June in Germany: German Basic Law and Eminent Domain

Thanks to the support of the University of Passau, I’m spending the better part of my June doing research in Germany. Now that I’ve had my fill of schwein (pig), radler (lemon-y beer), and, of course, weinerschnitzel, and I’ve driven on the autobahn, and I’ve been hiking through scenic Bavaria, it’s time to get to posting about German property law.

Today we start with eminent domain. Germany, like the United States, constitutionally protects private property from being taken by the State. The German Basic Law, i.e. the German Constitution, provides in article 14(1) that “[p]roperty . . . shall be guaranteed,” property “entails obligations,” and property’s “use shall also serve the public good.”

“Public good” is interpreted by German courts to mean that the use must create a public advantage, regardless of whether that advantage is created by the State or a private entity. While that interpretation is like the Supreme Court’s interpretation of the Fifth Amendment in the U.S. Constitution, unlike the U.S., economic development is an insufficient public good. In other words, Kelo isn’t happening in Germany. In fact, some German courts have interpreted the public use requirement in the German Basic Law to require a public necessity in order for expropriation to occur.

In order for the State to take property, the State must pay compensation. Under Article 14(3) of the German Constitution, the compensation required is an “equitable balance between the public interest and the interests of those affected.” Thus, the U.S. notion of “just” compensation is not required; instead there is a balancing test which, of course, means that compensation in Germany for a takings could be lower than fair market value. This may seem objectionable at first to an American audience, but keep in mind that less property can be taken in Germany because of the more limited interpretation of public good under the German Basic Law. (Side note: a number of countries use public use/good and compensation to balance one another, i.e. the broader the definition of public use, the higher the compensation required and vice versa. Whether this works better/worse/or just differently than the U.S. approach is worthy of discussion, but that will be for another post.)

Finally, article 14(3) of German Basic Law requires that any taking be made “pursuant to a law,” which essentially means that legislation must set forth the necessary takings procedure. In practice, this works pretty similarly to the U.S. notion of procedural due process.

There you have it—a brief primer on takings in Germany. Over the next couple of weeks we’ll look at other classic property doctrines under German property law, so if there’s a burning question you have about the Bürgerliches Gesetzbuch (the German Civil Code), fire away. No guarantees you’ll get an answer—there is, afterall, a lot of radler here to consume—but I’ll see what I can do.

Now Germany is about to play Ukraine in Euro 2016, so time to do as the Germans and head for the biergarten.