Land expropriation discussed at Cliffe Dekker Hofmeyr briefing

June 1st, 2018

Director in the Dispute Resolution department at Cliffe Dekker Hofmeyr, Jackwell Feris, spoke at the Land Expropriation briefing that was jointly held by CDH and Afrika-Verein der deutschen Wirtschaft on 11 April in Sandton.

By Kgomotso Ramotsho

Cliffe Dekker Hofmeyr (CDH) together with the Afrika-Verein der deutschen Wirtschaft (the German-African Business Association) held a media briefing with regard to land expropriation on 11 April in Johannesburg. CDH and Afrika-Verein said the purpose of the briefing was to have a discussion with regard to questions that investors had around the continued protection of property rights in light of the motion adopted by the National Assembly on 27 February, to initiate an amendment of the Constitution in order to allow for expropriation of land without compensation.

Director in the Dispute Resolution department at CDH, Jackwell Feris, said that clients and foreign investors had raised a number of concerns about the proposed amendment on s 25 of the Constitution and the element on compensation. He added that Parliament had established a review committee to set out terms of reference in terms of how Parliament would embark on the constitutional review. He pointed out that a fundamental part of the process includes public participation in order to make sure that the facts in the report, which the committee will set forward to Parliament, takes the views of the public into account.

Mr Feris said the report will consider the issues that will need to be put forward for purpose of reviewing s 25. He pointed out that when one looks at the review from a parliamentary perspective it is not definitive that s 25 will be amended, but it asks if there is room to look at the context of land ownership disparities in South Africa (SA). He added that the debate of land expropriation predates back to 1994, where there were discussions during multi-party talks on s 25 of the interim Constitution that had opposing views on the issues, and asked if there was a need from a South African perspective to have a property clause, where property rights were protected?

Mr Feris pointed out that when the issue of expropriation without compensation is discussed, it has to be looked at from a South African perspective and from a foreigner’s perspective. He said a South African citizen or corporate is essentially bound by South African law. He noted that there is the Constitution and domestic policies, which set forth domestic legislation. He added that SA citizens are confronted with issues from policy perspective land reform, land restitution and expropriation without compensation.

Mr Feris said foreign nationals have additional rights and added that there is legislation and customary international law, which the Constitution refers to. He noted that under customary international law it states that if foreign nationals are expropriated from their land they are entitled to compensation. He pointed out that foreign nationals are in a better position than many South Africans.

Mr Feris added that if the Constitution is amended, foreign nationals can go back to their home countries and report that SA expropriated their property. If there is a bilateral investment treaty, foreign nationals can initiate an investors state arbitration against SA, and SA may be obliged to compensate. He said those are facts that Parliament should look at if they looking to review s 25. He added that there is a need to have a discussion on whether s 25 needs to be reviewed. He pointed out that there is still a fundamental disparity on ownership of land in SA.

Afrika-Verien’s, Ignaz Fuesgen, said the process of land expropriation would be lengthy and might even see some court challenges coming through.

Afrikan-Verein’s, Ignaz Fuesgen, said the issue of land must be addressed properly. He added that if one looks back at 1994 the policies that were put in place, have not gone as far as they should have and they a liability. He said the question that must be asked is how to marry the interest of the people in SA and the interest of the economy and those of foreign investors. He pointed out that the reason why interest of foreign investors should be looked at, is a simple one according to former President Jacob Zuma’s 2016 State of the Nation Address, when he stated that around 35% of gross domestic product (GDP) is directly linked to foreign investments.

Mr Fuesgen said if SA does not look after foreign investors, it would be taking a chance with 35% of GDP. He added that foreign direct investment did not come from Asian or American countries, but from the European Union. He pointed out that Europeans were a part of the problem during Apartheid and now they want to be part of the solution in the post-Apartheid era. He noted that if one looked at the German-African Business Association, SA has been seen as an opportunity and not as a liability.

Mr Fuesgen said the issue of land will be a lengthy one and not everyone may agree with the outcome of the process. There could be court challenges and there would be constant renegotiations. He questioned how much it would cost the citizens to fund ongoing battles. He pointed out that ultimately someone would have to pay and it is going be the tax payers. He asked how the process would paralyse new investments, new policies and the investment climate, which would impact the overall economy?

Mr Fuesgen said the question that must be asked is how does SA look at the needs of citizens at grass-roots level and bring together economic requirements that international investors may have. He added that in this context, what is found on the emotional side of an investor, is the expression of policy uncertainty and the question is who is to blame for that?  He asked if foreigners did not understand what is going on locally or if they do not get enough information of what the South African government is trying to achieve with its policy and legal framework.

North-West University’s, Professor Elmien du Plessis, spoke at the CDH Land Expropriation briefing held in Johannesburg.

North-West University’s Faculty of Law, Associate Professor Elmien du Plessis, said it is not known on how much SA has achieved in terms of land reform, because there is no credible audits from government or from Agri South Africa (AgriSA). She added that the information received from government was that individual land ownership, by race in hectares, belongs to 72% white ownership and the number of individual landowners per race is 53%. She pointed out that the land that cannot be categorised by race amounts to 69%, because it is held in community based or company trusts, which include areas such as the Ingonyama Trust that cannot be given away as people live on that land.

Prof du Plessis noted that in some of the areas, land ownership is in favour of white people according to a land audit. She said the biggest problem with the government land audit, is that the information used is old information and where they could not find information they used title deeds and guessed the race of people by looking at their surnames, and added that the methodology was questionable. Prof du Plessis said there is also the audit from AgriSA, which focuses on agricultural land and noted that their audit findings showed that black people already owned more than half of the agricultural land in the Eastern Cape and KwaZulu-Natal.

Prof du Plessis said findings made by AgriSA showed black land owners own 26% of the agricultural land in terms of hectares and control more than 46% of the potential land. She added that land owned by black people and land owned by government has an interesting economic trickery to make a point that private land reform is better than government land and make a point using statistics that land reform should be privatised. She said the truth lies somewhere between the two audits. She added that another problem is that it is not known what equitable land redistribution looks like.

Prof du Plessis pointed out that land reform in SA is a big deal. She said the focus is mainly on land restorations and distributing agricultural land, but it is a much broader programme than just that. She noted that redistribution states that people should have equitable access to land and redistribution is largely based on the idea of the ‘willing buyer, willing seller’ principle. Prof du Plessis said those who know expropriation law, must not confuse it with the method of calculating market value. She added that the willing buyer, willing seller principle was a policy decision made by government that they will not expropriate land for reform purposes, but they are going to market transactions with people, so that it is transferred by contracts.

Prof du Plessis said that redistribution of land is mostly driven by policies that follow presidents as well. She pointed out that in the beginning the idea was that anybody who earned less than
R 1 500 per month, could through certain mechanisms apply to government for a transfer to get land. She added that one did not have to show proof that they had any connection to the land in question and it was aimed at giving poor people access to land. She noted that there were a few other policies in place to help people, once acquired land to use the land. It was not based on big agricultural farming and was to give more people access to the land.

Prof du Plessis spoke about the Settlement Land Acquisition Programme, in terms of the programme 6,5% of land was transferred. She said the idea of land redistribution in former President Thabo Mbeki’s era was to settle more commercial black farmers. However, she added that there were few requirements that if you wanted to have land you must have a business plan and you had to farm commercially. She noted that the programme was agricultural only and it was not known how beneficiaries were chosen.

Prof du Plessis said there was then the Proactive Land Acquisition Strategy. She added that with this programme government was to provide land to its citizens. She pointed out that the problem was that when government said it was going to rely on private individuals to make the land available, the land that became available was highly unprotected land, which led to people selling that land because the land was not fertile or was far away from infrastructure. Prof du Plessis noted that would have been a recipe for disaster.

Prof du Plessis said another problem was that land redistributed to farmers was without water rights. She noted that a recommendation was made that if government was going to redistribute land, there had to be water on that land. Prof du Plessis said another issue was that only a very small percentage of the budget is spent on land reform. This was according to a report that was tabled in Parliament, led by former President Kgalema Motlanthe, in November 2017. She added that the recommendation that was made was that SA needed a new framework and legislation that will give guidance to principles that will define to who the beneficiaries of land are, including what equitable redistribution is and also give institutional arrangements on what will happen with the land.

North-West University’s, Professor Elmarie Van der Schyff, said the question that arises is if it is necessary to change s 25 of the Constitution in order to facilitate expropriation of land without compensation.

North West University’s Faculty of Law, Professor Elmarie van der Schyff, said the question that has arisen is whether it is necessary to change s 25 of the Constitution in order to facilitate expropriation of land without compensation. She added that it was surprising to realise that s 25 of the Constitution, also known as the property clause as it currently stands, does not guarantee an ownership or private property. She pointed out that s 25 does not grant the right to property, but merely regulates or prescribes the manner in which property may be interfered with. She noted that she thought that this is one of the mistakes of the biggest aspects that must be considered if s 25 is amended.

Prof van der Schyff said s 25(1) stated that no one may be deprived of property except in terms of law of general application and no law may permit the arbitrary deprivation of property. She added that it is important to understand expropriation in the broader context of deprivation. She pointed out that deprivation refers to a wide category of interference with property. She noted that it is important to understand that deprivation constitutes a broad category that includes expropriation.

Prof van der Schyff added that s 25(2) states that property may be expropriated only in terms of law of general application. She said that there is a requirement that says there must be a law of general application that provides for the expropriation of property, then it can only be expropriated for a public purpose or in the public interest and expropriation must be subject to compensation. She pointed out that the amount of time and manner of payment, may either be agreed by those who are affected or decided or approved by court. Prof van der Schyff said it is also important to understand that compensation does not necessarily mean that money is being paid over but it can be linked with compensation in kind.

Kgomotso Ramotsho Cert Journ (Boston) Cert Photography (Vega) is the news reporter at De Rebus.

This article was first published in De Rebus in 2018 (June) DR 6.