Expropriation and Privatization
Expropriation and Privatization
Expropriation
In certain circumstances, governments have a legitimate need and the right to take private property for public purposes. In environmental emergencies, public authorities may need, in the interest of public health, to resettle people whose property is located in irreparably contaminated areas. To develop infrastructure, such as roads and power stations, governments may need to acquire land to place these assets.
When a government expropriates property, compensation should be timely, adequate and effective. The right to fair compensation and due process is uncontested and is reflected in all international investment agreements. At the same time, some recent agreements provide that, except in rare circumstances, non-discriminatory regulatory actions that are designed and applied to protect legitimate public welfare objectives, such as public health, safety and the environment, are not considered to constitute expropriations. Uncertainty about the enforceability of lawful rights and obligations should be avoided because it will restrain investment by raising the cost of capital, weakening firms’ competitiveness.
Key considerations
Defining the power to expropriate property
Governments should ask themselves whether the public interest can be served by using public policy means other than expropriation. If a government decides to expropriate land or other property, this decision ought to be motivated by a public purpose, observe due process of law, be non-discriminatory and guided by transparent rules that define the situations in which expropriations are justified and the process by which compensation is to be determined. This involves examining whether the country’s laws adhere to these principles and are in accordance with investment and investment-related treaties, which add to the predictability and legal enforceability of property rights against arbitrary expropriation.
Contesting expropriation
Expropriation
In certain circumstances, governments have a legitimate need and the right to take private property for public purposes. In environmental emergencies, public authorities may need, in the interest of public health, to resettle people whose property is located in irreparably contaminated areas. To develop infrastructure, such as roads and power stations, governments may need to acquire land to place these assets.
When a government expropriates property, compensation should be timely, adequate and effective. The right to fair compensation and due process is uncontested and is reflected in all international investment agreements. At the same time, some recent agreements provide that, except in rare circumstances, non-discriminatory regulatory actions that are designed and applied to protect legitimate public welfare objectives, such as public health, safety and the environment, are not considered to constitute expropriations. Uncertainty about the enforceability of lawful rights and obligations should be avoided because it will restrain investment by raising the cost of capital, weakening firms’ competitiveness.
Key considerations
Defining the power to expropriate property
Governments should ask themselves whether the public interest can be served by using public policy means other than expropriation. If a government decides to expropriate land or other property, this decision ought to be motivated by a public purpose, observe due process of law, be non-discriminatory and guided by transparent rules that define the situations in which expropriations are justified and the process by which compensation is to be determined. This involves examining whether the country’s laws adhere to these principles and are in accordance with investment and investment-related treaties, which add to the predictability and legal enforceability of property rights against arbitrary expropriation.
Contesting expropriation