Law of June 3, 1855

CHAPTER I.

CLASSIFICATION OF RAILWAYS.

ARTICLE 1. Railways shall be divided into lines of general service and of private service.

ART. 2. Among the lines of general service those starting from Madrid and terminating at the coast or frontiers of the kingdom shall be classified as of the first class.

ART. 3. All railway lines of general service are of public ownership, and shall be considered as works of public utility.

CHAPTER II.

THE CONCESSION OR AUTHORITY TO CONSTRUCT RAILWAYS.

ART. 4. Lines of general service may be constructed by the Government, and, in its absence, by individuals or companies.

ART. 5. In order that the Government may undertake the construction of a line with the funds of the State, of the provinces, or of the towns, it must be authorized by a law.

ART. 6. Individuals or companies can not construct any line whatsoever, either of general or private service, if a concession for the same has not been previously obtained.

ART. 7. This concession shall always be granted by a law.

ART. 8. The construction of lines of general service may be aided with public funds:

1. By performing therewith specified works.
2. By paying to the companies, at stated periods, a part of the capital. invested, recognizing as the highest limit of said capital that estimated.
3. By insuring to the capital invested a minimum interest or a fixed interest, as agreed upon and determined in the law of each concession.

ART. 9. The provinces and the towns directly interested in the construction of the line shall contribute with the State to the subsidy or payment of interest in the proportion and in the manner prescribed in the law of concession.

ART. 10. The maximum amount of the subsidy or interest which is to be given the constructing company being determined by the law of the concession, the concession shall be offered at public auction, under the terms prescribed, for three months, and shall be awarded to the highest bidder, with the obligation to pay to the proper person the cost of the plans of the project which may have served as a basis for the concession, which amount must be fixed before making the public sale in the cases and in the manner determined by the regulations.

ART. 11. In order to take part in the public auctions it must be shown that there has been deposited as a guaranty of the proposals which may be submitted, an amount which equals 1 per cent of the total value of the railway, according to the approved estimate.

ART. 12. In no case shall titles of concession be issued for lines of general service until the concessioner shows he has deposited as a guaranty of his obligations 5 per cent of the amount of the estimate of the works, if the concession is subsidized, and 3 per cent otherwise. If the concessioner allows fifteen days to pass without making this deposit, the award shall be declared null, with the forfeiture of the bond given, and the concession of the line shall again be offered at auction for forty days, if it be of those issued by awards.

ART. 13. The companies holding concessions may dispose of the amount which they may have deposited as a guaranty for the construction of the railway, in proportion as they show that they have performed sufficient labor to cover said amount, the works of the railway remaining specially mortgaged for the amounts returned, in the place of said guaranty.

ART. 14. The concession for lines of general service shall be granted for a period not to exceed ninety-nine years.

ART. 15. Upon the expiration of the term of the concession the State shall acquire the line granted, with all its dependencies, and shall fully enjoy the right of operation.

CHAPTER III.

FORMALITIES WITH WHICH THE AUTHORIZATION OR CONCESSION SHOULD BE REQUESTED.

ART. 16. When the Government shall consider it proper to construct a railway line with public funds, it shall present to the Cortes, with the project of a law of authorization, the following documents:

1. A report descriptive of the project.
2. A general plan, with longitudinal and transverse profiles.
3. An estimate of the cost of construction and the annual cost of the repairs and maintenance of the line.
4. An estimate of the cost of the material necessary for the operation and the annual cost of its repair and maintenance.
5. A schedule of the highest rates to be demanded for fares and transportation.
6. A report, in which are heard the deputations of the provinces interested in the construction, and the persons and corporations which, in the judgment of the Government, can throw light on the subject, showing the utility of the plan. This report as to utility is not necessary with regard to the lines classified as of the first class in this law.

ART. 17. The individuals or companies who desire a concession for a railway line shall address their petition to the Government, and must present therewith the documents mentioned in the foregoing article, except the report prescribed in paragraph 6, which should be prepared by the Government, and must also show that there has been deposited as a guaranty of the proposals they may submit or admit in the course of the proceedings, 1 per cent of the total estimated cost of the works and operating material of the line.

ART. 18. The plan being approved and the conditions of the concessions being mutually accepted, the Government shall present to the Cortes the proper form of law, together with the documents mentioned in article 16, in accordance with the provisions of article 7.

CHAPTER IV.

PRIVILEGES AND GENERAL EXEMPTIONS GRANTED TO COMPANIES HOLDING CONCESSIONS.

ART. 19. Foreign capital employed in the construction of railways or in loans for this purpose shall be under the protection of the State and is exempt from reprisals, confiscations, or attachments by reason of war.

ART. 20. The following shall at once be granted to all railway companies:

1. The public lands which the road and its appurtenances may have to occupy.
2. The rights which the inhabitants 'of the districts through which the line passes have to cut timber, to pasture, and other rights, shall be enjoyed by the employees and laborers of the companies and for the care of the draft animals employed on its works.
3. The right to open quarries, gather loose stone, construct lime, chalk, and brick kilns, to deposit material and establish workshops to work the same on lands adjoining the lines. If these be public lands, the right shall be exercised after giving previous notice to the local authority; but if it should be private property it can not be used without first advising the owner or his representative through the mayor of the territory, and after formally binding themselves to indemnify the owner for all losses and damages thereby caused.
4. The exclusive right to collect, while the concession lasts and according to the schedules approved, the rates charged for passengers and freight, without prejudice to those belonging to other companies.
5. The equivalent of such rates and charges shall be fixed with regard to the construction companies in the law of the concession of the line. And with regard to the operating companies the Government shall fix them annually, observing the procedure established in the regulations.
6. The exemption from mortgage fees now due and which shall hereafter become due for the transfer of ownership made by virtue of the law of eminent domain.

CHAPTER V.

FORFEITURE OF CONCESSIONS.

ART. 21. Whenever a forfeiture of a concession is definitely declared, the amount of the guaranty which may have been demanded of the concessioner shall be kept for the benefit of the State.

ART. 22. Railway concessions shall be forfeited if the work is not begun, or if the line or sections into which it is divided are not concluded within the periods fixed therein, excepting cases of force majeure. When any of these cases should occur, and it is duly proven, the Government may extend the periods granted for the time absolutely necessary; but at the conclusion of the extension the concession shall be forfeited, if within said period what may have been stipulated is not accomplished.

ART. 23. The concession shall also be forfeited if the public service of the line should be totally or partially interrupted through the fault of the company in the case foreseen in article 39.

ART. 24. From the decision of the Government declaring the forfeiture, the concessioner may appeal, through administrative litigation, within the period of two months, counted from the day on which he may have been advised thereof. If he should not appeal within this period, the resolution of the Government shall be considered as accepted, and no appeal shall lie therefrom.

ART. 25. When forfeiture is definitely declared, the annulled concession shall be offered at public auction.

ART. 26. The basis of this auction shall be the value, according to an appraisement made, of the lands purchased, the work performed, the constructing and operating material in existence, with deductions for the aid or subsidies granted to the concessioner and given to him in lands, works, money, or in any other values.

ART. 27. If no bidder should appear at the public sale within the period fixed, a new auction shall be advertised for a period of two months, and on the basis of two-thirds of the amount of the appraisal, and if even then it should not be sold, the third and last auction shall be announced for a term of one month, and for one-half of said appraisal.

ART. 28. The award of the line having been made at any of the three mentioned public sales, there shall be deducted from the proceeds of the sale the amount of the guaranty which the concessioner may have taken from the deposit in order to invest the same in the works, according to the provisions of article 13, and the expenses of appraisal and sale, delivering the remainder to the bankrupt concessioner or to his legal representatives. He who by the auction is the new concessioner shall give as a guaranty 5 per cent of the value of the unfinished works until the total estimate is completed, and in everything else the provisions of this law shall be applicable to him as though he had been the original concessioner.

ART. 29. Should the concession not be awarded at any of the three auctions referred to and it is agreed to continue the works of the railway by the State, the Government shall present to the Cortes the proper form of law.

CHAPTER VI.

CONDITIONS OF CONSTRUCTION TO WHICH THAT OF RAILWAYS MUST CONFORM.

ART. 30. Railways shall be constructed according to the following conditions:

1. The gauge of the road or distance between the inside edges of the rails shall be 1 meter 67 centimeters (6 Castilian feet).
2. The distance between the tracks shall be 1 meter 80 centimeters (6 feet 6 inches, Castilian measure).
3. The other dimensions, as well as the conditions of construction, shall be determined in each particular case by the Government.
4. Railways may be constructed with a single or double track or with a combination of these systems.

CHAPTER VII.

THE OPERATION OF RAILWAYS.

ART. 31. Every railway shall have two distinct uses, one for passengers and the other for freight.

ART. 32. The charges for each shall be those fixed by the schedules in forcefor each line.

ART. 33. In the document of conditions of each concession shall be included the gratuitous services which the company shall furnish and the special rates for public services, among the former being the carrying of the ordinary mails at the hours fixed by the Government.

ART. 34. No one shall be prohibited from the establishment of transportation companies by paying the proper charges.

ART. 35. After the first five years that the railway is in operation, and thereafter every five years, a revision of the schedules of rates shall be made. If the Government believes that without prejudice to the interests of the company the rates may be lowered, and the company does not agree to the reduction, it may nevertheless be made by a law guaranteeing to the company the total earnings of the previous year, and also the average progressive increase which it may have had in the last five years.

ART. 36. The companies may at any time reduce the schedule of rates as they may consider proper, advising the Government thereof. In such case, as in those included in the foregoing article, the changes made in the rates shall be duly announced beforehand to the public.

ART. 37. Along all roads there shall be established a telegraph line with the wires prescribed in the concession of each one. Its construction and repair shall be at the expense of the company, and the service of official and private correspondence shall be under the charge of the Government, whose employees shall be at the same time obliged to render the special service of the lines if the companies demand it.

ART. 38. Every company holding a concession is obliged to maintain transportation service or to procure it by private contract.

ART. 39. When the public service of the railway is wholly or partially interrupted through a fault of the company, the Government shall immediately take the necessary steps to provisionally insure such service, at the expense of the company. The company holding a concession must, within the period of six months, show that it has the necessary funds for continuing the operation, being privileged to transfer the operation to another company or to a third person, after special authority from the Government. If even by this means the service should not continue, the concession shall be considered as forfeited, observing, therefore, the provisions of Article 23 et seq. of Chapter V of this law.

ART. 40. The operation of the railways of the State shall be undertaken by the Government or by companies which contract for this service at public auction, as may be most advisable for the public interests.

ART. 41. In each concession shall be determined the manner in which the Government should exercise the necessary intervention in order to keep the railway service in good condition, and obtain information of the income and expenses of the company.

ART. 42. In the laws and special regulations which may be adopted for the police of railways shall be determined what may be proper with regard to the preservation and security of each road and of its works, there being observed therein meanwhile the provisions in force relating to roads, in so far as applicable to railways.

CHAPTER VIII.

STUDIES OF RAILWAY LINES.

ART. 43. The Government shall order that the studies be made at once, or those commenced be completed, relating to general lines of the first class, included in this law, by commissions of engineers, national or foreign, in order that they may, according to the plans and estimates which they prepare and approve, begin the construction of said lines. The same shall be done whenever it is proposed to construct a general line of the first class.

ART. 44. In order to meet the cost of these works, the necessary sums shall be appropriated in the ordinary budget.

ART. 45. The Government may authorize individuals and companies to make investigations for the purpose of securing the data and documents which, according to the provisions of articles 16 and 17, are necessary in order to obtain the concession of a line, without it being understood that this authorization confers any right against the State, nor limits in any manner whatsoever the power which the Government has to grant like authority to those who desire to investigate the same line.

CHAPTER IX.

STOCK COMPANIES FOR THE CONSTRUCTION AND OPERATION OF RAILWAYS.

ART. 46. The Government may provisionally authorize the formation of stock companies for the construction and operation of railways, according to this law and that of January 28, 1848, providing that the following provisions are not annulled or modified:

1. The capital stock shall be at least equal to the total cost of the work of construction and of the material for operating the line which the company proposes to acquire.
2. When two-thirds of the capital stock have been' subscribed the provisional establishment of the company can be authorized.
3. This provisional authorization only allows the company to appoint its directors, request the concession for the line which it is proposed to construct and operate, make its proposals at the auction, if the concession were to be granted with this requisite, and demand of the stockholders up to 10 per cent of their stock for the exclusive purpose of covering the cost of its organization, studies of the project, and the deposit required as a guaranty of the concession.
4. Until the company has been definitely organized and has obtained the concession or award of the line, it can not issue stock certificates or any other sort of transferable or negotiable documents, transfers being null and of no value which are made on the promises of stock or on the provisional certificates which are given to the subscribers.
5. The original subscribers and their assignees are liable for the payment of the first dividends, in solido, until the half of the nominal value of their stock is paid in.
6. When the stockholders have paid the total value of their stock the same may be converted into certificates payable to bearer.

ART. 47. The company shall be considered as definitely constituted as soon as the law relating to its organization is published.

ART. 48. If two-thirds of the capital stock are subscribed, paid in, and invested in the works of the line, and the company is not able to collect the other third of the capital by means of the issue and negotiation of stock not subscribed for, it may obtain authority of the Government to secure said third part of the capital by means of loans secured by a mortgage on the proceeds of the railway to whose construction or operation it is destined. In such case, the authorization may include also the power to issue cedulas or mortgage obligations with fixed interest and redeemable within the period of the concession, in the years fixed in the same.

ART. 49. The company. may also obtain from the Government authority to increase the capital stock, if the inversion of the same should not have been sufficient to place the entire line in operation, and if the increase requested should not affect the public funds in any manner whatsoever. If it should affect such funds, the authorization shall be the object of a law.

ADDITIONAL ARTICLE.-The provinces and towns immediately interested in the construction of lines already granted in a concession shall contribute the third part of the subsidy granted. Therefore, we order all tribunals, justices, chiefs, governors, and other authorities, civil as well as military and ecclesiastical, of whatsoever class and rank, that they observe and enforce the observance, fulfillment, and execution of this law in all its parts.

ARANJUEZ, June 3, 1855.

I, the Queen.

FRANCISCO DE LUXAN,
Secretary of the Interior.