# Expropriation of foreign-owned land without compensation may be illegal

- Link: https://dearsouthafrica.co.za/2019/12/19/expropriation-of-foreign-owned-land-without-compensation-may-be-illegal/
- Published: 2019-12-19T13:12:06+02:00
- Author: dearSA

![](https://cdn.dearsouthafrica.co.za/wp-content/uploads/2019/12/20191212/Screenshot-
29.png "Screenshot (29)")

Department of trade & industry officials have warned against expropriating land 
owned by foreign nationals, saying  it contravenes existing bilateral investment
treaties.

Doing so could also result in SA being denied access to key markets such as the 
US.

The country has 22 such bilateral agreements, but the cabinet decided in 2010 to
terminate the arrangements following concerns that the treaties were unbalanced 
in favour of the  investors.

Some of the treaties were said to be inconsistent with SA’s constitution, including
its transformation objectives.

While SA recently started terminating these treaties the pacts contain a “survival
clause” that guarantees that investment protections continue for between 10 and 
20 years.

Lawful expropriation of foreign investment should be for a public purpose, on a 
nondiscriminatory basis, under due process of the law, and based on the payment 
of prompt, adequate and effective compensation, department officials told MPs on
Wednesday.

The officials were briefing the ad hoc committee tasked with redrafting section 
25 of the constitution, or the property clause. Investors are increasingly worried
about the government’s proposals to expropriate foreign land without compensation.

Commentators have warned that wholesale expropriation without compensation will 
discourage investment, threaten food security and hurt economic activity and job
creation. SA is battling to address low growth and high unemployment.

Legal experts have also warned that expropriation of foreign-owned property without
compensation constitutes a violation of international law and several treaties to
which the country is a party.

In an opinion piece in 2018, Peter Leon, Hannah Ambrose and Ernst Müller of international
law firm Herbert Smith Freehills, wrote that a country cannot simply implement domestic
legislation while avoiding its international law obligations.

The department officials also warned of challenges if the new legislation was considered
detrimental to the value of  foreign owned land. Some of the jurisprudence on investment
treaties has referenced a standard of “legitimate expectation” regarding return 
on investment.

“It may be useful to draw attention to the relevant eligibility requirement set 
out in the US General System of Preferences [GSP],” said Xavier Carim, the deputy
director-general responsible for the international trade & economic development 
division.