1. Univeristy of Rijeka Faculty of Maritime Studies Loris Rak, LL.B.
ADRIATIC MARITIME LAW CONFERENCE Portorož, May GOVERNANCE AND ORGANIZATION OF SEAPORTS – CROATIAN LEGAL FRAMEWORK
Univeristy of Rijeka
Faculty of Maritime Studies
Loris Rak, LL.B.

2. CROATIAN LEGAL FRAMEWORK ON SEAPORTS – GENERAL OVERVIEW
First major reform on port governance and organization started in 1995 by adopting the Seaports Act, 1995
The reform on port law followed the reform on maritime law (Maritime Code, 1994)
The main objectives of new legislation:
Application of Transtion of Social Compannies Act,1994, to port companies;
Separation of operator and landlord function;
The new legal entities were established for landlord functions - port authorities
Port authorities assumed port infrastructure and port superstructure from port companies
Port companies that were transformed in accordance with Company Act, 1995, were granted with primary concessions for port services

3. CROATIAN LEGAL FRAMEWORK ON SEAPORTS – GENERAL OVERVIEW (2)
In 2003 the Government argued that the maritime domain and seaports should be regulated by single legislation, previously regulated by two separate legal sources (the Maritime Code, 1994, and the Seaports Act, 1995);
The new legislation was adopted – the Maritime Domain and Seaports Act, 2003
The new legislation in considered as second reform; however, no significant changes were introduced
Since 2003 governance and organization of seaports was generally regulated by governmental and ministerial bylaws adopted in accordance with the Maritime Domain and Seaport Act, 2003

4. CURRENT MAIN LEGAL SOURCES OF CROATIAN LAW ON PORTS
Maritime Domain and Sea ports Act („Official Gazzete” No. 158/03,141/06, 38/09, 23/11)
Maritime Code („Official Gazzete“ No. 181/04, 76/07, 61/11, 56/13, 26/15)
Government Regulation on the conditions to be met by sea ports (“Official Gazzete” br. 110/04)
Government Regulation on classification of ports open to public traffic and ports of special purpose (“Official Gazzete” No. 110/04, 82/07)
Ordinance on the criteria for determining the allocation of individual parts of ports open to public traffic county and local importance, methods of payment bond, terms of use and calculation of the maximum amount of compensation and the distribution of income (“Official Gazzete” No. 94/07, 79/08, 114/12, 47/13)
Ordinance on the conditions and method of maintaining order in ports and other parts of internal waters and territorial sea of the Republic of Croatia (“Official Gazzete” No. 90/05, 10/08, 155/08, 127/10, 80/12)

5. CLASSIFICATION OF SEAPORTS
Classification of ports in respect of purpose:
Ports open to public traffic
Ports of specific purpose
Classification of ports in respect of significance:
Ports open to public traffic:
Port of special (international) economic interest for the Republic of Croatia
Ports of regional importance
Ports of local importance
Ports of state importance

6. ORGANIZATION OF SEAPORTS (2)
Seaports are classified in respect of purpose for which they are established and in respect of significance they have for state and regional and local selfgovernement
Both criteria for classification determin the governance model of ports
In principle, the legislation on ports regulates primarily ports open to public traffic, while port of specific purpose are considered to be insufficiently regulated
In principle, there are no significant difference in organization of ports open to public traffic that are differently classified in respect of significance

7. PORTS OPEN TO PUBLIC TRAFFIC
PORT GOVERNANCE MODELS – PORTS OPEN TO PUBLIC TRAFFIC (GENERAL OVERVIEW)
PORTS OPEN TO PUBLIC TRAFFIC
Ports open to public traffic of special (international) economic interest for the state are governed by state port authorities
State port authorities are established by Govrenmental Decree to govern, develop and maintain port infrastructure and superstructure of ports open to public traffic of special (international) economic interest for the state
One port authority is established for every port of special (international) economic interest
Central Government retains administrative supervision and inspection directly or through harbourmasters’ offices

8. PORTS OPEN TO PUBLIC TRAFFIC
PORT GOVERNANCE MODELS – PORTS OPEN TO PUBLIC TRAFFIC (GENERAL OVERVIEW)
PORTS OPEN TO PUBLIC TRAFFIC
Ports open to public traffic of regional and local interest are governed by county port authorities
Couny port authorities are established by regional coucils to govern, develop and maintain port infrastructure and superstructure of ports open to public traffic of both regional and local interest
The regional government may establish one or more county port authorities to govern over all or several ports of regional and local interest in its territory
Central Government retains administrative supervision and inspection directly or through harbourmasters’ offices

9. PORT GOVERNANCE MODELS – PORTS OPEN TO PUBLIC TRAFFIC (GENERAL OVERVIEW)
LANDLORD FUNCTIONS
Port area of ports open to public traffic is part of maritime domain by law
Maritime domain is common domain of interest of the Republic
Common domain - no ownership or other property rights are allowed on port area (including booth infrastructure and superstructure)
Therefore, port authorities do not own port land and port infrastructure and superstructure, but marely govern it

10. PORT GOVERNANCE MODELS – PORTS OPEN TO PUBLIC TRAFFIC (GENERAL OVERVIEW)
LANDLORD FUNCTIONS
Port authorities govern, develop and maintain port infrastructure and superstructure
Port authorities govern all significant cargo handling equipment (by Art. 118.a of Public Domain and Seaports Act, 2003., all harbor cranes that are permanently fixed to the port area in ports open to public traffic until the entry into force of the Act became state property, and management of it is transferred to port authorities) – question of principle superficies solo cedit?
Port land can be leased to private operator through the concession
Lease contracts – port operator enters into lease of port infrastructure, port superstructure and port handling equipment (i.e. lease contracts as administrative contracts – concession contracts governed by administrative law)

11. PORT GOVERNANCE MODELS – PORTS OPEN TO PUBLIC TRAFFIC (GENERAL OVERVIEW)
REGULATOR FUNCTIONS
Port authorities are entitled to adopt port bylaws that regulate order in the port in accordance with port legislation and ministerial ordinances – limited authority
Regulator functions of port authorities are subjected to approval of harbourmaster’s offices
Although port authorities do posses regulator functions to adopt port bylaws, they are powerless to enforce them – all enforcement authorities within port area are granted to harbourmaster’s offices
Harbourmaster’s offices exercise their role beyond port authorities’ structure
Coordination of port authorities and harbourmaster’s offices is limited

12. PORT GOVERNANCE MODELS – PORTS OPEN TO PUBLIC TRAFFIC (GENERAL OVERVIEW)
OPERATOR FUNCTIONS
Port services are provided by private port companies, regardless of ownership
Port authorities can provide services of general economic interest and those services of which there is no economic interest of private sector
Commercial activates within ports can be preformed only under the terms of concessions (certain exceptions are present)
Concessions are dominant legal instrument of port governance and legal framework for port operations by private sector

13. PORT GOVERNANCE MODELS – PORTS OPEN TO PUBLIC TRAFFIC (GENERAL OVERVIEW)
OPERATOR FUNCTIONS
In principle, there are two main types of concessions:
Lease contracts – port operator enters into lease of port infrastructure, port superstructure and port handling equipment (i.e. lease contracts as administrative contracts governed by administrative law)
Concession contracts – port operators covers investment in port infrastructure and port superstructure and assumes all commercial costs
Lease contract type is dominant – “primary concession” - concession sui generis as a result of transformation of social enterprises and their partition into port authorities (public entities) and port operators (companies) in 1995
In practice, both types are present

14. PORTS OF SPECIFIC PURPOSE
PORT GOVERNANCE MODELS – PORTS OPEN TO PUBLIC TRAFFIC (GENERAL OVERVIEW)
PORTS OF SPECIFIC PURPOSE
Ports of specific purpose are governed by private operators (concessioners) in accordance with the terms of concession contract
Both landlord and poerator functions are performed by concessioner
Concessioners are allowed to adopt administrative measures required by relevant law on port governance – limited regulator function
Central Government retains administrative supervision and inspection directly or through harbourmasters’ offices
Types of ports of special purpose: Marinas, Shipyards, Industrial ports
Special regulations for military ports

15. MAIN DISADVATAGES OF CURRENT LEGAL FRAMEWORK
Legal status of port superstructure
Port superstructure is common domain – no property rights on port superstructure (including real estate mortgages)
Insufficient use of valuable asset
Insufficient activities of financial sector in port investments – no asset based collaterals
Insufficient application of conession contracts – port infrastructure generally financed by public sector (both Government and port authorities)
Collision and antinomy of provisions on concessions (procedure and legal remedies are differently regulated by Public Domain and Seaport Act, 2003, and Concessions Act, 2012.)
No differences in legal framework for ports of state interest and ports of county and local interest

16. LEGISLATIVE CHANGES AHEAD
Need for legislative changes in port regulations emerged in 2009., after adopting the Concession Act, 2008.
Activities taken in – Government Decree that entrusted Ministry of Maritime Affairs, Transport and Infrastructure to propose new legislation on maritime domain and seaports to harmonize it with Concessions Act, 2008
New Concessions Act, 2012., adopted by Parliament
New Directive 2014/23/EU of the European Parliament and the Council on the award of concession contracts – need to make further legislative changes on concessions in order to comply with Directive
In the new Maritime Domain and Seaports Bill published for public debate – withdrawn after many critics
In the new Maritime Domain and Seaports Bill adopted – current status unknown

17. SEVERAL OPENED ISSUES ON PROPOSED BILL
Should maritime domain and seaports be common domain or public domain – (other property rights would be allowed on maritime domain, e.g. mortgages on port superstructure)?
Should a property rights legal regime be established on port superstructure during the concession contract - (legal framework provided by the basic law – Ownership and other property rights Act, 1997.) ?
Should the ports be fully privatized or not? Should port authorities be abolished?
Redefining the role of county port authorities

18. SEVERAL DE LEGE FERENDA PROPOSALS
Aproperty rights legal regime should be established on port superstructure during the concession contract – no changes in other legislative is required – legal framework already provided in it
Property right legal regime on port superstructure built on ground of concession contract could mobilize a valuable asset and provide it as collateral for financing investments in port superstructure – exclusion of legal risk for financial sector
Port authorities should encourage BOT concessions - amount of public funds in developing the port infrastructure is inadequate for building new infrastructure, which limits port development
New legislation should be harmonized with Concession Act, 2012., and adopt results and goals of new Directive on the award of concession contracts

19. SEVERAL DE LEGE FERENDA PROPOSALS
Port authorities should remain legal entities entrusted with landlord functions and act as regulatory body to keep public interest and secure positive competition and free market on port area between port operators
Port authorities should be banned form exercising commercial activates if there is interest for them by private sector but retain activities of general economic interest
However, county port authorities should provide public service functions, i.e. the service port model should be established in ports of county and local interest – there are more then 59 ports of county interest and 352 ports of local interest – service port model
Legal framework of new legislation should provide port authorities with limited enforcement power

20. THANK YOU FOR YOUR ATTENTION