Council of Europe Article 1 of the First Protocol to the European Human Rights Convention contains a property guarantee in the following terms:
“ 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.” (Numbering of sentences supplied.)
These three sentences have come to be referred to as the first, second and third “rules” respectively.127 The first rule has come to be regarded as an institutional property guarantee. The second rule, despite the use of the word “deprived” has come to be identified with the state’s power to expropriate and the third rule with the state’s police power to regulate, or as a deprivation clause. Under the third rule dispossessions without compensation have been held to be lawful in cases where heavy property taxes have been imposed;128 exchange control impositions have been levied;129 compulsory contributions to a state pension scheme levied;130 fines imposed for a criminal offence, and smuggled goods forfeited;131 and property involved in a criminal act forfeited.132
Under the Convention a proportionality analysis has been developed in order to determine whether a deprivation of property is lawful or not. The regulatory measure must comply with a municipal law (be lawful), be in the public interest and establish a fair balance between the public interest served and the property interest affected.133 As to what is necessary in the public interest, that is left to the State as they are seen to be the best judges on this, but still there must be a purpose. The states are given a wide margin of appreciation in this regard.134
“(1) Property and the right of inheritance shall be guaranteed. Their substance and limits shall be determined by law.
(2) Property entails obligations. Its use should also serve the public interest.
(3) Expropriation shall only be permissible in the public interest. It may only be ordered by or pursuant to the law which determines the nature and extent of compensation. Compensation shall reflect a fair balance between the public interest and the interests of those affected. In case of dispute regarding the amount of compensation recourse may be had to the ordinary courts.”135
The Courts distinguish between “provisions defining the contents and limits” (“Inhalts- und Schrankenbestimmungen”) of property and dispossessions, which would classify as (legislative or administrative) expropriations in terms of Art. 14(3) GG.136
The distinction between a provision defining the contents and limits and expropriation has nothing to do with the extent of its interference with the property right of the individual; it is based exclusively on criteria that focus on the aim or purpose of the dispossession or interference. To qualify as an expropriation the purpose of the dispossession must be to confiscate the right as such; this is not the case where there is the incidental acquisition of property in the course of pursuing another, though legitimate, objective.137
Such an incidental acquisition, even if it amounts to a complete taking of the property right or object in question, does not qualify as an expropriation, but is still regarded as a provision defining the contents and limits in terms of Art. 14(1) GG. This is the case, for example, when the state confiscates generally a certain class of goods in order to pursue another legitimate public interest, such as the protection of an endangered animal species.138
In Germany every provision defining the contents and limits of property has to be justified by a proportionality analysis. Within this balancing process, the impact of the regulation on the property owner is an important consideration. Other concerns are the importance of the property right both to the owner and to society, the effort expended and expenditure incurred by the owner in order to acquire the right for herself, and whether the owner could legitimately expect that the particular right in the property in question would continue indefinitely without any modification.139
Particularly the last criterion has led the courts to require that, for certain limiting measures to be lawful, they have to be accompanied by some mitigating measure for the person whose property is subject to the limiting measure to ensure the protection of confidence in existing property rights.
Most often, regulations that limit existing property rights may only do so if transitional provisions are provided to cushion the limitation when it takes effect.140 In cases where regulations impose a severe burden or amount effectively to a complete taking of the vested property right, the constitution may even require the payment of compensation to equalize the effect of the non-expropriatory regulation.141