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Which are the key ports in your jurisdiction and what sort of facilities do they comprise? What is the primary purpose of the ports?
Germany’s major ports of Hamburg, Bremerhaven and Wilhelmshaven serve as transhipment and gateway ports, as well as hubs for all kinds of cargo.
Some of the more specialised terminals at other ports are owned or operated by or for industrial corporations for their specific purposes, including those for the offshore industry (mostly wind energy). Many terminals include special handling, processing and storage facilities.
The major ferry terminals are located on the Baltic Sea, where ports mostly serve as gateways for both passengers and cargo.
Besides the high-turnover seaports Germany has several important inland ports, which serve as gateways to inland waterways. Germany’s major inland port is the port of Duisburg (also known as Duisport), which is considered to be the largest inland port worldwide.
In Germany, inland ports are in various aspects subject to different legal provisions to seaports.
Describe any port reform that has been undertaken over the past few decades and the principal port model or models in your jurisdiction.
There has not been any major port reform in Germany recently. For a long time, German seaports have mostly operated as landlord ports or, in some cases such as Puttgarden, as private service ports.
State development policy
Is there an overall state policy for the development of ports in your jurisdiction?
Both the German government and the federal state governments have supplied port concepts (eg, Hamburg currently has a development concept until 2025) that comprise and explain the policies applied to the development and maintenance of ports and relevant infrastructure. The national port concept by which the state, federal states and port authorities abide was recently revised.
The 2015 federal port concept for inland ports and sea ports focuses on:
- the further development of port-relevant transportation links and hubs in order to eliminate capacity bottlenecks within the ports;
- the improvement of ports’ infrastructure in general, within, around and between ports, to handle the increasing load capacities;
- the improvement of German ports’ competitiveness as well as the encouragement of cooperation between ports, especially between seaports and inland ports;
- the optimisation of supply chains;
- a sustainable promotion of environmental and climate protection, which is to be achieved by an increase of environmental standards as well as the regulation and supervision of the emission of pollutants;
- the promotion of sea transportation as a more environmentally sound means of transportation than overland transportation;
- the improvement of ports’ security (including protection from terrorism, natural disasters and IT-related dangers); and
- the safeguarding and enhancing of training and employment.
What ‘green port’ principles are proposed or required for ports and terminals in your jurisdiction?
Aside from provisions under public environmental law, there are no compulsory or recommended ‘green port’ principles in Germany. However, the key environmental aims of the 2015 national port concept are:
- the reduction of the emission of pollutants and greenhouse gases in particular, as well as noise in ports, on waterways and in the hinterland;
- the preservation of ecosystems;
- the promotion of new propulsion systems and fuels; and
- the minimisation of the usage and consumption of land.
Most ports have adopted their own ‘green port’ principles and programmes. These differ from port to port, depending on the port’s setting and its facilities, purposes and resources.
In accordance with EU Directive 2014/94/EU, the German government passed a national concept on the development of the alternative fuels infrastructure on 9 November 2016. It states the importance of liquid natural gas (LNG) and shore-side electricity, especially in the maritime sector.
Using LNG and shore-side electricity is encouraged by favourable tax treatment under the Energy and Electricity Taxation Acts. While the subsidisation of LNG was extended until 2026, shore-side electricity benefits from taxation privileges only until 2020, not including ships already at the dockyard from 2018 onwards. By additional European and German public funds and increased requirements concerning emission control and noise protection, attractiveness of shore-side electricity compared to on-board supply could be raised. The first projects to establish shore-side electricity have been implemented in Hamburg and Lübeck.
In Germany every end user is obliged to pay a surcharge for consumed electricity in order to finance the subsidisation of renewable energy sources. By consequence, shore-side electricity is also burdened with this surcharge. The Renewable Energy Act (EEG) determines exceptions and privileges from this EEG-surcharge for certain electricity intensive industries. Right now, such exception is not granted for shore-side electricity, but political discussions about tax incentives have increased. In the wake of these discussions exceptions from the EEG-surcharge may also be granted for shore-side electricity.
Legislative framework and regulation
Is there a legislative framework for port development or operations in your jurisdiction?
In Germany, the federal states are competent to regulate their ports. This competence derives from articles 30, 73 and 74 of the German constitution. Therefore, each federal state possesses its own legislative framework for port development and operations, usually by way of special port operations laws.
The legislative framework for port operations also includes federal legislation such as water law, nature protection law and construction law. In contrast to state laws, which may vary from one federal state to another, federal legislation sets out rules for all matters in need of identical regulation in every federal state.
There is currently no specific set of laws concerning privatisation, public-private partnerships (PPP) or private finance initiatives for port projects. Such projects are governed by general public and civil law. In particular, PPPs are principally covered by general budget law and sometimes by PPP guidelines, although at both the federal level and the states’ level there may be laws for specific areas of PPP. Past years have seen various approaches for PPP or privatisation projects, but few actually succeeded.
Is there a regulatory authority for each port or for all ports in your jurisdiction?
All ports set in one federal state are assigned to the same regulatory authority of that federal state. However, some states also assign certain regulatory powers and competences to local authorities.
As for Hamburg, this federal state has assigned its general powers as well as its property in the port area to the Hamburg Port Authority. This institution acts as both a regulatory authority for the port of Hamburg and as a lessor of property in the port area.
What are the key competences and powers of the port regulatory authority in your jurisdiction?
The port regulatory authorities are competent for a number of tasks. First of all, the port regulatory authorities are responsible for ensuring the general safety and ease of traffic within and around the port. Further, handling, planning and maintenance of traffic and infrastructures in the port area and the hinterland are part of the port regulatory authorities’ competences. Certain security measures such as the port state control of ships are also within the port regulatory authorities’ responsibilities.
Besides the traffic-related issues the port regulatory authorities manage the ports’ property. The port regulatory authorities rent out property to suitable lessees and manage the existing lessees. Furthermore, the port regulatory authorities supervise any constructions conducted within the port area, be it by an operator or anyone else. Doing that, the port regulatory authorities are able to ensure a steady development of the port and its infrastructures.
How is a harbourmaster for a port in your jurisdiction appointed?
The harbourmaster represents the port authority. The procedure and requirements for the appointment of harbourmasters are subject to state law, and therefore differ from state to state. This position is appointed to eligible applicants who fulfil the requirements needed to hold the office of harbourmaster. Said requirements are set out in the relevant administrative provisions for the appointment of public servants.
Are ports in your jurisdiction subject to specific national competition rules?
Since ports are usually owned by public entities, they are subject to the Federal German Law Against Restraints of Competition, including the rules of public procurement. Whenever ports as public institutions assign construction services or other services to undertakings, strict competition rules are to be observed in order for the assignment to be transparent and fair.
On 15 February 2017, Regulation (EU) 2017/352 establishing a framework for the provision of port services and common rules on the financial transparency of ports was passed. It is applicable as of 24 March 2019 and entails major changes for German ports. German port authorities will be able to impose varying charges and to restrict the number of operators providing certain services. This was usually not possible under national law.
Are there regulations in relation to the tariffs that are imposed on ports and terminals users in your jurisdictions and how are tariffs collected?
Each relevant federal law authorises the regulatory authority to impose tariffs on port and terminal users. The mode of tariff collection differs between federal states. In Hamburg, the Hamburg Port Authority is authorised to impose tariffs through terms and conditions of rental contracts with terminals users.
In order to use a port, the vessel operators enter into civil law agreements with the relevant port operator that also cover the tariffs imposed for the utilisation of the port. In certain cases - for example, if a vessel or the vessels of the same operator regularly visit a specific port - the port operator may agree to special conditions for the vessel or liner operator, for example with respect to frequency discounts. Generally, however, the tariffs are provided for in port operator’s general terms and conditions or connected price lists. Depending on the ownership and operating structure of a state’s ports, there may also be some statutory provision that allows and sets the limits of the determination of port tariffs.
Are there restrictions relating to the currency applied to the tariffs or to any fees that are payable by a port operator to the government or port authority? Are any specific currency conditions imposed on port operators more generally?
As the euro is the currency in Germany, all tariffs and fees payable to the government or the competent port authority must be made in euros. There are no specific currency conditions (such as specific exchange rates or foreign exchange controls) imposed on port operators. Of course, every operator has to comply with all applicable laws (eg, the German Money Laundering Act).
Public service obligations
Does the state have any public service obligations in relation to port access or services? Can it satisfy these obligations through a contract with a private party?
It is the obligation of the federal state to ensure security in port areas, as well as regional planning and construction planning. These key public service obligations cannot be privatised. However, such obligations can be delegated to a private party through a contract governed by public law.
Also, in principle anyone is entitled to access and use a port with a vessel under public law provisions for the utilisation of ports. Such right to use the port is usually only limited by the rights and the safety of other port users, the port and its facilities. Accordingly, access to ports may be restricted for vessels that are sinking or burning, or that are too large or have too much draught to use the port safely.
Can a state entity enter into a joint venture with a port operator for the development or operation of a port in your jurisdiction? Is the state’s stake in the venture subject to any percentage threshold?
Based on commercial law, a legal entity may enter into a joint venture. Thus, state entities in the form of legal entities can enter into joint ventures with a port operator, albeit always subject to public procurement law.
A good example of joint ventures between state entities and private legal entities is the inland port of Duisburg (Duisport). Duisport has realised numerous joint ventures, for example with several big chemical companies, a Turkish logistics company and a leading construction group.
Are there restrictions on foreign participation in port projects?
Port projects are assigned based on German and European competition law. Therefore, in order for the assignment to be fair, transparent and equal, there is no general restriction on foreign participation.
Still, the federal government may scrutinise, restrict and even prohibit the acquisition of a participation in a German target by investors from non-EU member states and, in cases of evasive transactions, from EU member states, if the acquisition is deemed to pose a serious threat to internal public policy or security. These provisions apply to ports or their operators. Although there have been some reviews of such acquisitions in other industries, there have been few, if any, prohibitions of port-related transactions yet.
Public procurement and PPP
Is the legislation governing procurement and PPP general or specific?
As of now, there is no specific legislation for port PPP projects or privatisation in force. Yet the general German and EU provisions for tender procedures principally apply to port projects. Also, there may be specific privatisation laws for certain projects. For some areas, the federal government and some of the federal states’ governments have issued PPP guidelines that may serve as indications of relevant principles.
May the government or relevant port authority consider proposals for port privatisation/PPP other than as part of a formal tender?
Port privatisation and PPP are subject to general public procurement law, including the relevant law of the EU as applicable under national law. Hence, as a general rule, proposals for projects whose values exceed the relevant thresholds under applicable law may only be considered as a part of a formal tender.
Nevertheless, European and German law provide that either the German government or the relevant principal, usually the port authority, may apply for an exemption from public procurement law if an activity is directly exposed to competition on markets to which access is not restricted.
Joint venture and concession criteria
What criteria are considered when awarding award port concessions and port joint venture agreements?
Under public procurement law, concessions, agreements and other arrangements must be awarded to the tenderer offering the best price-performance ratio. The criteria to be considered in this respect need to have been published in the course of the tender procedure. They may include:
- environmental aspects;
- operating expenses;
- efficiency and productivity;
- technical aspects;
- timing and punctuality; and
- aesthetics (provided always that there is some connection to the project).
Bidders need to fulfil certain requirements regarding technical qualifications, general capability, legal compliance and reliability. If relevant for the project, there may be further requirements regarding social, environmental and innovative matters. If specific legal provisions apply to the project, they may set out further requirements regarding the bidder.
Is there a model PPP agreement that is used for port projects? To what extent can the public body deviate from its terms?
The German PPP market is less standardised than, for example, the UK market, which has a tradition of proceeding under standard contracts. At the same time this leads to the public body being free to choose the best project model for a project (concession, lease, joint venture, etc). Still, the federal government and some of the federal states’ governments have issued guidelines for certain PPP projects.
What government approvals are required for the implementation of a port PPP agreement in your jurisdiction? Must any specific law be passed in your jurisdiction for this?
Specific state or shareholders’ agreements are required that may vary from project to project (municipal or state; typically with no federal approval). Such approvals are usually not based on laws to be passed specifically for such projects, but on the applicable general laws.
On what basis are port projects in your jurisdiction typically implemented?
As there have been no, or at most only few, port projects, there is no general model used (build-operate-transfer (BOT) or build-own-operate-transfer (BOOT)). However, infrastructure projects, including port projects, are often structured using BOT models. In this context, according to the German Directive on Subsidising Terminal Infrastructure for Combined Transport, the German government is encouraging investments with the aim of relocating the transport of goods from roads to rail and waterways. Any potential investors should make themselves familiar with the complex conditions under which the subsidies are available. This is worthwhile: if the conditions are met, the non-repayable funding can be up to 80 per cent of the investment. The directive is in force until the end of 2021. The subsidies to be granted under this directive have a volume of approximately €90 billion.
Is there a minimum or maximum term for port PPPs in your jurisdiction? What is the average term?
There is no legal minimum or maximum term for PPP projects in Germany. The average term is 20 to 25 years, depending on the economic life cycle of the project.
On what basis can the term be extended?
Prolongation of the term is legally possible. Terms can be negotiated, but must be part of the tender procedure and be fixed with the award of the contract.
What fee structures are used in your jurisdiction? Are they subject to indexation?
The structure of fees payable by port operators or joint venture partners in a PPP project depends on the relevant port and the chosen operating model.
Does the government provide guarantees in relation to port PPPs or grant the port operator exclusivity?
Usually, there are no guarantees or exclusivity agreements regarding port PPPs by the competent government. However, general planning law and area restrictions would usually prevent the construction of closely competing ports.
Does the government or the port authority provide any other incentives to investors in ports?
See question 20, and the directive according to which the German government is encouraging investments with the aim of relocating the transport of goods from roads to rail and waterways (the Directive on Subsidising Terminal Infrastructure for Combined Transport).
Further, there is a programme by the German Ministry of Transport supporting innovative technology in sea and inland ports, known as IHATEC. This runs until 2021 and is aimed in particular at digital solutions.
Special incentives for greenfield or brownfield investments are currently not in place.
Port development and construction
What government approvals are required for a port operator to commence construction at the relevant port? How long does it typically take to obtain approvals?
The construction of a port requires various approvals, including those under planning and construction law, industrial law, environmental law and water law. The approvals will only be granted if the requirements set by the mentioned regulations are met.
There is no one-stop shop for the approval procedure so that different authorities on a federal, federal state and municipal level may be competent for different approvals. The port regulatory authorities, however, support and consult operators in matters regarding obtaining the needed approvals. Besides that, there are certain approvals that the port authorities themselves are competent to grant.
The entire process may take up to several years, in particular since third-party stakeholders may challenge granted approvals in court.
Does the government or relevant port authority typically undertake any part of the port construction?
Although there is no general rule for the involvement of governmental agencies or port authorities, the competent port authority usually provides the general port infrastructure, in other words, the quays, docks, basins, roads, etc, within the port area.
As the construction of the port infrastructure and the hinterland access will usually be part of the planning process under public law, government agencies will often provide for the building of roads. In some cases, the port authorities will provide (build and maintain) the railway network within the port area; for example, the Hamburg Port Authority has provided the port railway since 2005.
Does the port operator have to adhere to any specific construction standards, and may it engage any contractor it wishes?
In constructing the port infrastructure and suprastructure, the port operator will have to comply with the relevant construction standards under applicable public law. Also, the conditions of tender under public procurement law may provide for specific construction standards.
In principle, the port operator may also engage any contractor for the construction of the port, albeit subject to the contractor’s compliance with applicable law, in particular regarding industrial and labour laws.
What remedies are available for delays and defects in the construction of the port?
Any remedies for delays and defects in a port’s construction are provided for by the applicable contract law. In Germany this includes the:
- German Civil Law Code;
- German Commercial Law Code;
- German Construction Contract Procedures; and
- provisions of the relevant contracts themselves.
Remedies provided for under German Civil Law generally include specific performance, damages, contractual penalties and rescission of the contract.
What government approvals are required in your jurisdiction for a port operator to commence operations following construction? How long does it typically take to obtain approvals?
The port operator will require various approvals, some concerning his or her reliability, such as a general business licence, and others concerning the port facilities and their operation. Obtaining these approvals should not take more than a few months.
What services does a port operator and what services does the port authority typically provide in your jurisdiction? Do the port authorities typically charge the port operator for any services?
Most port services are privatised and will be provided by the port operator or other privately organised service providers. The port authority will usually only provide services that are related to public law obligations and security issues.
Access to hinterland
Does the government or relevant port authority typically give any commitments in relation to access to the hinterland? To what extent does it require the operator to finance development of access routes or interconnections?
The hinterland access of a port as a vital part of the port’s infrastructure will usually be considered in the general planning of the port under public law. Also, the agreements on the planning and construction of a new port usually provide for sufficient hinterland access by road, railway or inland navigation. If and to what extent a port operator participates in the financing of such hinterland access depends on the relevant agreements, and is therefore subject to the negotiations of the parties involved.
How do port authorities in your jurisdiction oversee terminal operations and in what circumstances may a port authority require the operator to suspend them?
Port authorities will oversee compliance with the relevant approval conditions and take care of general security issues. Suspension of port operations will only be a remedy of last resort. Before a suspension is issued, other less restrictive measures such as fines will be deployed.
Port access and control
In what circumstances may the port authorities in your jurisdiction access the port area or take over port operations?
Port authorities may enter the port area to the extent required to fulfil their public duties, or if provided for in any relevant agreement with the port operator. There are no practically conceivable circumstances in which the port authorities would take over the port operations themselves.
Failure to operate and maintain
What remedies are available to the port authority or government against a port operator that fails to operate and maintain the port as agreed?
If the port operator does not operate and maintain the port as agreed, the port authorities’ remedies will depend on the content of the relevant agreements and of the approvals whose terms have been violated. Contractual remedies include specific performance, damages, contractual penalties and rescission, while remedies in connection with the violation of public law approvals include penalty payments and fines, as well as substitute performance or even the revocation of an approval. The most common remedies are contractual penalties and fines.
What assets must port operators transfer to the relevant port authority on termination of a concession? Must port authorities pay any compensation for transferred assets?
Whether the port operator must transfer any suprastructures or is entitled or obliged to remove such assets depends on the contractual basis for the concession.
Under German statutory civil law, any assets that the operator adds to the port as replacement of equipment provided by the port authority as lessor need to be handed to the port authority without compensation, unless the port authority rejects the assets. Movable assets added by the port operator may principally be removed by him or her, or remain in the port area in return for a compensation by the port authority.
If the concession is based on a hereditary building right, immovable assets, such as buildings, that were constructed by the port operator remain in the port area, with the port authority as owner. In turn, the port authority as owner of the land and grantor of the hereditary building right is principally obliged to compensate the port operator for the loss of rights.
Special purpose vehicles
Is a port operator that is to construct or operate a port in your jurisdiction permitted (or required) to do so via a special purpose vehicle (SPV)? Must it be incorporated in your jurisdiction?
There is neither an obligation nor a prohibition to operate a German port via an SPV incorporated in Germany. In particular, EU law and certain other international agreements and conventions provide for freedom of establishment and equal treatment of the covered legal entities incorporated in other jurisdictions. Thus, setting up an SPV for the operation of a port is subject to practical and general legal and tax considerations, such as liability and tax transparency.
Transferring ownership interests
Are ownership interests in the port operator freely transferable?
There are no general restrictions on the transfer of shares or interests in the port operator. Depending on the legal form of the port operator, there may be restrictions on the transfer of shares or interests under German corporate law. In particular, the transfer of interests in general and limited partnerships is subject to the approval of the other partners. The transfer of shares in a corporation may be made subject to such approvals in the articles of association, but this is not necessarily so.
The federal government may scrutinise, restrict and even prohibit the acquisition of a participation in a German target by investors from non-EU member states and, in cases of evasive transactions, from EU member states, if the acquisition is deemed to pose a serious threat to internal public policy or security. These provisions might apply to ports or their operators (see question 14).
Can the port operator grant security over its rights under the PPP agreement to its project financing banks? Does a port authority in your jurisdiction typically agree to enter into direct agreements with the project financing banks and, if so, what are the key terms?
In principle, a port operator may grant any security it wishes to its financing banks. However, using the rights under the PPP agreement as collateral will usually be subject to the provisions of the PPP agreement itself and any restriction imposed by public procurement law.
A port authority might enter into direct agreements with the financing parties. However, governments holding a stake in the relevant port project might directly agree with the financing banks on potential additional collateral.
Agreement variation and termination
In what circumstances may agreements to construct or operate a port facility be varied or terminated?
Amendments to agreements for the construction or operation of a port that have been entered into by a public entity are subject to public procurement law in the same way as the original agreement.
Aside from that, such amendments are subject to general contract law; in other words, if the parties do not agree, a contract may only be varied or terminated if one party is in breach of contract, if there has been a significant change of circumstances or if the contract itself provides such rights.
What remedies are available to a government or port authority for contractual breach by a port operator?
As the contract on the operation of a port is subject to civil law, the government’s or port authority’s remedies are either stipulated by the contract or limited to the general remedies under German statutory civil law. These include, in particular, specific performance, damages and rescission.
Must all port PPP agreements be governed by the laws of your jurisdiction?
To the extent that the PPP agreement is subject to German Civil Law, there is no mandatory legal requirement to provide for the application of German law to a PPP agreement. Still, general civil law might provide limits to choice-of-law clauses. Further, for practical and political reasons, German law is likely chosen in most cases. To the extent to which the PPP agreement concerns matters of German public and, in particular, administrative law, the agreement will always be subject to German law.
How are disputes between the government or port authority and the port operator customarily settled?
Generally, the courts of general jurisdiction and the administrative courts are competent to adjudicate any disputes that may arise between the government or the port authority and the port operators. Where a dispute is governed by civil law, as opposed to administrative law, there are no specific restrictions regarding the agreement on arbitral tribunals for port projects. Hence, the inclusion of a stipulation of arbitration clause is common.
Updates and trends
Updates and trends
Updates and trends
The most important development in the area of seaports is that the dredging of the River Elbe has now been authorised. After 17 years of planning and years of court fights, the courts finally decided that this project may be started. The purpose of the dredging is to deepen the shipping route from the river outfall up to the port of Hamburg, and to enable vessels with a draft of up to 15.6 metres to reach Hamburg. Also, the width of the shipping route will be increased in order to allow more encounters of in- and outbound vessels. It is expected that turnarounds in port will become faster thanks to the larger time windows for leaving the port of Hamburg. The dredging process will start in March 2019 and is expected to be finished in 2021. It is presumed that this project will boost the port of Hamburg and lead to much higher competitiveness.
Apart from this, German ports are taking up the trend of digitalisation more seriously. However, there is room for improvement in this area.