The Parliament of the Republic of South Africa (“Parliament”) published a notice in the Government Gazette on 13 December 2019, inviting written comments by interested persons on the Draft Constitution Eighteenth Amendment Bill, 2019 (“Draft Bill”). The main object of the Draft Bill is stated to be as follows:

“To amend the Constitution of the Republic of South Africa, 1996, so as to provide that where land and any improvements thereon are expropriated for the purposes of land reform, the amount of compensation payable may be nil”.

The purpose of this note is to briefly give an overview of the background to the Draft Bill and to highlight some key takeaways for consideration.

Background

In the Memorandum to the Draft Bill, it is stated that the Constitutional Review Committee (“Committee”) was mandated by the two Houses of Parliament to solicit the views of the public on the possible review of section 25 of the Constitution of the Republic of South Africa, 1996 (“the Constitution”). 

The review focused on allowing the state to expropriate land in the public interest without compensation.  The Committee filed a report in the two Houses recommending that:

“Section 25 of the Constitution must be amended to make explicit that which is implicit in the Constitution, with regards to expropriation of land without compensation, as a legitimate option for land reform, so as to address the historic wrongs caused by the arbitrary dispossession of land, and in so doing ensure equitable access to land and further empower the majority of South Africans to be productive participants in ownership, food security and agricultural reform programs.”

The Draft Bill is the mechanism proposed by the Committee to address these recommendations.

Proposed amendments to Section 25

The current wording of section 25(2)(b) of the Constitution provides that expropriation must be “…subject to compensation, the amount of which and the time and manner of payment which have either been agreed to by those affected or decided or approved by a court.”

The Draft Bill firstly proposes that the following words be inserted in this paragraph:

“Provided that in accordance with subsection (3A) a court may, where land and improvements thereto are expropriated for the purposes of land reform, determine that the amount of compensation is nil.”

The Draft Bill secondly proposes that a new subsection 3A be inserted, to provide that national legislation must set out the circumstances where a court may determine that the amount of compensation is nil.

Some key takeaways

It is notable that the proposed amendments do not amend any current provisions of section 25, in other words, the current provisions leaving the compensation to agreement or the decision or approval by a court intact.  This principle has to be welcomed – the proposed amendment can in this context be seen to explicitly provide for nil compensation that has always been implied.

The principle contained in subsection 25(3), namely that compensation must be “just and equitable” has also been retained (subject to taking the possibility into consideration that compensation could well be nil), which is also to be welcomed.

The proposed amendments are, however, unclear on the circumstances where a court may determine that the amount of compensation is nil. This will be dealt with in national legislation, the most important of which will seemingly be a revised Expropriation Act. 

During the beginning of 2019 a Draft Expropriation Bill was published for comment.  It is understood that the revised Draft Expropriation Bill will be published early in 2020. It is expected that the revised Expropriation Act will contain these specific circumstances.

Care should be taken that there is sufficient clarity of the meaning of expropriation “for the purposes of land reform”.  This should either be clarified in the Constitution or the applicable national legislation (for example the revised Expropriation Act).

The way forward

Interested persons are invited to submit written comment on the Draft Bill by 16h00 on 31 January 2020.  It is expected that further public participation processes, including hearings, will be held, details to be advised early January 2020.

Only thereafter, the Draft Bill will be published as a Bill to be part of the legislative process. 

It will, however, be extremely important to consider the proposed provisions of the revised Expropriation Bill, which will have more detail on the circumstances where there could be nil compensation.

If any further information is required, or if any assistance is required with written submissions, please feel free to contact us.

Johan Coetzee

Partner and head of Real Estate

Fasken

Sandton