In this Rail Briefing we look at a complex area of law which deals
with how freight operators can achieve access to ports and
terminals. Although we look at some general principles, a complete
in-depth analysis of the law is outside the scope of this briefing.
Before the introduction of the Railways Infrastructure
(Access and Management) Regulations 2005 ("the
Regulations") facility owners of ports and terminals were
not obliged to provide access to third parties. These
facilities fell within an exemption1 excluding s.17 of the
Railways Act 1993 (as amended) which imposes a general
requirement to provide access. With the introduction of
the Regulations the position changed.
In this briefing we take the opportunity to consider how
freight operators may achieve access to ports and port
terminals by reference to the Regulations. We also briefly
look at:
(a) Connection Agreements; and
(b) Proposals to extend the exemption for ports and port
terminals to terminals generally
and how these work alongside the Regulations.
The Regulations
Although the Regulations have recently been amended by
The Railways Infrastructure (Access and Management)
(Amendment) Regulations 2009 the provisions we are
interested in remain unaltered.
Regulation 6 applies to both international groupings and
any railway undertakings for the purposes of operating
any type of rail freight service seeking access to terminals
and ports. It requires an applicant to be provided with
track access subject to restrictions only if “viable
alternatives by rail under market conditions exist”.
Although the meaning of this phrase is rather opaque,
ORR has issued guidance in its capacity as an appeals
body (see http://www.rail-reg.gov.uk/upload/pdf/275.pdf)
which sets out the framework within which it will
consider any applications. Broadly speaking, ORR
requires objective reasons for a refusal to provide access,
which may be due to:-
1. non-availability of capacity;
2. refusing to deal with applicants of poor repute on
financial or safety grounds;
3. imposing restrictions or refusing access on the basis of
sound, non-discriminatory safety and security
requirements;
4. imposing reasonable restrictions designed to ensure
efficient utilization of the facility or improve
performance; and/or
5. imposing restrictions reflecting the technical
limitations of the site or approaches to the site (e.g.
capacity constraints on railway network approaching
a port or terminal).
In the same guidance it also states:
"We have a duty to strike a balance between the applicant’s
right of access, the legitimate commercial interests of the
facility owner and the maintenance of a long-term
investment incentive. We would, therefore, be unlikely to
determine that access should be granted in circumstances
where the facility owner justifies why access has been refused
or made subject to restrictions, particularly where there is no
evidence that the facility owner had an incentive to restrict
access in order to restrict competition in downstream
markets where it is, or is potentially, active".
Any applicant is afforded the right of appeal to the ORR
under Regulation 29 "if it believes that it has been unfairly
treated, discriminated against or is in any other way
aggrieved".
It should also be noted the obligation to provide access is
not dependent on any management arrangements at a
particular facility. Thus a facility need not be owned and
operated by the same organisation – it could, for example,
be operated by a third party under a management
contract or on lease such as to a rail freight operating
company. Where this is the case, the Regulations still apply
with the party responsible for managing access having to use
reasonable endeavors to provide suitable access.
Facility owners remain free to enter into commercial
arrangements in relation to their facilities and services that
are within the scope of the Regulations without ORR's
approval.
Connection Agreements
Ports which have been linked to the network since 1994 will be
covered by a Connection Agreement entered into with NRIL
which typically contains an arrangement whereby it can claim
back the costs of maintaining the connection from the
connected party – usually the port or terminal owner. NRIL
reserves ancillary rights to enter onto the Port premises for the
purposes of maintenance, renewal of network etc (clause 7).
Other key terms include clause 5.2 (which prevents NRIL
from severing the connection to the network except in the
case of an emergency) and clause 6 which requires both
parties to agree arrangements for the safe handover of rolling
stock.
Connection Agreements are treated as access agreements
under the Railways Act 1993 and as such are subject to ORR
approval since they will be typically negotiated between NRIL
and the port owner/operator.
A model form is available from the website
http://www.networkrail.co.uk/documents/4266_Model%20C
onnection%20Contract.pdf.
A Proposal to extend the exemption to terminals generally
The ORR issued a draft General Approval for consultation on
22 June 2009.Whilst we will look at the draft regulations and
proposals in more detail in the briefing note next month, it is
interesting to note the ORR has indicated it will review the
ports and terminals freight facility market with a view to
establishing a long term exemptions policy.
