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“Land Reform” Decision
Published online by Cambridge University Press: 27 February 2017
Extract
In a consolidated constitutional proceeding, fourteen claimants, all citizens of the Federal Republic of Germany (FRG), attacked the constitutionality of that clause of the German Unification Agreement providing that property expropriated during the Soviet occupation of eastern Germany during the period 1945-1949 was not to be returned to the original owners and that the owners could only be compensated in money. The Court confirmed the constitutionality of the provision and thus took a first step toward clarifying one of the greatest obstacles to significant investment in the former German Democratic Republic (GDR): unclear property ownership, making it impossible to say with certainty who ultimately owned much of the property in the former GDR.
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- Copyright © American Society of International Law 1991
References
1 The “constitutional claim” (Verfassungsbeschwerde) is available to all, i.e., even to non-Germans, in appropriate circumstances (particularly relevant in immigration, asylum and deportation proceedings). Pursuant to Article 93(1), No. 4a of the German Federal Constitution (Grundgesetz, literally “Basic Law”) [hereinafter Constitution or GG], a constitutional claim can be raised by anyone who claims to have been injured in his or her “basic rights” (Grundrechte) by public authority. The substantive claim is treated in §§13, No. 8a and 90 et seq. of the Statute of the Federal Constitutional Court (Bundesverfassungsgerichtsgesetz) with respect to the jurisdiction of the Bundesverfassungsgericht and the procedure before this Court, respectively.
2 Agreement with respect to the Unification of Germany, Aug. 31, 1990, FRG-GDR, 1990 BGB1.II [Bundesgesetzblatt, Teil II] 889, translated and reprinted in 30 ILM 457 (1991) [hereinafter Agreement].
3 Under the German Constitution, the ordinary rule for wrongful expropriations is return of the property. Article 14(3) of the Constitution provides as follows:
(3) An expropriation is only permissible for the public benefit. It may only be effected pursuant to, or on the basis of, a statute that provides for the nature and the extent of the compensation. Compensation shall be determined on the basis of a fair balancing of the interests of the public and of the parties involved. In the event of disputes as to the amount of compensation, the ordinary courts of law are available.
Thus, if the expropriation itself was wrongful, either because it was not made for the public benefit or because it was based on a statute not providing for adequate compensation, the expropriation is void, and the taint cannot be removed by the subsequent payment of compensation. This result is generally explained by the fact that Article 14 of the Constitution protects the property itself, not merely its equivalent value.
4 The “compensation” to be awarded to the victims of expropriations during the Soviet occupation is not constitutional compensation, in the sense of payment of fair market value for a taking of property. Rather, it is compensation pursuant to statutes designed to equalize war burdens (Lastenausgleich). The principal difference between the two provisions is that the state has little discretion as to the amount of compensation under the Constitution, whereas under the equalizations statutes it has rather broad discretion as to how much and, in the opinion of some commentators, whether (cf. Leisner, Das Bodenreform-Urteil des Bundesverfassungsgerichts, 1991 Neue Juristische Wochenschrift 1573) compensation shall be paid.
5 Whether the expropriations were actually the work of the Soviet occupation authorities is hotly disputed by the legal commentators. Those arguing that they were in fact “Soviet expropriations” argue that the East German governmental authorities were really only extensions of the Soviets. Those on the other side of the argument state that while the acts of the German authorities were instigated by the Soviets, they could in no way be legally imputed to the Soviets. For an overview of the dispute, see Schweisfurth, Entschädigungslose Enteignungen von Vermögenswerten (Betrieben) auf besatzungsrechtlkher oder besatzungshoheitlicher Grundlage in der sowjetischen Besatzungszone Deutschlands (Expropriation of Assets (Firms) without Compensation on the Basis of Occupation Law or Occupation Authority in the Soviet Occupation Zone of Germany), 1991 Betriebsberater 281. In the present case, the decision of the Federal Constitutional Court turned, in part, on the finding that the expropriations had been the work of the Soviet occupation authorities.
6 Saxony served the Court as an example for the expropriation procedures followed generally in the eastern German territory during the Soviet occupation. The procedure in Saxony was effected pursuant to the Regulation on Property Reform, Sept. 3, 1945, 1945 VOB1 [Verordnungsblatt] Sachsen, No. 1, at 28.
7 By the end of 1948, some 3.2 million hectares of the approximately 9.5 million hectares in the aggregate area of the Soviet Occupation Zone had been transferred to the fund.
8 Order No. 124, Oct. 30, 1945, 1945 VOB1 Sachsen, No. 4/5/6, at 10.
9 In Saxony, for example, expropriation was on the basis of a popular referendum; the vote was 77.6% in favor of expropriation.
10 A total of 9,870 businesses were expropriated in this way.
11 GDR Statute with respect to the Rights of Owners of Land Reform Property, Mar. 6, 1990, 1990 GB1.I [Gesetzblatt der DDR, Teil I] 134.
12 GDR Statute with respect to the Structural Adjustment of the Agricultural Sector to the Social and Environmental Market Economy in the GDR, June 29, 1990, id. at 642.
13 GDR Statute with respect to the Privatization and Reorganization of Communist [literally “popularly owned”] Property, June 17, 1990, id. at 300.
14 Article 41, taken together with Annex III, of the Agreement, supra note 2, at 1237–38.
15 Pursuant to GG Article 79, it can be amended by a law passed by a two-thirds majority of both houses, provided that the law expressly contains the new or additional language.
16 Providing the procedure pursuant to which basic rights may be limited.
17 Setting forth the basic principles of the German federal system.
18 30 ILM at 466.
19 Sections 3 and 6 of the Law concerning Regulation of Unresolved Property Questions, Sept. 18, 1990, 1990 BGB1.II 1159.
20 GG Article 19(2) provides as follows: “In no event shall a basic right be abridged at its core.”
21 The Court considered (1) the constitutionality of a constitutional amendment conditional upon the effectiveness of reunification; (2) whether the rule of Article 79(1), sentence 1, providing that laws amending the Constitution must expressly set forth the text of the amendment or addition, had been violated; and (3) whether the constitutional doctrine of separation of powers had been violated.
22 Article 1 of the Constitution provides as follows:
(1) Human dignity is sacrosanct. To respect and protect it is the obligation of all public authority.
(2) The German people thus acknowledge inviolable and indefeasible human rights as the basis of human society, of peace and of justice in the world.
(3) The following basic rights are binding, as directly applicable law, upon the legislature, the executive and the judiciary.
There follows a list of the basic rights.
23 GG Article 20 reads as follows:
(1) The Federal Republic of Germany is a democratic and social federal state.
(2) All public authority derives from the people. It is exercised by the people in elections and other votes and by the special institutions of the legislature, the executive and the judiciary.
(3) The legislature is bound by constitutional order and the executive and the judiciary are bound by statute and law.
(4) Every German has the right to resist anyone who attempts to abolish this order, if no other help is available.
24 GG Article 14(1) provides, for example, as follows: “Property and the law of inheritance are guaranteed. The substance thereof and limitations thereon shall be determined by statute.”
GG Article 19(1) provides: “To the extent that, pursuant to this Constitution, a basic right can be infringed upon by, or on the basis of, a statute, such statute must be of a general nature, and not for the individual case.” In addition, the statute must mention the Constitution and the article in question.
25 This argument is questionable at best. First, Article 46 of the Regulations annexed to the Hague Convention Respecting the Laws and Customs of War on Land (Oct. 18, 1907, 36 Stat. 2277, TS No. 539, 1 Bevans 631) provides that expropriations by military occupation authorities are not permissible; the furthest that commentators will go in interpreting this provision is to indicate that such expropriations are only permissible to the extent necessary to maintain occupation authority. Certainly, transforming an entire society by means of communistic collectivization goes far beyond any thing necessary to maintain the authority of the Soviet occupation forces. Second, FRG law with respect to the Soviet expropriations has traditionally maintained that those expropriations had no effect on the property relationships. In this respect, it is interesting to note that the FRG Compensation Statute (Oct. 1, 1969, 1969 BGB1.I 1909) provides that compensatory payments to, inter alia, the victims of Soviet expropriations in the former GDR have no effect on the ownership rights of the recipients; i.e., this law, at least, was based upon the view that the Soviet occupation expropriations did not deprive the victims of their ownership rights.
26 That is, “hinreichende Inlands- und Gegenwartsbeziehung.”
27 This argument seems to overlook the fact that Article 6 of the Statute Introducing the Civil Code (Aug. 18, 1896, 1896 RGB1 [Reichsgesetzblatt] 604, revised by the law of Sept. 12, 1990, 1990 BGB1.I 2002), which contains the bulk of the German conflict-of-laws provisions, prohibits the application of foreign law that is incompatible with material legal norms of the FRG, particularly such norms as are of constitutional stature, as are the expropriation provisions. The Court did not address this issue.
28 See note 4 supra.