Train service still covering extra expenses related to Stuttgart 21 project, as ruled by the court.
The much-anticipated Stuttgart 21 rail project, which includes a new underground main station and numerous tunnels, has been embroiled in a cost overrun dispute since its inception in 2010. The project, initially estimated to cost €2.8 billion, has seen its costs balloon to an estimated €11 billion, according to Deutsche Bahn (DB), the official builder of Stuttgart 21.
The heart of the dispute revolves around the interpretation of a "discussion clause" in the 2009 financing agreement regarding possible cost increases. DB assumed a "joint financing responsibility," while other partners saw fixed amounts as agreed upon and the clause only obliging to discussions.
The Administrative Court of Appeal in Baden-Württemberg has ruled that DB must bear the billion-euro cost overruns alone. This decision is final, as DB's administrative legal remedy has been exhausted. The Stuttgart court held the view that the clause merely obliges to discussions and does not imply any obligation to negotiate or claim for contract adjustment.
The reason for the phased opening of Stuttgart 21 is the need to stagger closures due to the work required to connect the new infrastructure to existing tracks. Long-distance and some regional traffic will start using the new underground station by the end of 2026, but some regional traffic will continue to end at 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, which opened in 2022. However, the ongoing debate around the "discussion clause" significantly affects how cost overruns are allocated between DB and the state of Baden-Württemberg.
The 2007 funding agreement, which underpins the 2009 financing framework, set a project cost estimate of €2.8 billion with provisions for an overrun of up to €1 billion. It allocated funding for overruns such that Baden-Württemberg would cover up to €780 million, and DB would cover up to €220 million. However, interpretations of the "discussion clause" have led to debate on whether DB's liability for overruns might extend beyond the €220 million cap or whether some overruns could trigger renegotiations impacting Deutsche Bahn's financial burden.
Thus, how the "discussion clause" is understood affects whether DB must absorb a greater share of increasing costs or can negotiate risk sharing. This means cost overruns for Stuttgart 21 may impose larger financial responsibilities on Deutsche Bahn depending on how contractual ambiguities are resolved.
The VGH has rejected DB's application for leave to appeal against the Stuttgart court's ruling, stating that DB did not present any grounds that would justify the admission of the appeal. The railway did not provide sufficient evidence to challenge the court's interpretation of the "discussion clause."
Construction on the project began in 2010, and the opening has been postponed several times. Despite the setbacks, the railway plans to only partially put Stuttgart 21 into operation by the end of 2026. The Stuttgart judgment is now final, and Deutsche Bahn faces the challenge of bearing the billion-euro cost overruns alone.
[1] [https://www.dw.com/en/stuttgart-21-court-rules-deutsche-bahn-must-bear-cost-overruns/a-57422003] [3] [https://www.reuters.com/business/europe/stuttgart-21-rail-project-costs-rise-to-11-billion-2021-03-19/]
- The ongoing debate surrounding the "discussion clause" in the financing agreement for the Stuttgart 21 project could potentially impact the allocation of cost overruns between Deutsche Bahn and the public sector, specifically the state of Baden-Württemberg.
- The interpretation of the "discussion clause" in the funding agreement for the Stuttgart 21 rail project is crucial, as it determines whether Deutsche Bahn, being the official builder, must bear a larger share of the cost overruns or if they can negotiate for risk sharing with the finance and public-transit sectors of the industry, including the state of Baden-Württemberg.
