Vanderbilt Journal of Transnational Law


Rainer Frank

First Page



One of the greater problems arising from the reunification of Germany has been the privatization of land in eastern Germany. Initially, the principle that shaped the privatization policies was restitution, the idea that land unlawfully taken by the former East German government should be returned to its rightful owner. A second goal of the privatization program was to stimulate investment in the economy of eastern Germany. These two goals, however, have conflicted. The result has been a policy that has created confusion with regard to the ownership of property and clear title. This Article examines two series of amendments, in 1991 and 1992, that attempted to facilitate investment in eastern Germany.

Despite amendments to the major privatization laws in 1991, the investment in eastern Germany has remained anemic. The 1992 amendments expressly placed the goal of investment before restitution. However, the author concludes that the 1992 amendments have been helpful in only a limited number of cases. The absence of a clear mechanism for compensation of rightful owners continues to impede investment. Legislation proposing such a mechanism has yet to be adopted; more importantly, the legislation may not pass constitutional muster. Accordingly, the author concludes that Germany should employ other short-term remedies until it drafts a constitutionally sound law.