Court rules: Ongoing financial burden on trains remains with Stuttgart 21 project
In a recent ruling, the Administrative Court of Appeal in Mannheim has determined that Deutsche Bahn (DB), the German national railway company, is liable for the billion-euro cost overruns of the Stuttgart 21 rail project.
The Stuttgart 21 project, which includes the construction of a new main railway station in Stuttgart, has been a contentious issue for many years. The project, initially estimated to cost around €2.8 billion, has seen cost overruns of at least €6.5 billion.
The "talking clause" in the 2009 financing agreement for Stuttgart 21 was designed to address potential cost increases and risk-sharing among the project’s main partners: DB, the Federal Government, and the State of Baden-Württemberg. This clause allowed for negotiations on how to deal with cost increases above the initially estimated budget.
According to the cost-sharing agreement finalized in 2007, the project partners agreed on a degree of financial responsibility for potential cost increases up to €1 billion beyond the original estimate. Baden-Württemberg was to cover up to €780 million of the overruns, and DB was to cover up to €220 million.
However, the Administrative Court of Appeal in Mannheim has ruled that DB must bear the financial burden for exceeding costs beyond what was initially accounted for or negotiated in the agreements. This ruling clarifies that DB cannot pass the cost overruns to the government or state partners unilaterally and holds DB accountable for budget discipline on the project.
The new underground main station, unlike the current terminal station, is a through-station, and part of Stuttgart 21 will be operational by the end of 2026. Long-distance and some regional traffic will use the new underground station, while some regional traffic will continue to use the old terminal station until July 2027.
The Stuttgart-Ulm rail project, which includes Stuttgart 21, also involves the construction of the high-speed line Wendlingen-Ulm. The railway could face billion-euro sums due to the cost overruns.
This decision brings an end to DB's administrative legal remedy, as the decision of the highest administrative court in Baden-Württemberg is final. The Administrative Court had previously ruled that DB does not have a claim that project partners must participate in the cost overruns, a ruling that was upheld by the Administrative Court of Appeal.
The interpretation of this clause was highly controversial among the S21 partners, with DB believing it assumes a "joint financing responsibility," while other partners believed fixed amounts were agreed upon. The VGH has now rejected DB's application for leave to appeal to the Administrative Court of Appeal in Baden-Württemberg, effectively ending DB's legal challenges against the state of Baden-Württemberg, the city of Stuttgart, the Stuttgart Region Association, and the Stuttgart Airport.
Construction on the project began in 2010, and the opening has been postponed several times. The current cost overruns of at least €6.5 billion are likely to remain with DB after the decision.
[1] Sources: Financing agreements for the Stuttgart 21 project and legal rulings by the Administrative Court of Appeal in Mannheim.
- The Stuttgart 21 rail project, a contentious issue for many years, has resulted in billion-euro cost overruns, with Deutsche Bahn (DB) being held liable.
- The "talking clause" in the financing agreement for Stuttgart 21 was designed to address potential cost increases, with DB, the Federal Government, and the State of Baden-Württemberg as the project’s main partners.
- Despite the cost-sharing agreement that allowed for negotiations on cost increases, the Administrative Court of Appeal in Mannheim has ruled that DB must bear the financial burden for costs exceeding what was initially accounted for or negotiated.
- This ruling pertains to the Stuttgart-Ulm rail project, which includes Stuttgart 21, and the construction of the high-speed line Wendlingen-Ulm, potentially facing billion-euro sums due to cost overruns.
- Politics and policy-and-legislation will undoubtedly be involved in addressing these cost overruns, as the impact reaches across various sectors, including finance, industry, transportation, automotive, real-estate, and general-news.
- As DB's legal challenges against the state of Baden-Württemberg, the city of Stuttgart, the Stuttgart Region Association, and the Stuttgart Airport have ended, it remains to be seen how DB will navigate these significant financial obstacles in the future of their business operations.
