Thu, Jan. 22, 2004

Compensation for Expropriated GDR Real Estate

JN - Recklinghausen.   Today, the European Court of Human Rights held in a written opinion in the matter of Jahn et al. v. Germany, case nos. 46720/99, 72203/01 and 72552/01, that Germany violated its duty of protection of property as required by Article 1 of Protocol No. 1 to the European Convention of Human Rights.

Five German plaintiffs had inherited plots of land that had been assigned to their families, subject to encumbrances on transfer rights, by the German Democratic Republic (GDR) after the 1945 agrarian reform. On March 16, 1990, before reunification, the Modrow Act, named after GDR parliamentary president Hans Modrow, came into effect, lifted assignment restrictions and granted such landowners full ownership. After reunification, the plaintiffs were required to transfer their land to tax authorities under Germany's Second Property Rights Amendment Act ("PRAA") of July 14, 1992, without compensation.

Later, as a statute enacted by the GDR's first freely-elected parliament, the Modrow Act became part of German domestic law. The court held that, notwithstanding the situation before the Modrow Act, the plaintiffs had acquired full ownership in 1990. While the court acknowledged the legislature's objective of correcting the results of the Modrow Act, it ruled that the PRAA illegally deprived the plaintiffs of their property because the PRAA failed to provide for adequate compensation. Article 1 of Protocol No. 1 of the European Convention of Human Rights requires a fair balance between the protection of property and the requirements of general interest.

The ruling is likely to trigger a wave of claims for compensation valued at billions of Euros.

No Non-Compete for Competing Computer Expert

CK - Washington.   The Munich district court released yesterday its ruling on the validity of a non-competition agreement barring a programmer engaged by a corporation as an independent contractor from doing the same type of work for competitors, during the term of his engagement and for a year after its termination.

The programmer terminated the agreement and went to work for his former company's client to perform the same type of work. The first company sued him for violating the non-competition agreement, case number 6 O 12790/03.

On December 5, 2003, the court held the non-compete unenforceable for lack of any compensation for the programmer's forebearance of jobs in his field, thus clarifying a requirement under German law for such agreements. The contract impeded unconscionably the programmer's ability to exercize his right to work, Judge Brychcy ruled. The judgment also relies on a comparison of independent contractors with trade representatives for which special E.U. and German rules require compensation upon termination.

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