Expropriation bill ‘unclear on its links to property act’
THE draft Expropriation Bill now before Parliament was silent on how it would interact with the Property Valuation Act promulgated last year, the Centre for Constitutional Rights said yesterday. An official said the silence of the Expropriation Bill on its relation to the valuation act “could create a bureaucratic nightmare as their functions and roles would run parallel”.
CAPE TOWN — The draft Expropriation Bill now before Parliament is silent over how it will interact with the Property Valuation Act promulgated last year, the Centre for Constitutional Rights said yesterday.
The act provides for the establishment of an office of the valuer-general whose job it will be to value properties earmarked for expropriation.
Centre legal officer Phephelaphi Dube said the bill’s silence on its relation to the Property Valuation Act “could create a bureaucratic nightmare as their functions and roles will run parallel”.
The act establishes a valuer-general appointed by the development and land reform minister with the power to determine the purchase price of land identified by the state for expropriation.
The government proposed the law to overcome the logjam in land reform caused by the willing-buyer willing-seller principle and the large sums it had to pay out in compensation.
Ms Dube welcomed the fact that the Expropriation Bill now included recourse to the courts in the event of a dispute over the compensation to be paid by the state. This was not provided for in the original “flawed” version of the bill first released for comment in 2013.
“We are also concerned that the terms ‘public interest’ and ‘public purpose’ remain unchanged. As they are, they are vague and subject to a variety of interpretations, which may run the risk of abuse of powers, ” she said.
The draft bill, adopted by the Cabinet last September, is likely to stir up strong emotions in the wake of President Jacob Zuma’s announcement last week that foreign landownership would be banned, and a cap of 12,000ha placed on the domestic ownership of farm land.
The Expropriation Bill will be the foundation for the pending Protection and Promotion of Investment Bill, which will replace the bilateral investment treaties which SA has terminated.
The expropriation clauses in the investment bill were removed by the National Economic Development and Labour Council in favour of a universally applicable law.
The bill will give legislative force to the constitutional provision on expropriation which provides for “just and equitable” compensation rather than market value. It will be closely scrutinised during hearings by Parliament’s public works portfolio committee.
Committee chairman Ben Martins said the consultation process would be “thoroughly transparent and open”.
The bill meticulously follows section 25 of the constitution, which deals with the issue of expropriation.
The definition of property is not limited to land, which is a source of concern for Freedom Front Plus MP Anton Alberts, who fears abuse.
Expropriation will only be allowed in the “public interest” and for “public purposes” and only after an unsuccessful attempt has been made by the state to negotiate the purchase of the property “on reasonable terms”.
If the property owner’s claim for compensation is not accepted by the state, it will have to make an alternative offer. If property owners reject the offer, they can take the matter to court which will determine who bears the cost of the litigation on the basis of how close its award is to either the government’s offer or the claimant’s claim.
CAPE TOWN — Business has raised the alarm about the damage the proposed Promotion and Protection of Investment Bill could have on foreign investment, but an international expert says the proposals are in line with the trend for governments to rework their foreign-investment regimes to expand their policy space.
The bill, which will eventually replace the bilateral investment treaties SA has terminated, aims to establish a universally applicable investment protection regime. It will deal with expropriation and the arbitration of disputes.
United Nations Conference on Trade and Development head of international investment agreements Elisabeth Tuerk said this week that 40 to 50 governments wanted to reform their investment regimes. In some cases this was to increase their policy space and to ensure foreign investment was sustainable and contributed to social upliftment.
Ms Tuerk said at a public seminar organised by the South African Institute of International Affairs that the reform of investment regimes had to be “balanced, gradual, transparent and work for all stakeholders”.
She noted that when there was intense public debate about the South African government’s intention to change its foreign investment law, the flow of foreign investment into the country had increased, despite warnings by business that the contrary would occur.
However, one of the participants in the seminar pointed out that taken on its own the investment law might not be a cause for concern but when considered together with a host of other laws or planned laws on migration and foreign landownership, a discouraging cumulative message was sent to foreign investors.
Department of Trade and Indus- try chief director Mustaqeem de Gama, who was closely involved in the development of the Promotion and Protection of Investment Bill, said the department would not change the version approved by the National Economic Development and Labour Council. The bill was with state law advisers and if endorsed by the Cabinet it would be submitted to Parliament in April.
He said the bill gave foreign investors the same protection as domestic investors in “like circumstances”. The provisions on expro- priation and compensation were aligned to the constitution, with expropriation subject to compensation that was “just and equitable”.
“The bill specifies that government may take measures to, among other things: redress inequalities; preserve cultural heritage; foster economic development and industrialisation; achieve socioeconomic right,” Mr de Gama said.
“It will establish greater clarity on the balance between the rights of investors to protection alongside the right of government to regulate and safeguard the public interest.”
The bill confirmed the existing practice of allowing investors to freely repatriate returns, subject to taxation and applicable legislation.
Where a foreign investor wanted to challenge a government measure, any competent South African court, statutory body or independent tribunal would have jurisdiction.
The government was also discussing the possibility of introducing a screening mechanism to evaluate potentially damaging investments.