The Irrationality of Expropriation Without Compensation

The Rule of Law principle at the heart of South Africa’s constitutional dispensation is there to prohibit arbitrariness from government and demand reasonableness. Government’s plans to bring about expropriation without compensation (EWC), especially as a constitutional amendment, is a good case study of that very arbitrariness our legal system has been set up to combat.

Section 1(c) of the Constitution makes provision for the supremacy of both the Constitution and the Rule of Law. This section can only be amended if 75 percent of the votes in the National Assembly are in favour, as opposed to other parts of the Constitution and the Bill of Rights which need a 66 percent majority.

With the Rule of Law being a “fundamental postulate” that “permeates” our constitutional dispensation – according to the late judge of the Constitutional Court, Tholakele Madala – all government conduct and interventions, whether legislative, judicial, or executive, must be measured against the standards inherent in the Rule of Law – one of which is reasonableness. In the public law sense of this term, any government conduct or intervention must be rational, proportional, and effective.

Rationality, in this context, means whatever government is doing must be tied to a legitimate, or constitutional, government purpose or mandate. Proportionality speaks for itself and means that government’s intervention must be designed to give effect to that purpose or mandate, and do no more. When it comes to rights like private property rights, proportionality means government must prefer interventions that are the least invasive of those rights. Finally, effectiveness means that the intervention must have a reasonable likelihood of achieving the purpose it is aimed at.

When advocates of EWC defend their policy, they employ the rhetoric of restitution. Restitution is the process whereby the rightful owners of property, or their descendants, through the law, are given back possession of that property. This is what the so-called “original sin” refers to: the land was taken without wilful cooperation and that land must be given back. It is difficult to argue against the rhetoric of restitution, and rightly so. Restitution is basic justice and amounts to a vindication, rather than a limitation, on private property rights.

[perfectpullquote align=”right” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Nationalization cannot normalize patterns of property ownership as it keeps property in the hands of the State. Redistribution, furthermore, is only theoretical, because the government has kept ownership of the bulk of agricultural property it has hereunto expropriated for redistributive purposes.[/perfectpullquote]

But although the government uses the rhetoric of restitution to advocate for EWC, it is, in fact, apathetic about restitution. The restitution program receives a fraction of the national budget and the Land Claims Court is notoriously under-resourced.

What the government is interested in is nationalization, at worst, and redistribution, at best. As opposed to restitution, nationalization is the process whereby private property is either purchased or coercively seized and transferred into State ownership, and redistribution is the process whereby private property is purchased or seized from one person and transferred to the ownership of another despite the latter not having a legal claim to that property.

Already, then, the unreasonableness of EWC is manifest: government’s intervention (EWC) is cloaked in the rhetoric of restitution but is in fact angling for nationalization or redistribution. Nationalization or arbitrary redistribution of property are not legitimate constitutional purposes the government has at its disposal.

The only property rights-related roles the Constitution obliges government to undertake are to protect private property (section 25(1)), to foster conditions that enable citizens to become property owners on an equitable basis (section 25(5)), to strengthen insecure private property rights (section 25(6)) like the various Apartheid leasehold arrangements, and to provide for the restitution of dispossessed property (section 25(7)).

Even if we concede – and we ought not to – that government has a legitimate mandate to fulfill by pursuing nationalization or redistribution, EWC is highly disproportionate.

The security of private property is one of the hallmarks of our post-Apartheid dispensation, given that the white minority regime had no respect for the property rights of the vast majority of South Africans. This right to be secure in one’s property is linked with the right to dignity as well as equality. Rights, by their nature, concern security of recognized legal interests, like freedom of expression and private property. EWC, particularly if it is adopted as an amendment to the Constitution, has the effect of extinguishing property rights entirely, for, without the requirement of compensation when property is expropriated, owners are robbed of the ‘rights’ aspect of ‘property rights.’

Finally, EWC is ineffective.

The government has indicated repeatedly that, with this policy, it seeks to normalize patterns of property ownership, encourage economic growth and investment, and promote food security. Nationalization cannot normalize patterns of property ownership as it keeps property in the hands of the State. Redistribution, furthermore, is only theoretical, because the government has kept ownership of the bulk of agricultural property it has hereunto expropriated for redistributive purposes.

Growth and investment, too, will not follow in the wake of EWC. The opposite will occur, as we have seen in Venezuela and Zimbabwe. Investors, whether foreign or domestic, will not dedicate time, effort, and money, into developing their assets if they know the government can simply seize that property without compensation. The same is true for food security: The reports of farmers who have ceased investing in new equipment in anticipation of EWC being implemented, are sufficient for us to appreciate the dire food insecurity that awaits us if the government pushes ahead.

There is no doubt that EWC is irrational, disproportionate, and ineffective – in other words, arbitrary. This means EWC is at odds with the Rule of Law and, as a result, can only become a constitutionally-valid intervention if section 1 of the Constitution is itself amended. For that, the government will need 75 percent of the National Assembly – numbers it currently does not have. Merely amending section 25 would not cure EWC’s unconstitutionality.

Martin van Staden is Head of Legal Policy at the Free Market Foundation and is pursuing a Master of Laws at the University of Pretoria. He is the author of ‘The Constitution and the Rule of Law’ (2019).

Photo Credit: Biegun Wschodni