AS TO THE ADMISSIBILITY OF

                      Application No. 12484/86

                      by R.G.

                      against Austria

        The European Commission of Human Rights sitting in private

on 7 June 1990, the following members being present:

              MM. C.A. NØRGAARD, President

                  J.A. FROWEIN

                  S. TRECHSEL

                  F. ERMACORA

                  G. SPERDUTI

                  E. BUSUTTIL

                  G. JÖRUNDSSON

                  A. WEITZEL

                  J.-C. SOYER

                  H. DANELIUS

                  G. BATLINER

             Mrs.  G. H. THUNE

             Sir  Basil HALL

             MM.  F. MARTINEZ

                  C.L. ROZAKIS

             Mrs.  J. LIDDY

             MM.  L. LOUCAIDES

                  J.-C. GEUS

             Mr.  H.C. KRÜGER, Secretary to the Commission

        Having regard to Article 25 of the Convention for the

Protection of Human Rights and Fundamental Freedoms;

        Having regard to the application introduced on 19 September 1986

by R.G. against Austria and registered on 13 October 1986 under file

No. 12484/86;

        Having regard to the report provided for in Rule 40 of the

Rules of Procedure of the Commission;

        Having regard to:

        - the Commission's decision of 19 January 1989 to bring the

          application to the notice of the respondent Government and

          invite them to submit written observations on its

          admissibility and merits;

        - the observations submitted by the respondent Government on

          30 March 1989, the observations in reply submitted by the

          applicant on 27 May 1989 and his further submissions of

          19 February 1990;

        Having deliberated;

        Decides as follows:

THE FACTS

        The applicant, an Austrian citizen born in 1942 and residing

in Vienna, is a practising lawyer.

        The facts as submitted by the parties may be summarised as follows.

        The applicant owns an apartment house in the centre of Vienna.

The premises on the ground floor are shops which have been let to two

commercial firms since 1940 and 1958 respectively.  At those dates

they came within the scope of the rent restrictions under Section 16

of the 1929 Rent Act (Mietengesetz, Fed.  Law Gazette No. 210/1929)

which provided for a freeze of rents by reference to the level of rent

in 1914.  On this basis the rent was fixed at AS 1,592.80 and

AS 4,538.39 respectively.  One lease contained a clause according to

which the rent should be re-negotiated in case of abolition, the other

in case of amendment of the legal restrictions on the amount of rent

(Zinsanpassungsklausel).

        By an amendment of the 1929 Rent Act which entered into force

on 1 January 1968 (Mietrechtsänderungsgesetz, Fed.  Law Gazette

No. 281/1967) the rent restrictions were continued only for earlier

tenancy contracts.  New contracts were no longer subject to any

restrictions on the amount of rent even in respect of premises which

had previously been subject to rent control.

        The 1929 Rent Act was subsequently abrogated and replaced by a

new Rent Act (Mietrechtsgesetz, Fed.  Law Gazette No. 520/1981) which

entered into force on 1 January 1982.  It involved an overall reform

of the rent legislation and provided inter alia for the continued

application of the previous rent restrictions in respect of existing

tenancy contracts (Section 43 para. 2).

        Following the introduction of the new legislation, different

chambers of the Supreme Court (Oberster Gerichtshof) came to different

conclusions as to the validity of rent adjustment clauses such as the

ones contained in the above leases.  In some decisions the view was

expressed that such clauses were to be regarded as valid and the

conditions for re-negotiating the rent on the basis of an appropriate

amount were met by the introduction of the new legislation,

notwithstanding the fact that the legislation for new leases had been

liberalised already by the 1967 Act.  In other decisions, however, the

Supreme Court adopted the opposite view, namely that the clauses were

invalid if they contained no indication of the criteria according to

which the rent should be re-negotiated.  The Government claim that the

latter view was the Supreme Court's constant case-law.

        In the summer of 1984 the applicant, invoking the rent

adjustment clauses in the two agreements, asked his tenants to pay

henceforth an appropriate amount of rent fixed in accordance with

Section 16 para. 1 of the 1981 Rent Act.  He claimed a monthly rent of

AS 42,000 from one and AS 65,000 from the other tenant.  The tenants

refused, following which the applicant brought two separate actions

against them before the District Court of Vienna City (Bezirksgericht

Innere Stadt Wien) seeking consent orders modifying the rent agreements

to the effect that they would have to pay the above sums as from

1 July 1984.

        In the case concerning the tenancy agreement of 1940 where

the clause referred to the abolition (Aufhebung) of legal rent

restrictions, the District Court rejected the action by a decision of

14 February 1985.  It accepted that a rent adjustmement clause was as

such admissible, but considered that the conditions for such a clause

were not met.  Even in respect of new leases for business premises the

Rent Act still contained restrictions, namely the criterion of

appropriateness of the rent according to Section 16 para. 1.  The

restrictions concerning existing contracts continued to apply

by virtue of Section 43 para. 2 of the Act.  Moreover, the

contractual clause was not sufficiently precise to allow the

determination of a specific amount of rent.  It therefore had to

be regarded as invalid (als dem Vertrag nicht beigesetzt).

        The applicant's appeal (Berufung) against this decision

was rejected by the Regional Civil Court (Landesgericht für

Zivilrechtssachen) of Vienna on 3 July 1985.  It confirmed the

District Court's view that a rent adjustment clause was admissible and

found it not necessary to examine whether the 1981 Rent Act had

abolished the former rent restrictions or whether it had merely

replaced them by new regulations.  The contractual clause was invalid

because it lacked sufficient precision concerning the amount of rent

to be paid under a newly negotiated contract.  Even if the parties had

indicated more precise criteria, the agreement would not be compatible

with Section 43 para. 2 of the 1981 Rent Act which was based on the

principle that the freeze of rents continued to apply as regards

existing contracts.

        The Regional Court granted leave to appeal to the Supreme

Court on points of law (Zulässigkeit der Revision), observing that the

Supreme Court had not yet established a consistent case-law on the

question of the interpretation of rent adjustment clauses and the

required precision of such clauses having regard to the 1981 Rent Act.

        In the second case, concerning the tenancy agreement of 1958

where the rent adjustment clause referred to the amendment (Abänderung)

of the legal provisions on rent control, the District Court rejected

the applicant's action by a decision of 15 January 1985, finding that

the clause in question lacked sufficient precision.

        The applicant's appeal against this decision was rejected by

the Regional Court on 29 May 1985.  It confirmed the District Court's

view that the clause lacked sufficient precision indicating that it did

not share the Supreme Court's opinion expressed in a decision of

29 February 1984 according to which such a clause may be supplemented

by having recourse to the hypothetical will of the parties.  The clause

therefore had to be regarded as a mere declaration of intent which was

not binding (unverbindliche Absichtserklärung).  The increase of the

rent was furthermore excluded by Section 43 of the 1981 Rent Act.  The

Regional Court granted leave to appeal to the Supreme Court also in

this case.

        The applicant lodged appeals on points of law (Revision) in

both cases on 5 and 6 September 1985 respectively.  The time-limits

for filing these appeals expired on 20 September 1985 and thereafter

the applicant could not amend or supplement the appeals.  However,

before the Supreme Court decided the appeals, an amendment to the 1981

Rent Act was adopted by Parliament on 12 December 1985 (Fed.  Law

Gazette No. 559/1985).  It entered into force on 1 January 1986.  The

following new provision (Section 16a) was inserted in the 1981 Rent Act:

"Invalidity of rent adjustment clauses and rent agreements

(1) Stipulations in a contract concluded before 1 January 1982

which provide for an increase of the basic rent in case of

the amendment of the legal provisions concerning the amount

of the basic rent shall be invalid.  This also applies to

agreements stipulating a duty to renegotiate the rent in

case of the amendment of the legal provisions concerning the

amount of the basic rent.

(2) If a rent agreement is being or has been concluded on

the basis of a rent adjustment clause within the meaning of

para. 1, the agreement shall be invalid and the former rent

agreement shall continue to apply."

        By virtue of Article IV of the Amendment Act the above new

provision is applicable also in contentious and non-contentious court

proceedings which at the time of the entry into force of the Act have

not been finally concluded.

        By application of these new provisions the Supreme Court

rejected the applicant's appeals on 13 February and 16 January 1986

respectively, finding that notwithstanding its earlier case-law the

rent adjustment clauses were now legally invalid.  The decisions were

served on the applicant on 28 March and 1 April 1986 respectively.

COMPLAINTS

        The applicant complains that, by the application of the new

Section 16a of the Rent Act, he has been subjected to an unjustified

interference with his property rights, contrary to Article 1 of

Protocol No. 1 to the Convention, and that he has furthermore been

discriminated against, contrary to Article 14 of the Convention.

        The applicant states that he was unable to raise the above

complaints under the Convention in the domestic proceedings.  As the

new legislation was enacted only after the filing of his appeals to the

Supreme Court and after the expiration of the time-limit for filing

these appeals, he could neither challenge this legislation in his

appeals nor suggest to the Supreme Court that the matter be referred

to the Constitutional Court (Verfassungsgerichtshof) for

constitutional review.  As the new legislation was applied to the

applicant by virtue of a judicial decision, it was also impossible

to lodge a direct complaint against this legislation with the

Constitutional Court, because this was excluded by the terms of

Article 140 of the Federal Constitution (Bundes-Verfassungsgesetz).

PROCEEDINGS

        The application was introduced on 19 September and registered

on 13 October 1986.

        On 19 January 1989 the Commission decided to give notice of

the application to the respondent Government and to invite them,

pursuant to Rule 42 para. 2 (b) of the Rules of Procedure, to submit

written observations on the admissibility and merits.

        The Government submitted their observations on 30 March 1989

and the applicant replied thereto on 22 May 1989.

        Further examination of the case was adjourned pending the

judgment of the European Court of Human Rights in the case of

Mellacher and Others which also concerned rent restrictions under the

1981 Rent Act.  On 19 December 1989 the Court pronounced its judgment

in that case (to be published in Series A no. 169), finding that the

rent restrictions in question did not violate Article 1 of Protocol

No. 1 to the Convention.

        On 20 December 1989 this judgment was transmitted to the

applicant who was invited to state whether he wished to pursue his

application.  On 19 February 1990 the applicant replied that he

maintained the application which in his view could be clearly

distinguished from the Mellacher and Others case.

THE LAW

        The applicant complains of violations of Article 1 of Protocol

No. 1 (P1-1) to the Convention and of Article 14 (Art. 14) of the Convention.

These provisions read as follows:

        Article 1 of Protocol No. 1 (P1-1):

        "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."

        Article 14 (Art. 14) of the Convention:

        "The enjoyment of the rights and freedoms set forth in this

         Convention shall be secured without discrimination on any

         ground such as sex, race, colour, language, religion,

         political or other opinion, national or social origin,

         association with a national minority, property, birth or

         other status."

        The applicant claims that by the enactment of Section 16a of

the Rent Act in 1985 he was retroactively deprived of his contractual

right to re-negotiate the rents with his tenants following the

abolition or amendment of the earlier legal restrictions.  In his view

this amounted to expropriation contrary to the first paragraph of

Article 1 (Art. 1-1).  The continued freeze of rent by virtue of Section 43

para. 2 of the Rent Act 1981 furthermore constituted a control of the

use of his property which in the applicant's view was not in the

general interest and thus infringed the second paragraph of

Article 1 (Art. 1-2).  He finally complains that the co-existence of frozen

and freely negotiated rent contracts is discriminatory and therefore

contrary to Article 14 (Art. 14) of the Convention.

        The Government claim that the applicant failed to exhaust the

domestic remedies in accordance with the requirements of Article 26

(Art. 26) of the Convention.  He could have challenged Section 16a of

the Rent Act directly before the Constitutional Court under Article

140 of the Federal Constitution in the special circumstances of his

case where he could not plead unconstitutionality in the civil

proceedings.  He could also claim compensation under Article 13 of the

Administrative Proceedings Consolidation Act 1925, invoking the

alleged unconstitutionality of Section 16a of the Rent Act.  Finally

he could challenge the constitutionality of Section 43 of the Rent Act

in the context of civil proceedings instituted with a view to fixing

an appropriate amount of rent by the civil courts.

        The applicant contests that these remedies were actually

available or that they would have been effective.

        The Commission may leave this point undecided, as the

application is in any event manifestly ill-founded for the following

reasons.

        The applicant claims that there has been an expropriation

contrary to the first paragraph of Article 1 of the Protocol No. 1

(P1-1) in that he was deprived of his contractual right to

re-negotiate the rent.

        The Government submit that this was only a partial aspect of

the right of property which as such remained unaffected.  Moreover,

the re-negotiation clauses in the contracts concerned were not

sufficiently precise and therefore would have been found invalid even

if Section 16a of the Rent Act had not been adopted.  The right to

re-negotiate the rent therefore did not represent any financial value.

Insofar as it was affected by Section 16a of the Rent Act, this was

necessary to restore legal security in respect of divergent case-law

of different chambers of the Supreme Court.  The legislative measure

furthermore constituted a regulation of the use of property in the

general interest.  Section 16a ensured continuity of the applicable

rent for long-term leases of business premises so that the tenants

could continue their commercial activities without the economic

viability of their activities being undermined.  This also served

consumer interests in the preservation of existing commercial

enterprises.

        The Commission considers that, as in the case of Mellacher and

Others (Eur. Court H.R., judgment of 19 December 1989, to be published

in Series A no. 169, para. 44), the legislative measure complained of

in the present case did not amount to either a formal or to a de facto

expropriation.  There was no transfer of the applicant's property nor

was he deprived of his right to use, let or sell it.  The applicant

was not even deprived of a part of his income from the property, but

only prevented from negotiating a new rent by which his income would

have increased.  Accordingly, the measure must be qualified as a

control of the use of property which falls to be considered under the

second paragraph of Article 1 (Art. 1-2).

        As regards the justification of this measure as being in the

general interest, the Commission recalls the wide margin of

appreciation which the domestic legislature enjoys in the field of

housing.  The Commission must respect the legislature's judgment as to

what is in the general interest unless that judgment be manifestly

without reasonable foundation (cf. Eur. Court H.R., Mellacher and Others

judgment, loc. cit., para. 45 and James and Others judgment of

21 February 1986, Series A no. 98, p. 32 para. 46).

        Having regard to the legal uncertainty concerning the

admissibility and legal validity of rent re-negotiation clauses which

existed prior to the enactment of Section 16a of the Rent Act, the

Commission considers that this legislative measure was not manifestly

without reasonable foundation.  As its aim was primarily to restore

legal security, it cannot be criticised that the law was given

retroactive effect and that it also applied in cases pending before

the courts.  The new legislation was an authentic interpretation of

the existing law.

        Following legal invalidation of the rent re-negotiation

clauses the applicant could not claim an increase of rent on the basis

of these clauses and the previous rent restrictions applied, as

stipulated in Section 43 para. 2 of the Rent Act.  Insofar as the

applicant complains of the impossibility to increase the rent for the

business premises in question, he thus challenges the combined

application of Section 16a and Section 43 para. 2 in his case.

        The Commission notes that the relevant rent restrictions had

existed since before the leases were concluded.  Nevertheless, such

restrictions and their continued application, despite a change in the

general legal framework, require justification under the second

paragraph of Article 1 to Protocol No. 1 (P1-1).  As the Commission held

in Application No. 8003/77 (Dec. 3.10.79, D.R. 17 pp. 80, 82) a person

may claim to be a victim of pre-existing rent control measures if, and

insofar as, he claims that he has to submit to an Act which is as such

contrary to the Convention.  The justification of such measures may in

fact cease with the lapse of time and changing factual and legal

circumstances.

        However, in this respect, too, the State enjoys a wide margin

of appreciation.  In the Mellacher and Others case the Court held that

a considerable reduction of contractually agreed rents may be

justified under the second paragraph of Article 1 (Art. 1-2).  Neither

the fact that the original rents were agreed upon and corresponded to

the then   prevailing market conditions, nor the fact that the

reductions were striking in their amount, prompted the Court to find

that the measures  in question were disproportionate.  It accepted

that the legislature could reasonably decide as a matter of policy

that rents agreed according to market conditions were unacceptable

from the point of  view of social justice (cf.  Mellacher and Others

judgment, loc. cit.,  para. 56).

        The present applicant complains that he is not allowed to

raise the rent to the level which could be achieved on the market

without the application of the restrictive legislation.  The above

principles established by the Court also apply here.  It does not make

a difference whether a restriction is newly imposed or maintained if

only it pursues a legitimate aim and is not as such manifestly

unreasonable or disproportionate.

        It is true that the rent restrictions complained of in the

present case did not concern apartments as in the case of Mellacher

and Others, but business premises for which other criteria may be

appropriate as the applicant rightly observes.  However, this does not

mean that business premises may not be subjected to any rent

restrictions.  The Government claim that it was necessary to maintain

the previous level of rent in order to preserve the economic viability

of commercial enterprises in the interest both of these enterprises

and of consumers.  The Commission accepts that within its wide margin

of appreciation the Austrian legislature could reasonably consider

these aims to be in the general interest, and that no disproportionate

burden was thereby placed on the applicant.

        It remains to be examined whether the measure was

discriminatory and contrary to Article 14 (Art. 14) of the Convention

as alleged by the applicant.  The Government submit that it is

reasonable to differentiate between rent contracts according to the

date when they were concluded, and to provide for different legal

regimes for new contracts and for contracts which have been concluded

a long time ago.

        The Commission notes that the legal restrictions complained of

apply to every lease contracted at a time when the rents were frozen.

There is no distinguishing criterion based on the personal status of

the house-owner.  Also the present applicant will not be subjected to

such restrictions in respect of contracts which date from a different

period.  There is consequently no appearance of discrimination

contrary to Article 14 (Art. 14) of the Convention.

        The applicant's complaints must accordingly be rejected as

being manifestly ill-founded within the meaning of Article 27 para. 2

(Art. 27-2) of the Convention.

        For these reasons, the Commission

        DECLARES THE APPLICATION INADMISSIBLE.

Secretary to the Commission             President of the Commission

      (H.C. KRÜGER)                           (C.A. NØRGAARD)