Martin van Staden’s screed, The Expropriation Act is necessarily unconstitutional’ published in the opinion section on the Mail & Guardian’s website on 29 January, is wrong.
He alleges that the concept of “nil compensation” is an instance of parliament acting in fraudem legis (in fraud of the law), seeking to subvert the Constitution by setting up “a legalistic and formalistic ‘simulation’ to obscure and hide the substance or reality” of what it is doing.
What it is doing, Van Staden says, is permitting the expropriation of property without compensation contrary to what section 25(2)(b) of the Constitution requires. This, he says, is because a “nil” “amount” cannot be “paid” to the owner of expropriated property, hence the “simulation”. This would be true if it was the full story, but it is not.
First, the concept of “nil compensation” is what we lawyers call a legal fiction: something that exists in law but not in reality. There are many such fictions in our law and the law of basically every other nation on Earth. One prominent example of a legal fiction is corporate legal personality, the idea that a company exists as an entity independent of its shareholders.
This means the company can sue and be sued in its own name, buy and sell assets and be liable for its own debts, among other things. Its effect is that shareholders cannot be held liable for their company’s debts, nor can they claim its assets as their own. This legal fiction serves a purpose: to limit the liability of the shareholders to give them an incentive to create and invest their money in businesses without putting their personal assets on the line in the case of a company failing.
It is an indispensable legal fiction that is the bedrock of all economic activity in all market-based economies. “Nil compensation” will function in a similar way. It will allow the state, in certain circumstances, to expropriate property without paying any compensation for it, in the public interest. Put otherwise, it will create the fiction that the property was paid for even though no money will be exchanged because the amount would be set at “nil”. This will be the case, in particular, where the expropriation is for the purposes of land reform.
One may quibble with the purpose for which the concept of “nil compensation” will be employed, but there is nothing inherently or necessarily unconstitutional about it. Like corporate legal personality, “nil compensation” is a legally and constitutionally sound tool that parliament has chosen to use to achieve legitimate governmental ends. It is not fraus legis to use legal fictions in legislation; to the contrary, it is how law — that artefact of artificial reason — works.
Second, Van Staden claims that the Expropriation Act is unconstitutional because it allows for the state to take possession of the expropriated property before compensation has been paid to the owner. But this is also wrong.
In Haffajee N.O. and Others v eThekwini Metropolitan Municipality, the constitutional court held that ‘[t]he provisions of section 25(2)(b) [of the Constitution] do not require that the amount of compensation and the time and manner of payment must always be determined … before expropriation under section 25(2)” while acknowledging that it will be generally be just and equitable for compensation to be determined before expropriation takes place. Again, there is no unconstitutionality there.
Third, Van Staden claims that according to the work of the Dutch jurist Hugo de Groot, expropriation is “irrevocably tied to compensation” and that “expropriation without compensation” is thus a contradiction in terms. Grotius, in his On the Law of War and Peace, a work of public international law, discusses expropriation (or eminent domain) in the context of what a state could do, after a war, to settle debts incurred in war.
There, he explicitly states that the state must always compensate an owner for expropriated property and that the owner may be required to contribute some of that compensation to help pay off these wartime debts.
Elsewhere in the same work, addressing the concept of expropriation more broadly, he states that “through the agency of the king, even a right gained by subjects can be taken from them … by the force of eminent domain” subject to two conditions. First, there must be a public advantage or purpose. Second, “compensation from public funds be made, if possible, to the one who has lost his right”.
Van Staden would have you believe that Grotius viewed compensation as an absolute requirement for lawful expropriation. That is not so. Even Grotian scholars agree that “not in every case is compensation required”.
Last, Van Staden appears to be convinced that the Constitution requires compensation as an absolute requirement and that parliament could not, through the Expropriation Act, deviate from that requirement. That is also wrong. Section 25(8) of the Constitution explicitly empowers the state to deviate from the other provisions of section 25.
It states that: “No provision of this section may impede the state from taking legislative and other measures to achieve land, water and related reform, in order to redress the results of past racial discrimination, provided that any departure from the provisions of this section is in accordance with the provisions of section 36(1).”
Plainly, Parliament has the power to deviate from provisions of section 25 including the compensation requirement in section 25(2)(b).
Van Staden is obviously ideologically motivated to make the kind of argument he makes in his piece. But it is not at all a true reflection of how the law, or the Constitution, works. Recklessly making alarmist claims may serve his political interests, but he is not a legal thinker worth taking seriously.
Perhaps he should make it clear in future that his arguments rest on his idea of what the law should be, not what it is, because it is embarrassing for any lawyer to have such a poor grasp of the law.
Dan Mafora is an LLM candidate in constitutional theory at the University of Cape Town and the author of Capture in the Court: In Defence of Judges and the Constitution (Tafelberg, 2023). He is the senior researcher at the Council for the Advancement of the South African Constitution, and previously worked for the constitutional court.
‘Nil compensation’ in the Expropriation Act is a legally and constitutionally sound tool that parliament has chosen to use to achieve legitimate governmental ends
