemes and to verify that they comply with the principle of proportionality. The Advocate General first points out that, whilst Member States may provide for several penalty regimes that may co-exist, it is their responsibility to ensure that the measures adopted comply with the principles enshrined in the directive and are structured in a coherent and transparent manner. He continues by indicating that Member States are free to establish a performance improvement scheme providing for specific penalties where the scheduled duration of stops at border stations is exceeded, alongside the penalties generally applicable in the event of delays across the entire national network, provided, however, that such a system is consistent and does not, taken as a whole, result in the imposition of disproportionate penalties. He points out that the national regulatory authority is required, when approving the performance improvement system, to verify that the two penalty regimes applied pursue, in a coordinated manner, the objective of improving network performance and to assess the economic impact of these penalties on railway undertakings, in order to ensure that the economic viability and profitability of rail services are not compromised. This approach shifts the focus from a strict and formal legal analysis to a substantive evaluation of the overall financial impact on Infrastructure Managers and Railway Undertakings.
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Towards the vision of a coherent and proportionate performance improvement system, with balanced sanctions and penalties
The other key issue in this case is whether Article 35 of Directive 2012/34 is to be interpreted as meaning that, given the requirement to ensure the neutrality of a performance improvement scheme provided for in said article, the regulatory body must verify that such a system also provides for incentives for well-performing railway undertakings as well as compensation for undertakings that have suffered loss, and that penalties for delays also apply to the infrastructure manager where the latter is responsible for the delay. The Advocate General analyses Article 35 of Directive 2012/34 as meaning that, for a performance improvement scheme to be compatible with that provision, it is not necessary for it to provide bonuses for well-performing undertakings and compensation for undertakings that have suffered loss or damage in addition to the penalties imposed in the event of delays attributable to railway undertakings; nor is it necessary for each of the measures comprising that system and involving penalties to impose identical sanctions on railway undertakings and the infrastructure manager, provided that the system, as a whole, is consistent and proportionate to the objective pursued by Article 35, which is to encourage railway undertakings and the infrastructure manager to minimise disruptions and improve the performance of the rail network.
The Advocate General places significant emphasis on the principle of neutrality. He stresses that performance schemes cannot operate as one-sided instruments that systematically penalise railway undertakings while shielding infrastructure managers from responsibility. Instead, he advocates for symmetrical arrangements, where infrastructure managers assume financial responsibility for delays originating from their own operational failures. This interpretation aligns with a core principle of the SERA: infrastructure managers must remain impartial and should not benefit financially from regulatory arrangements that disadvantage railway undertakings.
Finally, the Conclusions underscore the protection of cross-border rail freight, a central objective of EU rail policy. The Advocate General warns that Member States cannot introduce national measures that, while formally applicable to all operators, disproportionately affect international freight services or undermine the smooth functioning of European rail corridors. This concern is particularly relevant given the strategic importance of the border crossings involved in the dispute.
The upcoming decision in the context of the new regulatory environment: the future of cross-border rail freight traffic towards coordinated and integrated governance
Joined cases C-161/25 and C-162/25 illustrate a broader trend in EU railway law: the evolution from fragmented national measures towards integrated network governance. The emerging legal framework increasingly recognises that the performance of the rail system depends on cooperation, transparency, and the equitable allocation of responsibilities among all participants in the rail sector.
The Advocate General’s Conclusions reinforce this evolution by confirming that performance incentives cannot operate in isolation but must form part of a coherent regulatory framework that supports efficient network operation. His conclusion that border-station penalties fall within the scope of the EU performance scheme will also be valid in light of the new Regulation (EU) 2026/1184 on railway infrastructure capacity management (Capacity Regulation) as Article 35 of the Directive 2012/34/EU was not revoked by the Capacity Regulation (see Article 78 of the Capacity regulation).
Ultimately, the CJEU’s judgment in these cases will clarify the boundaries of national performance schemes under EU law and set a precedent for how such mechanisms interact with the broader regulatory framework. As the Capacity Regulation begins to reshape railway capacity management, the Court’s ruling will provide essential legal certainty for infrastructure managers, railway undertakings, and regulatory authorities navigating this new era of EU railway governance.
The decision will not only resolve the Italian border penalty dispute but also define the legal parameters for a more cohesive, performance-driven, and cross-border-focused railway system in Europe.