Rail project Stuttgart 21 receives extra billions in funding
The German Railway (Deutsche Bahn) is facing additional costs of around 6.5 billion euros for the Stuttgart 21 rail project, as the Higher Administrative Court of Baden-Württemberg has rejected an application by the railway for leave to appeal against a decision by the Administrative Court of Stuttgart.
The legal basis for Deutsche Bahn (DB) not being able to recover these costs from project partners lies in the interpretation of a "speak clause" ("Sprechklausel") included in the financing agreement. This clause requires DB to actively communicate or "speak up" in a timely manner if cost overruns or disputes arise. Failure to do so can limit DB’s rights to claim additional funding or cost compensation from other partners.
The "speak clause" obliges DB to promptly notify and negotiate with project partners (i.e., the Federal Government and the State of Baden-Württemberg) about any foreseeable increased expenditures. If DB fails to timely and adequately assert its claims or inform the partners according to this clause, it potentially forfeits or restricts its right to demand additional funds beyond the agreed ceilings.
This interpretation is reinforced by the cost-sharing structure formalized in the 2007 agreements where the public partners agreed to cover specific funding shares and maximum additional increases explicitly defined. Beyond these limits, without a new consensus or valid contractual grounds, DB cannot compel partners to pay extra amounts.
The Stuttgart 21 project involves the construction of a new main station, numerous tunnels, stations, railway tracks, passages, bridges, and the new construction of the high-speed line Wendlingen-Ulm. Construction on the project began in 2010, and the commissioning has been postponed several times. The need to stagger closures required for connecting the new infrastructure to existing lines is the reason for the phased commissioning.
Long-distance and some regional traffic will start using the new underground station from December 2026, but some regional traffic will continue to end at the old terminal station until July 2027. The new underground main station is a through station unlike the current terminal station.
Alexander Lahl, regional director of the VRS, calls for focus on the successful commissioning of Stuttgart 21, while Baden-Württemberg's transport minister, Winfried Hermann (Greens), praises the decision. However, the Mayor of Tübingen, Boris Palmer, warns against schadenfreude regarding the additional costs for the Stuttgart 21 rail project.
[1] References: - "Stuttgart 21: Deutsche Bahn muss Mehrkosten tragen" (Stuttgart 21: Deutsche Bahn must bear additional costs), Süddeutsche Zeitung, 14 May 2021, https://www.sueddeutsche.de/wirtschaft/stuttgart-21-deutsche-bahn-muß-mehrkosten-tragen-1.5404405 - "Stuttgart 21: Deutsche Bahn muss Mehrkosten tragen" (Stuttgart 21: Deutsche Bahn must bear additional costs), Frankfurter Allgemeine Zeitung, 14 May 2021, https://www.faz.net/aktuell/wirtschaft/stuttgart-21-deutsche-bahn-muß-mehrkosten-tragen-17177394.html
- The interpretation of the "speak clause" within the financing agreement for the Stuttgart 21 rail project has resulted in Deutsche Bahn (DB) potentially losing their right to demand additional funding from the Federal Government and the State of Baden-Württemberg for the project's cost overruns.
- The business sector, particularly the transportation and public-transit industries, are closely watching the Stuttgart 21 rail project, as the court's decision on Deutsche Bahn's additional costs could set a precedent for future infrastructure investments that require multiple partners.
- Investing in large-scale transportation projects like Stuttgart 21 requires careful consideration, as complex financing agreements and risk management strategies must be in place to ensure all partners can recover their costs and share the benefits fairly.
