German High Court Rules in Favor of Heirs in Deutsche Kabelwerke Case

Osen LLC - July 17, 2009


Oradell, NJ (July 17, 2009) In a landmark decision (BVerwG 5 C 33/07), the Federal Administrative Court (German High Court) decided on July 17, 2009, that shares owned by Jewish directors of the publicly traded Deutsche Kabelwerke and sold under duress as a result of Nazi era persecution, have to be compensated according to the proportional value of the company. The decision, which puts an end to a 17-year legal dispute has implications beyond the narrow facts of the Deutsche Kabelwerke case as it is the first decision issued by the High Court on this specific issue of compensation for "Aryanized" shareholdings.


With this ruling, the judges have now corrected the ongoing practice of the Restitution Authorities of basing their calculations in awarding compensation based on the price at which the Nazi persecutes were forced to sell their shares instead of on the actual value of the company.


"We're obviously pleased with the High Court's ruling," said Gary M. Osen, the attorney for the former shareholders. "We are also gratified that we were able to see it through to the end."


"I'm happy that after so many years at least the material consequences of the injustice can be mitigated," said Peter Fenner of Ohio, a grandson of the original chairman of the company who brought the suit together with his sister.


The former Deutsche Kabelwerke AG, which, well into the 1930s was one of the largest German industrial companies, was  originally owned and controlled by Bernhard Hirschmann and his brother Siegfried who were forced to sell their shares in the company to Dresdner Bank. The brothers also lost their seats on the supervisory board and managing board of the company. At the end of the Second World War, the firm was expropriated by the Soviet Red Army and continued to operate as VEB until it was closed in 1990.


For years, Mr. Fenner's mother fought for appropriate compensation. In 2005, the BADV (German Restitution Authority) belatedly acknowledged that the heirs of Bernhard Hirschmann were entitled to compensation but refused to calculate the compensation based on the general provisions of the German Restitution Law, instead relying on a catchall clause in the statute to radically reduce the compensation amount to almost nothing.


The heirs were then forced to file a lawsuit against this administrative decision. The Administrative Court Berlin unfortunately affirmed the decision of BADV but that decision was reversed and vacated by the Federal Administrative Court based on the fact that one of the judges who heard the oral argument slept through parts of the hearing. The High Court  remanded the matter back to the same lower court who once again reached the same conclusion that the decision reached by BADV was correct. A new appeal of that decision followed and the Federal Administrative Court ultimately reversed the decision of BADV and the Administrative Court in Berlin.


It would have been preferable had anyone along the way done the right thing," said Mr. Osen, "but in the end, the results are vindication not only for our clients but for many other former shareholders who can now expect much higher levels of compensation."