Sector:

Transport – Railways

Name of Agreement:

Operator Sub-Agreement for Indicative Services in the Hunter Valley

Type of Agreement:

Track Access Agreement

Year of Agreement/ Draft:

2011

Principal Author(s)

ARTC

Annotated by:

Susanne Foerster, Consultant, LEGPS, World Bank

Purpose and Context:

Model contract was developed for railway network predominantly used for transport of coal from mine to port, but non-coal users are also granted access. Developed in accordance with the railway regulations of the Australian state, which provide for an open access regime. The Access Holder Agreement and the Operator Sub-Agreement together comprise the basis on which ARTC grants access to railway network.

Circumstances where this contract may be appropriate:

Track access arrangements for railway tracks used for the transport of freight from production center to port.

Drafted for common law/ civil law jurisdiction:

Drafted for common law jurisdiction; can be adapted to civil law jurisdiction.

Main Features:

1. Concept: Contract between ARTC and Operator. ARTC has granted Access Holder right to access Network for transport of coal in Access Holder Agreement (Recital B). In order to use access right, Access Holder must nominate Operator (Recital C). ARTC grants Operator rights to use and provide Services to Access Holder on the Network upon terms and conditions set out in Operator Sub-Agreement and Access Holder Agreement (Recital D). Operator Sub-Agreement to be endorsed by Access Holder (Recital F).

2. Contract Period: Unspecified (2.1).

3.Track Utilization Rights (3): Operator is granted derivative (3.1), non-exclusive (3.3) right to use Network for transport of coal from port or discharge point to load point and back (Train Paths) as identified in the Train Path Schedule.

Availability of Train Path or Path Usage is subject to

• Legislated passenger priority (3.4);
• Presentation of a Train to Network Control by Operator, which is ready for departure within 15 minutes of the time nominated in the applicable Daily Train Plan for departure of Train;
• Emergencies, safety considerations, matters outside ARTC’s reasonable control, material failure of Operator’s trains, Network Management Principles, any lawful order, direction or requirement given by a Governmental Authority, and Third Party Works.

4. Control and Management of Access to Infrastructure (5.1, 5.2, 6.1): ARTC to conduct Network Control and management of access to Network (5.1) and to comply with obligations set out in clause 5.2. ARTC to maintain Network so that Operator can provide envisaged services (6.1).

5. Obligations Operator (5.3 – 5.5): Operator to ensure that rolling stock operated on Network is fit for use on Network. Operator to use Network in such a way as to minimize obstruction and damage to Network, to ensure that property of ARTC and third parties does not get damaged, to ensure that any item hauled is secured and does not become deposited on or adjacent to Network, to comply with Code of Practice and instructions issued by ARTC, and to maintain communications equipment compatible with equipment use in Network Control Center. Removal of unsuitable rolling stock by Operator or ARTC at cost of Operator.

6. Temporary Variation or Cancellation of Train Paths (9):

• ARTC may temporary vary Train Path or Path Usage for the purpose of preventing or in response to actual safety and security risks (9.1);
• ARTC may permanently or temporary vary Train Paths or Path Usage as a result of changes to the Access Holder’s rights or the nomination of Operator (9.2). 
• ARTC may perform repairs, maintenance and upgrading of Network, and close relevant parts of Network in order to carry out these works (9.3. (a)). Agreement specifies actions to be taken by ARTC minimize adverse effects for affected Operators (9.3 (b) and (c)).
• Operator acknowledges that Third Party Works on Network can lead to temporary variation of Train Paths. No liability of ARTC for damages incurred by Operator occurring as a consequence of Third Party Works (9.4).

7. Inspection and Audit (10):Inspections and audits by ARTC regarding Operator’s services. Audits by Operator with regard to railway track and lines comprising Network.

8. Safety Standards (12) and Environmental Requirements (13): Operator to comply with applicable and appropriate safety standards and environmental requirements.

9. Suspension and Termination (14): Right to suspend and eventually terminate contract in the event of breach of material contract obligations if default is not rectified within reasonable time (specified for different breaches in contract). Typical list of events that give right to immediate terminate contract (14). Termination of agreement on termination of Access Holder Agreement (2.1. (a)).

10. Indemnities and Liability (15):Mutual indemnification for loss or damage to the extent that it is caused by breach of agreement. No indemnification to the extent that loss or damage is caused by breach of agreement or by acts or omissions of a party other than ARTC or Operator. No liability for Consequential Loss (15.4).  

11. Insurance (16): Operator and ARTC to take out and maintain appropriate insurance. 

12. Dispute Resolution (17):Dispute resolution through high-level negotiation and mediation. If dispute is not resolved by mediation within one month of appointment of mediator, either party may by notice in writing terminate the mediation proceedings and commence proceedings in court. Joint dispute resolution in case dispute also involves Access Holder. Exclusive jurisdiction of Courts of New South Wales (21.2).

13. Confidentiality Clause (18):Contract contains detailed confidentiality clause.

14. Assignment (19): ARTC may assign agreement under specified circumstances (in particular to a successor of ARTC) by prior written notice to Operator. In all other cases ARTC may not assign agreement without prior written consent of Operator not to be unreasonably withheld. Operator may not assign agreement, its interest in the subject matter of agreement or any right under agreement without prior written consent of Access Holder and ARTC not be unreasonably withheld.

15. Force Majeure (20):Contract contains provision on force majeure events.

16. Change in Law (22): Changes in law materially affecting a party’s rights under agreement excluded to extent permitted by law. Parties to renegotiate agreement to extent that change in law cannot be excluded and prevents party from performing obligations under agreement. Specific provision on changes to relevant access undertaking affecting obligations under agreement.

17. Law of the Agreement (21.1): Law of New South Wales.