HEADNOTES:

Statutory regulations enacted to deal with extraordinary problems resulting from historical events that took place in the period prior to the founding of the Federal Republic cannot be measured against art. 14 Basic Law. Under the Basic Law, it is largely within the sole responsibility of the legislature as to how to structure the equalization of economic and political burdens stemming from the War and the collapse of the German Reich.

Reparation losses are a part of the large complex of War and War-induced burdens, which were able to be compensated in accordance with the principles developed under the case law of the Federal Constitutional Court for clearing up the State bankruptcy left behind by the German Reich. The Federal Republic was only obligated to render domestic, social compensation for these losses (following from BVerfGE 15, 126 and BVerfGE 27, 253).

Those affected by reparation measures are not entitled, either from the standpoint of paying off a German reparation debt or from other legal standpoints, to claims for compensation against the Federal Republic that would have to be fulfilled outside of the State bankruptcy and that exceed participation in the social equalization of War and War-induced burdens.

The legislature was able to regulate compensation for reparation losses in a manner similar to the social concept underlying the Act on Equalization of Burdens. As under this Act, the legislature was able to restrict the limited resources available under the Act on Reparation Losses to effective aid for the affected individuals and to exclude corporations or other juridical persons from compensation payments.

Order of the First Senate of 13 January 1976 - 1 BvR 631/69, 1 BvR 24/70 -
in the proceedings on the constitutional complaints relating to the S. corporation at al. against: the Act on Reparation Losses of 12 February 1969 (BGBl. I, p. 205)

DECISION:

The constitutional complaints are rejected.

EXTRACT FROM GROUNDS:

Subject of the instant proceedings is domestic regulation dealing with the compensation of property losses; these losses were suffered during World War II and thereafter as a result of the confiscation of German external assets and the removal, damaging or destruction of domestic industrial facilities and other property holdings in German control by the Victorious Powers for the purpose of reparation or of weakening the national German economy (hereinafter, reparation losses). The constitutional complaints assert that the Act on Reparation Losses (Reparationsschädengesetz) fails to provide complete or reasonable expropriation compensation for these losses but instead only grants, as under the Act on Equalization of Burdens (Lastenausgleichsgesetz), compensation determined according to social aspects and, in particular, excludes juridical persons from compensation payments.

The funds necessary for implementing the equalization of burdens are to be raised through special levies of property, the proceeds of which are to be allocated for this purpose to an extra-budgetary compensation fund. The details will be regulated in the German laws on the equalization of burdens which, according to the preamble of the Currency Law, are to be enacted by 31 December 1948. These will also determine to what extent compensation is to be granted for losses originating in the currency reform or for other losses. Especially to be considered hereby are losses based on Control Council Law Number 5 and stemming from withdrawals as reparation.

A.I.

Following World War II, the Victorious Powers confiscated or destroyed a great amount of private German property in order, on the one hand, to compensate the German Reich's wartime enemies for their war damages and, on the other, to reduce decisively Germany's economic potential to wage war.

1. At the Potsdam Conference in July and August 1945, the United States of America, the Soviet Union and Great Britain decided to neutralize or place under their control all German industrial sectors that might be able to be used for war production. Production facilities that were not required for satisfying Germany's postwar needs at the low level approved by the Victorious Powers were either to be removed from Germany or destroyed. All German external assets situated in former enemy States, in States allied with Germany and in neutral States, which had already largely been impounded during the War, were to be confiscated, and the merchant fleet was to be seized. France, which had assumed supreme authority in Germany together with the other three Occupying Powers pursuant to the Berlin Declaration of 5 June 1945, took part in carrying out this policy.

In March 1946, the Control Council adopted an Industrial Plan for all four zones of occupation, whereby the German industry's level of production was to be reduced to 50-55 % of the pre-war status in 1938. The Plan contained corresponding prohibitions and restrictions on production and listed in detail the economic sectors in which dismantling was to be undertaken. However, the reparation policy pursued jointly by the four Occupying Powers quickly came to an end in May 1946, in that the three Western Occupying Powers temporarily halted the removal of dismantled industrial facilities since the economic union between all zones of occupation as provided for in the Potsdam Agreement had not come about. Furthermore, it soon became evident in the United States and in Western Europe that the economic recovery of Europe would be threatened if the Industrial Plan were to be carried out as intended. For this reason, US economic aid was extended to West Germany under the so-called Marshall Plan. In addition, following the consolidation of their zones of occupation in August 1947, the US and British Occupying Powers enacted a revised Industrial Plan, which now only provided for a reduction of production roughly to the 1936 level; the French Occupying Power amended the original planning for its zone accordingly.

In September 1948, the US military government declared the dismantling in its zone as completed. In the two other Western zones, the dismantling program was repeatedly curtailed.

No further dismantling was undertaken in the Federal Republic after 1951.

The situation developed differently with respect to German external assets. In the former enemy States, these were taken away from their German owners (liquidated) following the War virtually without exception and in all cases without compensation. Although the Victorious Powers also intended to employ German external assets located in neutral States for reparation purposes, this was initially blocked by opposition from these countries; they refused to consent to the transfer of these assets to a Commission for German external assets as ordered by the Control Council in Law No. 5 of 30 October 1945 (ABlKR No. 2, p. 27). This prompted the United States to freeze the credit balances of these neutral countries (Switzerland, Sweden, Spain and Portugal). As a result of this pressure, they pledged to the Western Occupying Powers in the so-called Washington or Safe Haven Agreements to liquidate German assets and to transfer the proceeds in whole or in part to the Allies. It was agreed in principle that the German owners were to be compensated, although the details of this were not regulated. These Agreements were later substantially modified by treaties between the Federal Republic and the neutral States.

According to an estimate by the Federal Equalization of Burdens Office submitted in the proceedings on the constitutional complaints, German reparation losses (not including public-sector losses and those of Germans living in the GDR) amounted to 18.8 billion reichsmarks (RM), in 1938 prices. Of these, RM 14.1 billion were incurred by 7,000 juridical persons, and RM 4.7 billion, by 74,000 natural persons. RM 13.1 billion of these losses were suffered abroad, and RM 5.7 billion, domestically. By comparison, the losses regulated under the Act on Equalization of Burdens -- damages due to expulsion, war damages to property and losses suffered in East German territories -- amounted to RM 105 billion andaffected more than 5 million persons.

The domestic reparation measures impaired not only the directly affected companies but also the remainder of the economy, e.g., due to the lack of supplying industries, and thereby generated adverse effects for both workers in these areas and the population as a whole. From a more far-sighted perspective, however, the dismantling program prompted the industries concerned to renovate their plants with modern equipment and facilities, which were to their advantage in international competition. At the same time, however, refurnishing had to be financed to a large extent with borrowed funding, which was capable of interfering with the earnings situation of these companies. The confiscation of external assets constrained the German export economy and led to substantial deficits in currency revenues. In the course of the recovery in foreign trade, a considerable amount of currency then had to be expended in order to reacquire German branches located abroad or to found new ones. There are no studies at hand as to which benefits foreign national economies received by way of the reparation measures at the expense of the German nationaleconomy.

2. Following the founding of the Federal Republic, still other official German authorities repeatedly appealed to the Western Occupying Powers to terminate the dismantling program and to return the confiscated external assets. In order to put a stop to this diplomatic maneuvering, the Allied High Commission enacted Law No. 63 on 31 August 1951 (ABlAHK, p. 1107; cf. BVerfGE 29, 348 [365 ff.]). This Law relates to all assets that had been seized and expropriated abroad as German property or that had been removed from Germany under the supervision of one of the Occupying Powers for the purpose of reparation or restitution (Art. 1). The rights of former owners and other beneficiaries in these assets are thereby deemed to have lapsed (Art. 2). The Law further states:

ARTICLE 2

Claims or complaints based on, or referring to the transfer, liquidation or delivery of items of property failing under this law

a) against persons who assigned or acquired the ownership or possession of these items of property, or against the items of property,

b) against an international organisation, the government of a foreign State or a person acting in conformity with the directions of such a post or government are inadmissible.

The legal framework created by this Law was in essence confirmed in the so-called Paris Treaties between the Federal Republic and the three Western Occupying Powers, which led to the termination of the occupation regime. The relevant provisions are to be found in Chapter Six of the Transition Convention on the Settlement of Matters arising out of the War and the Occupation of 26 May 1952, as amended by the Protocol on the Termination of the Occupation Regime in the Federal Republic of Germany, signed in Paris on 23 October 1954 (BGBl. 1955 II, pp. 213 ff., pp. 405 ff.). Pursuant to these provisions, the problem of reparation is to be settled by the Peace Treaty to be concluded or by special agreements, although the Three Powers undertake that they will at no time demand reparations against current production (Art. 1). Until such time as the matter is settled by such a Treaty, the following provisions, inter alia, are controlling:

ARTICLE 3

... The Federal Republic will not repeal or amend Law No. 63 [of the Allied High Commission] except with the consent of the Three Powers.

...

ARTICLE 4

(1) The Federal Republic shall in the future raise no objections against the measures which have been, or will be, carried out with regard to German external assets or other property, seized for the purpose of reparation or restitution, or as a result of the state of war, or on the basis of agreements concluded, or to be concluded, by the Three Powers with other Allied countries, neutral countries or former allies of Germany.

(2) ...

(3) No claim or action shall be admissible against persons who shall have acquired or transferred title to property on the basis of the measures referred to in paragraphs 1 and 2 of this Article, or against international organisations, foreign governments or persons who have acted upon instructions of such organisations or governments.

...

ARTICLE 5

The Federal Republic shall ensure that the former owners of property seized pursuant to the measures referred to in Articles 2 and 3 of this Chapter shall be compensated.

3. The domestic regulation of compensation for reparation losses was only enacted much later. In this area, the Third Law on reorganization of the monetary system (Currency Conversion Act; Umstellungsgesetz), enacted by the three Western Occupying Powers on 20 June 1948 (WiGBl. Beil. No. 5, p. 13), provided for the following:§ 29

The funds necessary for implementing the equalization of burdens are to be raised through special levies of property, the proceeds of which are to be allocated for this purpose to an extra-budgetary compensation fund. The details will be regulated in the German laws on the equalization of burdens which, according to the preamble of the Currency Law, are to be enacted by 31 December 1948. These will also determine to what extent compensation is to be granted for losses originating in the currency reform or for other losses. Especially to be considered hereby are losses based on Control Council Law Number 5 and stemming from withdrawals as reparation.

However, the Act on Equalization of Burdens of 14 August 1952 (BGBl. I, p. 446) did not cover reparation losses but rather in § 366 globally reserved for special laws the regulation of War and War-induced losses not covered there. Under the General Act on War Matters (Allgemeines Kriegsfolgengesetz) of 5 November 1957 (BGBl. I, p. 1747), parties who had suffered reparation losses were entitled to receive hardship assistance (only for natural persons) and recovery loans (for natural and juridical persons), although the compensation regulation was expressly reserved (§ 3(1) No. 2, §§ 68 et seq., § 85).

However, it took until the third (1961) and fourth (1963) legislative periods before representatives of the German Bundestag submitted drafts for a law on reparation losses. These provided for compensation to natural and juridical persons. Under the second draft, the losses were to be determined by reference to the current values of the seized property recorded in the reparation catalogue of the Federal Ministry of Economics and the amounts exchanged at a rate of 1:1 (Reichsmarks to Deutschmarks). Losses were compensated degressively: 100 % of the loss for losses up to 50,000 marks, to 20 % for losses over 15 million marks.

On the other hand, in the fourth (1963) and fifth (1967) legislative periods, the Federal Government submitted its own drafts for a law on reparation losses, which were closely modelled on the Act on Equalization of Burdens and consequently only provided for compensation payments to natural persons. The second government draft was enacted by the Bundestag without major amendment. It entered into force as the Act on the Settlement of Reparation, Restitution, Destruction and Reimbursement Losses (Act on Reparation Losses [Reparationsschädengesetz; RepG]) on 12 February 1969 (BGBl. I, p. 105), retroactive to 1 January 1969.

4. Apart from cases involving losses not of interest here, the Act on Reparation Losses distinguishes between reparation losses and destruction losses. Reparation losses within the meaning of the Act are losses incurred in the territory of the German Reich west of the Oder-Neisse line at the instigation of the Occupying Powers -- regardless of participation by German authorities -- from the seizure of commercial property, insofar as such commercial property was, or was intended to be, transferred to a foreign national economy (§ 2(1) No. 2). Reparation losses are also termed by the Act to be those losses incurred in Germany's former Eastern territories and abroad from the seizure of commercial property as a result of measures by foreign States against German assets, particularly due to enemy assets legislation, even though these also have to do with damages due to expulsion and losses suffered in the Eastern territories that are regulated under §§ 12 and 14 of the Act on Equalization of Burdens (Lastenausgleichsgesetz; LAG) (§ 2(1) No. 1, (3) RepG). Although damages due to expulsion and losses suffered in the Eastern territories are also covered by the Act on Reparation Losses, this does not mean that those affected receive double compensation for the relevant losses, since all damages suffered by a person are calculated and compensated in uniform fashion under the Act on Reparation Losses and the Act on Equalization of Burdens (cf. §§ 14, 25 in conjunction with §§ 32(2), 35(1) No. 2 RepG).

The Act describes destruction losses as losses incurred as a result of the destruction, damaging or removal of commercial property in some other manner than by acts of war for the purpose of eliminating Germany's economic potential, without their having been transferred to another national economy (§ 4).

For both groups of losses, the same regulation is controlling: compensation shall only be granted if and to the extent that this Act provides for such (§ 1(1)). The substance and, to a large extent, also the wording of the provisions dealing with entitlement to compensation, determination of losses and calculation of compensation are identical to the corresponding provisions under the Act on Equalization of War Burdens

Juridical persons are not to receive compensation:§ 13 RepG (cf. § 229(3) LAG)

(1) Losses must have been suffered by a natural person.§ 38 RepG

(1) A party entitled to compensation must be a natural person.

However, shareholders of a juridical person that has suffered reparation losses may receive compensation for the reduction in value of their shares, as long as they are natural persons and the juridical person was headquartered outside the territory of the Federal Republic (§ 6(2), § 12(3) No. 2(c), (4), (6) RepG; see also § 12(1) No. 2(e), (2) No. 3, (10) LAG).

Insofar as losses suffered by commercial enterprises are thus to be compensated, they are valued according to the standard tax value (steuerliche Einheitswert) of the removed or destroyed property (§ 19 RepG; see also §§ 41 et seq. LAG). If the losses were incurred in the Federal Republic, the total amount of all of an undertaking's losses to be compensated is limited by the so-called standard value comparison (Einheitswertvergleich): The loss is only covered up to an amount by which the standard tax value of company assets determined on 1 January 1940 (initial comparative value) exceeds the standard tax value of company assets determined for the currency computation date on 21 June 1948 and reduced by 30 % (end comparative value). Correspondingly, a loss cannot be determined and compensation not rendered when the end comparative value matches, or exceeds, the initial comparative value. By way of these rules, losses as well as deficits incurred between the two above-mentioned dates are set off against profits obtained during the same period, with the reason for the transfer of assets being irrelevant.

Based on the loss amount determined in this manner, the compensation amount (basic amount) is calculated according to a highly degressively graduated table (§ 33 RepG; see also § 246 LAG). This amount corresponds to the loss amount up to DM 4,800 and then falls gradually in the various loss groups to a rate of nearly 6.5 % for losses over 2 million marks. Parties that incurred losses but nevertheless were able to preserve a relatively large amount of their assets during the War and the subsequent collapse, or those who reacquired similar assets prior to the currency reform, receive either no compensation or less compensation than that provided under the tabular values (Reduction of the Basic Amount -- cf. § 35(1) No. 1 RepG; see also § 249(1) LAG).

In contrast to the Act on Equalization of Burdens, payments under the Act on Reparation Losses are financed by Federal budget resources (§ 56(1)). The resources for the equalization of war burdens payments, on the other hand, stem from a special Equalization Fund, which is primarily stocked with equalization levies (§§ 5 et seq. LAG). These include property levies, which must be paid by natural and juridical persons and normally amount to 50 % of leviable assets as of 21 June 1948 (§ 3 No. 1, § 16(1), § 21(1) in conjunction with § 31 LAG). This levy is to be paid until 31 March 1979 in equal, quarterly installments (§ 34(1) LAG). War damages to property, damages due to expulsion and losses suffered in East German territories that have been incurred by natural or juridical persons subject to a levy are taken into account by detailed rules in §§ 39 et seq. LAG by a reduction in the assets levy (cf. BVerfGE 12, 151 [152-53]). On the other hand, the Act on Equalization of Burdens does not provide a levy reduction for reparation losses. Also the Act on Reparation Losses does not provide a rule that corresponds to §§ 39 ff LAG.

II.

Complainant 1), a stock corporation (Aktiengesellschaft), manufactures heavy machine tools. Its five plants were completely dismantled by 1948 and sent to the Soviet Union, Yugoslavia, Albania and France. Production temporarily had to be halted entirely. The Complainant has calculated its losses at roughly 37 million marks.

The constitutional complaint is principally directed against the Act on Reparation Losses in its entirety. The Complainant alleges that the adoption of the principles of social equalization of war burdens, particularly the limiting of entitlement to compensation, as well as the methods for determining losses and calculating compensation lead to the situation where reparation losses, which were primarily suffered in the assets of commercial undertakings, are in most cases not compensated at all and in the remaining ones, only minimally. In the alternative, the Complainant attacks individual regulations under the Act, particularly the exclusion of juridical persons from compensation payments in § 13(1) and § 38(1) RepG, as well as the provisions on the determination of losses to the extent that they relate to the standard comparative value and the appraisal of company real estate (§ 19(2) No. 1, (3) Nos. 1-3, (4) RepG in conjunction with § 13(6) No. 1). Finally, the Complainant objects to the fact that the Act on Reparation Losses even deprives juridical persons of a reduction in the assets levy as is also granted to juridical persons under §§ 39 et seq. LAG.

The Complainant considers itself to have suffered a violation of its basic rights under art. 14 and art. 3(1) Basic Law by the attacked regulations in their entirety and individually.

1. ...

2. ...

3. In the view of the Complainant, the attacked laws also violated the provision on protection of ownership in Art. 1(1) of the 1st Additional Protocol to the European Convention for the Protection of Human Rights and Fundamental Freedoms of 20 March 1952 (BGBl. 1956 II, p. 1880).

III.

The places of business of Complainant 2), a private limited company (Gesellschaft mit beschränkter Haftung), were completely dismantled following the War by the French Occupying Power. The Complainant has valued the destroyed and removed commercial property (in 1938 prices) at roughly RM 8.9 million and the replacement value at more than DM 60 million.

Its constitutional complaint is also principally directed against the Act on Reparation Losses in its entirety and, in the alternative, against individual provisions (§ 13(1), § 38(1), § 19 -- especially (3) No. 4 -- §§ 25, 31, 33, 35 RepG). It considers itself to have suffered a violation of its basic rights under art. 14 and art. 3(1) Basic Law by these regulations. It further alleges violations of art. 1(3), art. 19, art. 25 and art. 142 a Basic Law.

...

IV.

The Federal Government, as represented by the Federal Minister of Finance, considers the constitutional complaints to be inadmissible, insofar as they are directed against provisions other than §§ 13(1) and 38(1) RepG, which relate to the exclusion of juridical persons from compensation payments; in all other respects, they are said to be unjustified.

...

V.

The President of the Federal Equalization of Burdens Office in essence set forth which costs would fall upon the State if individual provisions of the Act on Reparation Losses were to be declared unconstitutional.

The Federal High Court considers the exclusion of juridical persons from compensation payments in the Act on Reparation Losses to be compatible with art. 14(3) and art. 3(1) Basic Law (cf. Judgment of 13 October 1969 -- BGHZ 52, 371).

In proceedings relating to a restitution loss (§ 3 RepG), the Federal Administrative Court held that an exclusion of compensation by way of the provisions of the Act on Reparation Losses dealing with determination of loss, in particular, regarding the standard value comparison, does not violate art. 14 Basic Law (cf. Judgment of 27 June 1974 -- BVerwG III C 65.72).B.

The constitutional complaints are only in part admissible.I.

1. As juridical persons, the Complainants are directly affected by the provisions of §§ 13(1) and 38(1) RepG, since they are completely denied by this regulation in conjunction with § 1(1) RepG compensation for the reparation losses suffered by them. However, they principally attack the Act in its entirety, since in its overall structure, it is alleged to be tailored solely to the relations of natural persons. Nevertheless, a constitutional review of the provisions regarding the further requirements for compensation and its calculation is only possible if §§ 13(1) and 38(1) RepG are unconstitutional. On the other hand, if the exclusion of juridical persons from compensation payments for reparation losses is not constitutionally objectionable, then the asserted violation of basic rights by other provisions of the Act is henceforth irrelevant. This also applies to the specific attacks against individual provisions regarding determination of loss.

2. Insofar as Complainant 2) considers it to be a violation of basic rights that reparation losses are unable to lead to a reduction of the assets levy, as is provided in §§ 39 et seq. LAG, this submission can be interpreted as meaning that the Act on Reparation Losses should have granted juridical persons at least subsequently a corresponding reduction in levies or an equivalent concession. As seen from this perspective, this deals only with a partial aspect of the basic question of whether and to what extent the Act on Reparation Losses may exclude juridical persons from compensation or other payments; the constitutional complaint is also admissible to this extent.

On the other hand, the objections raised to individual provisions dealing with the calculation of the levy reduction -- namely, § 41 LAG in conjunction with § 13(6) No. 1(c) of the War Losses Assessment Act (Feststellungsgesetz) and § 47b(5) LAG -- as independent attacks are inadmissible. If juridical persons basically had to be granted a subsequent concession for reparation losses corresponding to §§ 39 et seq. LAG, it would thus depend on the specific contents of the necessary amendment to the Act whether the Complainant were hereby aggrieved. This submission can thus only be employed in conjunction with the above-mentioned basic question.

II.

1. As standard of review for the constitutionality of the exclusion of juridical persons from compensation payments for reparation losses, only conceivable are art. 14(1) and (3) and art. 3(1) Basic Law. The protection of these basic rights may also be claimed in the present context pursuant to art. 19(3) Basic Law by the Complainants as juridical persons of private law (cf. BVerfGE 23, 153 [163], with further references; 35, 348 [360]).

2. The violation of the European Convention on Human Rights cannot be attacked with the constitutional complaint (BVerfGE 34, 384 [395]; 10, 271 [274]).C.

Insofar as they are admissible, the constitutional complaints are unjustified.

The exclusion of juridical persons from compensation for reparation losses in § 13(1) and § 38(1) RepG does not violate the guarantee of property under art. 14 Basic Law, particularly, the requirement of compensation for expropriation found in art. 14(3) Basic Law, second and third sentences.

I.

From a broad perspective, the conduct of the Federal Republic with regard to reparation losses, including the statutory regulation of compensation, cannot be measured against art. 14 Basic Law; this has to do with the surmounting of extraordinary problems resulting from historical events that took place in the period prior to the founding of the Federal Republic. As also follows from art. 134(4) and art. 135 a Basic Law (cf. BVerfGE 15, 126 [140 ff.]), the Basic Law largely left it within the sole responsibility of the legislature as to how to structure the equalization of economic and political burdens stemming from the War and the collapse of the German Reich. The object of the property guarantee might only be the claims against the Federal Republic created by the legislature.

1. In conscious departure from the conditions under the National Socialist regime, the Basic Law made human dignity and human rights the basis of the new State order and ensured to a hitherto unrecognized extent the individual's sphere of liberty against interference by public authority by way of effective validity of constitutional norms and by way of the establishment of constitutional jurisdiction. To this structure belong also the constitutional guarantees of art. 14 Basic Law, which protect property in order to accord the individual a sphere of freedom for conducting his activities in the area of property law in his own responsibility (BVerfGE 24, 367 [369]). The strict requirements this sets forth for State interference with property, particularly the joint performance clause (Junktimklausel) in conjunction with the principles for calculating compensation, are directed at the restructuring of the relationship between public authority and the citizen; in other words, they relate to measures that will be undertaken in the future by the new bearers of public authority in the course of the general fulfillment of public functions. These limitations, which were intentionally placed high, cannot apply to the correction of domestic State interference for which earlier bearers of German public authority are responsible; they are most certainly incapable of hindering the Federal Republic in carrying out interference by foreign sovereigns caused by the War and its consequences.

This was countered by the catastrophic extent of the collapse of the Reich and the resulting requirements placed on the new State. At the conclusion of the War, the German Reich was in a state of total bankruptcy, which had resulted from the disproportional relationship between the Reich's assets and liabilities, as well as from its political fate (cf. BVerfGE 15, 126 [135 ff.]; 19, 150 [159 ff.]). The bearers of the new State order first had to create the foundations for political, economic and social recovery, particularly needing to restore the soundness of State finances as a decisive prerequisite for orderly social and political life. On the one hand, they were initially faced with the enormous volume of liabilities already lawfully entered into by the Reich, which were basically attributable to the same policies that had led to the collapse of the Reich; on the other, they were met with the obligation to make redress for the injustices of National Socialism and with the virtually insurmountable burdens stemming from the great complex of War and War-induced losses, particularly from the provision for victims of the War, the integration of expelled persons and assistance for those whose property had been damaged by the War, as well as compensation for repatriated prisoners of war and those suffering losses from Occupation. In light of this situation, a complete fulfillment of all of these liabilities was impossible; in evaluating a National bankruptcy, which necessarily brings with it suffering for the existence of the entire public good, "the focus ... is not on reckoning with the past but rather on creating a basis for the future" (BVerfGE 15, 126 [141]). Accordingly, the regulations of the Federal Republic's legislature serving to clear up the above-described legacy of the National Socialist regime cannot be measured with the standards applying to compulsory interference with the property of citizens for fulfilling a normal public function. A commitment to use these standards would have made national recovery impossible. Moreover, they would have led to the result, incompatible with the Basic Law's value system, that in view of the limited public resources, the compensation of measurable, material losses to property or other assets was to have priority to the compensation of immeasurable, immaterial losses to life, health, freedom, etc. (BVerfGE 27, 253 [285]).

2. Therefore, the Federal Constitutional Court ruled as early as its decision of 14 November 1962 that art. 14 Basic Law does not oppose the statutory regulation of Reich liabilities existing at the time the Basic Law entered into force according to the above-described principles for clearing up the State bankruptcy (BVerfGE 15, 126 [143 ff.]). The legislature was merely charged with fulfilling the claims against the Reich to the extent feasible. Under this standard, it may refuse in whole or in part to satisfy such claims. It is to be emphasized here that the decision took these powers of the legislature directly from the rule-making authority under art. 134(4) Basic Law and that the subsequently inserted provision of art. 135 a Basic Law only has the character of a legal interpretation of art. 134 Basic Law (BVerfGE 15, 126 [144]).

The Federal Constitutional Court has held that these principles developed as a result of the exceptional situation of State bankruptcy justify a reduction or denial of compensation without violating art. 14 Basic Law. This is the case not merely for the direct liabilities of the Reich entered into lawfully prior to its collapse, including claims evidenced by bounded claims (see BVerfGE 23, 153 [166 ff.]). Such regulations are also permissible with regard to the so-called Reich-related obligations of local authorities, which were entered into after the collapse due to the fact that these authorities were forced to assume administrative functions in the place of the incapacitated Reich (BVerfGE 19, 150 [159 ff., 163 ff.]). In addition, they apply by analogy to the management of the entire complex of War and War-induced losses. The Federal legislature was "only charged with covering the losses to the extent feasible, i.e., as far as the required national consolidation and the restoration of economic, social and private life permit a financial strain. In enacting the various regulations, the legislature should and must, on the one hand, take into account the overall volume of War and War-induced losses and other obligations engendered by the National Socialist regime, particularly those dealing with redress for victims, and on the other, pay regard to the fulfillment of the new functions stemming from the restoration of the State and the economy; in so doing, it was basically endowed with discretion in making decisions as to priorities" (BVerfGE 27, 253 [285]).

3. As was specified by the Federal Constitutional Court in the latter holding, the fact that the legislature is not bound by art. 14 Basic Law does not of course mean that it was fully free to decide whether it wished to enact any regulations whatsoever for War and War-induced losses and what the contents of these should be. "The value system of the Basic Law, which places at the center of the State order the free individual who develops in community with others, requires particularly with respect to the principle of the social State (Sozialstaatsprinzip) set forth in art. 20(1) Basic Law that the public community normally participate in bearing burdens that have come about as a result of a fate to be borne by all, especially due to external interference that has affected various citizens or certain groups more or less by chance. This does not mean that such burdens are to be automatically shifted to the State with the effect that it is then directly obligated to compensate those affected in full; on the contrary, these principles of law can only give rise to the duty to allocate burdens, i.e., to compensate them domestically according to standards set down in law. Only by way of such regulation by law can an injured party establish specific claims for compensation" (BVerfGE 27, 253 [283; see also 270-71]; 11, 50 [56]).

4. These principles developed by case law also apply in full to the statutory regulation of compensation for reparation losses (cf. also BGHZ 52, 371 [373 ff.]). It cannot be seriously disputed that reparation losses are directly related to the War and the political and military defeat of the German Reich: In the first place, the reparation measures were to serve in providing redress for losses imposed on enemy powers by the war begun and lost by the German Reich; furthermore, they were intended to weaken decisively the economic potential of the German industry in order to prevent a continuation or resumption of hostilities by the German side. In view of this double objective, reparation losses are to be classified among the complex of War and War-induced losses, regardless of the fact that reparation measures were predominantly undertaken following the end of military conflicts; the result is no different for Occupation losses (BVerfGE 27, 253 [284]).

II.

Despite these circumstances associated with the collapse of the German Reich, the Complainants are of the view that for a number of reasons, the Federal Republic is under a duty to compensate parties who have suffered reparation losses, this being unrelated to State bankruptcy and extending beyond social compensation. In so doing, they rely from a variety of legal standpoints primarily on the fact that the reparation measures were undertaken to pay off a German reparation debt or in any case resulted in the discharge of such. Notwithstanding a review of the basis in law for the claim asserted, this argument is opposed by the following:

1. With respect to a duty on the State responsible for a War to make amends for war damages pursuant to international law, a reparation debt of relevance in the above sense is only established in a given case when the States involved establish an obligation by treaty or at least when the other side's reparation claims are recognized by the responsible State. In contrast, e.g., to the rules in the Treaty of Versaille (cf. Arts. 231 et seq. of the Treaty, RGBl. 1919, p. 687 [985]), a corresponding stipulation did not take place following World War II. In Art. 1(1) of Chapter Six of the Transition Convention, the regulation of the reparation issue is expressly reserved for the peace treaty to be concluded between Germany and its former enemies or other future agreements specifically dealing with this question.

2. Even if one were to assume, as do the Complainants, the existence of not only a moral reparation debt but also one established by law, this debt directly affected the German Reich, whose war actions engendered the losses of the enemy powers to be redressed. In other words, if this in essence involves an obligation of the Reich, then its domestic management clearly falls within the area of State bankruptcy.

3. On the other hand, it cannot be asserted that the Federal Republic has objectively been exempted from the reparation debt to the amount of the reparation losses or at least the seized assets and thus been spared from further reparation claims of the Victorious Powers. In the present context, this argument is of no decisive importance, since benefit allegedly received by the Federal Republic does nothing to change the above-described state of bankruptcy. In view of the situation induced by the collapse of the Reich, German public authority was not capable of fulfilling the reparation claims of the Victorious Powers from public resources or to acquire such resources by seizing private property by way of "normal" expropriation along the principles of art. 14(3) Basic Law in exchange for compensation. It also cannot be asserted that the Federal Republic's financial status had actually improved as a result of the alleged discharge of a reparation debt via the reparation measures of the Occupying Powers. On the contrary, the weakening of the foreign-trade and industrial potential necessarily delayed the recovery of the German economy. This by force had detrimental effects for public finances, namely: it lowered tax revenues and raised the demands for public financial assistance.

4. The aspect of discharge of a reparation debt is likewise just as unable to establish a fundamental difference between reparation losses and other War-induced losses, such that reparation losses are to be treated differently than those involved with the State bankruptcy. This particularly applies in relationship to the losses covered by the Act on Equalization of Burdens. It is not evident why, in a future setting-off of the payments to the reparation debt already made by the German side to the Victorious Powers, the assets seized as a result of expulsion are not to be given the same treatment as assets attached by way of reparation measures. The Potsdam Agreement does not preclude this, since it does not determine the amount of the German reparation debt and which burdens placed on Germany after the War can be set off against this.

5. Finally, there is also no tradition in German law requiring that reparation losses and other war losses are strictly to be separated from one another within the framework of domestic compensation rules. Precisely the rules on war-related burdens enacted after World War I, on which Complainant 1) relies, show that losses from expulsion and damages incurred as a result of plundering or arson were at that time not treated differently than losses due to confiscation of external assets or removal of commercial property domestically for reparation purposes (cf. the Directive on Losses Related to Violence Gewaltschädenverordnung] of 28 October 1923 -- RGBl. I, p. 1018; the Act on Losses Related to Liquidation [Liquidationsschädengesetz] in the version of 20 November 1923 -- RGBl. I, p. 1148 -- in conjunction with the Final Act on War Losses [Kriegsschädenschlußgesetz] of 30 March 1928 -- RGBl. I, p. 120; see also BGHZ 52, 371 [375-76]).

III.

In addition, in reviewing each of the various reasons submitted by the Complainants, it is impossible to justify a special status for parties who have suffered reparation losses, by virtue of which they would have been entitled in the enacting of the Act on Reparation Losses to a claim in law against the Federal Republic to compensation that would be able to be satisfied unrelated to State bankruptcy and fall within the protected sphere of art. 14 Basic Law. Such a claim neither arises directly from the reparation measures themselves in conjunction with expropriation law (1), nor can it be derived from international law (2), civil law (3), special occupation law (4) or the Transition Convention (5 and 6).

1. There is no general principle of law relating to protection of property that would obligate the Federal Republic to answer for reparation measures (cf. BVerfGE 15, 126 [144], with further references).

Claims resulting from expropriation are out of the question here for the same reasons as described by the Federal Constitutional Court for occupation losses (BVerfGE 27, 253 [272]; 27, 326 [334-35]). It is not disputed that a special sacrifice has been imposed on parties directly affected by a reparation loss -- even though, for instance, workers of dismantled companies at the same time are required to accept indirect detriments that may under certain circumstances be more severe than the loss of commercial property. Nevertheless, this special sacrifice is not based, as is presumed by some claims, on action by a German authority. Reparation losses have been caused either by the Occupying Powers or -- with respect to external assets -- also by other foreign States, which in so doing were subject to occupation and international law but not to the German legal system (cf. BVerfGE 6, 290 [296]). German public authorities are basically unable to be made responsible for such actions, even in those cases in which German authorities were required by the Occupying Powers to undertake such action (BVerfGE 1, 10 [11]; 27, 253 [272], with further references, [273]; see also BGHZ 52, 371 [378 ff.]; BVerwG, Decision of 27 June 1974 -- III C 65.72; RGZ 121, 7 [9]).

It is irrelevant here whether the Federal Republic received benefits from the reparation measures, since this aspect is at best of significance for the question of which of several possible German authorities is required to render compensation for expropriation undertaken by German authorities (cf. BGHZ 13, 81). In any other case, the German State would be made liable for foreign measures entirely beyond its control, which would burden it with incalculable financial risks (cf. BVerfGE 4, 219 [235]).

Reparation actions are also unable to be attributed to the Federal Republic with the reasoning that the Occupying Powers, which assumed supreme authority in Germany pursuant to the Berlin Declaration of 5 June 1945, undertook these actions in exercise of German sovereignty. As has already been held by the Federal Constitutional Court, a trustee-like exercise of the powers of the occupied German State attributable to the latter would only be conceivable to the extent that this had to do with the "normal" exercise of sovereign power by the Occupying Powers in the sole interest of the State represented and for its purposes, e.g., with regard to measures to ensure the feeding and housing of the population (BVerfGE 27, 253 [273]). If this prerequisite was not fulfilled with respect to measures involving the seizure of houses for the purposes of the Allied forces, then it is most certainly absent with respect to reparation actions: The destruction or fundamental impairment of numerous industrial operations, the confiscation of virtually all external assets, the seizure of the merchant fleet, and the decisive reduction of the German economic potential and lowering of the living standard of the German population intended by all of this was without doubt not a normal exercise of German sovereign authority and was in manifest contradiction to German interests; the reparation actions thus fall within the area of international sovereign authority exercised by the Occupying Powers.

A different result is not reached in light of the consideration that the reparation debt of the German State was thereby to be discharged. Apart from the fundamental objections to this position (see supra C II), the reparation actions cannot be deemed measures for the regular fulfillment of a German State debt for the reason that they did not serve exclusively, or undoubtedly even primarily, to compensate the wartime opponents of the German Reich for their losses but rather at least just as much the military and political goal of destroying once and for all Germany's economic potential to wage war.

Finally, in contrast to the position taken by Complainant 1), Art. 3 of Chapter Six of the Transition Convention does not permit the conclusion that the reparation actions are to be attributed to the area of German sovereign power. This treaty provision merely obligates the Federal Republic "in the future" not to raise objections against these measures, but it does not commit it to view them retroactively as lawful and especially not to recognize them as a trustee-like exercise of German sovereign power.

2. Direct liability of the Federal Republic for reparation losses also does not follow from general international law in conjunction with art. 25 Basic Law. International law does not recognize a doctrine of law whereby the occupied State would be obligated, regardless of the domestic state of the law, to answer for losses incurred by the residents of its territory as a result of activities by the occupying power (cf. BVerfGE 27, 253 [273], with further references). Insofar as a duty on foreign powers can be made out under international law to compensate for reparation losses they have caused, art. 25 Basic Law does not transform these claims into claims against the German State. This constitutional norm endows the general rules of international law with validity in the Federal Republic and gives them priority over German laws; it does not however change the contents of the international rule and the claims deriving from it, particularly with regard to the addressees of the rule (BVerfGE, id. at [274]); see also BVerfGE 18, 441 [448]; BGHZ 52, 371 [384]).

3. Direct liability of the Federal Republic for reparation losses is just as unable to be established under civil law (§§ 812 et seq. of the Civil Code) (similar result: BGHZ, id). ... (elaboration by the Court)

4. The law of occupation likewise does not reveal any claims on the part of parties suffering reparation losses against the Federal Republic to compensation.

a) The remarks drawn upon by the Complainants -- the Directive by the US government to its Supreme Commander in Germany of 15 June 1947, comments by the US Senate and US agencies, the French note to Switzerland of 19 November 1959 relating to the seizure of Swiss assets by French occupation authorities -- must be left aside since they do not contain any legally binding directives addressed to the Federal Republic or German authorities.

In addition, Complainant 2) has not individually been promised a specific compensation commitment by an Occupying Authority, which would then have to be observed by all German authorities and courts pursuant to Art. 2(1) of the Transition Convention. In this Complainant's own words, a local Occupation office had merely informed the Complainant of its legal view that the Federal Republic must compensate all parties suffering reparation losses.

b) In contrast to the position taken by Complainant 2), Art. II No. 1 of Proclamation No. 3 by the Control Council of 20 October 1945 -- "No person shall be deprived of life, liberty or property without due process of law" -- cannot serve as a legal basis since this Proclamation relates to the restructuring of German administration of justice. The legal guarantee found in the cited provision is also to be understood as a guideline for the future conduct of German authorities and courts. A regulation of the consequences of the actions of the Occupying Powers cannot be inferred from it.

c) § 29 of the Currency Conversion Act (see supra A I 3) only contains a generally formulated directive and authorization for the German legislature to regulate certain War-induced burdens, including reparation losses, within the framework of a general equalization of burdens. Although this certainly means that the legislature may not ignore parties who have suffered reparation losses, the delineation of compensation payments for this group and in other respects as well are subject to its decision. The result is no different with respect to the Englishwording:

"Equalization of Burdens

The funds required to carry through the equalization of burdens shall be provided by means of special levies on property, the receipts from which shall be paid for this purpose to an equalization fund outside the budget. Further provisions shall be made in the German legislation on equalization of burdens to be enacted by 31st December 1948, as laid down in the preamble to the Currency Law. Such legislation shall also prescribe the extent to which compensation shall be granted for leases resulting from the monetary reform or otherwise. In this connection, special consideration shall be given to losses occasioned by Control Council Law No. 5 and by reparation removals.(Official Journal of the Military Government of Germany, British Control Sector, No. 25, p. 862 [872])".

The Complainant's assertion that this text expressly distinguishes between equalization of burdens provided for reasons of equity and compensation for reparation losses in the sense of effective, adequate compensation is first to be rejected by reference to the fact that under § 34(1), first sentence, of the Currency Conversion Act, the German wording is controlling. In addition, the English version does not offer any indications for sufficient justification of the allegation (see also BGHZ 52, 371 [375]).

5. The Transition Convention likewise does not offer sufficient justification for compensation for reparation losses as against the Federal Republic.

The Complainants rely on the so-called renunciation clauses of the Convention, namely, the obligation of the Federal Republic:

a) not to repeal or amend AHC Law. No. 63 without the consent of the Three Powers (Art. 2, second sentence, of Chapter Six),

b) in the future not to raise objections against reparation measures or to admit claims or actions against persons, foreign governments, etc. who/that have acquired or transferred title to property on the basis of these measures (Art. 3(1) and (3) of Chapter Six).

The Complainants assert that by way of these provisions, which have been transformed into German law in the Consenting Act to the Convention, the Federal Republic itself has deprived parties that have suffered reparation losses of rights in assets and is therefore obligated directly from art. 14(3) Basic Law to render reasonable compensation for expropriation. Here as well, a duty on the Federal Republic to render compensation is to be negated.

However, in contrast to the position taken by the Federal Government, the agreement in Art. 2 of Chapter Six of the Transition Convention, according to which Law No. 63 continues to apply and may only be repealed or amended with the consent of the Three Powers, might represent a renunciation by the Federal Republic of the substantive rights of those who have suffered reparation losses; under Art. 2(1) of this Law, the rights affected by reparation action are considered to be "extinguished". The substantive renunciation is moreover supplemented by the obligation on the Federal Republic entered into in Art. 3 of Chapter Six of the Transition Convention not to permit claims and actions resulting from the reparation measures. However, these agreements could only be considered new interference or "perfection" of early interference when those suffering reparation losses were at all entitled at the time the Convention was concluded to any rights with respect to the seized or destroyed assets, which they then might have been able to enforce absent conclusion of the Convention.

The original interference with private property or assets -- whether by confiscation of German external assets or by dismantling, removal or destruction domestically -- was in any event made legal by way of Law No. 63 (cf. BVerfGE 29, 348 [365 ff.]; see also BVerfGE 6, 290 [300]). As a result, the former holders definitively lost ownership or other rights in the seized property. The only remaining question is whether they are entitled to claims for damages or compensation against the expropriating State due to this deprivation of assets by way of international law, for instance, under Art. 46 of the Hague Land Warfare Convention (cf. BVerfGE 27, 253 [276-77]), with such claims also not having been affected by Law No. 63. This may, however, be left unresolved, since the agreements in the Transition Convention were also compatible with art. 14 Basic Law, if one were to assume the existence of such claims in favor of the Complainants at the time the Convention was concluded. The possible renunciation of their enforcement must therefore be evaluated in relation to the overall situation described at the outset (C I 1, 2) that resulted from the collapse of the German Reich and continued to have an effect at the time the Transition Convention was concluded.

The cause is for the interference with the property of those suffering reparation losses are to be found in the defeat of the German Reich; moreover, the actions by the foreign powers had in fact long been carried out and legalized by the law of occupation. Both the Federal Republic and other bearers of German sovereign authority could never have declared their recognition of these actions without at the same time being capable of enforcing their position vis-à-vis the Victorious Powers. The Complainants' assumption that absent the renunciation clause, the Federal Republic would have rescinded the measures of the Occupying Powers after reobtaining its sovereignty and could have achieved a regulation to the benefit of those suffering reparation losses in negotiations with the States involved fails to recognize the political situation of that time. The Federal Republic was only to receive by way of the series of treaties, at whose core was the Transition Convention, its sovereignty and thus the status of an equal treaty partner (BVerfGE 27, 253 [281-82]). Absent the renunciation of a retraction of reparation measures, the Three Powers would not have been willing to terminate the occupation regime; a refusal to adopt the renunciation clauses would thus have done nothing to change the continued validity of Law No. 63.

Similarly, those who had suffered reparation losses were just as unable to enforce possible individual damages or compensation claims of this sort against foreign States prior to conclusion of the Transition Convention (cf. BGHZ 52, 371 [382]). Apart from the problems of justiciability and jurisdiction, the barrier to legal action found in Art. 3 of Law No. 63, which had to be observed by the German courts, prevented such claims from being pursued domestically with any success. Moreover, decisions by German courts in favor of parties suffering reparation losses would normally have had to have been executed in the expropriating States. It would have been just as impossible to obtain the necessary consent of these States to such action as to file complaints in these countries. Accordingly, even a subsequent repealing of Law No. 63 would likely have been of no use to parties suffering reparation losses. The renunciation clauses also did not deprive parties suffering reparation losses of the opportunity to successfully assert their rights in allied or neutral States. Regardless of the Transition Convention, Austria is prevented by Art. 22 of the State Treaty of 15 May 1955 from returning German property to former owners. Similarly, under Art. 20 of its Peace Treaty, Japan is not allowed to release Germany property. ... For German property in neutral States, it is not the renunciation clauses of the Transition Convention that are controlling but rather the special agreements concluded by the Federal Republic on the basis of the authorization contained in Art. 4(3) of Chapter Six (cf. infra D I 3).

In all, the renunciation clauses thus mean, on the one hand, that the Federal Republic also continued to accept for the future the practically irreparable situation not created by it. On the other, the concession found in these agreements was, in addition to other stipulations, necessary in order to terminate the occupation regime and in general to achieve a status fundamentally "closer to the Basic Law" (BVerfGE 27, 253 [282]; see also BVerfGE 4, 157 [169-70]). It may be left unresolved whether such agreements serving to deal with the consequences of the War, for whose negotiation the German side necessarily had a conscribed radius of action in comparison to the former enemy States, are basically able to be evaluated under the law of expropriation, which has been created for other fact patterns and legal relations (cf. BVerfGE 27, 253 [276]; 29, 348 [360]; see also for the term expropriation, BVerfGE 38, 175 [179-80]; 20, 351 [359]). In any case, the Federal Republic was here not bound by art. 14 Basic Law, since the clauses in question and the conclusion of the Convention as a whole served to deal with events from the period prior to the origin of the Basic Law. Not only was the Federal Republic able to reduce or extinguish domestically the claims resulting from the political and financial State bankruptcy without violating art. 14 Basic Law, it was also able externally to renounce the possible rights of those suffering reparation losses without thereby being obligated to compensate for expropriation.

6. The described limits on the Federal Republic's liability for the claims stemming from the collapse of the German Reich basically do not apply to commitments first entered into by the Federal Republic itself: Claims under Federal regulations for the compensation of War and War-induced losses may also fall within the scope of protection of art. 14 Basic Law when the other prerequisites are fulfilled (cf. BVerfGE 23, 253 [166]). In this regard, the Complainants seek to infer from Art. 5 of Chapter Six of the Transition Convention, the so-called compensation clause, a legal claim of all those suffering reparation losses -- both juridical and natural persons -- to reasonable compensation oriented on art. 14(3) Basic Law.

It is not the task of the Federal Constitutional Court to interpret the compensation clause with respect to the relationship between the parties to the Convention, i.e., to decide bindingly on the substance of the international treaty duties of the Federal Republic stemming from this clause. On the contrary, the question of whether basic rights have been violated is solely determined by whether this clause in conjunction with the Consenting Act to the Convention established individual claims for third parties -- i.e., those suffering reparation losses -- going beyond the treaty obligation. In conformity with the Federal High Court (BGHZ 52, 371 [383-84]) and the Federal Administrative Court (Decision of 27 June 1974 -- III c 65.72), this question is to be answered in the negative.

a) As explained in detail by the Federal Constitutional Court in its Judgment of 7 July 1975 on the so-called East Treaties (BVerfGE 40, 141), international treaties normally only establish legal relations as between the States concluding them. The general view is that the establishment of legal duties or legal claims for individual citizens is an exception, which can only be considered as agreed upon when the text of the treaty clearly specifies this (cf. BVerfGE 40, 141 [164-65]; 29, 348 [360]).

In contrast to the East Treaties (cf. BVerfGE 40, 141 [163 ff.]), such an exception is not evident in light of the highly political character of the series of Treaties in general and the Transition Convention in particular, which follows from the termination of the occupation regime and the fundamental reorganization of the relations between the parties to the Treaties. Also different is the fact that the Transition Convention (as well as other sections of the Treaties) contains a number of specific regulations; the question of the effects for individual legal positions is thus not to be answered under an overall evaluation of the Convention but rather under a review of the respective, specific stipulations.

b) The wording of the compensation clause does not, however, offer sufficient indication for the establishment of individual rights. Even though the "former owners" are mentioned as beneficiaries of the planned compensation, the failure to specify this adequately does not permit the assumption of individual claims. In accordance with the undefined wording -- "shall ensure" compensation -- this provision merely obligates the Federal Republic to enact a regulation domestically, by way of which claims to specific compensation payments are only then to be established. Above all, it is unclear from the wording how this is to be "ensured", i.e., requirements for and nature and amount of compensation. The Complainants' position that the word "compensated" means, absent an explanatory phrase, at least, in the sense of art. 14 Basic Law, "reasonable" compensation oriented on the transaction value of the seized property cannot be supported by the text of the Convention.

This position is also countered by the fact that in § 29 of the Currency Conversion Act, the Occupying Powers placed on the German legislature the unspecified task of regulating compensation for reparation losses within the framework of general equalization of War burdens. When the Protocol of 23 October 1954 was signed, which amended in many details the Transition Convention signed on 26 May 1952 and gave it validity as between the partners to it, the Act on Equalization of War Burdens had been proclaimed some two years previously. If, as asserted by the Complainants, the compensation clause was to establish individual claims for those suffering reparation losses to greater compensation than provided for pursuant to equalization payments, then in view of the above-described circumstances, this would have had to have been clearly expressed.

This interpretation is also supported by a comparision with a similar compensation rule in Art. 297(i) of the Treaty of Versailles (RGBl. 1919, p. 687 [1134]):

"Germany undertakes to compensate her nationals in respect of the sale or retention of their property, rights or interests in Allied or Associated States".

The Court of the Reich refused to infer from this specific rights for individuals, since this did not follow from the Treaty itself with the clarity required by international law (cf. RGZ 121, 7 [9]).

This interpretation is also confirmed by a review of the clause in the context of the Convention. The Transition Convention contains a number of rules in which the Federal Republic assumed duties to compensate, such as in Chapter Three, which relates to internal restitution, and in Art. 3 of Chapter Nine dealing with occupation losses. In contrast to the precise, detailed description of these duties, the compensation clause in Art. 5 of Chapter Six appears vague and undefined; this permits the conclusion that the provision leaves the requirements for compensation, as well the nature and amount of this, to the agreed-upon statutory regulation.

c) The failure to specify individual compensation claims also cannot be repaired with the assumption that by way of the clause, the Three Powers shifted to the Federal Republic their own duty already existing under international law to render compensation to parties suffering reparation losses. Neither the wording of the clause nor other circumstances offer any indication that the Three Powers generally conceded that reparation actions were in violation of international law or that they at least recognized that they were under a compensation duty pursuant to international law that the Federal Republic was to assume under the agreement. On the contrary, also the context in which § 29 of the Currency Conversion Act is found argues more in favor of the assumption that the Occupying Powers considered the management of reparation losses, in contrast, for instance, to the regulation of occupation losses, to be an internal German concern.

Furthermore, in accordance with the historical background of the clause and of Art. 4(3) of Chapter Six of the Transition Convention, a shifting to the Federal Republic of the Three Powers' own duty to render compensation can at most be seen with respect to reparation losses in neutral States. In the drafts of the Convention, the Allies had provided that the Federal Republic was to assume the duties agreed upon in the Washington Agreements (see supra A I 1) to compensate German owners in full for losses in neutral States; Germany, on the other hand, proposed to ensure that parties suffering reparation losses were "indemnified to the extent that it was able to pay and in accordance with its Basic Law". Agreement was unable to be reached in the Sub-Committee, since the Three Powers insisted that the Federal Republic compensate losses in neutral States in full, whereas the German delegation rejected this with reference to arts. 3 and 14 Basic Law, arguing, inter alia, that expelled persons were also victims of reparation measures and could not be treated differently than others. After a Steering Committee was also unable to resolve the differences of opinion, the question was submitted to the Federal Chancellor and the three High Commissioners for a decision. The US High Commissioner McCloy proposed that the Convention only stipulate that the Federal Republic will ensure compensation.

With respect to losses in neutral countries, the Federal Republic was to negotiate the compensation issue with these nations directly.

Accordingly, the complex of reparation losses in neutral States was treated separately, that is, regulated in a special provision, which reads as follows:

ARTICLE 4
(1) ...
(2) ...
(3) "Regarding property taken as German assets in Portugal, Spain, Sweden and Switzerland, with respect to which agreements concluded by the Three Powers are, or will be, in force, the Federal Republic may negotiate with those countries arrangements in implementation of such agreements concerning the nature and amount of compensation to be paid to former German owners of assets in those countries. The Three Powers shall have the right to participate in such negotiations".

For all other reparation losses, the generally phrased formula in Art. 5 remained controlling.

d) It may also not be drawn from the declarations made in the past by the Federal Government regarding interpretation of the compensation clause that the Transition Convention established individual compensation claims against the Federal Republic for parties suffering reparation losses. On the contrary, they give expression to the fact that the Convention made it possible for the Federal Republic to create a domestic compensation rule conforming to its Basic Law. However, the Complainants' position that with respect to the Federal Republic's ability to pay and to the principle of the social State (Sozialstaatsprinzip) set forth in art. 20(1) Basic Law, this rule is to be structured in accordance with the standard laid down in art. 14(3) Basic Law is not of decisive importance for the constitutional review of the Act on Reparation Losses: at the time these declarations were made, the relevant decisions of the Federal Constitutional Court had not yet been rendered. Moreover, it is impossible to find any indications that this legal position regarding the constitutional requirements for the domestic compensation rule was the subject of agreements with the Three Powers or a basis for the Convention.

7. Finally, art. 142 a Basic Law is also incapable of supporting the alleged compensation claim. This constitutional norm was repealed by the Seventeenth Act to Amend the Basic Law of 24 June 1968 (BGBl. I, p. 709), in other words, prior to the entry into force of the Act on Reparation Losses. Even during the period in which it was in force, it only related to the Treaties referred to therein, signed in Bonn and Paris on 26 and 27 May 1952 (Convention on the Relations between the Federal Republic of Germany and the Three Powers -- BGBl. 1954 II, p. 61 -- and the Treaty Establishing the European Defense Community -- BGBl. 1954 II, p. 343), which never entered into force due to France's rejection of the European Defense Community. It is irrelevant that a significant number of regulations contained in these Treaties were later adopted in the so-called Paris Treaties, which included the Transition Convention. The "clarification" within the meaning of art. 79(1), second sentence, Basic Law can only refer to the Treaties specifically designated in this norm and, as an exceptional provision, is to be interpreted narrowly. There is thus no need to deal with the disputed question of what is meant by such a "clarification".

D.

The exclusion of juridical persons from compensation for reparation losses also does not violate art. 3(1) Basic Law. In addition, it is compatible with this constitutional norm that the Act on Reparation Losses does not provide these parties that have suffered reparation losses with a privilege corresponding to a reduction of the assets levy in §§ 39 et seq. LAG.

I.

The regulation dealing with compensation of reparation losses, which the Federal legislature was required to enact by way of both the Transition Convention and the mandate of domestic compensation of war burdens, is to be measured against art. 3(1) Basic Law. Nevertheless, in submitting this to constitutional review, extreme restraint is called for vis-à-vis the legislature. At the time of its founding, the Federal Republic was faced with immense social tasks, the nature and extent of which were unparalleled in history -- the reintegration of expelled persons and refugees, the compensation of victims of persecution, the caring for casualties of the War, etc. In addition to national recovery in general, all of these tasks were in fact accomplished within a relatively short period. The regulations created to this end cannot be measured against the same standard as laws dealing with social welfare benefits under normal circumstances. As has consistently been held by the Federal Constitutional Court, the legislature instead is endowed with a very broad margin of discretion in regulating War and War-induced burdens due to the situation of State bankruptcy, also with respect to art. 3(1) Basic Law as well. Referring to earlier judgments, the Court made the following observations on this matter in BVerfGE 27, 253 [286]:

"If it essentially follows from the described catastrophic situation ensuing from the collapse of the German Reich that the legislature must be provided with a very broad margin of discretion in regulating War and War-induced burdens (cf. BVerfGE 15, 167 [201]; 23, 153 [168]), then this also applies to the structuring of the equalization or compensation claims granted by these rules with respect to nature and amount of such. The War and its aftermath led to material and immaterial losses in millions of the most diverse of cases. It is impossible to develop for this overall area statutory rules that accord every citizen equivalent results and provide just compensation for blows of fortune in each individual case. Rather, it must suffice when the statutory rule comports in general terms with the precept of justice. In particular, in view of the extent of the "State bankruptcy", the legislature may limit itself in compensating losses to property or assets to redressing certain extreme damages in order to guarantee or to restore the absolutely necessary basis for the economic existence of those affected, i.e., it may give priority to social considerations".

The legislature has made use of this freedom in such a way that it modelled the regulation of reparation losses on the regulation of war damages to property, damages due to expulsion and losses suffered in East German territories provided for in the Act on Equalization of Burdens. This regulation was marked by a basic social conception (cf. BVerfGE 17, 67 [80]; 19, 354 [364]): priority was given to the objective of achieving where necessary the economic and social reintegration of persons who had suffered such losses and according them such assistance as is indispensable for restoring their personal and economic existence; on the other hand, the notion of compensation for losses incurred in the past was displaced. This above all finds expression in the fact that the focus is specifically on payments directed at reintegration, such as compensation for household effects, war indemnification pensions and reintegration loans, which are conclusively determined by need and less by the amount of the respective loss. Even with respect to the principal compensation, which turns more on the amount of the loss, social aspects are of considerable importance: they come into play in the ascertainment of the loss (cf. especially the standard value comparison [Einheitswertvergleich]) and in particular control the calculation of the compensation amount for the ascertained loss (cf. the social degression and the consideration of remaining assets). It is in relation to this basic concept that one also finds the exclusion of juridical persons from compensation payments.

In the opinion of the Complainants, the adoption of this equalization of burdens concept in the Act on Reparation Losses in essence violates the general principle of equality due to the failure to take into account the uniqueness of reparation losses. They assert that the legislature treats dissimilar things equally, in that it only compensates reparation losses under the same standard as for expulsion losses and war damages to property, and similar things unequally, in that it, on the one hand, disadvantages reparation losses as against certain other groups of War and War-induced burdens and, on the other, gives preference to reparation losses in neutral countries in relation to the complex of other reparation losses. This argumentation cannot, however, be affirmed.

1. a) Insofar as the Complainants infer from the alleged payment of the reparation debt that reparation losses are different from other War and War-induced burdens, in particular, from losses due to expulsion and war damages to property, their submission has already been refuted in the context of the review under art. 14(1) Basic Law (see supra C II). This same applies to the related argument that the Federal Republic in fact benefited from reparation payments.

In addition, if one could postulate a compensation rule that took into account both of these aspects, it would be impossible to develop a suitable standard for measuring compensation that even more or less corresponded to the notion of just compensation. Even if one were to assume the existence of a German reparation debt and its payment by way of reparation measures, its amount would be entirely uncertain for the simple reason that the Victorious Powers never stated this in precise figures and an accounting of the German reparation payments never took place. Moreover, it has thus far not even been remotely determined what value the German commercial property removed within Germany and abroad had in the hands of the Victorious Powers. In any case, the amount of a presumed mathematical benefit to the Federal Republic cannot -- as the Complainants appear to assume -- be equated with the amount of reparation losses. Particularly unable to be appraised are the indirect effects of reparation measures, such as the temporary lapse in German competition on world markets and, on the other hand, restrictions of German imports, which under certain circumstances may be detrimental for foreign national economies or companies. Even the direct commercial benefits gained by the Victorious Powers by the appropriation of German commercial property would be unsuitable as a basis for a compensation regulation. Seen in this light, all losses attributable to mere destruction or damaging of industrial facilities could not be taken into consideration. From the point of view of those affected by such losses, this sort of differentiation between destruction losses and other reparation losses, assuming that it is at all feasible, would not make any sense, and it is not compatible with the concept of social justice.

b) It likewise cannot be asserted that reparation losses are unique by arguing that these losses were caused by well-aimed, planned actions, whereas losses due to expulsion and war damages to property had to do with blows of fortune steered by pure coincidence (see also BGHZ 52, 371 [374-75]). From the point of view of those respectively affected, the reparation actions also were of a coincidental or fortuitous character, particularly since the nature and extent of the action depended on the different attitudes of the various Occupying Powers, even of individual occupation authorities. In addition, the expulsion of Germans from the former Eastern territories and the confiscation of their assets were also predominantly based on central directives (cf. BVerfGE 40, 141 [159 ff.]). But above all, these circumstances cannot be of significance for the measurement of domestic equalization of burdens against the standard of social justice.

c) The Complainants further rely on the fact that the losses incurred by parties affected by reparation measures largely deal with commercial assets and were to a great extent suffered by large undertakings, whereas the losses regulated under the Act on Equalization of Burdens primarily affected the general population. They assert that the transfer of the statutory concept tailored to the latter losses leads, despite formal equality of treatment, to de facto disadvantaging of parties suffering reparation losses and means that the Federal Republic is virtually totally evading its duty to render compensation.

This can initially be countered with the fact that larger undertakings have also suffered war damages to property and losses due to expulsion and are thus also subject to the same regulation. It cannot be denied that from the nature of the respective loss-invoking event, reparation losses affected, in comparison to losses due to expulsion, companies and larger undertakings to a greater extent than non-commercial, individual assets. However, this distinction in the structure of the losses does not justify the demand for different -- namely, more favorable -- compensation for reparation losses. This demand in essence conflicts with the social objective marking the equalization of war burdens, which, in accordance with the above-cited case law of the Federal Constitutional Court, the legislature was able to, if not required to, accord priority in regulating War and War-induced burdens (BVerfGE 27, 253 [283, 286], with further references). Damages to housing, objects of personal need and individual assets, as were predominantly occasioned by expulsion and war damages to property, have normally had a more invidious effect on the social situation of those affected than losses to commercial property. Whereas the dismantling program, for instance, usually only caused partial losses and at most in exceptional cases led to the collapse of an undertaking, the expulsion measures virtually without exception, and in many cases war damages to property, have wiped out the foundations of existence of those affected. The legislature was thus able to limit itself to according them the indispensable minimum of assistance needed to restore their economic existence; it does not mean that those suffering reparation losses have been unjustifiably disadvantaged when such assistance is not provided to them to the same extent, since their existence is normally not as severely threatened as those suffering losses due to expulsion or war damages. If one views the various groups of losses in the context of the great complex of War- and War-induced losses against the background of the situation marked by the collapse of the Reich, then the demands for better compensation for losses to larger assets seem all the less founded in that this would also disturb the priority status accorded to immeasurable immaterial losses.

d) Finally, the equal treatment of these groups of losses is also not to be questioned on account of the differences regarding the time the losses were incurred. However, most domestic reparation losses resulted much later than war damages to property and losses due to expulsion; in some cases, they were suffered during the phase of general recovery and thus were able under certain circumstances to have had detrimental effects on commercial competition in general, as well as with regard to expelled persons and those suffering war damages to property. But it is impossible to determine with certainty to what extent these effects actually occurred and how great they were in a given case. Moreover, parties suffering reparation losses were generally able to commence with recovery on the basis of relatively more intact remainder assets. Finally, consideration of the time of the loss would have made necessary a complicated, differentiated regulation, since reparation losses were incurred over a period of some six years. In view of the permissible typification (cf. BVerfGE 17, 1 [23]; 26, 16 [32]), the legislature's decision for a different structure at least remains within the broad margin of discretion with which it is endowed.

2. It is also not a violation of the principle of equality that other compensation laws enacted after the War provided more favorable rules for the respective groups of person than the Act on Reparation Losses.

The Federal Restitution Act in the version of 24 March 1958 (BGBl. I, p. 141) dealt with restitution for unlawful actions undertaken during the period of the National Socialist regime and is in all respects not comparable to War burdens regulations of the nature at issue here.

The special regulation of occupation losses in the Act on the Indemnification of Occupation Losses of 1 December 1955 (BGBl. I, p. 734) was portended by the law of occupation and -- in contrast to the compensation clause for reparation losses -- corresponded to the obligations on the Federal Republic set forth in detail in Chapter Nine of the Transition Convention (cf. BVerfGE 27, 253 [256-57, 275-76]; see also BVerfGE 35, 324 [337]).

The fact that the Act on the Liquidation of the Bank of the German Reich and the German Gold Discount Bank of 2 August 1961 (BGBl. I, p. 1165) did not operate according to the principles for clearing up the State bankruptcy but rather liquidated the two banks in reliance on the general law of insolvency is justified since a specially liable asset separate from the remaining State assets was available here.

3. There are also pertinent reasons for the refusal of the Act on Reparation Losses to treat all parties suffering reparation losses like those with assets in neutral States (Switzerland, Sweden, Portugal and Spain).

As mentioned above, the Federal Republic concluded special agreements with these States on the basis of the authorization in the Transition Convention in order to prevent the liquidation required by the Washington Agreements of German assets located there, insofar as this was still possible (see supra A I 1, C III 6 c). An example is the Agreement regarding German Assets in Switzerland of 26 August 1952 (BGBl. 1953 II, p. 17; cf. BVerfGE 6, 290 [291 ff.]). Under this Agreement, the Federal Republic paid Switzerland an amount of 121.5 million Swiss francs, with this satisfying the claims of the Western Powers to the proceeds of liquidation of the seized German assets. German owners were able to choose between either keeping their assets and paying a redemption amount, generally one-third of the asset value, in order to cover the Federal Republic's debt, or accepting the liquidation of their assets and receiving payment of the proceeds of liquidation in German currency. The latter choice also applied to those whose assets had already been liquidated at the time the Agreement was concluded. Under the Consenting Act to this Agreement of 7 March 1953 (BGBl. II, p. 15), the released assets were exempted from the assets levy under the Act on the Equalization of Burdens; a substitute assets levy had to be paid on the proceeds of liquidation, which essentially corresponded to that under the Act on the Equalization of Burdens. Similar regulations were agreed upon with other neutral States (cf. BVerfGE 24, 203 [205 ff.]).

Even if one assumes, as do the Complainants, that in these cases the Federal Republic itself paid the Allies' reparation demands in German assets, this is undoubtedly limited to seized assets in neutral States. These international agreements did not, in contrast to the Act on Equalization of Burdens or the Act of Reparation Losses, deal with the domestic regulation of the consequences of foreign interference with German assets, which was already implemented and virtually irreparable, but rather essentially with the warding off of threatened further interference in external assets not yet definitively deprived and their release for the German owners (cf. BVerfGE 6, 290 [296 ff.]). The Federal Republic, which, with the conclusion of these Agreements, satisfied its duty to afford diplomatic protection to its citizens (cf. BVerfGE, id. [299]), was forced to renounce the assets levy, since Switzerland insisted upon this and the Federal Republic was keenly interested in achieving an agreement with Switzerland in order to prompt other neutral States to release German assets. This resulted in preferential treatment of the affected owners of assets in neutral States in comparision to the regulations in the Act on Reparation Losses, which only reflects the different situations pertaining to German assets inside and outside these countries depending on the severity of the seizure by the Victorious Powers (cf. BVerfGE, id.). It thus cannot be termed irrelevant when the Federal Republic expended greater public resources in those areas where German assets were still able to be rescued.

II.

If the legislature may accordingly structure the compensation of reparation losses as a whole using as a model the Act on the Equalization of Burdens, then this also applies to the delineation of those entitled to compensation in detail. In contrast to the view of the Complainants, neither the exclusion of juridical persons from equalization payments nor the adoption of this regulation in the Act on Reparation Losses violated art. 3(1) Basic Law.

1. The restriction of equalization payments to natural persons in the Act on Equalization of Burdens results from the above-described basic concept, which is consistent with the Constitution. It corresponded with this social character of the Act that the focus was on affected individuals and that State assistance, intended as a payment for social equalization, was to be limited to them: social justice can only be required in the interrelations of the primary bearers of basic rights and not in the relations between natural persons and autonomous legal units created by them in the form of juridical persons for better organization and pursuit of their economic interests (cf. BVerfGE 35, 348 [357-58]). It therefore was not constitutionally objectionable for the equalization of burdens, insofar as War and War-induced losses to business or commercial property established any equalization claims whatsoever, only to include losses incurred by a natural person.

The tie to natural persons is also justified by the prospective direction taken by the regulation. In order for persons who had not only suffered economic injuries due to expulsion and war damages to property but also largely lost the basis for their personal life to be assisted effectively, the limited resources had to be concentrated toward them. If juridical persons had been included in socially graduated compensation, this would, on the one hand, not have resulted in essential assistance for these companies, but on the other, resources would have been tied up that, with widespread deployment, could achieve an effect with natural persons as mandated by the social State principle. The legislature could also have assumed that corporations, insofar as they still existed after the collapse, would be more likely than individuals to overcome their economic war losses under their own power and that it made more sense to render State assistance required or desired in the overall interest by way of general economic support than by coverage in the equalization of war burdens.

2. The same considerations constitutionally justifying the exclusion of juridical persons from payments under the Act on Equalization of Burdens show that the corresponding regulation in the Act on Reparation Losses is compatible with art. 3(1) Basic Law.

a) Just as with equalization payments, the compensation payments for parties suffering reparation losses serve the purpose of social equalization and may therefore be limited to the directly affected individuals. From the standpoint of social justice, it is that a higher percentage of reparation losses are thereby excluded from direct compensation than losses covered by equalization of war burdens.

In addition, this does not mean, as may not be overlooked, that losses suffered by juridical persons are completely ruled out; these are indirectly covered to a certain extent when they result in a reduction in the value of shares, thus leading to an assets loss on the part of natural persons, i.e., the shareholders (cf. the Order of the Federal Constitutional Court of this day, BVerfGE 41, 193).

b) The mentioned prognosis by the legislature has proved to be correct in the area of reparation losses as well: the undertakings organized as juridical persons and suffering reparation losses had rebuilt their operations by the time the Act on Reparation Losses was enacted and were participating in the general favorable development of the economy. In addition to other circumstances, an important contribution was made to this by the various measures of direct and indirect economic assistance from the public authorities. If even one leaves aside the tax reliefs regarding taxation of profits, since these may have been of only little benefit for undertakings suffering reparation losses, mention should nevertheless be made of the loans provided by the Federation and the states for re-erecting dismantled plants, the investment assistance programs (ERP, LAG, regional economic promotion, etc.), the yields from the investment assistance laws and other Federation loans. According to estimates by the Federal Government, this involved a total amount of roughly DM 4.7 billion. It lay in the very nature of these assistance measures that larger undertakings organized in the form of juridical persons profited more strongly from them than individual business persons or partnerships. At the same time, however, most of these State aids were able to be claimed not merely by undertakings suffering reparation losses but also by others in need of support. It also can no longer be determined what amount of public resources actually flowed to the companies incurring reparation losses. But for the evaluation of relevance here, it is sufficient that commercial undertakings that needed State assistance due to a reparation loss took part to a corresponding extent in the described economic support. In any event, the legislature could have assumed that these measures occasioned the economic recovery of the mentioned undertakings, which made additional aid unnecessary at the time the Act on Reparation Losses was enacted.

c) However, the developments that took place in the economy prior to enactment of the Act also improved the situation of natural persons suffering reparation losses. It thus cannot be overlooked that, as with principal compensation under the Act on Equalization of Burdens, the character of recovery assistance is less marked, such that the element of social equalization of the loss suffered is more strongly evident. The legislature was not, however, thereby compelled to delineate entitlement to compensation in a different manner, since it was authorized and obligated to observe the provisional decision made in the Act on Equalization of Burdens for a regulation not improper at that time and compatible with art. 3(1) Basic Law. Compensation of juridical persons in the Act on Reparation Losses would also have compelled a retroactive extension of the equalization payments in the Act on Equalization of Burdens to war damages to property, losses due to expulsion and losses in the Eastern territories suffered by juridical persons. The equality of these groups of losses, as was determined from the aspect of domestic equalization (see supra D I 1), works in both directions: It would not be compatible with the concept of justice to fail to compensate juridical persons under the Act on Equalization of Burdens if the Act on Reparation Losses were to include them in compensation. But for financial reasons, the legislature was able to reject such an extension of State payments, since they would have required an expenditure of roughly DM 1.2 billion for the principal compensation and roughly DM 1.7 billion in the area of the Act on Reparation Losses, i.e., a total of DM 2.9 billion (cf. BVerfGE 15, 126 [140 ff.]); 23, 153 [190]; 27, 253 [288]).

On the other hand, it is not possible to make reference to the relatively favorable condition of State finances at the time the Act on Reparation Losses was enacted, since the above-mentioned sum must be seen in relation to the financial needs for other State functions. The Federal Constitutional Court has already held with regard to occupation losses that an improvement in its financial situation does not obligate the Federal Republic to revise an earlier compensation regulation that, while not improper at that time, was based on an unfavorable financial prognosis. "A different appraisal would lead to the intolerable result that the legislature would be compelled to redraft all past compensation rules with every improvement in the financial situation; this would preclude effective planning for future State activities" (BVerfGE 27, 253 [288-89]).

3. It goes without saying that the complete exclusion of all juridical persons is based on a seemingly rough framework incapable of doing justice to all cases. For instance, if one were to compare small family businesses in the legal form of a private limited company with larger undertakings operated as independent firms or partnerships, then under certain circumstances, undertakings are treated differently depending on their form of organization, although equal treatment would better comport with the basic concept underlying equalization of war burdens. This may nevertheless be accepted with respect to the boundaries drawn for the review under art. 3(1) Basic Law, even though such borderline cases are more likely to appear with greater frequency in the area of the Act on Reparation Losses as a result of the described structure of the losses than in the area of the Act on Equalization of Burdens. The task placed on the domestic equalization of war burdens could not have been accomplished without extensive typification and schematization; therefore, for reasons of practicability, the statutory regulation may be oriented along the order established by the law of trade and corporations (cf. BVerfGE 13, 331 [339]; 40, 109 [117]). In view of the variety of forms of enterprise, on the one hand, and the extreme differences in the economic conditions of the various undertakings, on the other, it is not apparent that a different delineation would normally have led to socially more just results. In particular, it has not been demonstrated that, for instance, family corporations operated in form of juridical persons that have suffered reparation losses were generally in such a poor economic condition that the typification selected would have improperly disadvantaged an entire group of undertakings with regard to economic and social considerations. The fact that hardship is to be seen in isolated cases is unable to call into question the fundamental constitutionality of the typifying regulation; this is particularly the case since family corporations may receive development loans under § 46 RepG, and the hardship clause found in § 301 b LAG offers a sufficient basis for granting reasonable compensation from the hardship fund (cf. BVerfGE 17, 337 [354]; 26, 16 [32]; 28, 324 [356]; 31, 119 [130-31]; 38, 61 [92]). The competent authorities are both entitled and obligated to make use of this power when the rigid schematization of the Act leads to particular hardship; in so doing, they may not once again proceed schematically but rather must review the given case in light of the social concept of domestic equalization of war burdens (cf. BVerfGE 41, 193 -- B II 3 and 4).

III.

Assuming the exclusion of juridical persons from compensation payments under the Act on Reparation Losses to be compatible with art. 3(1) Basic Law, it may nevertheless be objected that in contrast to the provisions in §§ 39 et seq. LAG, the Act on Reparation Losses does not contain an authorization to reduce the assets levy due to a reparation loss. The authority to reduce the assets levy pursuant to §§ 39 et seq. LAG meant for juridical persons that at least in this form they received a benefit for losses due to expulsion, war damages to property or losses in Eastern territories. Thus, the denial of a corresponding levy reduction in the Act on Reparation Losses disadvantages those juridical person suffering reparation losses. Since the legislature has in all other respects followed the concept of the Act on Equalization of Burdens, and since it was entitled, if not obligated, to provide for such due to the likeness of the elements of the loss, this deviation requires a justification (cf. BVerfGE 18, 315 [334], with further references; 27, 58 [65], with further references; 32, 157 [168-69]).

1. In opposition to the view of the Federal Government, the disadvantaging of juridical persons suffering reparation losses cannot be founded on the difference in the manner of financing of compensation payments -- Act on Equalization of War Burdens: Equalization of Burdens Fund; Act on Reparation Losses: general Federal resources -- or on the related consideration that under the system of the Act on Equalization of Burdens, the only losses able to be covered are those also included on the payments side. Particularly since the Equalization of Burdens Fund is not available for reparation losses, it would have seemed obvious to credit juridical persons suffering reparation losses -- which are required to finance this Fund without being able to participate in it -- for their own War-induced losses on the levies side.

An adequate reason for the denial of a benefit is also not to be found -- as asserted by the Federal Government -- in Art. 6(2) of Chapter Ten of the Transition Convention. Even if a reduction in the revenues from property levies were truly capable of changing the relationship set forth in the Transition Convention between the share of the Equalization Fund to be used for social purposes and that share of the Fund to be used for compensation of War losses, then this could have been countered by covering the reduction in revenues for the Equalization of Burdens Fund with general Federal resources, such as the compensation payments of the Act on Reparation Losses. In any event, the regulation in the Transition Convention did not prohibit juridical persons suffering reparation losses from being paid directly from the Federal budget, which in economic result would be equivalent to a reduction in the assets levy under §§ 39 et seq. LAG.

2. However, the following considerations may be set forth in favor of the legislature's decision:

The fact that at the time the Act on Equalization of Burdens was enacted, reparation losses were ignored on both the levies side and the payments side and thus were also not included in §§ 39 et seq. LAG resulted from the former situation and was not constitutionally objectionable. It could not be predicted at that time whether the efforts to obtain a release of confiscated German assets would be successful, to what extent a corresponding compensation of reparation losses would thus be necessary and how this was to be structured. After subsequent developments had led to the situation where parties suffering reparation losses were also -- permissibly -- compensated pursuant to the concept underlying the Act on Equalization of War Burdens, it could be said with the benefit of hindsight that the principle of equality would have been better served if the reduction in the assets levy had also been accorded at that time -- i.e., in 1952 -- for reparation losses. But since this was omitted, the only question to be resolved at the time the Act on Reparation Losses was enacted was whether at this date -- i.e., in 1969 -- such a regulation should now be provided for in favor of juridical persons suffering reparation losses. Arguing against this might have been that this levy was to expire in 1979, i.e., to be imposed for a significant duration (two-thirds of its period of validity). Therefore, only conceivable would have been a compensation in the form of a one-time State payment. The overall amount of such a substitute payment would have placed a not inconsiderable strain on the Federal budget and have engendered a substantial administrative effort, although the economic benefit for the juridical persons would have in general been relatively minor. If §§ 39 et seq. LAG were to be taken as a basis, many juridical persons suffering reparation losses would not have received any benefit whatsoever.

However, Complainant 1), which also would have not received a benefit under the application of this provision, asserts that the calculation of such a subsequent payment must deviate from §§ 39 et seq. LAG in favor of the parties suffering reparation losses, since certain provisions detrimental to larger assets may not be applied. There is, however, no room for such a consideration in reviewing whether art. 3(1) Basic Law obligates the legislature to provide juridical persons suffering reparation losses with benefits equal or equivalent to those accorded juridical persons favored by §§ 39 et seq.

LAG.

Under these circumstances, the legislature may have based its decision on the fact that a subsequent State payment of this sort would have been of an entirely different character than the reduction in levies spread across 30 years in §§ 39 et seq. LAG, which came to bear in partial sums of quarterly contributions. This reduction in levies was not an important financial aid or an effective compensation payment for the affected juridical persons; on the contrary, by virtue of its very smallness, it was to be understood as a relief predominantly motivated by tax policy, which seemed called for at that time in light of the still fresh War losses and with respect to high tax rates regarding taxation of profits. A comparable relief was neither necessary nor sensible at the time the Act on Reparation Losses was enacted, since the conditions of the postwar period were, thanks to the economic development supported by State measures, long out-dated: A subsequent State payment would have tied up public funds without promoting the economy any further or achieving a social objective corresponding to the underlying concept of domestic equalization of war burdens.

This cannot be countered with the argument that the favorable development in the long period between the incurrence of the loss and the enactment of the Act must be left out of consideration since the legislature could otherwise relieve itself of the fulfillment of its duties by delaying a compensation regulation required at a given point. Such an objection may be justified when the delay is intended for this purpose or when the legislature can be accused of such for other reasons. The late enactment of the Act on Reparation Losses, however, is attributable at least also to the reason that the German side -- both the public authorities and the parties suffering reparation losses -- had long hoped, even after conclusion of the Transition Convention, that foreign States could be prompted to release in part the German assets. Furthermore, the unusually long duration of the legislation can basically be traced back to the difficulty in clarifying the questions of law as to whether parties suffering reparation losses are entitled to a claim for damages or for compensation for expropriation.

In all, the legislature's decision thus cannot be viewed as being particularly improper. With respect to the caution called for here in the review under art. 3(1) Basic Law, the denial in the Act on Reparation Losses of a payment corresponding to the reduction in the assets levy is compatible with this constitutional norm.

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