This week, the Rule of Law Project – an initiative of the Free Market Foundation (FMF) – was in the Western Cape High Court in Cape Town to challenge the constitutionality of the Expropriation Act. As an amicus curiae (friend of the court), the FMF was among many civil society organisations making the case for private property rights.

As I wrote in my column last week, the Rule of Law Project objected to section 12(3) of the Act on the grounds that it is unconstitutional, irrational, and inconsistent with customary international law.

This column will follow a similar structure but focus on the Rule of Law Project’s oral submissions made by Advocates Mark Oppenheimer and Kessler Perumalsamy on the third day of the five-day trial.

The FMF Rule of Law Project team in the Western Cape High Court: David Ansara, Adv Mark Oppenheimer, Adv Kessler Perumalsamy and Dr Martin van Staden.

Unconstitutional

In his oral submission to the court, Adv Mark Oppenheimer noted that the Constitution expressly forbids nil compensation:

“We take the view that a proper interpretation of section 25(2) means that you have to accept that words matter, that every word that is in the Constitution is there for a reason. And that means that you must take note of the words ‘payment’, ‘amount’, and ‘compensation’.”

The Constitution is not meant to be an arcane document that only the enlightened high priesthood of the judiciary can understand. It must be easily understood by all South Africans, and we should take the words in the Constitution to mean what they say.

Such common sense was not always prevalent amongst the respondents (and another applicant), who asserted that ‘nil’ could in fact be a form of compensation under certain circumstances.

However, as Adv Oppenheimer noted, while ‘zero’ is a number, that does not make it an ‘amount’:

“An amount must be a positive number. You have to be able to possess an amount, and you cannot possess the absence of an amount. So nil is the absence of something. Nil compensation, then, is also no compensation, or the absence of compensation.”

Adv Oppenheimer added that payment requires transferring something of value, and that you cannot pay someone nothing for expropriating their property:

“It is not possible to pay someone with a cheque that has a negative number, or a number that has zero written on it. And compensation, by its nature, entails that you are rectifying a wrong. And so, it is never possible to compensate someone with nothing.”

Compensation means making good on a loss or a deprivation, he said. Giving someone nothing after taking their property is confiscation not compensation.

Similarly, if the state were to pay only one rand as a form of compensation, then such a nominal amount would not satisfy the constitutional requirements that compensation be ‘just and equitable’.

Adv Oppenheimer also pointed out that the African National Congress (ANC) government tried to amend section 25 of the Constitution in 2021 through the Eighteenth Amendment Bill but did not obtain the requisite two-thirds majority support in Parliament.

Having failed to change the Constitution, Parliament cannot achieve the same outcome through ordinary legislation, which need only achieve a simple majority, he said.

Inconsistent with international law

Junior counsel, Adv Perumalsamy followed with further oral submissions on behalf of the Rule of Law Project.

Adv Perumalsamy noted that South African courts must consider international law when interpreting the Bill of Rights and that customary international law recognised compensation as a necessary component of expropriation:

“There is not a single authority by a regional or an international court that says that compensation may be nil or that it may be nominal. Not one. Every single court that has considered the possibility of awarding a person nothing for expropriation has rejected it outright as a possibility.”

South Africa is a signatory to various international conventions and nearly fifty Bilateral Investment Treaties (BITs), he said, which would compel the government to compensate foreign nationals in the event of an expropriation.

By enabling expropriation for nil compensation in s12(3), the Expropriation Act would effectively create a two-tiered system, Adv Perumalsamy argued.

This would mean that foreigners would be entitled to compensation under international law, while South African citizens would not be granted the same protections under domestic law.

Irrationality

The Constitution already provides the framework for determining compensation, Adv Perumalsamy said, which means that the courts must consider the relevant factors in expropriation cases and decide what is just and equitable on a case-by-case basis.

So why does the Expropriation Act single out one specific ‘amount’, namely nil, he asked?

“The Constitution allows Parliament to identify relevant factors. It does not allow Parliament to fix a number.”

If compensation must always be determined on the facts of each case, prescribing one predetermined amount under selected circumstances is irrational, he said.

Whether it is ten rand, a hundred rand, a thousand rand or infinity. There is no purpose in specifying any amount whatsoever.

Legal gymnastics

I was proud to sit in court this week watching the FMF’s counsel eloquently defend private property rights.

But I was also struck by the folly of it all: the needless expense of time, effort, and money to resist what is effectively a blatant power grab by the state. A serious country would not be having such debates.

Nevertheless, it was important to be there to counter the nonsense that nil is a form of compensation. Courts are imperfect, but they are an important arena of political contestation. I believe we contributed meaningfully to the court’s deliberations, although it remains to be seen how the judges will rule.

After the day’s proceedings, I joked to our lawyers that they stated the bleeding obvious bloody brilliantly.

It is obvious that the state should compensate people if it expropriates their property. It is obvious that nil is not an amount. Taking something without paying for it is not justice, it is theft. Obviously.

Ansara is CEO of the Free Market Foundation.