In order to maintain appropriate scheduled maritime transport of passengers and goods to, from or between islands, Member States may impose public service obligations or conclude public service contracts on these routes, in particular in the event of market failure to provide such adequate services. Member States are bound by conditions and requirements set out in Article 4 of the Cabotage Regulation (No 3577/92).
Public service obligations must be imposed or public service contracts concluded in a non-discriminatory manner. When a financial compensation is granted for a public service obligation or contract, its amount shall be set in compliance with the EU state aid rules.
Public service contracts can only be awarded for a limited period of time (Maximum 12 years) and on the basis of an open, transparent, fair and non-discrimatory Union-wide award procedure. The call for tender must be published in the Official Journal of the European Union.