Austria, Constitutional Court, 14 July 2020, G202/2020 et.al.
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Link to the full text of the decision
General Summary
The claimants were owners of corporations whose stores were located in several Austrian cities.
On March 2020, the Austrian competent Minister issued the Covid-19 Measures Regulation-96 published in the Federal Law Gazette II 96/2020, as amended by Federal Law Gazette II 151/2020 (= COVID-19-Maßnahmenverordnung-96 BGBl II 96/2020, idF BGBl II 151/2020): this regulation provided, among other things, a prohibition on entering commercial premises. The regulation was based on the Covid-19 Measures Law.
The same regulation provided several exceptions to this general rule: for example, drugstores, petrol station, banks, veterinary services were not affected by the entry prohibition.
The claimant's stores were not comprehended in the exceptions to the general entry ban rule. Due to relaxation measures, the competent Minister introduced a further exception to the entry ban rule to those stores with a customer area limited to 400 square meters. Despite this rule, the claimants could not take advantage of the provision.
The claimants alleged an infringement on their freedom to conduct a business and to the integrity of property because the challenged rule did not provide compensation for the entry ban rule.
Furthermore, the claimants alleged an infringement on the principle of the equal application of the law on the grounds that, prior to the Covid-19 Measures Law, businesses were closed according to the Epidemic Law of 1950: these businesses were entitled to compensation, while the corporations closed under the Covid-19 Measures Law did not have such a right.
The Court partially upheld the claim because the challenged provision infringed upon the principle of legality.
Facts of the case
The claimants were owners of corporations and groceries, whose core business concerned the trade of foods and other products. The claimant owned stores were located in several Austrian cities.
Originally the challenged regulation provided a list of economic sectors which could continue to carry out their operations: the claimants were not comprehended in the exceptions to the general entry ban.
In April 2020 the competent Minister introduced an amendment to the regulation, that allowed stores with a customer area limited to 400 square meters to be exempted from the general entry ban rule. However, the legislature had stated that changes to the size of the customer area made after April 7, 2020 were not to be taken into account when determining the size of the customer area (the so called “zoning ban”). As a consequence, the claimants' stores could not take advantage of the entry ban exception provided by the challenged rule.
Because no other legal remedy was available the claimant took advantage of a constitutional procedure, which allowed individuals to submit an application for constitutional review.
Type of measure challenged
Measures, actions, remedies claimed
Individual / collective enforcement
Nature of the parties
Claimant(s)
Private individualDefendant(s)
Public
Type of procedure
Reasoning of the deciding body
The Court examined two preliminary questions concerning the admissibility of the claim because the challenged provision expired in April 2020 as well as the fulfillment of the requirement in order to apply for constitutional review. The Court followed the reasoning provided in sentence V411/2020.
On the merits of the case, the Court noticed that the claimants raised similar concerns and arguments to case V411/2020: for this reason, the Court recalled the reasoning of this specific sentence. Consequently, the Court focused its attention on other alleged infringements, in particular, on the right of integrity of property and on equal application of the law.
With regard to the property right, the Epidemic Law of 1950 provided a right to compensation for economic losses suffered due to closures: the Covid-19 Measures Law did not provide a similar rule.
Property rights enjoy the protection of the Austrian Constitution: the provision also applies to restrictions on property. However, the Austrian Constitution allows the legislature to restrict property rights, in order to pursue a public interest, when the restriction is not disproportionate. Furthermore, the restriction should not affect the essence of the property right.
According to the Court entry bans were addressed to customers and indirectly affected owners of commercial businesses: the right to property remained untouched by the challenged provision. In this sense, no expropriation had occurred: considering the time limit of the rule implementation, the Court recognized a serious restriction of property which the affected companies had to tolerate.
The Court remarked that the core matter of its decision was whether an encroachment on property rights was permitted without compensation. The legislature was not obliged to provide compensation in any case, but whether the encroachment on property rights was proportional was still to be examined. Compensation is required when an individual or group of persons are subject to an objectively unjustified "special sacrifice" (Sonderopfer), as for example when owners are affected by an individual planning act in a different and unobjective manner.
The Court did not share the claimant’s arguments on the right to compensation because the affected corporations had obtained economic subsidies, support, and promotion measures: among the financial measures, the Court recalled the fixed cost subsidy (Fixkostenzuschuss) according to which non-repayable grants were provided to corporations.
With regard to the alleged infringement on the principle of equality, the Court did not share the claimants’ arguments. The principle of equal treatment binds the legislature, who is prohibited from making regulations that are not objectively justifiable. Whether the result of a regulation may be perceived as satisfactory in all cases cannot be measured under the lens of the principle of equality, according to the Court. Therefore, the legislature, within its leeway, decided to issue the Covid-19 Measure Law, which among other things excluded the right to compensation for the closure of businesses.
Conclusions of the deciding body
The Court concluded that the legislature had failed to record the circumstances on which the challenged provision was based. These records allowed a check on the reasons which lead the legislator to consider the issued measures to be necessary.
The Court rejected the claims on the points of infringement of property rights and the right to compensation because the encroachment was proportionate.
The Court rejected the claim concerning the alleged violation of equal treatment because the business closure due to the Epidemic Law of 1950 was not regarded as equivalent to the closures due to the Covid-19 Measures Law.
Implementation of the ruling
No implementation was necessary.
Fundamental Right(s) involved
- Freedom to conduct a business
- Right to property
- No-discrimination
Fundamental Right(s) instruments (constitutional provisions, international conventions and treaties)
- Property right, Art. 5, Austrian Constitution
- Protection of property, Art. 1 Protocol No. 1, ECHR
- Principle of equal treatment, Art. 7, Austrian Constitution
Rights and freedoms specifically identified as (possibly) conflicting with the right to health
- Health v. freedom to conduct a business
- Health v. property
General principle applied
- Rule of law
- Proportionality
Balancing techniques and principles (proportionality, reasonableness, others)
Throughout the sentence, the Court applied the rule of law: this principle was applied in particular when the Court decided over the preliminary questions. On the merits of the case, the Court applied the rule of law when it recalled how the right to property was concretely implemented and when it decided on the difference between the Epidemic Law of 1950 and the Covid-19 Measures Law.
However, the Court also applied the principle of proportionality when it examined the impact of the entry bans on businesses: though no compensation was provided, the Court considered the measure to be proportional because the entry bans were a measured part of a package which provided several economic supports and subsidies.
Judicial dialogue
Reference to rulings of the ECtHR in the cases of Sporrong-Lönnroth, Appl. 7151/75 and Phocas, Appl. 17.869/91 on Art.1 of Protocol No. 1 of the ECHR.
In its sentence, the Court recalled the reasoning of another sentence V411/2020 concerning preliminary questions and the reasoning on an infringement to the principle of legality: the outcome of this reasoning was recalled in the conclusions, which led to the ascertainment of the unlawfulness of the challenged rule.
Impact on Legislation/Policy
Challenged governmental measures were no longer in force.
Impact on national case law
The Constitutional Court held that the effectiveness of ordinance provisions, and thus the legitimation of the complaint notwithstanding its expiry, was valid in the case of time period-related regulations. As they continued to apply to the corresponding time period, the complaint was admissible.
Other notes
On "type of measure challenged":
- Covid-19 Measures Regulation-96 issued in March 2020;
- Covid-19 Measures Law (=COVID-19-MaßnahmenGesetz)
