SUR LA RECEVABILITÉ
Application No. 22351/93
by Erich FENZEL and Ernst KÖLLNER
against Austria
The European Commission of Human Rights (First Chamber) sitting
in private on 15 May 1996, the following members being present:
Mr. C.L. ROZAKIS, President
Mrs. J. LIDDY
MM. E. BUSUTTIL
A.S. GÖZÜBÜYÜK
A. WEITZEL
M.P. PELLONPÄÄ
B. MARXER
N. BRATZA
I. BÉKÉS
A. PERENIC
C. BÎRSAN
Mrs. M.F. BUQUICCHIO, Secretary to the Chamber
Having regard to Article 25 of the Convention for the Protection
of Human Rights and Fundamental Freedoms;
Having regard to the application introduced on 8 April 1993 by
Erich FENZEL and Ernst KÖLLNER against Austria and registered on
27 July 1993 under file No. 22351/93;
Having regard to the reports provided for in Rule 47 of the Rules
of Procedure of the Commission;
Having regard to the observations submitted by the respondent
Government on 29 May 1995 and the observations in reply submitted by
the applicants on 13 July 1995;
Having deliberated;
Decides as follows:
THE FACTS
The first applicant, born in 1944, and the second applicant, born
in 1937, are Austrian nationals residing in Vienna. In the proceedings
before the Commission they are represented by Mr. G. Grießer, a lawyer
practising in Vienna.
A. Particular circumstances of the case
The facts of the case, as submitted by the parties, may be
summarised as follows.
On 1 December 1989 composition with creditors proceedings
(Ausgleichsverfahren) were instituted with regard to the company in
which the applicants had been employed since 1958 and 1952,
respectively. These proceedings were set aside on 21 June 1990.
Meanwhile, the employer company requested the Vienna Commercial
Court (Handelsgericht) for permission to terminate the contracts of
employment of a number of its employees, including the applicants,
under SS. 20 b and 20 c of the Composition with Creditors Act
(Ausgleichsordnung).
On 25 January 1990 the Vienna Commercial Court granted this
permission. It found that according to the company's submissions, which
had been confirmed by the administrator in the composition proceedings
(Ausgleichsverwalter), the further employment of the persons concerned
would endanger the composition with the employer's creditors while the
employees would not suffer disproportionate damages, as they were due
to receive compensation under the Insolvency Continued Payment Act
(Insolvenz-Entgeltsicherungsgesetz). It appears that the employees
concerned were not heard prior to this decision.
On 31 January 1990 the employer company, referring to the
Commercial Court's decision, gave the applicants notice of the
termination of their contracts of employment with effect from
30 June 1990. The applicants did not lodge an action under S. 105 of
the Industrial Relations Act (see below, Relevant domestic law and
practice).
Subsequently, on 9 February 1990, the applicants requested the
Labour Office (Arbeitsamt) for payment under the Insolvency Continued
Payments Act. On 10 October 1990 the Labour Office granted part of the
applicants' request, including payment of their salary until
31 March 1990.
On 11 October 1990 the Labour Office dismissed the applicants'
request as regards the payment of their salary from 1 April to 30 June
1990. It referred to S. 3 para. 3 of the Insolvency Continued Payment
Act, which, in case an employee is dismissed in accordance with
SS. 20 b and 20 c of the Composition with Creditors Act, guarantees
payment until the end of employment, but not beyond the period of
notice (Kündigungsfrist) provided for by law or by collective
agreement. However, the Labour Office found that the applicants'
dismissal had not been based on SS. 20 b and 20 c of the Composition
with Creditors Act, as the employer company, although referring to
these provisions, had not made use of the possibility to make their
dismissal effective on 30 April 1990, in case of the first applicant,
or on 31 March 1990, in case of the second applicant. Thus, the
conditions for payment under S. 3 para. 3 of the Insolvency Continued
Payment Act were not met.
Payment could neither be granted under S. 3 para. 1 of this Act,
as this provision only guaranteed payment for the first three months
after the introduction of insolvency proceedings.
On 31 January 1991 the Vienna Labour and Social Court (Arbeits-
und Sozialgericht) found that the first applicant was entitled to
payment until 30 April 1990, but dismissed the remainder of his claim.
As regards the second applicant, the Court dismissed his claim
entirely. The Court noted that the first applicant had been employed
in the company at issue as an apprentice (Lehrling) from 1958 to 1962,
as a worker (Arbeiter) from 1962 to 1 February 1983 and as an employee
(Angestellter) from 1 February 1983 to 30 June 1990. The second
applicant had been employed as an apprentice from 1952 to 1955, as a
worker from 1955 to 1 July 1987, and as an employee from 1 July 1987
until 30 June 1990. By letter of 4 February 1993 in the first
applicant's case, and by letter of 1 July 1987 in the second
applicant's case, the employer company had stated that the period of
the applicants' employment as workers would be taken into account as
regards any rights or claims, which were dependent on the length of
employment. The Court further noted the parties' submissions. The
applicants had claimed in particular that, by taking the years of their
employment as workers into account, the period of notice provided for
by law was five months. It followed that they had a right to payment
under S. 3 para. 3 of the Insolvency Continued Payment Act until
30 June 1990. The Labour Office had maintained that the applicants'
dismissal had not been based on SS. 20 b and 20 c of the Composition
with Creditors Act.
The Court, referring to S. 20 of the Employees' Act, found that
the period of notice depended on the length of the applicants'
employment as employees, and was three months in respect of the first
applicant and two months in respect of the second applicant. Taking the
applicants' employment as workers into account, the period of notice
was five months. However, this period of notice was one agreed upon by
specific contract, which the employer was allowed to disregard in case
of a termination of the contract of employment under SS. 20 b and 20 c
of the Composition with Creditors Act. The company, although dismissing
the applicants with effect from 30 June 1990, could have dismissed the
first applicant with effect from 30 April 1990 and the second applicant
with effect from 31 March 1990. S. 3 para. 3 of the Insolvency
Continued Payment Act only provided payment until the end of the period
of notice provided for by law.
On 19 February 1992 the Vienna Court of Appeal (Oberlandes-
gericht) dismissed the applicants' appeal (Berufung) and confirmed the
Labour Court's legal view. In these and the subsequent proceedings the
applicants were represented by counsel.
On 16 September 1992 the Supreme Court (Oberster Gerichtshof)
dismissed the applicants' appeal on points of law (Revision). It found
that the lower instances had correctly applied the law. As regards the
applicants' complaint that the relevant provisions, including SS. 20 b
and 20 c of the Composition with Creditors Act, were unconstitutional,
the Court found inter alia that a dismissal was a unilateral act, which
did not depend on the approval of the person to be dismissed. Thus,
there was no violation of the right to a fair hearing, if the court,
in the composition with creditors proceedings, gave permission to
terminate contracts of employment without hearing the employees
concerned.
The Supreme Court's decision was served on the applicants' lawyer
on 13 October 1992.
B. Relevant domestic law and practice
1. Composition with Creditors Act (Ausgleichsordung)
The Composition with Creditors Act governs the proceedings to be
followed in case of insolvency, if the debtor proposes a composition
with creditors. The relevant provisions, in the version of the 1982
amendment, Federal Law Gazette (Bundesgesetzblatt) 1982/370, which were
in force at the time of the facts, are summarised below. They have
partly been changed by an amendment of 1994, Federal Law Gazette
1994/153.
S. 20 b para. 2 states that the debtor, provided permission is
given by the court, may give notice of termination of contracts which
have not been entirely performed at the time of the institution of the
composition proceedings. If appropriate, the court has to hear the
other contracting party and the administrator in the composition
proceedings before taking a decision. Permission to give notice of
termination of a contract may only be given if its fulfilment would
endanger the composition with creditors or the further existence of the
enterprise, and if the other contracting party will not suffer
disproportionate damage. The decision of the court has to be served
upon the debtor, the administrator in the composition with creditors
proceedings and the other contracting party. There is no appeal against
the court's decision.
S. 20 c para. 2 states that Section 20 b is also applicable to
contracts of employment, where the debtor is the employer. In such
cases, the court may allow the debtor to give notice of termination of
contracts of employment. The debtor has to respect the period of notice
(Kündigungsfrist) provided for by law or by collective agreement, but
is not bound to respect a longer period of notice which might have been
agreed upon in a specific contract, nor the duration of employment
agreed upon in a fixed-term contract. Apart from that the employer has
to respect restrictions on the termination of contracts of employment
provided for by law (gesetzliche Kündigungsbeschränkungen).
S. 23 deals with claims which are privileged in the composition
with creditors proceedings (bevorrechtete Forderungen). According to
para. 1 subpara. 3, claims of employees, for the period following the
institution of such proceedings, are privileged, if their contract of
employment has not been terminated either before the institution of the
proceedings or after their institution in accordance with SS. 20 b or
20 c. Section 46 para. 2 provides that debtors whose claims are
privileged have to be fully paid.
2. Employees' Act (Angestelltengesetz)
S. 20 deals with the termination of contracts of employment which
have not been concluded for a fixed term. The employer may terminate
the contract at the end of each quarter of the year (Kündigungstermin)
after giving prior notice. The period for giving notice
(Kündigungsfrist) is six weeks, after two years of employment it is two
months, after five years of employment it is three months, after
fifteen years of employment it is four months and after 25 years of
employment it is five months (para. 2). The employee can terminate the
contract at the end of each month with one month's notice (para. 4).
3. Industrial Relations Act (Arbeitsverfassungsgesetz)
S. 105 deals with the dismissal of employees.
Before dismissing an employee the employer shall notify the works
council, which may comment within five days (para. 1).
Provided the works council has not expressly authorised the
dismissal within this period, application may be made to the Court
inter alia if the dismissal is not justified from a social point of
view and the dismissed employee has already been in the employ of the
undertaking for six months. Dismissal is unjustified from a social
point of view, when it damages the employee's important interests,
unless the employer can prove that inter alia it is due to business
requirements which militate against continued employment (para. 3).
The employer is required to give the works council notice of the
dismissal. If it has expressly objected to the proposed dismissal, the
works council may, within one week of being notified, contest it before
the court at the dismissed employee's request. If the works council
does not act on the employee's request, he may himself do so within one
week following expiry of the time-limit laid down for the works council
(para. 4).
According to the Labour and Social Courts Act the Labour Courts
are competent to deal with these proceedings.
4. Insolvency (Continued Payments) Act (Insolvenz-Entgelt-
sicherungsgesetz)
S. 3 para. 1 states that, if not provided otherwise, an employee
can claim payment under this Act for claims under S. 1 para. 2
(including claims for payment originating from the contract of
employment or its termination), which have originated until the end of
the third month following the institution of bankruptcy or other
insolvency proceedings.
S. 3 para. 3 provides that an employee is entitled to payment
under this Act, if his contract has been terminated by the employer
either before the opening of bankruptcy or composition with creditors
proceedings or after the opening of such proceedings according to
Section 25 of the Bankruptcy Act or according to Sections 20 b and 20 c
of the Composition with Creditors Act. For claims under Section 1 para.
2 the payment is due until the end of employment. It may not be granted
beyond the period of notice (Kündigungsfrist) which is provided for by
law or by collective agreement having regard to the date of termination
(Kündigungstermin) and any restrictions for the termination of
contracts provided for by law (gesetzliche Kündigungsbeschränkungen).
COMPLAINTS
1. Under Article 6 para. 1 the applicants complain that they were
not heard by the Vienna Commercial Court prior to its decision of
29 January 1990, which gave their employer permission to terminate
their contracts of employment under SS. 20 b and c of the Composition
with Creditors Act. They submit that the above decision affected their
civil rights in that it reduced their claim to payment to the quota in
the composition with creditors proceedings, and in that they did not
get fully compensated under the Insolvency Continued Payment Act for
the damage suffered. They also submit that they could not foresee this
effect at the time the contested decision was taken.
2. The applicants complain under Article 4 of the Convention that
the termination of their contracts of employment under SS. 20 b and
20 c of the Composition Act compelled them to work without full pay,
as they could not terminate their contracts themselves without loosing
other claims, e.g. a lump sum payment which is only due if the employer
terminates the contract.
3. Finally, the applicants submit that the reduction of their claims
for payment, which followed from the application of SS. 20 b and 20 c
of the Composition with Creditors Act and was effective as of the date
of the institution of the composition with creditors proceedings,
amounted to an expropriation, for which they were not fully
compensated. Moreover, the said provisions have a discriminatory effect
as they leave it entirely in the employer's discretion for which
employees he seeks the court's permission to terminate their contracts.
The applicants invoke Article 1 of Protocol No. 1 alone and in
combination with Article 14.
PROCEEDINGS BEFORE THE COMMISSION
The application was introduced on 8 April 1993 and registered on
27 July 1993.
On 28 February 1995 the Commission decided to communicate the
application to the respondent Government, pursuant to Rule 48 para. 2
(b) of the Rules of Procedure.
The Government's written observations were submitted on 29 May
1995. The applicants replied on 13 July 1995.
THE LAW
1. The applicants complain under Article 6 para. 1 (Art. 6-1) of the
Convention that they were not heard by the Vienna Commercial Court
before it gave their employer company permission to terminate their
contracts of employment under SS. 20 b and 20 c of the Composition with
Creditors Act.
Article 6 para. 1 (Art. 6-1), so far as relevant, reads as
follows:
"In the determination of his civil rights and obligations ...,
everyone is entitled to a fair ... hearing ... by an independent
and impartial tribunal ...".
a. The Government submit that the applicants failed to exhaust
domestic remedies as required by Article 26 (Art. 26) of the
Convention. Firstly, the applicants should have appealed against the
decison of the Vienna Commercial Court of 25 January 1990. Although
this appeal would have been rejected as inadmissible under S. 20 b of
the Composition with Creditors Act, they could then have lodged a
further appeal with the Vienna Court of Appeal, which could have
requested the Constitutional Court to review the constitutionality of
the provisions at issue. Secondly, the Government submit that the
applicants failed to challenge the termination of their employment
under S. 105 of the Industrial Relations Act. They argue that under
this provision the labour courts can declare the termination of
employment invalid if the interests of the employee prevail over those
of the employer. Finally, the Government submit that the applicants
failed to claim payments which were not covered by the Insolvency
(Continued Payments) Act from their employer. They claim that there is
case-law according to which such payments are not reduced to the quota.
The applicants contest the Government's view. They submit that
S. 20 b of the Composition with Creditors Act clearly states that there
is no appeal against a decision taken under this provision. The Vienna
Court of Appeal, as a court of second instance, has a right to
challenge a law before the Constitutional Court. However, the party
concerned is not entitled to have such proceedings instituted. As
regards possible proceedings under S. 105 of the Industrial Relations
Act, the applicants submit that they would not offer any prospects of
success. They argue that other courts would be bound by the decision
of the Vienna Commercial Court. Thus, they would not be able to come
to a different assessment when examining whether the interests of the
applicants prevailed over the employer's interest in terminating their
contracts under S. 20 b of the Composition with Creditors Act.
Moreover, the proceedings under S. 105 of the Industrial Relations Act
are aimed at restoring the employment, whereas they wished to complain
about the effects of the permission to terminate their employment under
S. 20 b of the Composition with Creditors Act.
The Commission recalls that Article 26 (Art. 26) of the
Convention only requires the exhaustion of such remedies which relate
to the breaches of the Convention alleged and at the same time can
provide effective and sufficient redress. An applicant does not need
to exercise remedies which, although theoretically of a nature to
constitute remedies, do not offer any chance of redressing an alleged
breach (cf. No. 20357/92, Dec. 7.3.1994, D.R. 76-A, p. 80, 87).
In the present case, the Vienna Commercial Court, on 25 January
1990, gave the applicants' employer permission to terminate their
contracts of employment under SS. 20 b and 20 c of the Composition with
Creditors Act. According to S. 20 b of the said Act, no remedy was
available against this decision. Thus, an appeal would have been
rejected as inadmissible. As regards a further appeal to the Vienna
Court of Appeal, the Commission notes that this court may challenge a
law before the Constitutional Court, but is not obliged to do so.
As regards the possibility to challenge the termination of their
employment, the Commission finds that the proceedings under S. 105 of
the Industrial Relations Act are aimed at the continuation of
employment. They do not, however, offer the applicants a possibility
to claim that the general rules of labour law, instead of SS. 20 b
and c of the Composition with Creditors Act, should be applied to the
termination of their contracts of employment.
Finally, as regards the Government's submission that the
applicants failed to claim payments which were not covered by the
Insolvency (Continued Payments) Act from their employer, the Commission
notes that, according to S. 23 of the Composition with Creditors Act,
claims of employees whose contracts were terminated under SS. 20 b and
c of the said Act, loose their status as privileged claims, i.e. they
are reduced to the quota. The Government have failed to show that, at
the relevant time, there was case-law to the contrary. Thus, it appears
that such a claim would not have provided full redress to the
applicants.
In conclusion, the Commission finds that the applicants have
exhausted domestic remedies as required by Article 26 (Art. 26) of the
Convention.
b. As regards the merits of the complaint, the Government argue that
the Commercial Court's decision of 25 January 1990 did not determine
the applicants' civil rights and obligations within the meaning of
Article 6 (Art. 6) of the Convention. This decision only gave the
applicants' employer permission to terminate their contracts of
employment prematurely, in accordance with SS. 20 b and c of the
Composition with Creditors Act. Further, the Government point out that
the applicants' employer company did not make use of this permission,
as it terminated their contracts only at the specific dates and periods
of notice set out in their contracts.
Moreover, the Government argue that the applicants did not suffer
any other disadvantages as a result of the impugned decision. They
submit that the Supreme Court, in its decision of 6 May 1994, has found
that claims for payment remain privileged claims under S. 23 para. 1
of the Composition with Creditors Act, insofar as they are not covered
by the Insolvency (Continued Payments) Act.
Further, the Government point out that S. 20 b of the Composition
with Creditors Act, in the version applicable at the relevant time,
stated that the competent court has to hear the employees concerned,
if appropriate. Given the need to observe close deadlines in the
composition with creditors proceedings and the interest of the debtor
and the general public in obtaining a decision, they argue that the
Commercial Court's refraining from hearing the applicants was
justified. Finally, the Government again refer to S. 105 of the
Industrial Relations Act, and submit that the applicants had the
possibility to challenge the termination of their employment as being
unjustified from a social point of view before the labour courts and
to be heard in these proceedings.
The applicants submit that the Commercial Court's decision
directly affected their civil rights within the meaning of Article 6
(Art. 6). They submit in particular that it allowed their employer to
terminate their contracts with the effect that a shorter period of
notice applied and that their claims, which would otherwise have to be
fully paid, were reduced to the quota in the composition with creditors
proceedings.
Further, the applicants submit that the need to conduct the
composition with creditors proceedings speedily cannot justify the fact
that they were not heard at all. As regards the possibility to
challenge the termination of their employment under S. 105 of the
Industrial Relations Act, the applicants refer to their above
submissions, namely that the labour courts would not come to a
different assessment of the interests involved; and that the
proceedings were not suited to assert their claim that they suffered
damages from the termination of their employment under SS. 20 b and c
of the Composition with Creditors Act.
Finally, the applicants argue that they are not entitled to full
compensation under the Insolvency (Continued Payments) Act. In
particular they argue that the Supreme Court's decision of 6 May 1994,
referred to by the Government, constituted a change of the case-law,
which occurred after their cases had been before the courts.
The issues to be decided are whether, in regard to the Vienna
Commercial Court's decision to permit the applicants' employer to
terminate their contracts of employment under SS. 20 b and c of the
Composition with Creditors Act, the applicants were entitled to a
procedure in accordance with Article 6 para. 1 (Art. 6-1) of the
Convention and, if so, whether such a procedure was available to them.
After an examination of these issues in the light of the parties'
submissions, the Commission considers that they raise questions of fact
and law which can only be determined by an examination of the merits.
It follows that this complaint cannot, therefore, be declared
inadmissible as being manifestly ill-founded within the meaning of
Article 27 para. 2 (Art. 27-2) of the Convention. No other grounds for
inadmissibility have been established.
2. Under Article 4 (Art. 4), the applicants submit that, following
notice of their dismissal, they were compelled to perform work without
full pay as they could not terminate their contracts themselves without
loosing claims, which were only due if the employer terminated the
contract.
Article 4 para. 2 (Art. 4-2) reads as follows:
"No one shall be required to perform forced or compulsory
labour."
The Commission recalls that the concept of forced or compulsory
labour within the meaning of Article 4 para. 2 (Art. 4-2) comprises two
elements. These elements are first that the labour or service must be
performed by the person concerned against his will and secondly that
the obligation to perform this labour or service must be either unjust
or oppressive, or must itself constitute an avoidable hardship
(No. 9322/81, Dec. 3.5.83, D.R. 32 p. 180, 182).
In the present case, the applicants entered freely into their
contracts of employment. Moreover, it appears that, according to S. 20
para. 4 of the Employees' Act, they were free to terminate them with
one month's notice. Moreover, the applicants failed to show that the
financial losses they would allegedly suffer from terminating their
contracts of employment, would be such as to amount to a restriction
of their contractual freedom. Therefore, it cannot be said that they
had to perform their work against their will. In any event, there is
no indication that the performance of their work can be considered as
unjust or oppressive or as constituting avoidable hardship.
It follows that this part of the application is manifestly ill-
founded within the meaning of Article 27 para. 2 (Art. 27-2) of the
Convention.
3. Finally, the applicants complain that the application of SS. 20 b
and 20 c of the Composition with Creditors Act amounted to an
expropriation, for which they were not compensated. Moreover, they
claim that the said provisions have a discriminatory effect as they
leave it entirely in the employer's discretion for which employees he
seeks the court's permission to terminate their contracts. They invoke
Article 1 of Protocol No. 1 (P1-1) alone and in combination with
Article 14 (P1-1+14).
The Commission will first examine this complaint under Article 1
of Protocol No. 1 (P1-1), which reads as follows:
"Every natural or legal person is entitled to the peaceful
enjoyment of his possessions. No one shall be deprived of his
possessions except in the public interest and subject to the
conditions provided for by law and by the general principles of
international law.
The preceding provisions shall not, however, in any way impair
the right of a State to enforce such laws as it deems necessary
to control the use of property in accordance with the general
interest or to secure the payment of taxes or other contributions
or penalties."
The Commission recalls that legal provisions governing private
law relations between individuals and which, as such, provide for one
person to surrender a possession to another, do not infringe the right
to peaceful enjoyment of possessions, unless these provisions result
in one person being arbitrarily and unjustly deprived of property in
favour of another (No. 12462/86, Dec. 13.7.1987, D.R. 53 p. 234).
The Commission notes that the relations between the applicants
and their employer company were governed by private law contracts, i.e.
by their contracts of employment. The applicants' rights flowing from
these contracts, including the right to payment, may be regarded as a
"possession" within the meaning of Article 1 of Protocol No. 1
(P1-1). The Commercial Court's decision permitted the applicants'
employer to terminate their contracts with the effect that the
applicants' claims for payment were reduced to the quota in the
composition with creditors proceedings. Thus, the contested decision
related to the adjudication of property between private parties.
However, it was in accordance with SS. 20 b and 20 c of the Composition
with Creditors Act, which do not appear arbitrary as they allow
termination of contracts of employment only if otherwise the
composition with creditors or the existence of the enterprise would be
endangered and if the employees concerned do not suffer
disproportionate damage. The applicants were actually compensated,
though not fully, under the Insolvency (Continued Payment) Act.
In these circumstances, the Commission finds no appearance of a
violation of the applicants' right to peaceful enjoyment of their
possessions within the meaning of Article 1 of Protocol No. 1
(P1-1).
As regards Article 14 in combination with Article 1 of Protocol
No. 1 (Art. 14+P1-1), the Commission finds that the applicants have not
substantiated their complaint. In particular, they have not submitted
that they were singled out for dismissal on the basis of any particular
personal status which distinguished them from other employees.
It follows that this part of the application is manifestly ill-
founded within the meaning of Article 27 para. 2 (Art. 27-2) of the
Convention.
For these reasons, the Commission, unanimously,
DECLARES ADMISSIBLE, without prejudging the merits, the
applicants' complaint that they were not heard as regards
permission to terminate their contracts of employment under
SS. 20 b and c of the Composition with Creditors Act, which was
given to their employer by the Vienna Commercial Court;
DECLARES INADMISSIBLE the remainder of the application.
Secretary to the First Chamber President of the First Chamber
(M.F. BUQUICCHIO) (C.L. ROZAKIS)
Full & Egal Universal Law Academy