AS TO THE ADMISSIBILITY OF

Application No. 11189/84

by S-S., I. AB and B.T.

against SWEDEN

        The European Commission of Human Rights sitting in private

on 11 December 1986, the following members being present:

              MM. C. A. NØRGAARD, President

                  G. SPERDUTI

                  F. ERMACORA

                  G. JÖRUNDSSON

                  B. KIERNAN

                  A. S. GÖZÜBÜYÜK

                  J. C. SOYER

                  H. G. SCHERMERS

                  H. DANELIUS

                  G. BATLINER

              Mrs G. H. THUNE

              Mr.  F. MARTINEZ

               Mr J. RAYMOND, Deputy 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 June 1984

by S-S. I. AB and B.T. against Sweden and registered on 8 October

1984 under file No. 11189/84;

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

Rules of Procedure of the Commission;

        Having deliberated;

        Decides as follows:

THE FACTS

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

summarised as follows:

        The first applicant is a Swedish company with its headquarters

in Stockholm.  The second applicant is a Swedish citizen, born in

1914.  He is a chief county surveyor and resides at Vänersborg.  He is

a minority shareholder in five different companies and submits that he

does not control any of these companies.  Before the Commission the

applicants are represented by Mr.  Hasse W. Tullberg, a lawyer

practising in Stockholm.

        In 1975 the Swedish Trade Unions Confederation (LO) intiated a

debate on the economic policy in Sweden.  The new element in the

debate was a proposed introduction of so-called employee investment

funds (löntagarfonder).  Through these funds the LO envisaged a change

in the economic power balance by increasing the influence of the

employees in industry and commerce by means of a transfer of the

ownership of capital.

        The debate culminated in 1983 with the introduction of new

legislation consisting of two new laws and nine amendments to

existing laws.  In their proposals the Swedish Government referred in

particular to the international economic situation and stated inter

alia:

"The policy of stability is thus today more complex than

during the period of swift progress after the war - and it

therefore also means that new methods to solve the problems

are required.  The task is in short to combine an increasing

profit with a just distribution, a stable price and cost

development and a low unemployment rate.

...

Since we now again face a situation where the profits of

trade increase, this time due inter alia to the enormous

increase in competitive power from the devaluation in 1982,

it is of the utmost importance that the price and cost

development in our country does not accelerate again so that

the devaluation effects are destroyed leaving us in a new

cost crisis with harmful effects on trade balance and

employment.

To avoid such a development now as well as later it would be

necessary to decide upon measures which counter the increase

of profits leading to a further concentration of power and

property in trade.  On the contrary it is the task to spread

out the power and property so that more people participate

in the increase of property.  Through this the conditions for

lower increase in costs and bigger growth are created, while

a just distribution is not set aside but on the contrary

intensified.  Through this the conflict of the policy of

stability is alleviated considerably and the pre-conditions

created for a stable and employment-creating economical

growth.

This is the decisive and basic motive for the Government to

propose the employee investment funds.  It is also the

motive which in various forms has been brought forward in

the debate concerning the funds, in Sweden as well as in

other places."

        The structure of the system was based on a new law concerning

a profit-sharing tax and a new law concerning the administration of

the taxes through the Government pension fund system.  It may be

summarised as follows:

Means of obtaining capital

        The Profit-sharing Tax Act regulates the manner in which the

funds are to be raised to satisfy the requirements of the employee

investment funds for the capital needed.  The obligation to pay

profit-sharing tax embraces Swedish limited liability companies,

co-operative associations, savings banks and certain insurance

companies.  Under Section 1, the tax accrues to the State and is

transferred to the National Pension Insurance Fund.

        The amount of tax corresponds to 20% of the "profit-sharing

base".  This base is the real profit of the company, after a

"deductible" amount has been allowed for.  The deductible amount is

either 6% of the payroll of the company which is liable to pay tax or

500,000 Swedish crowns if the company so prefers.  By real profit is

meant the nominal profit of the company for the fiscal year, after

taking into account the effect of inflation on the assets and

liabilities of the company (Section 2).

        In addition to the profit-sharing tax, the employee investment

funds shall be financed by an increase in the supplementary pension

charge, which Swedish employers and the self-employed are bound to

pay to the Government.

        Briefly, the system of general (State) pension and its

financing is built up as follows:

        Swedish employees and the self-employed are covered by the

1962 General Insurance Act.  The insurance schemes consist of health

insurance, basic pension and supplementary pension insurance.

Normally, pensions are paid after the person concerned has reached 65

years of age.  The right to supplementary pension is based on the

income from gainful employment.  The person entitled to pension

collects a larger or lesser number of pension points in relation to

his income, upon which the amount of the supplementary pension benefit

is based.

        The general (State) insurance scheme is financed through the

levying of a number of charges under the Act on Social Security

Charges which are paid by the employers and by the self-employed.  One

of these charges is intended to finance supplementary pensions.  For

1984, it was levied at the rate of 10% of the employees' pay or of the

income of the self-employed from his work.

        From the Bill on employee investment funds it appears that

0.2-0.5% of the supplementary pension charge in the form of a special

supplementary pension charge shall be paid to the boards of the

employee investment funds.  The additional charge for 1984 of 0.2% is

regulated in the Act on the Amendment to the Act on Percentage Rates

for Levying Charges for Supplementary Pension Insurance.

        The profit-sharing tax is expected to bring in receipts of

1.5-2 billion Swedish crowns per year until 1990 and the special

supplementary pension charge is expected to bring in receipts in the

region of 2-2.5 billion Swedish crowns annually.  The employee

investment fund boards will thus have available an average sum of 4

billion Swedish crowns annually from 1984 to 1990 and a total of 28

billion Swedish crowns over the seven year period.  However, a limit

on the transfer of funds to the boards has been stated.  This

corresponds to an "investment capacity" of 2-2.5 billion Swedish

crowns per year.

The administration of the capital

        The second new law passed in 1983 which is of importance in

the employee investment fund system is the Act on the Statutes of the

National Pension Insurance Fund.  The capital received under the law

on social security charges is managed by a government body, called the

National Pension Insurance Fund (AP Fund).  Further, it shall also

manage the capital that is collected from the new profit-sharing tax

and the special supplementary pension charge which is intended to

finance the acquisition of shares by the employee investment funds.

        Before the creation of the employee investment fund system,

the assets of the National Pension Insurance Fund were managed by

four independent boards.  As a result of the new Statutes for the

National Pension Insurance Fund five new fund boards, called "Employee

Investment Fund Boards", were created.  Each of them has nine members

appointed by the Swedish Government.  Five of the members shall

represent the employee interest.  The five boards are to have

regional links (northern, eastern, western, southern and central

board).

        As regards the management of the assets made available to the

fund boards the following directives are laid down in the Statutes of

the National Pension Insurance Fund:

      "34.  The Fund Boards shall, within the limits of what

benefits the supplementary pension insurance system and is

compatible with general economic policy, and taking into account

the functioning of the credit market, manage the assets

entrusted to them by investing them on the capital market.  The

object of their investments shall be to improve the supply of

risk capital to the benefit of Swedish production and employment.

        The assets shall be invested so that the demand for a

good yield, a long-term approach and spread of risk is satisfied.

        36.  An employee investment fund board may invest the

assets that the board manages

        1.  in the shares of Swedish limited liability companies

        2.  in such convertible loan stock or loan stock to which

options to subscribe to new shares are attached as has been

issued by such limited liability companies as are intended in 1,

and

        3.  as risk capital in Swedish co-operative associations.

        37.  Para. 2.  An employee investment fund board may not

acquire so many of the shares registered on the stock exchange in

a limited liability company that they amount to 8% or more of the

total number of shares in the company or, if the shares have

various different voting values, so that the voting rights

attached to the shares amount to 8% or more of the total voting

rights of the shares in the company."

        The employee investment fund boards will primarily invest their

assets through the stock market.  This will be done in the normal

situation by purchasing shares through the Stockholm Stock Exchange.

Each of the five fund boards may acquire a maximum number of shares in

quoted companies as corresponds to voting rights of 8%.  The five

boards can thus together obtain voting righs of 40% in a quoted

limited liability company.  There is no similar limitation on the

acquisition of shares in other companies.

        As a result of acquiring shares in Swedish companies, the

boards of the employee investment funds are entitled to exercise the

voting rights of these shares at the members' meetings of the

companies concerned and consequently influence to a greater or lesser

extent the election of the Boards of Directors of the companies and

the direction of the companies' affairs.

        A limitation on the voting rights of the fund boards is found

in Section 38 para. 1:

       "An employee investment fund board shall, at the request

of a local trade union organisation at a limited liability

company in which the fund board has acquired shares or, if the

company is the parent company of a group, at its Swedish

subsidiaries, assign to the trade union organisation for a

maximum period of one year at a time the right to vote for half

the voting rights attached to the shares."

        By local trade union organisation is meant such an association

of employees as has the standing of a party in local negotiations

with the employer.  The voting rights are transferred from the fund

board by "assigning" to the trade union organisation for a maximum of

one year at a time the voting rights of the shares that the board

manages.

        There is no obstacle preventing the board of an employee

investment fund from voluntarily assigning voting rights for more than

50% of the shares.  However, the right of the local trade union

organisation to exercise voting rights for the above-mentioned

percentage of the shares is unconditional.

        The boards of the employee investment funds shall in

accordance with Section 28 in the statutes of the National Pension

Insurance Fund annually transfer a certain income from the assets

under administration to the three fund boards responsible for

the disbursement of supplementary pensions.  This income corresponds

to 3% of the current value of the assets that the boards managed at

the end of the previous financial year.  The current value

calculations are performed with the aid of changes in the consumer

price index.  Briefly, the system means that the fund boards are to be

responsible for paying a 3% real interest on managed assets mentioned

above to the AP Fund system.

The Swedish Law Council (Lagrådet)

        The proposal that the Swedish Government presented to

parliament was under the Constitution submitted for scrutiny from a

legal point of view by an institution called the Law Council.  This

council is composed of three members from the country's supreme legal

institutions, the Supreme Court and the Supreme Administrative Court.

In the present case, two Supreme Administrative Court Judges and a

Supreme Court Judge scrutinised the bill and gave their opinion on

3 November 1983.

        Concerning the compatibility of the Government bill with the

Swedish Constitution and the European Convention on Human Rights, the

Law Council made the following statement:

"In some statements of opinion it has been questioned

whether the proposal is compatible with the Constitution and

whether it is in accordance with Swedish international

commitments.  On the latter point, it is probably the

convention that Sweden supported through the ratification of

the First Protocol of March 20, 1952 to the Convention

concerning the Protection of Human Rights and Fundamental

Freedoms that is referred to.  According to Article 1 in the

Protocol all rights of physical or juridical persons to

their own property shall remain inviolate and nobody may

have their property confiscated except in the national

interest and under conditions laid down in the law and the

general principles of public law.  The bodies which have

received the proposal for their opinion and which have taken

up the question of the compatibility of the present proposal

with the Constitution have not gone into the question in

more detail.  What they appear to be wishing to question is

whether our legal system allows assets to be taken from

specific companies to be used by organs dominated by

employees in the collective employee interest.  The Law

Council for its part has the following comment to make.  The

assets are taken from business firms by government taxes in

the manner prescribed in the Constitution, viz. in

accordance with laws; the supplementary pension charges

should also be regarded as taxes.  The taxes are specially

destined for the National Pension Insurance Fund.  The

Constitution contains no rules concerning limitations on the

purposes for which government taxes may be levied.  The use

of government funds is decided by Parliament and the

principal rule is that this shall be done by budgetary

means.  However, Chapter 9, Section 2 in the Constitution

allows the use of government funds for special purposes

apart from through the budget.  Giving government revenues

special destination is admittedly being brought to an end

and parliament has stated that no new special destinations

should be introduced.  There is nevertheless no

constitutional obstacle to giving taxes a special

destination.  Nor is there anything to prevent government

funds being made available to bodies in which a specific

group of citizens has a guaranteed dominating influence.  In

the view of the Law Council no complaint can be made against

the proposed employee investment fund system on the grounds

of incompatibility with the Constitution.  Similarly, the

Law Council finds that the proposal is not in conflict with

our international commitments.  The requirement in Article 1

of the above-mentioned supplementary protocol that such

interference as is intended in the Article must be based on

the "public interest" can be regarded as being satisfied in

that the assets will accrue to the National Pension

Insurance Fund and be managed by bodies subject to public

law.  The fact that the proposal also has other purposes

such as strengthening the influence of employees over the

business sector would not appear to lead to any other

conclusion."

        Summary

        In summary, the complex of laws in connection with the

parliamentary approval of the government bill includes the following

points:

        - A large number of Swedish companies will have to share a

certain amount of their profits with the State by means of a special

tax called the profit-sharing tax.

        - All business enterprises which are compelled to contribute

to the State for supplementary pensions under the law on social

security charges will be affected, regardless of their earnings via

the additional surcharge.

        - The receipts from the above charges are destined for the

acquisition on the open market of shares in Swedish limited liability

companies.

        - The owner of these shares will be the National Pension

Insurance Fund, which is a government organ.

        - Five of the nine fund boards, the Employee Investment Fund

Boards, are assigned to manage the above-mentioned shares and through

their use of the voting rights attached to these shares at annual

general meetings to exercise influence on decisions regarding the

affairs of the companies concerned.

        - The majority of the members of the employee investment fund

boards (five out of nine) shall represent the employee interests.

        - The local trade union organisations at the companies in

which shares have been acquired can claim to exercise voting rights

for half the votes attached to the shares.  The trade union

organisations will not themselves be the owners of the share capital

of the companies, but they may exercise the functions of ownership

(voting rights) attached to the shares that the fund boards acquire.

The right of ownership will be retained by the State (AP Funds).

        Finally, it appears that the Swedish Government as a motive

saw the employees investment funds as one element in their economic

policy.  Action appeared necessary to enable employees to participate

in the earnings of business enterprises in order to improve the

stability of long-term economic policy and to lower unemployment.

COMPLAINTS

        Both applicants complain that Sweden has violated the European

Convention on Human Rights and Protocol No. 1 to the Convention by

virtue of the introduction in 1983 of the employee investment funds.

Both applicants maintain that the law obliges companies in Sweden to

make payments to the State, payments that almost exclusively are to be

used to purchase company shares, which will then be at the disposal

of trade union interests.  The result of the law is that trade union

interests are assured the ownership of shares in Swedish companies in

a way that deprives companies of assets, which are then used to

support in an arbitrary fashion trade union demands for power and

right of decision in Swedish limited companies.  This, the applicants

allege, constitutes a deprivation of property in contravention of

Article 1 of Protocol No. 1 to the Convention.

        The law also contravenes the conditions for a State's use of

power, set out in Articles 17 and 18 of the Convention.  Nor does

Swedish law allow any effective remedy before Swedish courts or other

authorities with regard to questions relating to the rules of the

Convention, the absence of which is in contravention of Article 6 and

Article 13 of the Convention.

        Finally, the second applicant complains that, regarding the

relationship between shareholders, the trade unions will benefit at the

expense of the others in a way that violates the principle of equality

between shareholders in a limited company to an extent that

contravenes the principle of equality in Article 14 of the Convention.

        The following is a summary of the submissions of the

applicants in support of their allegations.

        The aim of the employee investment funds is to cause a change

of ownership within existing companies by means of legislation using

money which arises from special public taxation.  This

collectivisation of private ownership will be a continuous task for

the boards of the funds.  The execution of their task takes place

without any balancing of interests according to law or any other legal

control by a public body regarding, for example, the purpose or need

for this transfer from private to collective ownership.  In these

respects the Swedish system differs on practically all points from the

normal practice in Western Europe regarding nationalisation.  The

entire design is alien to the legal traditions of Western Europe.

        The funds work as autonomous socialisation instruments -

formally speaking by taking decisions regarding voluntary purchases on

the stock market from individual shareholders - but thereby using

financial resources, acquired for the purpose by compulsory

acquisition from companies.  It must be considered inadmissible to

create an autonomous socialisation instrument outside of the State's

direct control regarding questions of budget decisions and without any

law concerning the principles of the transfer of ownership from

individuals to trade union bodies.

        Contrary to international practice about payment from public

funds in cases of nationalisation, the Swedish system forces

companies to pay for their own socialisation.  Impositions which in

this way are aimed at financing transactions on the stock market, which

interfere with the market conditions, affecting firms and private

individuals, and which directly are aimed at changing the ownership

configuration, are not such as to which fulfil any of the normal

purposes of taxation.  It is not within the realm of normal public

activity to organise stock-broking activities using the proceeds of

impositions on companies; activities which are intended to be used for

the ousting or out-manoeuvring of the current private owners.  The

aim is incompatible with a reasonable general interest, something

which, according to the Convention, is necessary for taxation

measures.

        The violation of the Convention consists in the transfer of

profits from firms to a governmental institution which then forwards

them to trade-union-run funds, which use the money to purchase shares

and thereby acquire ownership of the firms.  In fact, this transfer of

ownership takes place not as claimed for the benefit of the pension

schemes  but to secure for trade unions the rights to vote and to

exert influence over individual firms.

        According to the Convention neither expropriation nor

taxation is to be used to satisfy anything but the public interest.

It cannot be regarded as satisfying a reasonable public interest to

provide trade unions with a right of decision to acquire shares with

money which is taken from enterprises by means of law and then to give

trade union representatives that right of decision which is an

integral part of share ownership.  On the contrary, it involves

favouring group interests which do not form sufficient grounds from

the public interest point of view to exercise public power in such a

way as to acquire private possessions via taxation with the aim of

changing the existing ownership configuration in limited companies.

In order to describe this acquisition as taxation, the State is in

fact in an artificial way brought into acting formally as a "middle-man"

and money manager before the financial resources are free to be used

for the purchase of shares by the trade-union-steered funds.  This is

to obscure the fact that the financial resources derive from firms

which the trade unions wish to purchase.

        In principle an individual's possessions are to enjoy

protection against public interference in such a way that the

execution of public power can be controlled.  Article 1 of the First

Protocol contains three distinctive rules.  In its first paragraph it

states the principle of the fundamental right to peaceful enjoyment of

possessions.  Secondly, the Article gives the State the power to

interfere with the protection of possessions by such means as

expropriation, that is acquiring property for public use, in ways

described by law and in accordance with international law.

Thirdly, the second paragaraph of Article 1 gives the State an

extensive right to regulate the use of property in the way it

considers necessary for the public benefit and in order to secure

payment of taxes and other contributions for the same purpose.

        The law concerning employee investment funds allows the

transfer of possessions in ways which either lack the support of

any constitutionally acceptable form of taxation right or

constitute such abuse of constitutionally acceptable instruments of

taxation that the right of property is violated.  Such a violation of

the right of possession is in contravention of the fundamental right

of peaceful enjoyment of possessions according to the Convention.

        Protocol No. 1 constitutes a State's right to regulate the

right of property by means of legislation.  However, there is a

certain control of the State's legislative power, for example that

the power must not be used in contravention of Article 17 of the

Convention.  The said Article states that a State must not act in such

a way that a human right as given in the Convention is lost or limited

more than necessary.  Article 18 of the Convention forbids abuse of

public power in such a way that human rights as defined by the

Convention are limited for reasons not allowed by the Convention.

        The power to impose tax is used for the purpose of causing a

change in the power structure within enterprises, a purpose for which

it is not intended.  The payments from the companies for the financing

of the employee investment funds are not necessary to meet any public

requirements for pensions.  The special designation to purchase shares

is of no reasonable public interest but is in excess of what can be

considered reasonable regarding interference in established relations

of ownership within the companies.

        As a matter of fact the employee investment fund system has

been created for other purposes than the one officially given, that is

to say for pension purposes.  The purpose is to satisfy trade union

demands for the right to use shares and thus the right of decision

within Swedish companies.

        The collection of money in question is therefore such an abuse

of the taxation system that it is in contravention of Articles 17 and

18 of the Convention.

        The employee investment funds finally represent a system where

trade union interests are decisive for the purchase of shares in

companies.  The principle, however, that a transfer of possessions to

the public is to be performed in accordance with law and can be

brought before a court according to Articles 6 or 13 of the

Convention does not apply in the Swedish system and accordingly these

articles are also violated.

        There is no constitutional court in Sweden but the

Constitution gives a formal right to Swedish courts and authorities to

test whether an Act in a particular case contravenes the Swedish

Constitution.

        Chapter 2, section 18 of the Swedish Constitution

(Regeringsformen) gives the individual a right of compensation in case

of expropriation or similar measures.  If an Act is in contravention

of this requirement, a court can for example examine the question

of compensation.  The legality of tax measures can also be tried by

tax courts.

        However, the test of constitutional viability is generally

regarded more as a formal than a practically feasible right in cases

of constitutional deficiencies in Swedish law.  Nor has there ever

been any test of constitutional viability leading to the disapproval

of a Swedish law.

        Instead Swedish Acts are examined by a committee called

the Legal Council (Lagrådet) before the passing of a bill.  The Legal

Council is formally an advisory body to the Government.  It has

examined the Employee Investment Fund Acts and found that they do not

contravene the rules of expropriation found in the Constitution,

Chapter 2, section 18 or the European Convention on Human Rights.

        The Legal Council, however, is not a court and cannot decide

on its own working conditions, such as the time allowed for the

examination of a bill.  In this instance, the Government gave the

Council only three weeks to examine the proposed legislation.  The

Council was, furthermore, not commissioned to examine all Acts forming

part of the legislation.  The members therefore complained over the

short time and the incomplete material given to them.  The conditions

under which the Legal Council was forced to work must be regarded as

almost a parody of judicial work.  The Council's control was later

also publicly criticised by the opposition in Parliament.

        However, the findings of the Legal Council normally exercise

great influence on the Swedish courts.  Therefore, the Council's

acceptance reduces the already very small possibilities of being

successful in Sweden with a test case regarding the

unconstitutionality of the employee investment funds according to

Swedish law.

        According to Article 13 of the Convention every individual has

the right to bring his case before a national authority in case his

rights according to the Convention have been violated.  According to

the practice of the European Court of Human Rights this also applies to

anybody who maintains that such a violation has taken place.  In

Sweden - which has not incorporated the rights of the Convention into

her domestic law and where the courts refuse to take the rules of the

Convention into consideration - there are no effective remedies within

the meaning of the Convention regarding decisions taken by the

Government or the Parliament.

        In the case of Sporrong and Lönnroth v.  Sweden (Comm.  Report

8.10.80) the Commission found that Swedish legislation violated

Article 13 of the Convention as regards decisions taken by the Swedish

Government as the primary and ultimate decision-making body.  According

to the Swedish system there is no possibility of having a case

examined on the basis of the Convention.  The applicants feel that

this is a case of violation of Article 13 and possibly also of

Article 6 para. 1.

        The second applicant has finally separately submitted the

following regarding the effect of the interference on the companies'

owners/shareholders.

        Primarily, it is the companies themselves that are subject to

the public interference since they must abstain from resources which

are then used for the purchase of shares in the interest of trade

union bodies.  Ultimately, however, the interference affects the

owners of the companies.  Thus, both the companies as legal entities

and their owners, that is the physical persons who own the shares, are

affected.

        The law on the employee investment funds will create a new

group of company owners, who finance their ownership of shares by

acquisition of the companies' own assets.  Thus, the purchase by the

new group of owners takes place without any corresponding sacrifice of

their own assets.  The change of ownership does not take place under

commercial conditions by means of purchasing new issues of shares or

purchasing shares on the stock market by using money which does not

come from the companies themselves.  Other groups of shareholders will

be overpowered by institutions which are not subjected to the

commercial market condition whereby economic sacrifices must be made

in order to purchase shares and to gain ownership in the companies.

        Changes in the regulation of the relationship between

different groups or types of shares, stated in the articles of

companies, can, according to Swedish law, only be carried out

voluntarily and, principally, by means of decision by a qualified

majority at a general meeting of shareholders.  This method of

acquiring shares which is, in principle, cost-free for the new group

of owners, will endanger the existing relationship between different

groups of owners, a relationship voluntarily created and regulated in

the articles of companies.  Other owner groups, which separately or

together own two or three per cent of the shares, may thereby have

secured for themselves a decisive influence in company affairs

through representation on the board or even involvement in management.

Such an owner or group of owners is now in danger of losing influence

because of the employee investment funds which - with means provided

by the companies themselves - are able to purchase say five or six per

cent of a company's total stock of shares.

        The involvement of a previously influential group of

shareholders will then become considerably changed, perhaps even

meaningless from their own point of view.  It will no longer be

possible to retain control of the company, something which is perhaps

necessary if the original shareholders are to retain their

involvement.  A block of shares that gives the owner influence

represents a value as such, a value that is endangered or lost by the

operations of the employee investment funds - operations which had

been completely impossible to carry out without legislative support

provided by the funds' statutes, and which authorise the funds to

acquire compulsorily assets from the firms in the way described

above.  The money used for the funds' purchase of shares is, in

principle, money acquired from the shareholders.  The change of

ownership is thus carried out at the expense of other shareholders.

        The profit and profit-sharing taxes and the social security

contribution, amounting to 0.2 per cent of wages/salaries and

specially designated for the purchase of shares, all reduce companies'

assets.  The assets acquired are then out of the companies' reach.

This reduction of the companies' assets of course affects the value of

the shares.  By the transfer of assets, in fact belonging to the

companies, for purposes alien to the companies and without the support

of any decision taken by the shareholders in a voluntary way

stipulated in the charters of the companies, both the companies and

their shareholders are sustaining losses.  These losses are directly

linked to the enrichment of the employee investment funds.  This

enrichment is in contravention of the protection of property afforded

by the Convention as it forbids compulsory transfer of property

without compensation.

        In order to satisfy the trade union demand for part-ownership

of companies it has been necessary to alter the ordinary rules for

and the meaning of shareholding.  The Swedish Company Act, Chapter 1,

section 1 has been amended to allow the transfer of voting rights to

trade unions.  To abandon the Company Act's so-called "principle of

indivisability" regarding share votes is by itself an expropriative

measure as it is a direct transfer of powers of ownership to trade

unions.

        Thus it is clear that, as mentioned above, the employee

investment funds in reality are administrative bodies taking care of

trade union interests and not of national public interest.  The funds'

organisation and administration are in practical terms alien to, or at

least not necessary for the interests and needs of the State Pension

Scheme.

        As the funds choose companies as objects of purchase and

begin to infiltrate them, the boards of the funds appear as intruders

among the other shareholders.  In fact, the funds obtain assets from

companies to the detriment of the other shareholders.

        As mentioned before this endangers the configuration of

ownership in the companies.  It also sets aside the principle of

equality among shareholders, as the funds obtain company assets to

enable them to purchase the companies' shares on the stock market.

        Such a measure is to be considered an interference with the

concerned companies' sphere of assets, an interference of an

expropriative nature.  As mentioned "the principle of equality"

is violated and the relationship within groups of shareholders is

endangered by the introduction of a new group of shareholders who have

been given assets from the companies to enable them to finance their

purchases of shares.  Further, the principle of indivisability is

surrendered when the right to vote, one of the prerogatives following

ownership, is transferred to the trade unions.  This way of

favouring a new group of owners and certain individual/trade union

group interests also contravenes the principle of equality stated in

Article 14 of the Convention.

THE LAW

1.      Both applicants have complained that the introduction in 1983

of the legislation in Sweden concerning the employee investment funds

involves a breach of Article 1 of Protocol No. 1 (P1-1) to the Convention

which reads:

        "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."

        It is clear from Article 25 para. 1 (Art. 25-1) of the

Convention that the  Commission can receive an application from a

person, non-governmental organisation or group of individuals only

if such person, non-governmental organisation or group of

individuals can claim to be a victim of a violation by one of the

High Contracting Parties of the rights set forth in the Convention.

Moreover, the Commission is competent to examine the compatibility of

domestic legislation with the Convention only with respect to its

application in a concrete case, while it is not competent to examine

in abstracto its compatibility with the Convention.

   Accordingly the Commission will only examine the applicants'

complaints insofar as the legislation in question affects the

applicants themselves.

   Both applicants have alleged that the levying of a profit-sharing

tax upon certain companies and the obligation of these companies to

pay an increase in the supplementary pension charge are an

interference with property rights which, therefore, can only be

justified insofar as the interference is legally justified in

accordance with the exception rules in the second sentence of the

first paragraph or the second paragraph of Article 1 of Protocol No. 1

(P1-1) to the Convention.

        Regarding this complaint the Commission observes that the

"possessions" referred to are the sum of money the first applicant

must pay under the Profit-sharing Tax Act and the supplementary

pension scheme.  The Commission finds that this applicant, therefore,

may claim to be a victim of an alleged violation of Article 1 of

Protocol No. 1 (P1-1) to the Convention.  The Commission furthermore finds

that this could be regarded as an interference with the first

applicant's right to peaceful enjoyment of its possessions and that,

therefore, Article 1 of Protocol No. 1 (P1-1) is applicable regarding this

applicant.

        Regarding the second applicant the Commission recalls that he

is a shareholder in certain companies liable to pay the charges in

question.

        The Court of Human Rights has held that the term "victim" in

Article 25 (Art. 25) of the Convention denotes the person directly

affected by the act or omission which is at issue (cf. Eur. Court

H.R., Eckle judgment of 15 July 1982, Series A No. 51, p. 30, para.

66).  The Commission has previously held in two cases that a

shareholder was entitled to claim to be a victim of measures directed

against a company (No. 1706/62, Dec. 4.10.66, Collection 21 p. 26 and

No. 7598/76 Kaplan v. United Kingdom, Comm. Report 17.7.80, D.R. 21

p. 5  (p. 23)).

        However, the Commission recalls that in both these cases the

individual concerned held a substantial majority shareholding in the

company.  In effect both applicants were carrying out their own

business through the medium of the company and both applicants had a

direct personal interest in the subject-matter of the complaint.  Thus

in Application No. 1706/62 the applicant alleged that the actions of

which he complained were part of a general scheme aimed against him

personally.  The Kaplan case concerned restrictions imposed on the

company on the basis of the applicant's alleged personal unfitness to

act as a controller.

        In the case of Yarrow and others (No. 9266/81, Dec. 28.1.83,

D.R. 30 p. 155 (p. 185)) the Commission held that the applicants, who

did not hold a majority or controlling interest in the company in

question, were not directly and personally affected by the measure

taken (the nationalisation of the company) even though this measure

undoubtedly reduced the value of their shareholdings and they could

not therefore claim to be victims within the meaning of Article 25

(Art. 25) of the Convention.  Moreover, it was open to the direct

victim - the company - to lodge an application.

        The circumstances of the particular complaint in this case

are, in the Commission's view, comparable to the latter decision.  The

second applicant himself is not required to pay any tax or additional

charge to the national pension scheme and he cannot therefore be found

to be directly and personally affected by these charges which are the

subject of the first complaint to be considered by the Commission.

Thus he is in this respect not entitled to claim to be a victim for

the purposes of Article 25 (Art. 25) of the Convention and it follows

that this part of the application, so far as brought by the second

applicant, is manifestly ill-founded and must therefore be considered

inadmissible under Article 27 para. 2 (Art. 27-2) of the Convention.

        Regarding this particular complaint it thus remains to examine

whether the interference with the first applicant's rights was

justified.

        The Commission has previously been called upon to determine

whether another applicant company in Sweden had been subject to an

unjustified interference when forced to pay the charges in question

under the Swedish Employee Investment Fund Acts (Dec. No. 11036/84,

2.12.85, to be published in D.R.).  In this decision the Commission

stated:

"The sums of money to be paid relate either to a

profit-sharing tax or to a contribution to the Swedish

pension system and the interference therefore falls under

the notion 'to secure the payment of taxes or other

contributions' as set out in the second paragraph

of Article 1 (Art. 1-2).  The power of taxation is

expressly recognised hereby and includes ... also the

right to levy taxes as such.

Though it is certain that no general prohibition of taxes

payable exclusively out of the tax-payer's capital can be

derived from Article 1 (Art. 1), the Commission finds that a

financial liability arising out of the raising of taxes or

contributions may adversely affect the guarantee of

ownership if it places an excessive burden on the person

concerned or fundamentally interferes with his financial

position.  However, it is in the first place for the

national authorities to decide what kind of taxes or

contributions are to be collected.  Furthermore the

decisions in this area will commonly involve the

appreciation of political, economic and social questions

which the Convention leaves within the competence of the

Contracting States.  The power of appreciation of the

Contracting States is therefore a wide one.

In the present case the Commission recalls that the

applicant is of the opinion that the employee investment

fund legislation, after a scrutiny of the facts, is no more

than the expression of a desire for a different distribution

of wealth and power and greater trade union influence

through joint ownership.  The outcome of the transactions is

in no way different from transactions concerning the

nationalisation of industry aiming at the Swedish State

becoming the actual owner.  The reasons stated by the

Government are, in the applicant's opinion, merely a pretext

intended to conceal the real point, which is the demands of

the trade unions associated with the Swedish labour movement

to influence the Swedish business enterprises.

As already mentioned above, the Convention leaves it to the

Contracting States to determine their political, economic

and social policies and Article 1 of Protocol No. 1 (P1-1) to the

Convention is not intended to protect any specific political

view or system.  Article 1 (Art. 1) is a guarantee within the

democratic states Parties to the Convention, securing the

peaceful enjoyment of possessions and it is in this light

that the Commission examines the interference imposed on the

applicant.

The circumstances of the present case show that the

applicant is bound to pay a new tax which amounts to a

certain percentage of its profits.  Furthermore it has been

established that the applicant must pay an increase in

social pension charges amounting to 0.2 - 0.5 per cent.  The

Commission cannot find that these obligations affect the

applicant's guarantee of ownership or interfere with its

financial situation to such an extent that this could be

considered disproportionate or an abuse of the Contracting

Party's right under Article 1 of Protocol No. 1 (P1-1).

It may be true that the aim of these transactions includes

the creation of a different policy in the economic field.

However, although opinions evidently differ as to the

fairness of such policy the Commission considers that it was

one which the Government were entitled to pursue.

Accordingly, the legislation concerning the employee

investment funds did not infringe the applicant's rights

under Article 1 of Protocol No. 1 (P1-1)."

        It has not been established that the circumstances of the

present applicant company are different in any way from the company in

the previous case.  For the same reasons the Commission therefore

concludes that its complaint is manifestly ill-founded within the

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

2.      Under Article 1 of Protocol No. 1 (P1-1) to the Convention the

second applicant has complained that he, as shareholder, may be

overpowered by institutions which are not subjected to the commercial

market conditions whereby economic sacrifices must be made in order to

purchase shares and to gain influence in the companies.  The

involvement of a previously influential group of shareholders would

thus be changed considerably.  A block of shares, which in the

applicant's opinion represents a value as such, gives the shareholder

influence over a company, an influence/value that is endangered or

lost by the operation of the employee investment funds.  Furthermore

the reduction of the companies' assets would affect the value of the

shares as such to the detriment of the present shareholders, including

the second applicant.

        The Commission has first examined whether the second

applicant, in the light of the Commission's earlier case-law set out

above, can claim to be a victim with regard to this particular

complaint.  Insofar as the second applicant refers to the value of the

shares he owns the Commission recalls its decision in the Yarrow case

where a decrease in value of shares was found not to affect the

applicants to such an extent that they could be considered victims

within the meaning of Article 25 (Art. 25) of the Convention.  The

Commission maintains this position here.

        However, the applicant has also complained under Article 1 of

Protocol No. 1 (P1-1) to the Convention that he is deprived of his influence

and power over the companies in which he holds shares.  In this

respect the Commission observes that a company share is a complex

thing.  It certifies that the holder possesses a share in a company

together with the corresponding rights.  This is not only an indirect

claim on company assets but other rights, especially voting rights and

the right to influence the company, may follow the share.  In these

circumstances the Commission would not exclude that the applicant may

claim to be a victim of an alleged violation of Article 1 of Protocol

No. 1 (P1-1) and this complaint is not rejected for this reason.

        In the present case the Commission recalls that the second

applicant owns shares in five companies liable to contribute under the

new system.  There is no doubt that these shares are "possessions"

within the meaning of Article 1 of Protocol No. 1 (P1-1).

        However, in the present case, the Commission also recalls that

the second applicant has not been compelled in any way to surrender

his shares nor is he liable to contribute to the tax system in

question.  The issue which might arise is therefore only whether the

second applicant's power or influence over the companies as

shareholder is protected by Article 1 of Protocol No. 1 (P1-1) and, if so,

whether the applicant's situation was indeed of such a character that

the right secured to him by that provision has been infringed.

        The Commission does not find it necessary, however, in this

case to decide whether the power or influence a shareholder may

acquire over a company is a "possession" within the meaning of Article

1 of Protocol No. 1 (P1-1), because even assuming this to be the case the

present case does not disclose any appearance of a breach of this

provision.  In the companies in which the second applicant holds

shares, his shareholdings are of such size that he cannot in his

capacity as shareholder control any of these companies.  There has

accordingly not been any interference with his rights under Article 1

of Protocol No. 1 (P1-1) and it follows that the complaint is manifestly

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

Convention.

3.      The applicants have also complained that their rights under

Articles 17 and 18 (Art. 17, 18) of the Convention have been violated.

These provisions provide as follows:

        Article 17 (Art. 17)

        "Nothing in this Convention may be interpreted as

        implying for any State, group or person any right to

        engage in any activity or perform any act aimed at the

        destruction of any of the rights and freedoms set

        forth herein or at their limitation to a greater extent

        than is provided for in the Convention."

        Article 18 (Art. 18)

        "The restrictions permitted under this Convention to

        the said rights and freedoms shall not be applied for

        any purpose other than those for which they have been

        prescribed."

        As has been indicated above, the applicants consider that the

legislation in question aimed at the destruction of rights contrary to

restrictions permitted under the Convention.

        The Commission has already found that the adoption and

application of the new legislation was compatible with Article 1 of

Protocol No. 1 (P1-1).  Insofar as it concerned the first applicant the

interference could be considered justified as being "to secure the

payment of taxes or other contributions" within the meaning of Article

1 of Protocol No. 1 (P1-1) and insofar as it concerned the second applicant

there was no interference with the rights secured by Article 1 of

Protocol No. 1 (P1-1).  For similar reasons the Commission does not consider

that the enactment and application of the 1983 Acts aimed at the

destruction or the excessive limitation of the applicants' rights

under the Convention.

        The Commission accordingly finds no breach of Article 17 or

Article 18 in conjunction with Article 1 of Protocol No. 1

(Art. 17+P1-1, 18+P1-1) and it follows that this part of the

application is also manifestly ill-founded within the meaning of

Article 27 para. 2 (Art. 27-2) of the Convention.

4.      The applicants, invoking Articles 6 and 13 (Art. 6, 13) of the

Convention,   have furthermore complained that Swedish law provides no

effective  remedy before Swedish courts or other authorities with

regard to the questions arising in the present case.

        With regard to Article 6 (Art. 6) of the Convention the Commission

recalls that it has already stated above that the system introduced in

Sweden was based on a new tax, the so-called profit-sharing tax, which

amounted to twenty per cent of a specified amount of the profits of

the company in question.  Further the first applicant was obliged to

pay an increased contribution to the national pension scheme.  The

Commission considered this system to be covered by the Contracting

States' power of taxation expressly recognised by the Convention.

        The Commission has constantly held that Article 6 (Art. 6) is not

applicable to proceedings regarding taxation (cf. No. 2552/65, Dec.

15.12.67, Collection 26, p. 1, No. 2717/66, Dec. 6.2.69, Yearbook 13

p. 176, No. 8903/80, Dec. 8.7.80, D.R. 21 p. 246 and No. 9908/82, Dec.

4.5.83, D.R. 32, p. 266).  It follows that this part of the application

is incompatible ratione materiae with Article 6 (Art. 6) of the Convention

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

        With regard to Article 13 (Art. 13) of the Convention the Commission

recalls that in its judgment in the case of Klass and others the

European Court of Human Rights stated that "Article 13 (Art. 13) must be

interpreted as guaranteeing an 'effective remedy before a national

authority' to everyone who claims that his rights and freedoms under

the Convention have been violated" (Eur. Court H.R., Klass and

others judgment of 6 September 1978, Series A No. 28, p. 29, para.

64).

        The Commission has stated in its Report in the case of

Sporrong and Lönnroth against Sweden that it is "obvious that it

(Article 13) cannot be considered to give an unqualified right to a

remedy to anyone in respect of any complaint as soon as he chooses to

invoke the Convention."  According to the Commission it is necessary

"to take account of the nature of the acts complained of" (Comm.

Report 8.10.80, para. 155).

        In the case of Young, James and Webster against the United

Kingdom the Commission stated that "it cannot be deduced from Article

13 (Art. 13) that there must be a remedy against legislation as such

which is considered not to be in conformity with the Convention.  Such

a remedy would in effect amount to some sort of judicial review of

legislation because any other review - generally sufficient for

Article 13 (Art. 13) which requires only a remedy before a national

authority - could hardly be effective concerning legislation" (Comm.

Report 14.12.79, para. 177).

        The Commission is of the opinion that the applicants'

complaints in substance concern legislation.  However, in applying the

case-law mentioned above the Commission finds no appearance of a

breach of Article 13 (Art. 13) as this Article does not relate to

legislation and does not guarantee a remedy by which legislation could

be controlled as to its conformity with the Convention.

        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.

5.      Finally the second applicant has complained that in regard to

the relationship between shareholders the trade unions will benefit at

the expense of the other shareholders in a limited company to an

extent that contravenes "the principle of equality" in Article 14

(Art. 14) of the Convention.

        The Commission recalls that Article 14 (Art. 14) has no independent

existence but plays a role only in order to safeguard individuals

placed in similar situations from any discrimination in the enjoyment

of the rights and freedoms set forth in the Convention and its

Protocols.  Furthermore, as already indicated above, the Commission

will only examine the applicant's complaints insofar as the issues

raised affect the applicant directly and personally.

        In the present case the Commission recalls that the second

applicant holds shares in five different companies but that he has no

controlling influence over these companies.  In these circumstances the

Commission finds no appearance of any discriminatory issues which

affected the second applicant directly or personally and 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

        DECLARES THE APPLICATION INADMISSIBLE

Deputy Secretary to the Commission         President of the Commission

      (J. RAYMOND)                             (C. A. NØRGAARD)