CEDH · CASELAW;DECISIONS;DECCOMMISSION;ENG — 8 mai 1986

.sDD6737AE { font-size:11pt } .s211D6B00 { margin-top:0pt; margin-bottom:0pt; line-height:normal; widows:0; orphans:0; font-size:8.5pt } .sBB9EE52A { font-family:Arial }                          AS TO THE ADMISSIBILITY OF                          Application No. 10522/83                    by Leopold MELLACHER and another                             against Austria                                      *                          Application No. 11011/84                        by Johann MÖLK and others                             against Austria                                      *                          Application No. 11070/84                by Christiane WEISS-TESSBACH and another                             against Austria           The European Commission of Human Rights sitting in private on 8 May 1986, the following members being present:                   MM G. SPERDUTI,   Acting President                    F. ERMACORA                    M.A. TRIANTAFYLLIDES                    G. JÖRUNDSSON                    S. TRECHSEL                    B. KIERNAN                    A.S. GÖZÜBÜYÜK                    A. WEITZEL                    J.C. SOYER                    H.G. SCHERMERS                    H. DANELIUS                    G. BATLINER                    H. VANDENBERGHE                Sir Basil HALL                  Mr   H.C. KRÜGER, Secretary to the Commission           Having regard to Art. 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms;           Having regard to the application introduced on 5 August 1983 by Leopold and Maria MELLACHER against Austria and registered on 12 August 1983 under file No. 10522/83;           Having regard to the application introduced on 22 May 1984 by Johann, Ernst and Anton MÖLK and Maria SCHMID against Austria and registered on 18 June 1984 under file No. 11011/84;           Having regard to the application introduced on 4 July 1984 by Christiane WEISS-TESSBACH and Maria BRENNER-FELSACH against Austria and registered on 6 August 1984 under file No. 11070/84;           Having regard to the Commission's decision of 4 December 1984 to give notice of the applications to the respondent Government and to invite them, in accordance with Rule 42 para. 2 (b) of the Commission's Rules of Procedure, to submit observations in writing on the admissibility and merits of the applications;           Having regard to the observations submitted by the respondent Government on 4 March 1985 (application No. 10522/83) and 19 March 1985 (applications Nos. 11011/84 and 11070/84);           Having regard to the observations in reply submitted by the applicants on 11 April 1985 (application No. 10522/83) and 9 May 1985 respectively (applications Nos. 11011/84 and 11070/84);           Having regard to the Commission's decision of 8 July 1985 to join the three applications and to invite the parties, in accordance with Rule 42 para. 3 (b) of the Rules of Procedure, to submit further observations on the admissibility and merits orally at a hearing before the Commission;           Having regard to the oral submissions of the parties at the hearing on 8 May 1986;           Having deliberated;           Decides as follows:   THE FACTS           The applicants are house-owners who complain essentially that rent due to them under tenancy agreements made before the entry into force of the 1981 Rent Act (Mietrechtsgesetz, Fed. Law Gazette No. 520/1981) was reduced by operation of section 44 of this Act.           A system of rent control has existed in Austria since World War I.   The 1922 Rent Act (Mietengesetz, Fed. Law Gazette No. 872/1922), which remained in force until 1981, provided for the freezing of rents at the 1914 level.   However, it did not apply to flats constructed after its entry into force, for which no rent restrictions applied. After 1967 (Mietrechtsänderungsgesetz, Fed. Law Gazette No. 281/1967), rent restrictions were continued only for earlier tenancy agreements which remained in existence.    For new tenancy agreements, however, there were no restrictions on the rent which could be agreed freely, even for flats which had previously been subject to rent control.   In 1974 (Mietengesetz- novelle, Fed. Law Gazette No. 409/1974), fresh restrictions were introduced for new leases of sub-standard flats, for which rents were to be calculated on the basis of a fixed maximum rent per square metre.           The 1981 Act, which entered into force on 1 January 1982, extended the system of maximum rents per square metre to other categories of flats.   Section 16 (2) provides for certain maximum rents per square metre for new leases:   AS 22.- for class A; AS 16.50 for class B; AS 11.- for class C and AS 5.50 for class D.   Any rent agreement covered by this provision can be declared void insofar as it exceeds those amounts.   Moreover, the system of maximum rents was extended to pre-existing tenancy agreements:   by section 44 (2) and (3) a tenant occupying a flat under a previously uncontrolled contract may apply for a reduction of his rent to a maximum of 150% of the above amounts.   Thus, the rent agreement is not automatically affected by the legislation.   Only if the tenant so requests, the competent authorities will declare the agreement void to the extent that it provides for a rent exceding the legal maximum amount.   This declaration does not render the agreement void ab initio, but only as from the month following the tenant's request.           However, the above provisions are not of general application. The Act in fact exempts numerous types of flats from the system of fixed maximum square metre rents, either by excluding them from the scope of applicability (cf. section 1/4 according to which no restrictions apply to flats in buildings constructed without public subsidies after 1953, to flats in family houses and to freehold flats; section 1/3 according to which flats in buildings of non-profit making housing associations come under a different rent control system established under the Non-Profit Housing Act = Wohnungsgemeinnützig- keitsgesetz 1979) or by providing for another type of restrictions (appropriate amount of rent which can be agreed according to section 16/1 for flats in buildings constructed after 1945, for flats in historical buildings to whose preservation in the public interest the landlord has made considerable financial contributions, for flats upgraded in standard by considerable financial contributions of the landlord, for class A and B flats beyond a certain size, and generally for all flats after 6 months of tenure).           The Rent Act further contains a number of provisions concerning the use of the rent proceeds by the landlord.   They must in principle be used for the maintenance of the building and only if they are not sufficient for this purpose is there a possibility for the landlord to ask for increased rents according to section 18 or for maintenance contributions according to section 45 of the Act.   Further provisions limit the landlord's right to give notice to his tenants.   This right is in principle limited to important reasons specified in section 30 of the Act.   Even the death of the tenant does not terminate the lease as various persons are entitled to continue the contractual relationships according to section 14.           The facts in the particular cases may be summarised as follows:   Application No. 10522/83           The applicants, a married couple residing in Feldkirchen, are both Austrian citizens.   They are represented by Mr. H.G. Medwed, a lawyer practising in Graz.           The applicants jointly own a block of flats in Graz with several apartments leased out to tenants.           One of these apartments consisting of two rooms and a kitchen (with a total surface of 40 m2) was let on 15 September 1978 under a freely negotiated tenancy contract according to section 16 (1) of the 1922 Rent Act as amended in 1967.   The rent in this particular case was set at AS 1,870.-- per month.           In application of the 1981 Rent Act, the tenant of the above apartment on 5 February 1982 applied to the competent Arbitration Board (Schlichtungsamt) of the City of Graz to reduce his rent to AS 330.-- (= 150% of the legal maximum rent for class D) as from 1 March 1982. After holding a hearing on 25 May 1982, the Board ruled on 7 June 1982 to allow the application.           The applicants being dissatisfied with this decision then took the case to the courts, and the Board's decision thereby lost its effect.   The tenant claimed that when he rented the apartment it was without running water and toilet facilities.   These facilities were subsequently installed in the apartment at the tenant's cost.           By a decision of 22 October 1982, the District Court of Graz confirmed that the apartment was in class D and that under section 16 (2) of the Rent Act the regular monthly rent therefore should not exceed AS 5.50 per m2.   Under section 44 (2), the rent had to be reduced to 150% of the regular amount, which in this case was AS 330.--.   The overcharge as from 1 March 1982 (AS 12,320.--) had to be paid back to the tenant by virtue of section 37 of the Act.           The applicants appealed claiming in particular that the restrictions resulting from the application of section 44 of the Rent Act were unconstitutional.   In this respect they invoked the Commission's decision on Application No. 8803/77 (DR 17, 80) which had dealt with the earlier rent protection legislation and had found the restrictions under this legislation to be at the very limit of permissible interferences with property rights.   Given the even more restrictive nature of the new legislation, it was submitted that this legislation went beyond the permissible limits.   The reduction of a freely and lawfully negotiated rental amount in favour of the tenant in fact amounted to an expropriation of the landlord's property without compensation. For these reasons, the applicants suggested that the appellate court refer the matter to the Constitutional Court for an examination of the constitutionality of the relevant legislation.           In addition, the applicants claimed that in the absence of a specific request by the tenant, the Court should not have adjudicated the reimbursement of the overcharged rent, and that the amount of the reimbursement was exaggerated because it included tax which the applicants had already paid but could not recover from the revenue office.           The Regional Court of Graz, however, rejected this appeal on 18 February 1983.   It did not feel prompted to seize the Constitutional Court with the question of the constitutionality of section 44 of the Rent Act, having regard to the Constitutional Court's case-law concerning similar issues.   As regards the reimbursement, the court found that under the applicable provisions it had to be adjudicated ex officio, and the question of taxation was not in issue in the present proceedings.           This decision is final, no further remedy being available to the applicants under the domestic law.   Application No. 11011/84           The applicants, four Austrian citizens born in 1902, 1908, 1948 and 1956, respectively, are all members of the same family and reside in Innsbruck.   They are represented by Mr. Ludwig Hoffmann, a lawyer practising in Innsbruck.           The applicants jointly own an apartment house in Innsbruck as a community of heirs.   One of the apartments in this house with a total surface of 68 m2 and consisting of three rooms and a kitchen, plus toilet and water facilities accessible through the corridor outside the apartment, was let on 7 December 1972 under a freely negotiated tenancy contract according to section 16 (1) of the 1922 Rent Act as amended in 1967.           The rent in this particular case was set at AS 800.-- per month until August 1975, and at AS 1,500.-- per month as from 1 September 1975 having regard to certain investments to be made by the tenants (including in particular the transfer of the water installations to the apartment itself).   The rent was furthermore subject to an indexing provision on the basis of the consumer price index for 1966.   As of April 1983, the rent would therefore have been AS 2,985.-- per month. The tenants actually paid AS 1,308.30 as from November 1982.           On 4 October 1982, in application of the Rent Act 1981, the tenants of the above apartment applied to the competent Arbitration Board (Schlichtungsstelle) of the City of Innsbruck to reduce the rent to 150% of the legal maximum rent for class D.   The Board allowed the application by a decision of 6 April 1983.           However, the applicants then took the case to the courts, and the Board's decision thereby lost its effect.   A new decision had accordingly to be taken by the District Court of Innsbruck.           Before the court, the applicants argued in particular that the apartment in question was at present in class B.   Although the improvement of standard had not been financed by themselves, but by the tenants, they observed that such improvements at the tenants' costs had in fact been agreed in the original contract and had led to a reduction of the rent for the initial period.   The tenants objected that the costs of their investments had by far exceeded the amount by which the rent had temporarily been reduced.           The court decided on 22 June 1983 that the chargeable rent was in fact to be based on class D because the apartment had been in this class when the tenancy contract was concluded and the standard had not been improved by the landlords.   It accordingly reduced the rent to AS 561.-- as from November 1982.   At the same time, it ordered the applicants to pay back to the tenants the overpayments received since that time (amounting to some AS 4,000.--).           The applicants appealed against this decision, claiming in particular that the application of the legal provisions to them amounted to an expropriation or other disproportionate interference with their property rights as guaranteed by Article 5 of the Basic Law and Article 1 of Protocol No. 1.   They suggested that the question of constitutionality should be referred to the Constitutional Court. Apart from that they again claimed that the chargeable rent should in any event be based on class B and not class D.           The Regional Court of Innsbruck partially allowed the appeal by a decision of 15 November 1983.   It found that the court of first instance had failed to take into account the indexing provision of the initial contract.   Apart from that it confirmed the decision.   In particular it considered that the apartment had not been wrongly classified as a class D apartment having regard to its standard at the time of the conclusion of the tenancy contract.           The court had no doubts as to the constitutionality of the applicable legislation.   Section 44 of the 1981 Act provided for an expropriation which was in conformity with the requirements of the Constitution and of the Convention.   The public interest served by this legislation was the safeguarding of stable, socially and economically justified housing rents for apartments which as a rule served the urgent needs of those broad sectors of the population who depended on tenancy contracts.   Such apartments were often provided by the landlords without any considerable expenditure of their own. In those circumstances it could hardly be maintained that the legislator had not acted in the public interest.   Insofar as the legislation did not provide for any compensation for the landlords in respect of the above expropriation, the court referred the applicants to the possibility to claim such compensation in the appropriate proceedings (i.e. non-contentious proceedings under the Railway Expropriation Act).           Following this suggestion of the court, the applicants made an application to the District Court of Innsbruck on 28 December 1983 in which they claimed compensation from the State for legal expropriation, in the amount of AS 26,600.-- (concerning the 14-month period between November 1982 and December 1983).   The application was rejected on 5 July 1984 and the applicants did not appeal in time against this decision.   Their subsequent application to be granted leave to appeal out of time was finally rejected by the Innsbruck Regional Court on 3 April 1986.           The applicants also filed an appeal against the Regional Court's above decision of 15 November 1983 in which they repeated in particular their arguments as to the unconstitutionality of the applicable legislation.   On 6 March 1984, the Supreme Court rejected this appeal as inadmissible.   It found that the appeal was directed against that part of the Regional Court's decision which had confirmed the District Court's decision.   An appeal against a decision of an appellate court was, however, admissible only insofar as it had not confirmed the decision of the court of first instance or if the appellate court itself had granted leave to appeal in view of the fundamental importance of the legal issue involved.   In the present case leave to appeal had not been granted.   In these circumstances there was no room for dealing with the applicants' arguments, in particular as regards the alleged unconstitutionality of the 1981 Rent Act.   Application No. 11070/84           The two applicants are Austrian citizens born in 1924 and 1899 who live in Vienna.   They are each represented by a different lawyer, i.e. by Mr. O. Weiss-Tessbach and Mr. F. Leon, respectively. At the hearing before the Commission, they were represented by yet another lawyer, Mr. G. Benn-Ibler of Vienna.           The first applicant is the owner, the second applicant the usufructuary of a house in Vienna with several apartments leased out to tenants.           One of the apartments consisting of six rooms, a kitchen, a corridor, a bathroom and a toilet (total surface 200 m2) was let on 1 April 1979 under a freely negotiated tenancy contract according to section 16 (1) of the 1922 Rent Act as amended in 1967.   The rent in this particular case was set at AS 3,800.-- per month, subject to an indexing provision on the basis of the consumer price index for 1976. The rent had risen to AS 4,236.51 by January 1982.           In application of the 1981 Rent Act, the tenant of the above apartment wrote to the house administration on 23 December 1981 asking them to reduce his rent to AS 3,300.-- (= 150% of the legal maximum rent for class C) as from 1 January 1982.   The applicants' lawyer replied on 13 January 1982 that the request was unjustified.           On 19 February 1982, the tenant applied to the competent Arbitration Board (Schlichtungsstelle) of the City of Vienna to reduce the rent to AS 3,300.-- as from January 1982 according to the above legal provisions.   After holding a hearing on 24 February 1982, the Board decided on 28 May 1982 to allow the application.           The applicants being dissatisfied with this decision then took the case to the courts, and the Board's decision thereby lost its effect.   The applicants observed in particular that the tenant had in his original application referred to a square metre rent of AS 16.50, i.e. the maximum rent corresponding to class B apartments.   They submitted that this qualification of the apartment was correct and that the reduction of the rent was inadmissible in the case of apart- ments of class B exceeding a surface of 130 m2 (section 16 (1) 4 of the Act). They further submitted that the house was situated in an area of protection of monuments, and that the reduction of the rent was inadmissible also under section 16 (1) 3.   The tenant contested these arguments.           After holding several hearings, the District Court of Vienna City decided on 31 August 1983 to reduce the rent to AS 3,300.-- per month as from 1 January 1982.   It held that the apartment had in fact been in class C at the date of the conclusion of the tenancy contract, and that section 16 (1) 4 of the Act was therefore inapplicable. Section 16 (1) 3 was likewise inapplicable because it had not been proven that the house was situated in a zone of monument protection. It was true that the applicants had made considerable investments (in the total amount of AS 563,745.--), but this did not change the situation.           The applicants appealed from this decision alleging in particular that the apartment had been wrongly classified in class C, and that the application of section 16 (1) 3 had been wrongly denied.           The Regional Court of Vienna rejected the appeal by a decision of 13 December 1983.   It considered that the court of first instance had correctly assessed the evidence and had rightly concluded that neither section 16 (1) 4 nor section 16 (1) 3 of the Act were applicable.   In particular it had not been proven that the investments made by the applicants had been financed from other means than their rent income which they were legally obliged to use for maintenance purposes.   It had therefore not been shown that they had borne a considerable financial risk of their own.   In these circumstances the legal conditions for reducing the rent were fully established.           This decision is final.   COMPLAINTS   1.       The applicants in all three cases complain that their property rights under Article 1 of Protocol No. 1 to the Convention have been violated.           They claim that the reduction of the rent due to them under lawfully concluded tenancy contracts cannot be described as a legitimate measure to control the use of property in accordance with the general interest.   They generally consider the degree of interference with the landlords' rights brought about by the 1981 Rent Act as being disproportionate and in particular deny a pressing social need justifying an interference with existing rent agreements.   In their opinion the reduction of the rent amounts to a legal expropriation (Legalenteignung) of their contractual claims and at the same time to an expropriation of their real property whose value was considerably diminished by this measure.   This expropriation is allegedly unjustified because it does not serve the public interest. It is further claimed that the expropriation in question violates Convention law because there is no possibility for the landlord to get any compensation.   2.       The applicants in case No. 11011/84 further claim a violation of Article 14 of the Convention, read in conjunction with Article 1 of the Protocol.   In their view, the legislation is discriminatory of private house-owners who have to bear a heavier social burden than certain others including public house-owners.   PROCEEDINGS           Application No. 10522/83 was introduced on 5 August and registered on 12 August 1983.           Application No. 11011/84 was introduced on 22 May and registered on 19 June 1984.           Application No. 11070/84 was introduced on 4 July and registered on 6 August 1984.           The Commission began its examination of the admissibility of application No. 10522/83 on 14 May 1984, but decided to adjourn the further consideration.   The examination of admissibility was resumed on 4 December 1984, when the Commission had also before it the two further applications No. 11011 and 11070/84.   The Commission decided to give notice of all three applications to the respondent Government and to invite them, in accordance with Rule 42, para. 2 (b) of its Rules of Procedure, to submit observations in writing on the admissibility and merits of these applications which, however, were not joined at this stage.           The Government were requested to submit their observations before 22 March 1985.           The Government submitted observations concerning application No. 10522/83 on 4 March 1985 and observations concerning each of the other two applications on 19 March 1985.           The applicants in application No. 10522/83 submitted observations in reply on 11 April 1985 and the applicants in each of the other two applications submitted theirs on 9 May 1985.           The Commission resumed the examination of the admissibility of the three applications on 8 July 1985.   It decided to join the cases and to invite the parties, in accordance with Rule 42, para. 3 (b) of the Rules of Procedure, to submit further observations on the admissibility and merits orally at a hearing before the Commission.           The date of the hearing was first scheduled for 6 March 1986, but at the Government's request had to be postponed to a later date. On 23 December 1985, the new date of the hearing was fixed on 8 May 1986.   On 14 March 1986, the parties were informed of the details of the hearing and were asked to deal in particular with a number of specific questions.           The hearing took place on 8 May 1986.   The parties were represented as follows: The Government by their Agent, Botschafter Dr. Helmut TÜRK, Head of the International Law Department, Federal Ministry of Foreign Affairs, who was assisted by Ministerialrat Dr. Wolf OKRESEK, Federal Chancellery, Constitutional Law Department, and Ministerialrat Dr. Robert TSCHUGGUEL, Federal Ministry of Justice, Advisers.    The applicants by Rechtsanwalt Dr. Hans Günther MEDWED, Graz,   and Rechtsanwalt Dr. Gerold KLEINSCHUSTER, Counsel for the applicants in application No. 10522/83;   Rechtsanwalt Dr. Ludwig HOFFMANN, Innsbruck,   Counsel for the applicants in application No. 11011/84; Rechtsanwalt Dr. Gerhard BENN-IBLER, Vienna, Counsel for the applicants in application No. 11070/84.                    SUMMARY OF THE PARTIES' OBSERVATIONS   A.     The Government   1.     On exhaustion of domestic remedies           According to the Government, the applicants have not complied with the requirements of Article 26 of the Convention because they failed to take or to pursue proceedings with a view to obtaining compensation on account of the alleged legal expropriation.           Such proceedings are in principle possible under Article 13 of the Administrative Proceedings (Simplification) Act (Verwaltungs- entlastungsgesetz, Fed. Law Gazette No. 277/1925) which provides that in all cases of expropriation which do not come under special legislation the Railway Expropriation Act (Eisenbahnenteignungsgesetz, Fed. Law Gazette No. 71/1954) shall apply in the proceedings. According to section 22 of the latter Act, the compensation due on account of an expropriation shall be determined by a judicial decision if no agreement can be reached between the parties.   The judicial proceedings in question are governed by the Non-Contentious Proceedings Act (Ausserstreitgesetz, Imp. Law Gazette No. 208/1854). It has been clarified by the highest jurisdictions in Austria, namely the Constitutional Court and the Supreme Court, that the competence of the ordinary courts in non-contentious proceedings is also established if the claim for compensation is based on an alleged expropriation by legislation.   The Government refer to the Constitutional Court decision of 5 December 1974 (A 2/74-8 = Slg. 7421), and the Supreme Court decision of 9 December 1975 (5 Ob 241/75) which both concerned the case underlying application No. 8003/77 to the Commission (cf. DR 17, 80). The applicant in that case had claimed compensation in respect of an alleged legal expropriation brought about by the 1922 Rent Act.   While it is true that in last resort it was confirmed by another decision of the Supreme Court of 1 March 1977 (5 Ob 542/77) that the claim in that case was without foundation, this does not mean that similar claims could not succeed in the present cases.           The Government admit that they themselves consider such claims as being unfounded.   Such claims cannot be based on section 365 of the Civil Code which provides that an individual must cede even his total right of property for an adequate compensation if this is required in the public interest.   The case law of the Austrian courts has clarified that the principle of compensation stipulated in this provision is not inherent in the constitutional guarantee of property laid down in Article 5 of the Basic Law on the Rights of Citizens (Staatsgrundgesetz über die Rechte der Staatsbürger, 1867), and that in each case a special legal basis is required for any compensation in respect of measures interfering with property.   The 1981 Rent Act itself does not provide such a legal basis.   However, the Constitutional Court has developed a case law based on the principle of equality according to which legislation may be unconstitutional if it does not provide for compensation in respect of special disadvantages (Sonderopfer) imposed in the public interest on certain persons but not on others. Originally this jurisprudence was developed in connection with cases of genuine expropriation, but more recently it has been extended to cover also cases of the regulation of the use of property in the general interest.           In this respect the Government refer in particular to litigation brought by the owners of a nuclear power station against the State for compensation in respect of the Nuclear Power Abolition Act (Atomsperrgesetz) prohibiting the operation of nuclear power stations in Austria.   By a decision of 15 March 1984, the Regional Court (Kreisgericht) of St. Pölten recognised a compensation claim based on section 365 of the Civil Code.   While this decision was not upheld by the Supreme Court on the ground that section 365 did not in itself provide a sufficient basis for compensation, the Supreme Court nevertheless interrupted the proceedings and submitted the matter to the Constitutional Court by a request under Article 140 of the Constitution.   The Constitutional Court was asked whether the failure of the legislation to provide for compensation in respect of the special disadvantages arising for the above nuclear power station was unconstitutional.   The Constitutional Court's ruling on this question is still outstanding.           The Government do not conceal that in the proceedings concerning the nuclear power station they opposed the compensation claim in question.   The development of the case nevertheless shows that a compensation case is in principle arguable even in respect of measures regulating the use of property in the general interest.   A Constitutional Court decision of 16 December 1983 (G 46/82) had clarified that the Nuclear Power Abolition Act involved such measures, and the restrictions brought about by the rent legislation are of the same nature.   In this latter respect the Government refer to the qualification of the restrictions under the 1922 Rent Act by the Austrian Supreme Court (decision of 1 March 1977, 5 Ob 542/77) and the Commission (decision on application No. 8003/77, DR 17,80); they further refer to the qualification of the restrictions under the 1981 Rent Act in the Supreme Court's decision of 3 July 1984 (5 Ob 86/83).           As regards this latter decision, the Government observe that it concerned a procedure for the reduction of rent under section 44 of the 1981 Act.   It is true that in this connection the Supreme Court confirmed the constitutionality of this provision and refused to seize the Constitutional Court with a request for reviewing the constitutionality of the legislation (Art. 140 of the Constitution). However, it is submitted that different criteria would apply in a compensation procedure brought under Art. 13 of the Administrative Proceedings (Simplification) Act read in conjunction with section 22 of the Railway Expropriation Act.   Therefore the Supreme Court's above decision of 3 July 1984 does in no way prejudge the issue of compensation.           The Government observe that the applicants in cases No. 10522/83 and No. 11070/84 did not bring any compensation proceedings while the applicants in case No. 11011/84 in fact brought such proceedings in the District Court of Innsbruck.   However, they did not pursue the proceedings after the latter court had rejected their claim by a decision of 5 July 1984.   They later asked to be allowed to appeal against this decision out of time (Wiedereinsetzung in den vorigen Stand), but their request was rejected by the District Court on 28 November 1984 and finally by the Regional Court of Innsbruck on 3 April 1986.   Therefore none of the applicants has exhausted the domestic remedies in this respect.   2.       On compliance with Article 1 of Protocol No. 1           The Government consider that the restrictions on property contained in the 1981 Act cannot be regarded as a deprivation of possessions within the meaning of Article 1 para. 1 of Protocol No. 1 to the Convention.   In this respect they rely on the Commission's decision on application No. 8003/77 v. Austria (DR 17, 80), where it was said that this provision is not applicable to restrictions on property imposed by rental law regulations.   The 1981 Act has not led to any fundamental change in the legal position on which the Commission based this decision.   The new Act did not interfere with the applicant's title as owners of the property nor with the substance of their property.   Further, there is no shift of property to the State, but only a redistribution of financial advantages as between the landlords and tenants.   For this reason, too, the measure of rent reduction cannot be considered as an expropriation.           This conclusion is not altered by the applicants' allegation that there was not a deprivation of the thing itself (the real property), but a deprivation of a right attached thereto (i.e. the contractual claims under the rent agreements concluded in respect of this property).   Every restriction on property means that some of the rights associated with the ownership of the object, such as the right to financial benefit, are reduced to a smaller or greater extent by the legislation.   This does not entail a deprivation of possessions contrary to the Convention.   The other partial rights of ownership such as the right to sell, bequeath or mortgage the property in question have remained totally unaffected.           In this connection the Government submit that despite the rent restrictions introduced since 1982, the value of housing property has recently increased and even big investors such as banks, insurance companies etc. continue to acquire such property.   The reason is that according to the applicable valuation principles (Realschätzordnung), the value does not only depend on the rent proceeds (Ertragswert) but also on other factors (Substanzwert).   In practice it is possible to encumber half of the value with mortgages for loans, although it is admitted that under the system of the Rent Act only loans for investments in the property itself can be repaid from the rent income while loans for other purposes must in principle be repaid from other sources.           In the Government's view, the 1981 Act only contains rules on the use of property as referred to in Article 1, para. 2 of the Protocol.   In this respect the Government refer to the long-standing case law of the Constitutional Court (since decision No. 1123/1928) concerning the rent legislation in Austria.   While the Constitutional Court itself has not expressed itself on the constitutionality of sections 16 and 44 of the 1981 Rent Act, the Supreme Court in its above-mentioned decision of 3 July 1984 has dealt with this issue and did not find it necessary to refer the matter to the Constitutional Court.   It held that although the disadvantages brought about by the rent reform for the landlord might be more important than the advantages, the legislation nevertheless involved no expropriation but only a restriction on property.   Under Article 5 of the Basic Law, such restrictions could be ordered without infringing constitutional law if they did not impinge on the essential content of the fundamental right to inviolability of property or did not in any other manner violate a constitutional principle.   The transitional provisions of section 44, paras. 2 and 3 of the Act were necessary in the public interest for the general good because they fitted in with the balanced structure of the adjustment of old law to new law and represented part of this necessary and useful approximation.   In conclusion the Supreme Court held these provisions to be compatible with Article 5 of the Basic Law and Article 1 of the Protocol.   It further did not find a violation of the principle of equality because it considered the provisions to be entirely justified in view of the actual situation and not disproportionate in the overall framework of the reform.   In this context no arbitrariness or excess was seen in the discretion left to the tenant by the legislation.   The Supreme Court finally observed that leases of apartments were continuous obligations which were not completely immune from a certain amount of adjustment and change also in other cases.           The Government observe that in this decision the Supreme Court relied on the Commission's decision on application No. 8003/77 (DR 17, 80).           The Government further invoke the Eur. Court H.R. Handyside judgment of 7 December 1976 (Series A, No. 24) where it was said that those legal rules concerning the use of property are admissible which a State considers necessary in accordance with the general interest and that in this context the Contracting States are to be considered as the sole judges of the necessity of any such interference.           The protection afforded to property in Article 1 of the Protocol is couched in general terms and admits of more far reaching restrictions through national legislation than are admissible, for instance, under the exceptions stated in Article 8, para. 2 of the Convention.   It is explicitly reserved to States to order restrictions in the general interest.   Article 1 thus places the determination of the substantive content of property rights largely in the hand of the national parliaments.   This has also been confirmed by the Eur. Court H.R. judgment of 21 February 1986 in the case of James and others, to be published in Series A, No. 98.   The Government refer in particular to the following statements of the Court:           "Because of their direct knowledge of their society         and its needs, the national authorities are in principle         better placed than the international judge to appreciate         what is in the public interest...           The Court, finding it natural that the margin of appreciation         available to the legislature in implementing social and         economic policies should be a wide one, will respect the         legislature's judgment as to what is in the public interest         unless that judgment be manifestly without reasonable         foundation....           Modern societies consider housing of the population to be a         prime social need, the regulation of which cannot entirely be         left to the play of market forces.   The margin of appreciation         is wide enough to cover legislation aimed at securing greater         social justice in the sphere of people's homes, even where such         legislation interferes with existing contractual relations         between private parties and confers no direct benefit on the         State or the community at large." (loc. cit., paras. 46 and         47).           The Government admit that the 1981 Act subjected the property rights of the applicants to certain statutory restrictions including intervention in rental agreements concluded prior to the entry into force of the Act by reduction of the rent at the tenant's request to 150% of the rents listed in section 16, para. 2 of the Act.           It is, however, submitted that restrictions of this kind are covered by Article 1, para. 2 of the Protocol.   Paras. 2 and 3 of section 44 of the Act pursue a legitimate objective of social policy, namely the protection of tenants' interests in a situation where reasonably priced accommodation is scarce.           The Government insist that there is indeed a scarcity of cheap accommodation in Austria and that many tenants had to leave flats with free rent agreements because they were unable to afford the rent.           In order to ensure fair rents, Parliament in section 16, para. 2 of the Act laid down, stating maximum amounts, what rents are reasonable (i.e. may not be exceeded) in new tenancy contracts so as not to overtax the resources of people looking for an apartment who, in order to get it, might be prepared to pay amounts which are unreasonably high taking into account all relevant circumstances.   Had no rule been introduced in addition to section 16, para. 2 to cover "old" tenancy contracts already existing on 1 January 1982, then this would have led to unjustifiable discrimination between old tenants and new tenants.   Tenants who signed a contract before this date deserve the same protection in social policy terms, being in the same situation where they had to pay any price they could just barely afford, simply to get the apartment.           The Government further submit that the interference with property complained of is reasonable and does not transgress the margin of appreciation conceded to national parliaments by Article 1 of the Protocol.   In this respect they refer to the Eur. Court H.R. Sporrong and Lönnroth judgment of 23 September 1982, Series A, No. 52, according to which a reasonable balance must be struck between the protection of the community's general interest and the respect for property enjoined by Article 1 para. 1.           The Government Bill proposing the legislation stated the following on the question of general interest:           "All measures taken in this area must take account of         the principle that housing accommodation is one of the         basic vital needs of every human being.   In the further         development of socially desirable rental housing law,  &#xa0