FIFTH SECTION

DECISION

Application no . 36294/08 GEBR. ARNHOLD OHG I.L. against Germany

The European Court of Human Rights ( Fifth Section ), sitting on 17 December 2013 as a Chamber composed of:

Mark Villiger, President, Angelika Nußberger, Boštjan M. Zupančič, Ann Power-Forde, Ganna Yudkivska, Helena Jäderblom, Aleš Pejchal, judges, and Stephen Phillips , Deputy Section Registrar ,

Having regard to the above application lodged on 28 July 2008 ,

Having deliberated, decides as follows:

THE FACTS

1. The applicant, Gebr. Arnhold OHG i.L., is a n ordinary partnership in liquidation which is registered in Germany. The applicant is represented before the Court by Mr J. M. Cramer von Clausbruch, a lawyer practising in Dresden.

A. The circumstances of the case

2. The facts of the case, as submitted by the applicant, may be summarised as follows.

3. The applicant is the legal successor of the Gebrüder Arnold KG Dresden ( “G-KG”). The partners of the G- KG, who were of Jewish origins, were forced to sell real estate, including a specific plot of land , in 1939. On 1 December 1980 the plot of land was owned by a people ’ s enterprise ( volkseigener Betrieb , VEB ) . On 26 November 1992 the B. company was entered into the land register as the VEB ’ s legal successor.

4. On 25 June 1990 the applicant applied for restitution of the plot of land.

5. On 4 January 1996 the Dresden District Court ordered the compulsory auction of the plot because of the B. company ’ s insolvency .

6. On 8 September 1997 the applicant notified the Dresden District Court of its pending restitution claim.

7. On 10 September 1997 the Dresden District Court accepted the tender by Z. The court order conferring title to the property on Z. contained the following sentence (brackets in the original version):

„ ( Es wurden die vermögensrechtlichen Ansprüche de r Fa. Gebrüder Arnhold i. Abw. a uf Rückübertragung des Grundstücks wirksam zum Versteigerungsverfahren angemeldet und im Termin bekannt gemacht. § 9 a EGZVG )“

“ (The [applicant ’ s] restitution claims were validly filed in the auction proceedings and were made known on the day of auction. Section 9a EGZVG [Introductory Law on Compulsory Auction])”

Subsequently, Z. was entered in the land register as owner of the plot.

8. On 14 October 2003 the Office for the Resolution of Outstanding Property Issues for the Land of Saxony ( Sächsisches Landesamt zur Regelung offener Vermögensfragen ) rejected the applicant ’ s request for restitution of the plot and ordered the insolvency administrator over the property of the B . company to pay the applicant a sum of money equivalent to the auction proceeds . The Federal Office observed, at the outset, that the partners of the applicant ’ s legal predecessor had been exposed to persecution because of their Jewish origins. Accordingly, the applicant was in principle entitled to restitution. However, restitution of the plot itself was excluded in the instant case under section 3b § 4 first sentence of the Law on the Resolution of Outstanding Property Issues (Property Act, see relevant domestic law, below) because Z. had acquired the property in compulsory auction. The fact that the applicant had notified the District Court of the pending restitution proceedings was irrelevant in this context. Section 9a of the Introductory Law on Compulsory Auction ( EGZVG , see paragraph 19, below) was not applicable in the instant case, as this provision exclusively applied in case the seizure extended to the previously separate property of any building erected on the land.

9. On 12 October 2006 the Dresden Administrative Court quashed the decision and ordered the Federal Republic of Germany to restitute the plot to the applicant. Relying on the case law of the Dresden Court of Appeal (decision of 14 November 1997 – 6 W 1526/06) and of the Greifswald Administrative Court (decision of 3 June 1997 – 3 B 789/97), the Dresden Administrative Court considered that Section 9a of the EGZVG was not only applicable to restitution claims relating to separate building property, but also to claims relating to the restitution of plots of land. It followed that the sale in compulsory auction did not alter the applicant ’ s restitution claim.

10. On 19 December 2007 the Federal Administrative Court, on the Federal Office ’ s appeal on points of law, quashed the judgment of the Dresden Administrative Court and rejected the applicant ’ s action. Relying on the systematic context and on the explanatory memorandum attached to section 9a EGZVG , the Federal Administrative Court considered that this provision only applied to restitution claims relating to separate building property and in case the compulsory sale had taken place after 31 December 1999. Neither of these prerequisites was met in the instant case. It followed that under section 3b § 4 first sentence of the Property Act, the applicant did not have a claim to restitution of the plot itself, but only to a sum of money equivalent to the auction proceeds.

11. There was no legal obligation to treat persons entitled to other forms of restitution equally to those entitled to restitution of building property. Such an interpretation would contradict the clearly recognisable aim of the provision and would fail to take account of the split-up between property of buildings and land property under the legal regime of the former German Democratic Republic (GDR) and the current aim of reuniting the two legal systems.

12. On 24 January 2007 the insolvency administrator informed the applicant partnership that the insolvency proceedings into the property of the B. company had been discontinued for lack of financial means.

13. On 18 April 2008 the Federal Constitutional Court (no. 1 BvR 523/08) refused to entertain the applicant ’ s constitutional complaint without giving further reasons.

B. Relevant domestic law

1. Law on the resolution of outstanding property issues – the Property Act

14. On 29 September 1990 the Property Act came into force. Under the Unification Treaty the Property Act would remain in force in Germany after the reunification of the two German States on 3 October 1990. The Act ’ s purpose was, in particular, to settle any conflicts relating to property on the territory of the GDR in a manner that was socially acceptable, in order to ensure long-term legal certainty in Germany.

15. Section 1 § 6 of the Property Act provides that it is also applicable to persons against whom proceedings were brought in Germany between 30 January 1933 and 8 May 1945 on racist, political, religious or ideological grounds and who had consequently lost their property “by forced sale, expropriation or other means”.

16. Section 3 § 1 of the Property Act provides that any property that became “people ’ s property” shall be returned on request unless excluded by the law.

17. Section 3b § 4, first sentence , provides that if restitution of property is impossible because the property has been sold by compulsory auction, the person entitled may request payment from the previous right holder of a sum equivalent to the auction proceeds.

2. Introductory Law to the Law on Compulsory Auction

18. Under the legal system of the GDR, it was possible to acquire building property without being at the same time the owner of the plot of land it had been erected on. Under the legal system of the Federal Republic of Germany, there was no possibility separately to acquire building property. Accordingly, on 1 October 1994 the rights established under the law of the GDR were transferred into the legal order of the Federal Republic of Germany.

19. Section 9a § 1 , first sentence , of the Introductory Law to the Law on Compulsory Auction ( Einführungsgesetz zu dem Gesetz über die Zwangsversteigerung und die Zwangsverwaltung, EGZVG ), which entered into force on 25 December 1993, provided that a seizure of land executed after 31 December 1999 extended to the previously separate property of any buildings erected on the seized land. The second sentence of that provision provided that after expiry of that date, any rights relating to separate building property expired unless they had been entered into the land register or had been notified at the latest at the day of auction before the bidding had started. Section 9a § 1 (3) provided that the second sentence applied mutatis mutandis to restitution claims under the Property Act .

COMPLAINTS

20. The applicant complained under Article 1 of Protocol No. 1 to the Convention that the judgment given by the Federal Administrative Court on 19 December 2007 violated its property rights. The applicant further complained about having been discriminated against as compared to persons entitled to restitution claims relating to building property and those entitled to restitution claims regarding plots of lands which had been auctioned off after 31 December 1999 .

THE LAW

21. The applicant complained that the Federal Administrative Court, by refusing restitution of the plot of land, violated its rights under Article 1 of Protocol No. 1, providing:

“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.”

22. The applicant submitted that it had the legitimate expectation that the plot of land was returned. This expectation was confirmed by the Dresden District Court, which established on the date of the auction that the plot of land remained subject to the applicant ’ s restitution claim. The applicant further submitted that the interference was not in accordance with the law, as the Federal Administrative Court erroneously assumed that Sect ion 9a § 1 , third sentence , was not applicable in the instant case. This interpretation was arbitrary and not foreseeable . The interference with the applicant ’ s property rights was disproportionate having particular regard to the fact that the monetary claim against the B. company was worthless in view of the latter ’ s insolvency. The proceeds of the auction amounting to 400,000 DEM were fully distributed among the creditors of the B. company.

23. The Court must first examine the question of the applicability of Article 1 of Protocol No. 1. For that purpose it must ascertain whether the applicant had “possessions” within the meaning of this provision, which, if there are no “existing possessions”, as in the present case, extends to assets, including claims, in respect of which the applicant could argue that it had at least a “legitimate expectation” of obtaining effective enjoyment of a property right. Such a legitimate expectation, which has to be more concrete in nature than a mere hope, must “be based on a legal provision or have a solid basis in the domestic case-law” (see, among other authorities, Von Maltzan and Others v. Germany (dec.) [GC], nos. 71916/01 , 71917/01 and 10260/02 , §§ 74, 77, 78 and 112, ECHR 2005-V and Althoff and Others v. Germany , no. 5631/05 , § 39 , 8 December 2011 ).

24. In the present case, the Court notes that the applicant submitted a restitution claim in June 1990 based on the relevant provisions of the Property Act. On 10 September 1997, after the applicant had notified the auction court about the pending restitution claim, the respective plot was sold in public auction. In October 2003 the Office for the Resolution of Outstanding Property Issues rejected the applicant ’ s request on the grounds that restitution was excluded under section 3b §4 , first sentence , of the Property Act because a third party had, pending restitution proceedings, acquired the plot in compulsory auction. It further considered that section 9a of the Introductory Law on Compulsory Auction, which allowed for restitution even after compulsory sale if the restitution claim was duly notified, was not applicable in the instant case, as this provision exclusively applied to separate building property. While the Dresden Administrative Court quashed the decision as it considered that section 9a was also applicable to claims relating to the restitution of plots of land, the Federal Administrative Court reversed the judgment and endorsed the original decision given by the Office for the Resolution of Outstanding Property Issues. Having examined the arguments put before it, that court considered that section 9a was only applicable to the restitution of building property. It further considered that section 9a was not applicable because the relevant time-limit had not been met.

25. The Court notes that the restitution claimed by the applicant was based on legal provisions, in particular of the Property Act and of the Introductory Law to the Law on Compulsory Auction , which are subject to interpretation. The Court reiterates in this context that it has held on several occasions that it is in the first place for the national authorities, and notably the courts, to interpret domestic law and that the Court will not substitute its own interpretation for theirs in the absence of arbitrariness (see, among other authorities, Tejedor García v. Spain , 16 December 1997, § 31 , Reports of Judgments and Decisions 1997 ‑ VIII and Zolotas v. Greece (no. 2) , no. 66610/09 , § 57 , 29 January 2013 ).

26. The Court observes, at the outset, that the Dresden District Court, in its capacity as an insolvency court, did not have the competency to rule on the applicant ’ s alleged restitution claim. Accordingly, the court order issued by that court on 10 September 1997 could not establish a legitimate expectation that the applicant would be granted restitution of the plot of land.

27. The Court further observes that the Federal Administrative Court, in its capacity as last instance court in administrative matters, considered that following the sale in public auction, the applicant did not have a claim to restitution of the plot itself, but only to a sum of money equivalent to the auction proceeds. The Court further notes that the Federal Administrative Court based this conclusion on a thorough interpretation of the domestic law which took into account the context of the relevant legislation. In particular, the Federal Administrative gave relevant reasons as to why persons claiming restitution of land property did not have to be treated equally to those claiming restitution of separate building property which stemmed from the necessity of re-uniting the different legal systems following reunification. There is no indication that this interpretation was in any way arbitrary.

28. The Court further notes that prior to the Federal Administrative Court ’ s ruling in the instant case, there does not seem to have been any definite ruling on the subject matter in issue. The Dresden Administrative Court, when adjudicating the case on 12 October 2006, relied on two decisions given by a first and second instance court in 1997. However, the Dresden Administrative Court did not rely on any case-law by the Federal Administrative Court in this respect. In the absence of a previous ruling of the Federal Administrative Court, the Court considers that the applicant has not established that the expectation to be granted restitution of the plot of land had a solid basis in the domestic case-law and could thus qualify as a “legitimate” expectation within the meaning of the Court ’ s case-law.

29. In the view of the above considerations, the Court considers that the applicant has not established that it had a legitimate expectation to be granted restitution of the plot of land.

30. It follows that the complaint under Article 1 of Protocol no. 1 to the Convention is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.

31. The applicant also claimed to be the victim of discrimination contrary to Article 14 taken in conjunction with Article 1 of Protocol No. 1 to the Convention because, unlike other categories of persons, it was unable to claim a right to restitution of the property that had been unlawfully expropriated.

32. According to the Court ’ s settled case-law, Article 14 of the Convention complements the other substantive provisions of the Convention and its Protocols. It has no independent existence since it has effect solely in relation to the “enjoyment of the rights and freedoms” safeguarded by those provisions. Although the application of Article 14 does not presuppose a breach of those provisions - and to this extent it is autonomous - there can be no room for its application unless the facts at issue fall within the ambit of one or more of the latter (see, among other authorities, von Maltzan , cited above, § 116) .

33. Having regard to the finding that Article 1 of Protocol No. 1 is inapplicable, the Court holds that Article 14 of the Convention cannot be taken into account in the present case.

34. It follows that the complaint under Article 14, taken in conjunction with Article 1 of Protocol No. 1, is also incompatible ratione materiae with the provisions of the Convention, within the meaning of Article 35 § 3 (a) , and must be rejected in accordance with Article 35 § 4.

For these reasons, the Court by a majority

Declares the application inadmissible.

Stephen Phillips Mark Villiger Deputy Registrar President