SUR LA RECEVABILITÉ

                      Application No. 22351/93

                      by Erich FENZEL and Ernst KÖLLNER

                      against Austria

     The European Commission of Human Rights (First Chamber) sitting

in private on 15 May 1996, the following members being present:

           Mr.   C.L. ROZAKIS, President

           Mrs.  J. LIDDY

           MM.   E. BUSUTTIL

                 A.S. GÖZÜBÜYÜK

                 A. WEITZEL

                 M.P. PELLONPÄÄ

                 B. MARXER

                 N. BRATZA

                 I. BÉKÉS

                 A. PERENIC

                 C. BÎRSAN

           Mrs.  M.F. BUQUICCHIO, Secretary to the Chamber

     Having regard to Article 25 of the Convention for the Protection

of Human Rights and Fundamental Freedoms;

     Having regard to the application introduced on 8 April 1993 by

Erich FENZEL and Ernst KÖLLNER against Austria and registered on

27 July 1993 under file No. 22351/93;

     Having regard to the reports provided for in Rule 47 of the Rules

of Procedure of the Commission;

     Having regard to the observations submitted by the respondent

Government on 29 May 1995 and the observations in reply submitted by

the applicants on 13 July 1995;

     Having deliberated;

     Decides as follows:

THE FACTS

     The first applicant, born in 1944, and the second applicant, born

in 1937, are Austrian nationals residing in Vienna. In the proceedings

before the Commission they are represented by Mr. G. Grießer, a lawyer

practising in Vienna.

A.   Particular circumstances of the case

     The facts of the case, as submitted by the parties, may be

summarised as follows.

     On 1 December 1989 composition with creditors proceedings

(Ausgleichsverfahren) were instituted with regard to the company in

which the applicants had been employed since 1958 and 1952,

respectively. These proceedings were set aside on 21 June 1990.

     Meanwhile, the employer company requested the Vienna Commercial

Court (Handelsgericht) for permission to terminate the contracts of

employment of a number of its employees, including the applicants,

under SS. 20 b and 20 c of the Composition with Creditors Act

(Ausgleichsordnung).

     On 25 January 1990 the Vienna Commercial Court granted this

permission. It found that according to the company's submissions, which

had been confirmed by the administrator in the composition proceedings

(Ausgleichsverwalter), the further employment of the persons concerned

would endanger the composition with the employer's creditors while the

employees would not suffer disproportionate damages, as they were due

to receive compensation under the Insolvency Continued Payment Act

(Insolvenz-Entgeltsicherungsgesetz). It appears that the employees

concerned were not heard prior to this decision.

     On 31 January 1990 the employer company, referring to the

Commercial Court's decision, gave the applicants notice of the

termination of their contracts of employment with effect from

30 June 1990. The applicants did not lodge an action under S. 105 of

the Industrial Relations Act (see below, Relevant domestic law and

practice).

     Subsequently, on 9 February 1990, the applicants requested the

Labour Office (Arbeitsamt) for payment under the Insolvency Continued

Payments Act. On 10 October 1990 the Labour Office granted part of the

applicants' request, including payment of their salary until

31 March 1990.

     On 11 October 1990 the Labour Office dismissed the applicants'

request as regards the payment of their salary from 1 April to 30 June

1990. It referred to S. 3 para. 3 of the Insolvency Continued Payment

Act, which, in case an employee is dismissed in accordance with

SS. 20 b and 20 c of the Composition with Creditors Act, guarantees

payment until the end of employment, but not beyond the period of

notice (Kündigungsfrist) provided for by law or by collective

agreement. However, the Labour Office found that the applicants'

dismissal had not been based on SS. 20 b and 20 c of the Composition

with Creditors Act, as the employer company, although referring to

these provisions, had not made use of the possibility to make their

dismissal effective on 30 April 1990, in case of the first applicant,

or on 31 March 1990, in case of the second applicant. Thus, the

conditions for payment under S. 3 para. 3 of the Insolvency Continued

Payment Act were not met.

     Payment could neither be granted under S. 3 para. 1 of this Act,

as this provision only guaranteed payment for the first three months

after the introduction of insolvency proceedings.

     On 31 January 1991 the Vienna Labour and Social Court (Arbeits-

und Sozialgericht) found that the first applicant was entitled to

payment until 30 April 1990, but dismissed the remainder of his claim.

As regards the second applicant, the Court dismissed his claim

entirely. The Court noted that the first applicant had been employed

in the company at issue as an apprentice (Lehrling) from 1958 to 1962,

as a worker (Arbeiter) from 1962 to 1 February 1983 and as an employee

(Angestellter) from 1 February 1983 to 30 June 1990. The second

applicant had been employed as an apprentice from 1952 to 1955, as a

worker from 1955 to 1 July 1987, and as an employee from 1 July 1987

until 30 June 1990. By letter of 4 February 1993 in the first

applicant's case, and by letter of 1 July 1987 in the second

applicant's case, the employer company had stated that the period of

the applicants' employment as workers would be taken into account as

regards any rights or claims, which were dependent on the length of

employment. The Court further noted the parties' submissions. The

applicants had claimed in particular that, by taking the years of their

employment as workers into account, the period of notice provided for

by law was five months. It followed that they had a right to payment

under S. 3 para. 3 of the Insolvency Continued Payment Act until

30 June 1990. The Labour Office had maintained that the applicants'

dismissal had not been based on SS. 20 b and 20 c of the Composition

with Creditors Act.

     The Court, referring to S. 20 of the Employees' Act, found that

the period of notice depended on the length of the applicants'

employment as employees, and was three months in respect of the first

applicant and two months in respect of the second applicant. Taking the

applicants' employment as workers into account, the period of notice

was five months. However, this period of notice was one agreed upon by

specific contract, which the employer was allowed to disregard in case

of a termination of the contract of employment under SS. 20 b and 20 c

of the Composition with Creditors Act. The company, although dismissing

the applicants with effect from 30 June 1990, could have dismissed the

first applicant with effect from 30 April 1990 and the second applicant

with effect from 31 March 1990. S. 3 para. 3 of the Insolvency

Continued Payment Act only provided payment until the end of the period

of notice provided for by law.

     On 19 February 1992 the Vienna Court of Appeal (Oberlandes-

gericht) dismissed the applicants' appeal (Berufung) and confirmed the

Labour Court's legal view. In these and the subsequent proceedings the

applicants were represented by counsel.

     On 16 September 1992 the Supreme Court (Oberster Gerichtshof)

dismissed the applicants' appeal on points of law (Revision). It found

that the lower instances had correctly applied the law. As regards the

applicants' complaint that the relevant provisions, including SS. 20 b

and 20 c of the Composition with Creditors Act, were unconstitutional,

the Court found inter alia that a dismissal was a unilateral act, which

did not depend on the approval of the person to be dismissed. Thus,

there was no violation of the right to a fair hearing, if the court,

in the composition with creditors proceedings, gave permission to

terminate contracts of employment without hearing the employees

concerned.

     The Supreme Court's decision was served on the applicants' lawyer

on 13 October 1992.

B.   Relevant domestic law and practice

1.   Composition with Creditors Act (Ausgleichsordung)

     The Composition with Creditors Act governs the proceedings to be

followed in case of insolvency, if the debtor proposes a composition

with creditors. The relevant provisions, in the version of the 1982

amendment, Federal Law Gazette (Bundesgesetzblatt) 1982/370, which were

in force at the time of the facts, are summarised below. They have

partly been changed by an amendment of 1994, Federal Law Gazette

1994/153.

     S. 20 b para. 2 states that the debtor, provided permission is

given by the court, may give notice of termination of contracts which

have not been entirely performed at the time of the institution of the

composition proceedings. If appropriate, the court has to hear the

other contracting party and the administrator in the composition

proceedings before taking a decision. Permission to give notice of

termination of a contract may only be given if its fulfilment would

endanger the composition with creditors or the further existence of the

enterprise, and if the other contracting party will not suffer

disproportionate damage. The decision of the court has to be served

upon the debtor, the administrator in the composition with creditors

proceedings and the other contracting party. There is no appeal against

the court's decision.

     S. 20 c para. 2 states that Section 20 b is also applicable to

contracts of employment, where the debtor is the employer. In such

cases, the court may allow the debtor to give notice of termination of

contracts of employment. The debtor has to respect the period of notice

(Kündigungsfrist) provided for by law or by collective agreement, but

is not bound to respect a longer period of notice which might have been

agreed upon in a specific contract, nor the duration of employment

agreed upon in a fixed-term contract. Apart from that the employer has

to respect restrictions on the termination of contracts of employment

provided for by law (gesetzliche Kündigungsbeschränkungen).

     S. 23 deals with claims which are privileged in the composition

with creditors proceedings (bevorrechtete Forderungen). According to

para. 1 subpara. 3, claims of employees, for the period following the

institution of such proceedings, are privileged, if their contract of

employment has not been terminated either before the institution of the

proceedings or after their institution in accordance with SS. 20 b or

20 c.  Section 46 para. 2 provides that debtors whose claims are

privileged have to be fully paid.

2.   Employees' Act (Angestelltengesetz)

     S. 20 deals with the termination of contracts of employment which

have not been concluded for a fixed term. The employer may terminate

the contract at the end of each quarter of the year (Kündigungstermin)

after giving prior notice. The period for giving notice

(Kündigungsfrist) is six weeks, after two years of employment it is two

months, after five  years of employment it is three months, after

fifteen years of employment it is four months and after 25 years of

employment it is five months (para. 2). The employee can terminate the

contract at the end of each month with one month's notice (para. 4).

3.   Industrial Relations Act (Arbeitsverfassungsgesetz)

     S. 105 deals with the dismissal of employees.

     Before dismissing an employee the employer shall notify the works

council, which may comment within five days (para. 1).

     Provided the works council has not expressly authorised the

dismissal within this period, application may be made to the Court

inter alia if the dismissal is not justified from a social point of

view and the dismissed employee has already been in the employ of the

undertaking for six months. Dismissal is unjustified from a social

point of view, when it damages the employee's important interests,

unless the employer can prove that inter alia it is due to business

requirements which militate against continued employment (para. 3).

     The employer is required to give the works council notice of the

dismissal. If it has expressly objected to the proposed dismissal, the

works council may, within one week of being notified, contest it before

the court at the dismissed employee's request. If the works council

does not act on the employee's request, he may himself do so within one

week following expiry of the time-limit laid down for the works council

(para. 4).

     According to the Labour and Social Courts Act the Labour Courts

are competent to deal with these proceedings.

4.   Insolvency (Continued Payments) Act (Insolvenz-Entgelt-

     sicherungsgesetz)

     S. 3 para. 1 states that, if not provided otherwise, an employee

can claim payment under this Act for claims under S. 1 para. 2

(including claims for payment originating from the contract of

employment or its termination), which have originated until the end of

the third month following the institution of bankruptcy or other

insolvency proceedings.

     S. 3 para. 3 provides that an employee is entitled to payment

under this Act, if his contract has been terminated by the employer

either before the opening of bankruptcy or composition with creditors

proceedings or after the opening of such proceedings according to

Section 25 of the Bankruptcy Act or according to Sections 20 b and 20 c

of the Composition with Creditors Act. For claims under Section 1 para.

2 the payment is due until the end of employment. It may not be granted

beyond the period of notice (Kündigungsfrist) which is provided for by

law or by collective agreement having regard to the date of termination

(Kündigungstermin) and any restrictions for the termination of

contracts provided for by law (gesetzliche Kündigungsbeschränkungen).

COMPLAINTS

1.   Under Article 6 para. 1 the applicants complain that they were

not heard by the Vienna Commercial Court prior to its decision of

29 January 1990, which gave their employer permission to terminate

their contracts of employment under SS. 20 b and c of the Composition

with Creditors Act. They submit that the above decision affected their

civil rights in that it reduced their claim to payment to the quota in

the composition with creditors proceedings, and in that they did not

get fully compensated under the Insolvency Continued Payment Act for

the damage suffered. They also submit that they could not foresee this

effect at the time the contested decision was taken.

2.   The applicants complain under Article 4 of the Convention that

the termination of their contracts of employment under SS. 20 b and

20 c of the Composition Act compelled them to work without full pay,

as they could not terminate their contracts themselves without loosing

other claims, e.g. a lump sum payment which is only due if the employer

terminates the contract.

3.   Finally, the applicants submit that the reduction of their claims

for payment, which followed from the application of SS. 20 b and 20 c

of the Composition with Creditors Act and was effective as of the date

of the institution of the composition with creditors proceedings,

amounted to an expropriation, for which they were not fully

compensated. Moreover, the said provisions have a discriminatory effect

as they leave it entirely in the employer's discretion for which

employees he seeks the court's permission to terminate their contracts.

The applicants invoke Article 1 of Protocol No. 1 alone and in

combination with Article 14.

PROCEEDINGS BEFORE THE COMMISSION

     The application was introduced on 8 April 1993 and registered on

27 July 1993.

     On 28 February 1995 the Commission decided to communicate the

application to the respondent Government, pursuant to Rule 48 para. 2

(b) of the Rules of Procedure.

     The Government's written observations were submitted on 29 May

1995.  The applicants replied on 13 July 1995.

THE LAW

1.   The applicants complain under Article 6 para. 1 (Art. 6-1) of the

Convention that they were not heard by the Vienna Commercial Court

before it gave their employer company permission to terminate their

contracts of employment under SS. 20 b and 20 c of the Composition with

Creditors Act.

     Article 6 para. 1 (Art. 6-1), so far as relevant, reads as

follows:

     "In the determination of his civil rights and obligations ...,

     everyone is entitled to a fair ... hearing ... by an independent

     and impartial tribunal ...".

a.   The Government submit that the applicants failed to exhaust

domestic remedies as required by Article 26 (Art. 26) of the

Convention. Firstly, the applicants should have appealed against the

decison of the Vienna Commercial Court of 25 January 1990. Although

this appeal would have been rejected as inadmissible under S. 20 b of

the Composition with Creditors Act, they could then have lodged a

further appeal with the Vienna Court of Appeal, which could have

requested the Constitutional Court to review the constitutionality of

the provisions at issue. Secondly, the Government submit that the

applicants failed to challenge the termination of their employment

under S. 105 of the Industrial Relations Act. They argue that under

this provision the labour courts can declare the termination of

employment invalid if the interests of the employee prevail over those

of the employer. Finally, the Government submit that the applicants

failed to claim payments which were not covered by the Insolvency

(Continued Payments) Act from their employer. They claim that there is

case-law according to which such payments are not reduced to the quota.

     The applicants contest the Government's view. They submit that

S. 20 b of the Composition with Creditors Act clearly states that there

is no appeal against a decision taken under this provision. The Vienna

Court of Appeal, as a court of second instance, has a right to

challenge a law before the Constitutional Court. However, the party

concerned is not entitled to have such proceedings instituted. As

regards possible proceedings under S. 105 of the Industrial Relations

Act, the applicants submit that they would not offer any prospects of

success. They argue that other courts would be bound by the decision

of the Vienna Commercial Court. Thus, they would not be able to come

to a different assessment when examining whether the interests of the

applicants prevailed over the employer's interest in terminating their

contracts under S. 20 b of the Composition with Creditors Act.

Moreover, the proceedings under S. 105 of the Industrial Relations Act

are aimed at restoring the employment, whereas they wished to complain

about the effects of the permission to terminate their employment under

S. 20 b of the Composition with Creditors Act.

     The Commission recalls that Article 26 (Art. 26) of the

Convention only requires the exhaustion of such remedies which relate

to the breaches of the Convention alleged and at the same time can

provide effective and sufficient redress. An applicant does not need

to exercise remedies which, although theoretically of a nature to

constitute remedies, do not offer any chance of redressing an alleged

breach (cf. No. 20357/92, Dec. 7.3.1994, D.R. 76-A, p. 80, 87).

     In the present case, the Vienna Commercial Court, on 25 January

1990, gave the applicants' employer permission to terminate their

contracts of employment under SS. 20 b and 20 c of the Composition with

Creditors Act. According to S. 20 b of the said Act, no remedy was

available against this decision. Thus, an appeal would have been

rejected as inadmissible. As regards a further appeal to the Vienna

Court of Appeal, the Commission notes that this court may challenge a

law before the Constitutional Court, but is not obliged to do so.

     As regards the possibility to challenge the termination of their

employment, the Commission finds that the proceedings under S. 105 of

the Industrial Relations Act are aimed at the continuation of

employment. They do not, however, offer the applicants a possibility

to claim that the general rules of labour law, instead of SS. 20 b

and c of the Composition with Creditors Act, should be applied to the

termination of their contracts of employment.

     Finally, as regards the Government's submission that the

applicants failed to claim payments which were not covered by the

Insolvency (Continued Payments) Act from their employer, the Commission

notes that, according to S. 23 of the Composition with Creditors Act,

claims of employees whose contracts were terminated under SS. 20 b and

c of the said Act, loose their status as privileged claims, i.e. they

are reduced to the quota. The Government have failed to show that, at

the relevant time, there was case-law to the contrary. Thus, it appears

that such a claim would not have provided full redress to the

applicants.

     In conclusion, the Commission finds that the applicants have

exhausted domestic remedies as required by Article 26 (Art. 26) of the

Convention.

b.   As regards the merits of the complaint, the Government argue that

the Commercial Court's decision of 25 January 1990 did not determine

the applicants' civil rights and obligations within the meaning of

Article 6 (Art. 6) of the Convention. This decision only gave the

applicants' employer permission to terminate their contracts of

employment prematurely, in accordance with SS. 20 b and c of the

Composition with Creditors Act. Further, the Government point out that

the applicants' employer company did not make use of this permission,

as it terminated their contracts only at the specific dates and periods

of notice set out in their contracts.

     Moreover, the Government argue that the applicants did not suffer

any other disadvantages as a result of the impugned decision. They

submit that the Supreme Court, in its decision of 6 May 1994, has found

that claims for payment remain privileged claims under S. 23 para. 1

of the Composition with Creditors Act, insofar as they are not covered

by the Insolvency (Continued Payments) Act.

     Further, the Government point out that S. 20 b of the Composition

with Creditors Act, in the version applicable at the relevant time,

stated that the competent court has to hear the employees concerned,

if appropriate. Given the need to observe close deadlines in the

composition with creditors proceedings and the interest of the debtor

and the general public in obtaining a decision, they argue that the

Commercial Court's refraining from hearing the applicants was

justified. Finally, the Government again refer to S. 105 of the

Industrial Relations Act, and submit that the applicants had the

possibility to challenge the termination of their employment as being

unjustified from a social point of view before the labour courts and

to be heard in these proceedings.

     The applicants submit that the Commercial Court's decision

directly affected their civil rights within the meaning of Article 6

(Art. 6). They submit in particular that it allowed their employer to

terminate their contracts with the effect that a shorter period of

notice applied and that their claims, which would otherwise have to be

fully paid, were reduced to the quota in the composition with creditors

proceedings.

     Further, the applicants submit that the need to conduct the

composition with creditors proceedings speedily cannot justify the fact

that they were not heard at all. As regards  the possibility to

challenge the termination of their employment under S. 105 of the

Industrial Relations Act, the applicants refer to their above

submissions, namely that the labour courts would not come to a

different assessment of the interests involved; and that the

proceedings were not suited to assert their claim that they suffered

damages from the termination of their employment under SS. 20 b and c

of the Composition with Creditors Act.

     Finally, the applicants argue that they are not entitled to full

compensation under the Insolvency (Continued Payments) Act. In

particular they argue that the Supreme Court's decision of 6 May 1994,

referred to by the Government, constituted a change of the case-law,

which occurred after their cases had been before the courts.

     The issues to be decided are whether, in regard to the Vienna

Commercial Court's decision to permit the applicants' employer to

terminate their contracts of employment under SS. 20 b and c of the

Composition with Creditors Act, the applicants were entitled to a

procedure in accordance with Article 6 para. 1 (Art. 6-1) of the

Convention and, if so, whether such a procedure was available to them.

     After an examination of these issues in the light of the parties'

submissions, the Commission considers that they raise questions of fact

and law which can only be determined by an examination of the merits.

It follows that this complaint cannot, therefore, be declared

inadmissible as being manifestly ill-founded within the meaning of

Article 27 para. 2 (Art. 27-2) of the Convention. No other grounds for

inadmissibility have been established.

2.   Under Article 4 (Art. 4), the applicants submit that, following

notice of their dismissal, they were compelled to perform work without

full pay as they could not terminate their contracts themselves without

loosing claims, which were only due if the employer terminated the

contract.

     Article 4 para. 2 (Art. 4-2) reads as follows:

     "No one shall be required to perform forced or compulsory

     labour."

     The Commission recalls that the concept of forced or compulsory

labour within the meaning of Article 4 para. 2 (Art. 4-2) comprises two

elements. These elements are first that the labour or service must be

performed by the person concerned against his will and secondly that

the obligation to perform this labour or service must be either unjust

or oppressive, or must itself constitute an avoidable hardship

(No. 9322/81, Dec. 3.5.83, D.R. 32 p. 180, 182).

     In the present case, the applicants entered freely into their

contracts of employment. Moreover, it appears that, according to S. 20

para. 4 of the Employees' Act, they were free to terminate them with

one month's notice. Moreover, the applicants failed to show that the

financial losses they would allegedly suffer from terminating their

contracts of employment, would be such as to amount to a restriction

of their contractual freedom. Therefore, it cannot be said that they

had to perform their work against their will. In any event, there is

no indication that the performance of their work can be considered as

unjust or oppressive or as constituting avoidable hardship.

     It follows that this part of the application is manifestly ill-

founded within the meaning of Article 27 para. 2 (Art. 27-2) of the

Convention.

3.   Finally, the applicants complain that the application of SS. 20 b

and 20 c of the Composition with Creditors Act amounted to an

expropriation, for which they were not compensated. Moreover, they

claim that the said provisions have a discriminatory effect as they

leave it entirely in the employer's discretion for which employees he

seeks the court's permission to terminate their contracts. They invoke

Article 1 of Protocol No. 1 (P1-1) alone and in combination with

Article 14 (P1-1+14).

     The Commission will first examine this complaint under Article 1

of Protocol No. 1 (P1-1), which reads as follows:

     "Every natural or legal person is entitled to the peaceful

     enjoyment of his possessions.  No one shall be deprived of his

     possessions except in the public interest and subject to the

     conditions provided for by law and by the general principles of

     international law.

     The preceding provisions shall not, however, in any way impair

     the right of a State to enforce such laws as it deems necessary

     to control the use of property in accordance with the general

     interest or to secure the payment of taxes or other contributions

     or penalties."

     The Commission recalls that legal provisions governing private

law relations between individuals and which, as such, provide for one

person to surrender a possession to another, do not infringe the right

to peaceful enjoyment of possessions, unless these provisions result

in one person being arbitrarily and unjustly deprived of property in

favour of another (No. 12462/86, Dec. 13.7.1987, D.R. 53 p. 234).

     The Commission notes that the relations between the applicants

and their employer company were governed by private law contracts, i.e.

by their contracts of employment. The applicants' rights flowing from

these contracts, including the right to payment, may be regarded as a

"possession" within the meaning of Article 1 of Protocol No. 1

(P1-1). The Commercial Court's decision permitted the applicants'

employer to terminate their contracts with the effect that the

applicants' claims for payment were reduced to the quota in the

composition with creditors proceedings. Thus, the contested decision

related to the adjudication of property between private parties.

However, it was in accordance with SS. 20 b and 20 c of the Composition

with Creditors Act, which do not appear arbitrary as they allow

termination of contracts of employment only if otherwise the

composition with creditors or the existence of the enterprise would be

endangered and if the employees concerned do not suffer

disproportionate damage. The applicants were actually compensated,

though not fully, under the Insolvency (Continued Payment) Act.

     In these circumstances, the Commission finds no appearance of a

violation of the applicants' right to peaceful enjoyment of their

possessions within the meaning of Article 1 of Protocol No. 1

(P1-1).

     As regards Article 14 in combination with Article 1 of Protocol

No. 1 (Art. 14+P1-1), the Commission finds that the applicants have not

substantiated their complaint. In particular, they have not submitted

that they were singled out for dismissal on the basis of any particular

personal status which distinguished them from other employees.

     It follows that this part of the application is manifestly ill-

founded within the meaning of Article 27 para. 2 (Art. 27-2) of the

Convention.

     For these reasons, the Commission, unanimously,

     DECLARES ADMISSIBLE, without prejudging the merits, the

     applicants' complaint that they were not heard as regards

     permission to terminate their contracts of employment under

     SS. 20 b and c of the Composition with Creditors Act, which was

     given to their employer by the Vienna Commercial Court;

     DECLARES INADMISSIBLE the remainder of the application.

Secretary to the First Chamber       President of the First Chamber

     (M.F. BUQUICCHIO)                        (C.L. ROZAKIS)