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29 Apr 2016 11:11
Plough back: Labour tenants and people in the former homelands have yet to be recompensed, but the Bill permits a state body to request expropriation for land reform when it is in the public interest. (Paul Botes, M&G)
The National Assembly recently passed the
Expropriation Bill, which
has drawn much criticism since its tabling at the beginning of 2013. In our view,
many of these fears are exaggerated
and misplaced in view of section 25
of the Constitution (the property
clause), the purpose of the Bill, and
the fact that it is meant to replace its
outdated predecessor, the Expropriation Act 63 of 1975 (the 1975 Act).
The state may not limit or take
away property in any way it likes.
Section 25(2) allows the state to
expropriate property only for a
public purpose (building roads, airports, hospitals, etcetera) and in the
public interest (realising land and
related reforms, as permitted by
This power, which entails the compulsory acquisition of property by
the state from affected owners without their permission, isn’t new; it
also existed during apartheid.
The Bill hence provides an orderly
procedure through which the state
may expropriate property.
purpose and public interest requirements are meant to prevent the state
from abusing this power.
The fact that the Bill refers to “property” is not controversial, as section 25(2) uses this term.
This approach, which is also followed in jurisdictions such as the
United States, Germany and Ireland,
is therefore unlikely to pose a threat
to investor confidence.
The Bill provides better protection to property holders than its
predecessor; it obliges the state to
first attempt to acquire the property
through agreement on reasonable
terms. Only in failing such agreement may the state expropriate the
property against payment of just and
equitable compensation, which must
be able to strike an equitable balance
between the owner’s interests and
the public interest.
Market value one of several factors to determine compensationPayment of compensation in the
Bill now aligns with the provisions of
section 25(3) in the Constitution. As
in the Constitution, market value is
but one of several factors that must
be considered in determining compensation that is just and equitable.
The Bill defines “expropriation” as
the compulsory acquisition of property by an expropriating authority.
This doesn’t mean that the state must be the ultimate beneficiary in all cases for there to be expropriation.
The 1975 Act included a provision
allowing the minister to expropriate
property on behalf of a juristic person, such as educational institutions,
if such expropriation is for a public
purpose. This kind of expropriation
is called “third-party transfers”.
The Bill does not provide for this
type of expropriation in similar
terms, but stipulates in clause 9(1a)
that ownership vests “in the person
on whose behalf the property was
expropriated”. This is a necessary
provision, because expropriation for
land reform purposes would necessarily involve third-party transfers.
It is also conceivable that-third
party transfers for the benefit of
educational institutions would satisfy the public purpose and public
It is debatable, however, whether
the expropriation of property involving a third-party transfer purely for
economic development purposes
would satisfy the public purpose
or public interest requirements.
Experience elsewhere, such as in the US, reveals that such expropriations are not well received and can
amount to an abuse of state power.
The reference in clause 2(1) of the
Bill to the fact that expropriation
may not be arbitrary would afford
courts the opportunity to scrutinise the purpose of the expropriation more strictly than is currently
State will not be able to acquire land without compensationThe state custodianship model
does not mean — as so many people
fear — that the state may indirectly
acquire (or even nationalise) certain
categories of property without having to pay compensation. According
to section 25(1), which governs the
regulation of property, there must
be sufficient reason for introducing such a model into a property
regime. In the absence of such reason, the custodianship model is
The Constitutional Court’s 2013
Agri SA judgment doesn’t provide
authority that state custodianship
of all property, such as land ownership, will necessarily comply with
As to its ability to promote land reform, the Bill must be considered
in view of South Africa’s unfortunate
past and the Constitution’s commitment to land and related reforms, as
authorised in section 25(4-9).
The Bill, unlike its predecessor,
which only allowed expropriation
for public purposes, permits the state
to pursue a reform-based agenda.
Clause 3(2) permits an organ of state,
which includes the department of
rural development and land reform,
to request the minister to expropriate property for land reform purposes, which would comply with the
public interest requirement.
It is therefore likely that, once the
Bill has been passed into law, the
state will use it to realise land reform. - EJ Marais & BV Slade
EJ Marais teaches private law at the University of Johannesburg; BV Slade teaches public law at Stellenbosch University. Both specialise
in, among others, expropriation law
and are alumni of the South African
Research Chair in Property Law.
The views expressed here are their
own and should not be attributed to
their respective employers.
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