Estonia obligated to pay compensation to bus operators

Lux Express buses.
Lux Express buses. Source: Priit Mürk/ERR

A law that has remained valid in Estonia for 20 years and imposes an obligation on bus companies to carry people with disabilities and preschoolers free of charge but without compensation by the state is incompatible with European law, according to the European Commission.

The European Commission gave its assessment to the European Court of Justice on July 20 in a case initiated by bus operator Lux Express in Estonia in 2019 in relation to the Public Transport Act being unconstitutional.

Ingmar Roos, member of the management board of Lux Express Estonia AS, said that the decision marks an important breakthrough in ending a long-lasting unfair and unlawful situation.

"We did not turn to the court against people with disabilities and preschoolers and we're not questioning the state's right to offer them more favorable conditions for using public transport. We challenge the unfair system developed by the state. Carriers from whom the state is buying transport service on the basis of public service agreements are compensated for transporting passengers entitled to free travel through the price per kilometer; however, carriers operating routes that function on ticket revenues alone must also service the same passenger groups without any compensation," Roos said. 

Roos added that the unfair situation is rendered even more grotesque by the Ministry of Economic Affairs and Communications promising bus companies in 2008 that a special compensation system was to be created soon for servicing people entitled to free travel. 

"13 years have passed and this promise has yet to be fulfilled. Meanwhile, the government has found that the Estonian state is rich enough to launch universal free bus service on public regional routes," Roos said. 

Carri Ginter, sworn advocate at the Sorainen law firm lauded a judge of the Tallinn Administrative Court for sending the matter to the European Court of Justice.

"The state was trying to claim until the very last minute that the EU law does not apply in this case. From now on, the dispute can only concentrate on the size of the compensation payable by the state to bus operators," Ginter said. 

The resolution of the case may be rendered more complicated by the Estonian state not having data on the number of passengers entitled to free travel by law. A project was launched in this regard in 2018 at the initiative of bus operators; however, the state gave up on implementing it because it would not have been possible to carry out the project before the end of the EU funding period. 

Lux Express turned to court against the Estonian state in July 2019 seeking for the obligation imposed by the Public Transport Act to carry preschoolers and people with disabilities free of charge on commercial routes without any compensation from the state to be declared unconstitutional. Some time later, three more Estonian bus companies turned to the administrative court with a similar complaint.

The Ministry of Economic Affairs and Communications representing the state in the court proceedings thus far has maintained the position that the said obligation does not constitute the imposition of a public service obligation.

The position relayed to the European Court of Justice by the European Commission clearly stipulates, however, that the obligation imposed on companies carrying passengers on a commercial basis to carry passengers in certain categories free of charge, as is currently the case pursuant to the Public Transport Act, constitutes a public service obligation. The European Commission also assumed the position that the section of the Public Transport Act stipulating that the free-of-charge carriage of passengers is not to be compensated to carriers is incompatible with EU law. Thus, the European Commission's position is essentially that the regulation in effect in Estonia since 2000 is unlawful.

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Editor: Helen Wright

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