We represent Lux Express and other Estonian bus operators in their dispute with the Estonian Government.
On the 8th of September, the European Court made a ruling that matches the view of our specialists – the law that has been applied in Estonia for the past 20 years and obliges bus operators to transport preschoolers and disabled individuals for free and without governmental compensation is illegal and must be invalidated.
In August 2019, Lux Express Estonia filed a claim against the Estonian state with a request to declare it invalid and against the Constitution to oblige bus operators to provide transport for preschoolers and disabled individuals free of charge on commercial lines without compensation from the state as given in the Public Transport Act. Shortly after, three other bus operators filed similar complaints (MK Autobuss, Arilix, and Estonian Lines). In 2020, the Tallinn Administrative Court, which processed the case, made a request to the European Court of Justice, asking for an assessment of whether, in addition to national law, the obligation to offer rides for free is also regulated by European law. The decision of the European Court passed on the 8th of September is binding on the Tallinn Administrative Court.
“The state tried to argue until the very last minute that EU law is not applicable in this case and the state has the right to oblige bus operators to offer free of charge transport for selected groups. However, now the European Court said that the obligation to pay compensation for such services is valid already since 1971. Now we will calculate how big were the related costs for bus operators in order to get an understanding of how expensive the state’s gift, meant to be paid for from the pockets of bus operators, has been,” commented Carri Ginter, partner at Sorainen, representing Lux Express and other Estonian bus operators in the dispute.
The court’s opinion differs from the state’s position
The Estonian Ministry of Economic Affairs and Communications, which is representing the state in this dispute, has expressed its position that the obligation to offer free-of-charge transport without compensation is not imposing a public service obligation.
Our counsel Kadri Härginen added that now the court is requesting the ministry (as the responsible party) to formulate its position after acknowledging the court’s opinions. „Most probably they cannot keep to their prerequisite that there is no need for compensation. It would be recommended to start negotiations with the applicant about the amount and details of the compensation. The court is waiting for the final position of the responsible party within 15 days after the ruling has been received,“ added Härginen.
Complaint against an unfair system
Ingmar Roos, a member of the Lux Express Estonia management board, commented that it is very important to emphasize that they did not go to court against preschoolers and disabled people and did not dispute the state’s right to offer transport on special conditions to them.
“We argued against the unfair, and as it recently turned out, also illegal system designed by the state of Estonia. Bus operators from whom the state buys transport services on the basis of public service contracts are reimbursed for the cost of transporting passengers with the right to travel for free through the price per kilometer, but carriers serving lines operating purely from ticket revenue must serve the same groups of passengers without receiving any payment. This harms the competition between ticket-based bus traffic and services supported by the state budget. In summary, this means that there are fewer bus routes in operation due to the burden imposed by the state illegally than there would be under conditions of undistorted competition.”
The unfair situation that has existed for years is made grotesque by the fact that already in 2008, the Estonian Ministry of Economic Affairs and Communications, through the Chancellor of Justice, promised bus operators that a special compensation system would soon be created to serve individuals with the right to travel for free. “14 years have passed, but this promise has not yet been fulfilled. However, in the meantime, the government has decided that the Estonian state is rich enough to start free bus traffic on public county lines,” added Roos.