Opinion of the Advocate General — ECLI:EU:C:2023:740
Date: 2023-10-05
Language of the case: Bulgarian
Subject matter: Transport
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

Summary C-390/22 – 1 
Case C-390/22 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice  
Date lodged: 
14 June 2022  
Referring court:  
Okrazhen sad Burgas (Bulgaria)  
Date of the decision to refer:  
7 June 2022 
Appellant:  
Obshtina Pomorie  
Respondent:  
‘Anhialo auto’ OOD  
  
Subject matter of the case in the main proceedings 
Appeal against judgment No 260207 of the Rayonen sad Pomorie (District Court, 
Pomorie) of 8 November 2021, by which the Obshtina Pomorie (municipality of 
Pomorie) was ordered to pay to the undertaking ‘Anhialo auto’ OOD the sum of 
24 931.60 leva (BGN), representing part of the amount due under a contract of 
1 November 2013 by which the municipality had commissioned the undertaking 
with the operation of public passenger transport. 
Subject matter and legal basis of the request 
Interpretation of EU law; Article 267 TFEU 
Questions referred for a preliminary ruling 
1. Do the provisions of Regulation (EC) No 1370/2007 permit a Member State 
to introduce, by way of national legislation or internal rules, additional 
requirements and restrictions in relation to the payment of compensation to a 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-390/22 
 
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transport undertaking for the discharge of a public service obligation which are 
not provided for in that regulation? 
2. Does Article 4(1)(b)(i) of Regulation (EC) No 1370/2007 permit the 
payment of compensation to the transport undertaking for the discharge of a 
public service obligation where the parameters on the basis of which the 
compensation is to be calculated were not established in advance in a public 
service contract, but in general rules, and the net financial effect or the amount of 
compensation due was determined in accordance with the mechanism provided for 
in Regulation (EC) No 1370/2007? 
Provisions of European Union law and case-law relied on 
Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 
23 October 2007 on public passenger transport services by rail and by road and 
repealing Council Regulations (EEC) Nos 1191/69 and 1107/70 (OJ 2007 L 315, 
p. 1): recitals 5, 9, 27 and 28 and Articles 1, 2, 4 and 6 
Provisions of national law relied on 
Zakon za avtomobilnite prevozi (Law on road traffic): Paragraph 4 of the Final 
Provisions 
Naredba za usloviata i reda za predostavyane na sredstva za kompensirane na 
namalenite prihodi ot prilaganeto na tseni za obshtestveni patnicheski prevozi po 
avtomobilnia transport, predvideni v normativnite aktove za opredeleni kategorii 
patnitsi, za subsidirane na obshtestveni patnicheski prevozi po nerentabilni 
avtobusni linii vav vatreshnogradskia transport i transporta v planinski i drugi 
rayoni i za izdavane na prevozni dokumenti za izvarshvane na prevozite 
(Ordinance on the conditions and procedure for granting funds for compensating 
losses of revenue due to the application of tariffs for public passenger transport by 
road which are provided for in legislative acts in respect of certain categories of 
passengers, for subsidising public passenger transport on unprofitable bus routes 
in urban transport and transport in mountainous and other areas and for issuing 
transport documents for the provision of transport services (adopted by Decree 
No 163 of the Ministerski savet [Council of Ministers] of 29 March 2015, 
Darzhaven vestnik [State Gazette; ‘DV’] No 51 of 7 July 2015, last amended by 
DV No 18 of 4 March 2022; ‘the Ordinance’): Articles 1, 2, 3, 55 and 56. 
Naredba No 3 ot 4. april 2005 za usloviata i reda za predostavyane na sredstva za 
subsidirane na prevoza na patnitsite po nerentabilni avtobusni linii vav 
vatreshnogradskia transport i transporta v planinski i drugi rayoni (Ordinance 
No 3 of 4 April 2005 on the conditions and procedure for granting funds to 
subsidise passenger transport on unprofitable bus routes in urban transport and 
transport in mountainous and other areas (DV No 33 of 15 April 2005, repealed 
by DV No 57 of 28 July 2015): Articles 1 and 3 
OBSHTINA POMORIE  
 
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Succinct presentation of the facts and procedure in the main proceedings 
1 By decision of the Oblasten upravitel na Oblast Burgas (Governor of the Burgas 
Region) of 14 August 2013, the Mayor of the municipality of Pomorie was given 
consent to make a direct award of a contract, within the meaning of Article 5(5) of 
Regulation No 1370/2007, for the provision of bus transport services on routes 
specified in the decision, for a maximum period of six months. 
2 On the basis of that decision, a contract for the operation of public transport 
services on the defined bus routes was concluded between the municipality of 
Pomorie and the undertaking ‘Anhialo auto’ on 1 November 2013. The contract 
was concluded by way of a direct award made in accordance with Article 5(5) of 
Regulation No 1370/2007 as an emergency measure to overcome the disruption of 
public passenger transport services on the routes referred to due to the expiry of 
the existing contracts with contractors and, at the same time, the termination of a 
tender procedure for the award of new contracts for public transport services. 
3 Article 2 of the contract states that the term of the contract is to run until the 
conclusion of the procedure under the Zakon za obshtestvenite porachki (Law on 
public procurement). 
4 Article 5 of the contract provides that the contracting authority undertake to 
transfer funds to the contractor if provision is made for such funds for the 
purposes of subsidisation under the applicable national law and for providing 
compensation free and reduced fares groups of citizens under the applicable 
national law. 
5 The contract was terminated on 15 January 2019 following the conclusion of the 
procedure conducted under the Law on public procurement. 
6 The undertaking takes the view that the municipality of Pomorie failed to pay it 
the amount of BGN 86 497, which corresponds to the subsidies owed to it under 
the contract of 1 November 2013 and the applicable legislation, for urban 
transport services for the period from 1 January 2016 to 31 December 2018. It 
brought an action in respect of part of that amount, namely BGN 24 931.60, 
before the District Court, Pomorie. 
7 Before that court, the undertaking argued that compensation within the meaning of 
Regulation No 1370/2007 had been provided for in respect of its discharge of a 
public service obligation. The company stated that, throughout the term of the 
contract, it had provided the information required by law for the purpose of 
determining the amount of compensation due. The net financial effect and the 
amount of the compensation payments were determined in accordance with the 
mechanism provided for in Regulation No 1370/2007. 
8 The defendant – the municipality of Pomorie – contested the action. It submitted 
that, according to Article 56(1) of the Ordinance, ‘subsidies shall be granted only 
to transport undertakings with which the municipality concerned has concluded 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-390/22 
 
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contracts which comply with the requirements of Regulation No 1370/2007’. 
However, according to the defendant, the applicant’s contract does not comply 
with those requirements. Moreover, the Ministerstvo na finansite (Ministry of 
Finance) granted a subsidy of BGN 3 690 for the period at issue, which was paid 
in full to the applicant undertaking. As the municipality of Pomorie did not 
receive any further subsidisation from the central budget, it also did not pay any 
subsidies to the transport undertakings and was not responsible for that. 
9 It is common ground in the present case that the applicant undertaking provided 
the services as contractually agreed. 
10 On the basis of the expert report on accounting which was commissioned by the 
court in the proceedings, the net financial effect for the applicant, as provided for 
in Regulation No 1370/2007, was determined in accordance with the rules laid 
down in the annex to that regulation (‘Rules applicable to compensation in the 
cases referred to in Article 6(1)’) and those laid down in Article 55 of the 
Ordinance. In fact, it was determined that the net financial effect for the 
undertaking was BGN 25 469 for 2016, BGN 36 624 for 2017 and BGN 23 290 
for 2018. The expert report also established that the organisation of the 
undertaking’s accounts allows for a precise breakdown of costs and revenue 
according to subsidised and non-subsidised activities, in accordance with the 
requirements arising from the annex to the regulation. 
11 The District Court also found that, during the period at issue, in respect of which 
the applicant claims payment of compensation, the municipality of Pomorie paid 
the undertaking the amount of BGN 3 690, which corresponds to the total amount 
of funds allocated and paid to the Municipality of Pomorie from the central budget 
of the Republic of Bulgaria for subsidies for urban and interurban transport 
services. 
12 The District Court, Pomorie stated that Regulation No 1370/2007 regulates how 
competent authorities may act in the field of public passenger transport to 
guarantee the provision of services of general interest and, in that respect, also 
lays down the conditions under which competent authorities, when imposing or 
contracting for public service obligations, compensate public service operators for 
costs incurred and/or grant exclusive rights in return for the discharge of public 
service obligations. 
13 That court stated that the purpose of the compensation was to offset the negative 
net financial effect (loss) by reimbursing the public transport undertaking for the 
cost of providing the public service. As the contract was concluded in 2013, the 
District Court considered that the defendant’s objection that the applicant was not 
entitled to a subsidy because the contract did not contain the mandatory conditions 
set out in Article 56(2) of the Ordinance was incorrect. In fact, the Ordinance was 
adopted by a decree of the Ministerski savet (Council of Ministers) of 29 March 
2015, with the result that the requirements for contracts laid down in the 
OBSHTINA POMORIE  
 
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Ordinance, including the requirement that they contain the rules on compensation, 
could not be applicable to the contract at issue. 
14 The District Court took the view that the applicant is entitled to a subsidy under 
Regulation No 1370/2007 since it actually provided the public service which was 
the subject of the contract concluded. 
15 For the reasons set out above, and on the basis of the expert report [on accounting] 
that the court introduced in the proceedings, that court upheld the undertaking’s 
action against the municipality of Pomorie. 
16 The municipality has brought an appeal against that judgment before the 
Okrazhen sad Burgas (Regional Court, Burgas) – the referring court. 
The essential arguments of the parties in the main proceedings 
17 The appellant – the municipality of Pomorie – submits that the conclusions drawn 
by the court of first instance regarding the applicable provisions of substantive law 
are incorrect. 
18 The municipality argues that the conditions laid down in the Ordinance are also 
regulated in Regulation No 1370/2007. It submits that that regulation, in turn, has 
had direct effect since its adoption (23 October 2007), with the result that the 
requirements under Article 4(1) had already been introduced in 2007. The fact that 
they are not included in the contract at issue militates in favour of there being no 
entitlement to a subsidy and, consequently, of the action being unfounded. 
19 The municipality also cites Article 5 of the contract concluded, from which it 
concludes that its obligation to pay subsidies is not unconditional – as was 
assumed in the judgment under appeal – but dependent on fulfilment of the 
statutory conditions. 
20 It also argues that, due to the fact that its budget was not subsidised by means of 
funds from the central budget, no subsidies were paid to the transport 
undertakings either, a circumstance for which it cannot be criticised. The 
contracting municipality does not have the legal authority to determine the amount 
of compensation and subsidies itself, but merely compulsorily distributes the 
funds allocated to it in that regard. 
21 The applicant undertaking (respondent in the appeal before the referring court) 
considers that the appeal is unfounded. 
22 It argues that it is unlawful to take into account the lack of conformity of a 
contract concluded in 2013 with an ordinance adopted two years later, on 29 June 
2015. Article 56(2) of the Ordinance is substantive in nature and therefore does 
not have retroactive effect. Since the contract at issue was concluded before the 
Ordinance entered into force, the requirements of the Ordinance as to the content 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-390/22 
 
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of the contract cannot apply to the latter. Entitlement to the subsidies depends on 
whether the relevant public passenger transport services were provided, that is to 
say, whether the service in question was actually provided, and not on the 
existence of certain elements in the contract. 
23 The undertaking also submits that Regulation No 1370/2007 regulates an 
irrevocable right of the public transport undertaking, namely the right to 
compensation, and that it is impermissible to limit that right or to derogate from it 
altogether. Although that regulation provides for requirements for contracts for the 
award of public passenger transport services, it does not contain an express 
prohibition on the payment of compensation in the event that the contracts do not 
formally meet the requirements. The objective of the regulation is to ensure the 
transparency of the procedure for calculating compensation and to avoid 
overcompensation, but not under any circumstances to deprive transport 
undertakings of the compensation to which they are entitled. 
24 Furthermore, the undertaking submits arguments asserting that the objection that 
the State, and not the municipality, is responsible for the payment of the subsidies 
is unfounded. In fact, under Article 3(1) of the Ordinance, the municipalities are 
exclusively responsible for ensuring that contracts for the award of public 
passenger transport services comply with Regulation No 1370/2007. The granting 
of subsidies from the central budget depends solely on the municipality 
concerned, namely on the question as to whether it complied with the statutory 
requirements when awarding public transport services. Therefore, the municipality 
always owes the full amount of compensation to the transport undertaking 
concerned, irrespective of whether or not the State has granted a subsidy to that 
municipality. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
25 In the present case, it has been established that it is not in dispute that a contract 
for the operation of public passenger transport services was concluded between 
the applicant undertaking and the municipality of Pomorie and that the transport 
undertaking duly performed the contract. The latter was concluded as an 
‘emergency measure’ in accordance with Article 5(5) of Regulation 
No 1370/2007. 
26 National law, namely Paragraph 4(1) of the Final Provisions of the Law on road 
traffic, stipulates that, each year, the State Budget of the Republic of Bulgaria is to 
provide for expenditure for the following: 1. subsidisation of passenger transport 
on unprofitable bus routes in urban transport and transport in mountainous and 
other areas, on a proposal from the Ministar na transporta, informatsionnite 
technologii i saobshteniata (Minister for Transport, Information Technology and 
Communications); 2. compensation for loss of revenue from the application of 
transport tariffs provided for in respect of certain groups of passengers in 
legislative acts. 
OBSHTINA POMORIE  
 
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27 The Ordinance was adopted on the basis of that law. Under Article 2(1) of the 
Ordinance, funds are to be made available up to the amount specified in the Zakon 
za darzhavnia byudzhet (Law on the State budget) for the year in question. At the 
same time, Article 56(1) provides that subsidies are to be granted only to transport 
undertakings with which the municipality concerned has concluded contracts 
which comply with the requirements of Regulation No 1370/2007. The 
subsequent paragraphs set out additional requirements for the content of contracts 
concluded with transport undertakings. 
28 An interpretation of the provisions of national law which were introduced by the 
Law on road traffic and by the abovementioned Ordinance leads to the conclusion 
that the competent authorities are to grant compensation to transport undertakings 
up to the amount allocated and made available to them from the State budget for 
the year in question. Furthermore, additional requirements have been imposed on 
the accountability of transport undertakings vis-à-vis the competent authorities. 
29 On the other hand, EU law, and in particular Regulation No 1370/2007, does not 
provide for such requirements and restrictions in relation to the payment of 
compensation to public service operators. 
30 According to Article 6(1) of the regulation, all compensation connected with a 
general rule or a public service contract is to comply with the provisions laid 
down in Article 4, irrespective of how the contract was awarded. All 
compensation, of whatever nature, connected with a public service contract 
awarded directly in accordance with Article 5(2), (4), (5) or (6) or connected with 
a general rule is also to comply with the provisions laid down in the Annex. 
31 A comparison of the provisions of the national law and those of EU law leads to 
the conclusion that the national law provides for an additional requirement for the 
payment of compensation, namely that the latter has been provided for in the Law 
on the State budget for the year in question and is made available to the competent 
authority. If that is not the case, the authority cannot lawfully pay it to the 
transport undertaking, even if the public service contract has actually been 
performed. 
32 For the reasons set out above, it is necessary to obtain an answer to the question as 
to whether the provisions of Regulation No 1370/2007 permit a Member State to 
introduce, by way of national legislation or internal rules, additional requirements 
and restrictions in relation to the payment of compensation to a transport 
undertaking for the discharge of a public service obligation. 
33 The contract concluded between the parties does not define the parameters on the 
basis of which the subsidy is to be calculated. For that reason, the municipality of 
Pomorie takes the view that the contract at issue does not comply with the 
requirements of national law (the Ordinance; Ordinance No 3 of 4 April 2005, 
which was in force at the time of conclusion of the contract at issue, contained a 
similar provision) or of Regulation No 1370/2007. 
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34 The undertaking rejects those arguments and asserts that the compensation 
constitutes an irrevocable right of the transport undertaking once it has duly 
provided the services. Moreover, the compensation was determined ex post facto, 
in accordance with the provisions of the regulation. The undertaking refers to the 
objectives set out in the regulation and the fact that the latter does not expressly 
prohibit the payment of compensation in the event that the contracts do not 
formally comply with the statutory requirements. 
35 Article 4 of Regulation No 1370/2007 establishes the mandatory content of public 
service contracts and sets out general rules. The contract between the parties in the 
main proceedings constitutes a public service contract, having regard also to the 
interpretation of that concept in Article 2(i) of Regulation No 1370/2007. 
36 Therefore, it can be inferred from Article 4(1)(b)(i) of Regulation No 1370/2007 
that the contract between the parties must establish the parameters on the basis of 
which the subsidy is to be calculated. It is apparent that, in view of the need to 
avoid overcompensating the transport undertaking, the conjunction ‘and’ is used 
in Article 4(1) in reference to the need for those parameters to be regulated: [it 
reads] ‘Public service contracts and general rules shall …’. That provision could 
be interpreted as meaning that it is sufficient if the parameters on the basis of 
which the compensation is to be calculated are defined in general rules. The panel 
seised of the present case takes the view that the provisions of the Ordinance and 
the earlier Ordinance No 3 of 2005 constitute such general rules. 
37 Another possible interpretation is that the parameters must be defined not only in 
general rules but also in the contract concluded between the parties (as a public 
service contract within the meaning of the regulation). 
38 For the reasons set out above, the referring court considers that an interpretation of 
the abovementioned provision of Regulation No 1370/2007 is necessary so as to 
allow for the correct application of EU law in the resolution of the dispute 
between the parties. In particular, an interpretation is required in relation to the 
question as to whether Article 4(1)(b)(i) of Regulation No 1370/2007 permits the 
payment of compensation to the transport undertaking for the discharge of a 
public service obligation where the parameters on the basis of which the 
compensation is to be calculated were not established in advance in a public 
service contract, but in general rules, and the net financial effect or the amount of 
compensation due was determined in accordance with the mechanism provided for 
in Regulation No 1370/2007.