Expropriation without compensation – it is not the end of the road and is still on the table

In a significant development in the land reform debate, the National Assembly on 7 December 2021 failed to pass a resolution to amend the South African Constitution to specifically allow land expropriation without compensation. The failure to adopt the constitutional amendment was expected, as the ruling party, the African National Conference (ANC) was unable to muster a two-thirds majority which is required for a constitutional amendment[1].

• In February 2017, the Economic Freedom Fighters (EFF) tabled a motion calling for the amendment of Section 25 to provide for expropriation without compensation, which motion was defeated.
• At the end of 2017 at the ANC’s 54th conference, a party resolution was adopted to pursue land reform with greater determination and that “[e]xpropriation of land without compensation should be among the key mechanisms available to government to give effect to land reform and redistribution”. It did not call for the amendment of Section 25.
• The EFF again tabled a motion to amend Section 25 in February 2018, calling for an amendment to Section 25 to provide for “expropriation without compensation” and place all land under the custodianship of the state. The ANC amended the motion drastically and a standing Constitutional Review Committee was charged with determining whether the Constitution should be amended to make this possible.
• Following a public participation process, the Constitutional Review Committee reported back to Parliament in November 2018, recommending that “section 25 of the Constitution must be amended to make explicit that which is implicit in the Constitution, with regards to Expropriation of Land without compensation, as a legitimate option for land reform”.
• Parallel to this was the making of an Expropriation Bill that seeks to replace the 1975 Expropriation Act to bring it in line with the Constitution. Its compensation provision mimics the wording of the Constitution. However, in December 2018, Parliament published a draft Bill with a new clause 12(3) listing the circumstances under which it “may be just and equitable for nil compensation to be paid where land is expropriated in the public interest”, an attempt by the government to signal that it is willing to test the waters of “nil compensation” and that it does not envision taking large tracks of productive agricultural land.
• A new ad hoc committee published a draft Bill amending Section 25 of the Constitution for public comment in December 2019. However, public participation was put on hold due to the global pandemic. After general inertia in 2020 and a public participation process in 2021, the final Constitution Eighteenth Amendment Bill was published in September 2021.

On the 7th of December 2021, the ANC failed to muster the required two-thirds majority as neither the DA nor the EFF supported the proposed constitutional amendment. In the end, 204 Members of Parliament voted in favour of the Bill and 145 against it, with no abstentions. A total of 267 votes are required for a two-thirds majority. The effect of this is that despite the lengthy process, it would be the end of the road for the amendment of Section 25. However, and as alluded to in the introductory paragraphs of this bulletin, this does not mean the end of the road for the passing of the Expropriation Bill.

The Expropriation Bill [B23/2021][6]

For purposes of this bulletin, section 12(3) of the Expropriation Bill is relevant, which reads as follows:

(3) It may be just and equitable for nil compensation to be paid where land is expropriated in the public interest, having regard to all relevant circumstances, including but not limited to—
    (a) where the land is not being used and the owner’s main purpose is not to develop the land or use it to generate income, but to benefit from appreciation of its market value;
    (b) where an organ of state holds land that it is not using for its core functions and is not reasonably likely to require the land for its future activities in that regard, and the organ of state acquired the land for no consideration;
    (c) notwithstanding registration of ownership in terms of the Deeds Registries Act, 1937 (Act No. 47 of 1937), where an owner has abandoned the land by failing to exercise control over it;
    (d) where the market value of the land is equivalent to, or less than, the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land; and
    (e) when the nature or condition of the property poses a health, safety or physical risk to persons or other property.”

In a previous bulletin[7], we have unpacked these provisions which we repeat again below:

Clause 12(3) of the Bill introduces the notion of the payment by the State of ‘nil’ compensation where land is expropriated, provided that it is determined by the State to be just and equitable. Instances, where it may be just and equitable for the State to pay ‘nil’ compensation, are listed under clause 12(3) of the Bill, and notably, excludes primary residential homes and productive farm land.

The instances listed under clause 12(3) have been quite controversial, especially clause 12(3)(a) which refers to “where the land is not being used and the owner’s main purpose is not to develop the land or use it to generate income, but to benefit from appreciation of its market value” (in other words for speculative purposes).Several concerns immediately arise, for example who will determine this and what will happen to land that is used for example for conservation purposes and cannot be developed for a valid reason? Hopefully, these type of issues will be clarified in regulations.

It is important to note that the ‘nil’ compensation clause only applies to property which is land and does not apply to any other form of property, for example, any movable or intellectual property.[20] More importantly (which appears to be widely misunderstood), the Bill does not provide a blanket provision for the expropriation of land at ‘nil’ compensation.

The payment of ‘nil’ compensation must be just and equitable under the circumstances, and when it is determined by the State to be just and equitable, then the State must provide particulars of how such amount was determined. Although not expressly stated, given that ‘nil’ compensation albeit at ‘nil’ rand is still regarded as “compensation”, the Bill can be interpreted to imply that the process of determining compensation discussed above also applies to ‘nil’ compensation, which means that it can be challenged.

The use of the word “may” further implies that clause 12(3) is a discretionary provision. It would be interesting to see if regulations will be published on how such discretion must be exercised.

The future of the Expropriation Bill

It is anticipated that the Expropriation Bill will form part of the Parliamentary process for adoption early in 2022. It is at this stage unclear which comments and submissions made regarding the Expropriation Bill will be accommodated, if at all. In any event, there will most likely be further discussions and submissions when the Expropriation Bill is tabled in Parliament.

Importantly, it should be noted that a simple majority, i.e. more than 50%, will be required to adopt the Expropriation Bill. In order for the ANC to do so, it will most probably not require any other political party to support this. As an aside, it is worth mentioning that the ANC had earlier this year (in 2021), for the first time in the municipal elections, obtained less than 50% support. Should this trend continue in the next general elections of 2024 and if the adoption of the Expropriation Bill is delayed until then, the ANC will have no choice but to rely on the support of any of the other opposition parties.

Concluding thoughts

It is evident over the last 27 years that both government and the South African courts have been slow in implementing meaningful land reform by the use of expropriation. It is doubtful if the proposed expropriation without compensation provisions in the Expropriation Bill, if adopted by Parliament, will on its own speed up this process.

What is needed is both the political will and even a further debate and discussion on how the intentions of Section 25 regarding land reform and restitution can be achieved.

In this regard, we support the views of Prof Elmien Du Plessis where she mentions that land reform has been a “useful tool to use for political roulette”. We agree with her concluding remarks:

“But most importantly, land reform has been placed on the public agenda, and the state is under more pressure than ever to ensure that a successful land reform program delivers. But as the Ugandan proverb goes: A roaring lion kills no game – the government will do well by delivering and implementing instead of talking. Otherwise, this process will be repeated.”

--

Read the original publication at Fasken