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Bulletin

Unpacking the who, what and why of the Expropriation Bill

Fasken
Reading Time 7 minute read
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The land reform debate over the last few years in South Africa can at best be described as controversial, political and mostly emotional, more specifically so in the context of expropriation.  From the outset, it should be noted that the current Expropriation Act, 1975[1] (the "1975 Act") is completely outdated and predates the Constitution[2] and the South African expropriation laws were in dire need of being overhauled.

One example that showcases this need, is the basis on which the amount of compensation to be paid to an owner in respect of property expropriated under the 1975 Act, is determined. The 1975 Act, on the one hand, provides that compensation to be paid for expropriated property will be on a willing-buyer, willing-seller basis, whilst the Constitution, on the other hand, contains no such provision.  Given this disconnect, the time has arrived for the legislative authorities to introduce legislation that will align the expropriation laws of South Africa with the principles enshrined in the Constitution.

The Expropriation Bill, 2020[3] (the "Bill") was published on 9 October 2020 and gazetted in Government Gazette 43798. It has been introduced as part of the Parliamentary process in the National Assembly.  It is anticipated that public hearings will be held over the first few months of this year.  The Bill will most probably be adopted during the course of the next year or two.

It is further important to note that the introduction of the Bill is a separate process than the review[4] by the Constitutional Review Committee of Section 25 of the Constitution[5] to provide for nil compensation.  This review process will seemingly continue. 

This bulletin is the first in a series of bulletins where we will unpack and discuss some of the material provisions of the Bill.  In this bulletin we will unpack the following:

  • Who (which entities or authorities) may expropriate?
  • What (the subject matter) may be expropriated?
  • Why (for what purpose) may expropriation be done?

Who may expropriate?

Expropriation in terms of the Bill is defined under section 1 of the Bill as “compulsory acquisition of property by an expropriating authority”.

Expropriating authority is defined as “an organ of state or a person empowered by this Act or any other legislation to acquire property through expropriation”. This means that any organ of state[6] (essentially any state department in the national, provincial or local sphere of government, for example, the Minister of Mineral Resources and Energy, who is empowered to expropriate property for purposes of prospecting or mining in accordance with the provisions of the Mineral and Petroleum Resources Development Act (the "MPRDA")[7], or an institution which exercises a public power or performs a public function in terms of any legislation may expropriate.

Importantly, section 2 of the Bill excludes expropriation:

  1. by an expropriating authority arbitrarily or for a purpose other than a public purpose or in the public interest;
  2. of state owned property without the concurrence of the relevant executive authority;
  3. unless the expropriating authority has without success attempted to reach an agreement with the owner on reasonable terms (subject to section 22 which provides for urgent expropriation), and
  4. in terms of any law of general application unless the exercise of such power is in accordance with sections 5 to 27 and 31

Accordingly, it is important to note that there are limitations on the powers to expropriate and that all other empowering legislation which allows for expropriation must follow the procedures contained in the Bill.

In terms of Chapter 2[8] of the Bill, the Minister responsible for Public Works and Infrastructure may also expropriate for a public purpose or in the public interest. However, the power is subject to the compensation provisions contained in Chapter 5 and is limited to “property which is connected to the provision and management of the accommodation, land and infrastructure needs of an organ of state, in terms of the Minister’s mandate”. These limitations will most probably lead thereto that it will be unlikely that the Minister will use its powers to expropriate, but rather that an expropriating authority will do so. It will be interesting to see how these provisions will be used in practice.

What may be expropriated?

The subject matter of expropriation is “property” as defined in Section 25 of the Constitution.  Section 25 does not contain a specific definition, but section 25(4)(b) states that for purposes of Section 25 “property is not limited to land”. In other words, this means that any property which includes all movable property and immovable property can be expropriated.

Understandably so, this is one of the more controversial provisions in the Bill. It should, however, be noted that the provision has been in the Constitution since 1996 and it is not a new concept.  Now that it is specifically contained in expropriation legislation, the effect is more real and should be considered.

One can immediately think of the complexities arising when movable property (for example a manufacturing plant which does not accede to the land) is expropriated – should the land be expropriated, or the plant, or both? In the current Covid vaccine debate, available vaccines could arguably be expropriated and even patents to manufacture such vaccines. It can only be speculated how this will play out in the future.

Why (for what purpose) may expropriation be done?

Expropriation can essentially be done in two instances, namely if the expropriation has to be done for 1) a public purpose; or 2) that it is in the public interest:

  • Public purpose

    public purpose” is defined[9] to include “…any purposes connected with the administration of the provisions of any law by any organ of state”.  On the face of it, this is fairly wide, but it is noteworthy that the purpose must be connected to the administration of legislation, in other words, if a state organ wishes to expropriate, there are limitations thereto and cannot be done arbitrarily without reason. 

    Expropriation for a public purpose is a concept generally known in other jurisdictions and in line with previous expropriation laws in South Africa.  Examples would be when land is required for building a dam, constructing a road, prospecting and mining, or building a power station where it is the intention that the land is owned by Eskom.

  • Public interest

public interest” is not a new concept and was introduced in section 25[10] of the Constitution which reads as follows: “the public interest includes the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources”.

The first part of the definition used in the Bill[11] is the same as that used in the Constitution, but it is noteworthy that the following additional wording is used “in order to redress the results of past racial discriminatory laws or practices”. It is self-evident that this would be used for land reform purposes.  It is again wide and consists of general concepts, but interestingly, there is no limitation and from the State’s perspective it leaves it open to use generally.

However, it should always be taken into account that as mentioned in the introductory paragraph above, it speaks for itself that the provisions of the Bill must be followed as the checks and balances in complying with the Constitutional principles.  In the end, it should be considered that the courts will have the final say, especially regarding the determination of compensation for expropriation.

Finally, an interesting provision is inserted in Chapter 7, which deals with urgent expropriation.  These provisions entitle an expropriating authority to urgently expropriate property.  These powers are, however, limited where any property held by the national, provincial or local government is not available and the property is needed in terms of the Disaster Management Act[12] or a court order. 

This is not per se expropriation, as it is only limited to the right to use the property temporarily “for as long as it is urgently required for a period not exceeding 12 months”.  Understandably, the process of urgent expropriation involves a more expedited process, as opposed to the conventional protracted process, in the sense that the expropriating authority is exempt from complying with certain procedural requirements which an expropriating authority would otherwise have to comply with. This is coupled with an obligation to tender a written offer of compensation to the owner within 30 days from the date on which the notice to expropriate the property on a temporary basis was given and is payable as soon as possible thereafter. Any extension of the time period within which the expropriating authority intends temporarily using the property must be agreed to by the owner, failing which a court order is required. In any event, no extension may be granted for a period exceeding 18 months from the date the property was taken for temporary use.

In a pre-Covid pandemic era, this provision would most probably have been implemented without even being noticed. However, the Covid era has made this quite relevant and could become a useful tool in the hands of the state to preserve the lives and livelihoods of the citizens of South Africa when faced with an unprecedented national disaster such as the Covid-19 pandemic.

Comments on the Bill are due by 10 February 2021.

If more information or any assistance is required, please feel free to contact our property team.



[1] Act 63 of 1975

[3] [B23-2020]

[5] Act 108 of 1996

[6] As defined in section 239 of the Constitution.

[7] Act 28 of 2002; Section 55 of the MPRDA.

[8] Sections 3 to 4 of the Bill.

[9] Section 1.

[10] Section 25(4).

[11] Section 1.

[12] Act 57 of 2002.

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