Appendix 1, IRR Submission regarding the Promotion and Protection of Investment Bill of 2015 – 25 August 2015

Appendix 1, IRR Submission to the Portfolio Committee on Trade and Industry, regarding the Promotion and Protection of Investment Bill of 2015 [B18-2015].
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You are here: Home Reports & Publications Submissions on Proposed Legislation Appendix 1, IRR Submission regarding the Promotion and Protection of Investment Bill of 2015 – 25 August 2015

Appendix 1, IRR Submission regarding the Promotion and Protection of Investment Bill of 2015 – 25 August 2015

Appendix 1, IRR Submission to the Portfolio Committee on Trade and Industry, regarding the Promotion and Protection of Investment Bill of 2015 [B18-2015].

Appendix 1

IRR Submission to the Portfolio Committee on Trade and Industry, regarding the
Promotion and Protection of Investment Bill of 2015 [B18-2015]

 

Broad parameters of the IRR’s proposed alternative expropriation bill
Scope:
The IRR’s alternative Expropriation Amendment Bill deals with direct and indirect expropriation by all expropriating authorities – whether the minister of works or any other organ of state. It covers both movable and immovable property as well as mining and water rights; mortgages, servitudes, and other registered rights; shares in companies; intellectual property rights, including patent rights; and unregistered rights such as leases and customary land-use rights.

Governing principles:
An expropriating authority is obliged to fulfil all relevant constitutional requirements for a valid expropriation, including those governing ‘just and equitable’ compensation. If a dispute as to the validity of a proposed expropriation arises, the expropriating authority must obtain a High Court order confirming that it has met all these requirements before it may issue a notice of expropriation.

‘Just and equitable’ compensation must start with the market value of the property, less the four ‘discount’ factors listed in the property clause of the Constitution. However, since expropriation places an ordinate burden on the shoulders of particular individuals and firms, compensation must also include damages for all financial losses resulting from the expropriation, including moving expenses and any loss of future income from the property. If the property to be expropriated includes the owner’s home, his or her eviction must expressly be authorised by the High Court, which may also order the provision of suitable alternative accommodation where it considers this appropriate.

Initial processes:
An expropriating authority must start by negotiating with the owner with a view to agreeing on a voluntary purchase. If these talks fail, it must issue a notice of possible expropriation, invite objections, and give reasons in writing for rejecting any objections submitted to it. It may also investigate the value of the property.

If a dispute as to the constitutional validity of the proposed expropriation thus arises and the expropriating authority still wishes to proceed, it must give the owner 180 days’ notice of its intention to seek a High Court order confirming the validity of the proposed expropriation.

High Court hearing on constitutionality:
The expropriating authority bears the onus of proving, on a balance of probabilities, that its proposed expropriation is not arbitrary, that it is objectively in the public interest (as defined in Section 25 of the Constitution), that the compensation it proposes is indeed just and equitable, and that all other constitutional requirements for a valid expropriation have been met.

During this court hearing, the owner’s evidence and representations must be heard in full.  The expropriating authority must also pay the owner’s reasonable legal costs in participating in these proceedings (on an attorney-and-client basis).

If the High Court confirms the constitutionality of the expropriation, it must issue an order dealing with all relevant issues, as listed in this Bill. Among other things, the court’s order must also instruct the expropriating authority to pay all compensation due to the owner at least 15 working days before the transfer of ownership to it is due to take place.

Notice of expropriation:
If the High Court confirms the constitutionality of the proposed expropriation, the expropriating authority may thereafter issue a notice of expropriation. This notice must be in keeping with the High Court order and accompanied by a copy of it. The notice must give the owner 90 days from the date of service of the notice before the transfer of ownership to the expropriating authority may take place, and another 90 days before possession may pass. However, the owner may agree in writing to shorter periods.

The expropriating authority must pay all the compensation due to the owner at least 15 working days before ownership is to pass to it. If the expropriating authority cannot provide written evidence of having done so, the expropriation notice is automatically set aside and has no further force or effect.

If the High Court has ordered the provision of suitable alternative accommodation for an owner to be evicted from his or her home, this accommodation must also be provided 15 working days before ownership is due to pass. The same consequences follow for any failure to do so.

The owner has the right to the use of, and income from, the property until possession passes to the expropriating authority, but must look after the property, pay municipal rates and charges (if applicable), and maintain the property’s value.

Third-party rights:
The expropriating authority must pay any mortgage holder so much of the total compensation due as is needed to settle the debt; and must do so at least 15 working days before ownership is due to pass to it. On the same day, it must also pay the remaining balance to the owner. Provided that the mortgage holder has been paid timeously and in full, the mortgage ends on the date of expropriation, when ownership is transferred to the expropriating authority.

If the expropriating authority wishes to expropriate mining rights or other third-party rights in the expropriated property, it must follow the process set out in this alternative Bill in relation to each rights holder. However, if the matter is particularly urgent, the expropriating authority may seek and obtain High Court authorisation to issue the same notice of expropriation to all rights holders, each of whom will be entitled to just and equitable compensation and all the other protections set out in this alternative Bill.

Incidental matters:
Further rules will apply where the owner cannot be traced, for example; and will also govern urgent or temporary expropriations and the withdrawal of a notice to expropriate. The existing Expropriation Act of 1975 (and earlier amendments to it) will be repealed when this Bill is enacted and comes into effect.

Regulations:
Any regulations must be consistent with this Bill and tabled in Parliament for approval three months in advance.

Precedence over other expropriation legislation
To ensure that the procedures and requirements outlined apply to all expropriations, this Bill will trump all other laws dealing with expropriation, other than the Constitution or a statute adopted with the express and specific aim of amending the terms of this Bill.

South African Institute of Race Relations NPC    25th August 2015

IRR TV

Appendix 1

IRR Submission to the Portfolio Committee on Trade and Industry, regarding the
Promotion and Protection of Investment Bill of 2015 [B18-2015]

 

Broad parameters of the IRR’s proposed alternative expropriation bill
Scope:
The IRR’s alternative Expropriation Amendment Bill deals with direct and indirect expropriation by all expropriating authorities – whether the minister of works or any other organ of state. It covers both movable and immovable property as well as mining and water rights; mortgages, servitudes, and other registered rights; shares in companies; intellectual property rights, including patent rights; and unregistered rights such as leases and customary land-use rights.

Governing principles:
An expropriating authority is obliged to fulfil all relevant constitutional requirements for a valid expropriation, including those governing ‘just and equitable’ compensation. If a dispute as to the validity of a proposed expropriation arises, the expropriating authority must obtain a High Court order confirming that it has met all these requirements before it may issue a notice of expropriation.

‘Just and equitable’ compensation must start with the market value of the property, less the four ‘discount’ factors listed in the property clause of the Constitution. However, since expropriation places an ordinate burden on the shoulders of particular individuals and firms, compensation must also include damages for all financial losses resulting from the expropriation, including moving expenses and any loss of future income from the property. If the property to be expropriated includes the owner’s home, his or her eviction must expressly be authorised by the High Court, which may also order the provision of suitable alternative accommodation where it considers this appropriate.

Initial processes:
An expropriating authority must start by negotiating with the owner with a view to agreeing on a voluntary purchase. If these talks fail, it must issue a notice of possible expropriation, invite objections, and give reasons in writing for rejecting any objections submitted to it. It may also investigate the value of the property.

If a dispute as to the constitutional validity of the proposed expropriation thus arises and the expropriating authority still wishes to proceed, it must give the owner 180 days’ notice of its intention to seek a High Court order confirming the validity of the proposed expropriation.

High Court hearing on constitutionality:
The expropriating authority bears the onus of proving, on a balance of probabilities, that its proposed expropriation is not arbitrary, that it is objectively in the public interest (as defined in Section 25 of the Constitution), that the compensation it proposes is indeed just and equitable, and that all other constitutional requirements for a valid expropriation have been met.

During this court hearing, the owner’s evidence and representations must be heard in full.  The expropriating authority must also pay the owner’s reasonable legal costs in participating in these proceedings (on an attorney-and-client basis).

If the High Court confirms the constitutionality of the expropriation, it must issue an order dealing with all relevant issues, as listed in this Bill. Among other things, the court’s order must also instruct the expropriating authority to pay all compensation due to the owner at least 15 working days before the transfer of ownership to it is due to take place.

Notice of expropriation:
If the High Court confirms the constitutionality of the proposed expropriation, the expropriating authority may thereafter issue a notice of expropriation. This notice must be in keeping with the High Court order and accompanied by a copy of it. The notice must give the owner 90 days from the date of service of the notice before the transfer of ownership to the expropriating authority may take place, and another 90 days before possession may pass. However, the owner may agree in writing to shorter periods.

The expropriating authority must pay all the compensation due to the owner at least 15 working days before ownership is to pass to it. If the expropriating authority cannot provide written evidence of having done so, the expropriation notice is automatically set aside and has no further force or effect.

If the High Court has ordered the provision of suitable alternative accommodation for an owner to be evicted from his or her home, this accommodation must also be provided 15 working days before ownership is due to pass. The same consequences follow for any failure to do so.

The owner has the right to the use of, and income from, the property until possession passes to the expropriating authority, but must look after the property, pay municipal rates and charges (if applicable), and maintain the property’s value.

Third-party rights:
The expropriating authority must pay any mortgage holder so much of the total compensation due as is needed to settle the debt; and must do so at least 15 working days before ownership is due to pass to it. On the same day, it must also pay the remaining balance to the owner. Provided that the mortgage holder has been paid timeously and in full, the mortgage ends on the date of expropriation, when ownership is transferred to the expropriating authority.

If the expropriating authority wishes to expropriate mining rights or other third-party rights in the expropriated property, it must follow the process set out in this alternative Bill in relation to each rights holder. However, if the matter is particularly urgent, the expropriating authority may seek and obtain High Court authorisation to issue the same notice of expropriation to all rights holders, each of whom will be entitled to just and equitable compensation and all the other protections set out in this alternative Bill.

Incidental matters:
Further rules will apply where the owner cannot be traced, for example; and will also govern urgent or temporary expropriations and the withdrawal of a notice to expropriate. The existing Expropriation Act of 1975 (and earlier amendments to it) will be repealed when this Bill is enacted and comes into effect.

Regulations:
Any regulations must be consistent with this Bill and tabled in Parliament for approval three months in advance.

Precedence over other expropriation legislation
To ensure that the procedures and requirements outlined apply to all expropriations, this Bill will trump all other laws dealing with expropriation, other than the Constitution or a statute adopted with the express and specific aim of amending the terms of this Bill.

South African Institute of Race Relations NPC    25th August 2015

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