The Expropriation Act: A Legal Conundrum for South Africa's International Treaty Obligations

Last week, President Cyril Ramaphosa of South Africa signed into law the Expropriation Act, initiating intense debate over its compatibility with international treaty obligations. The Act supersedes the apartheid-era Expropriation Act No. 63 of 1975, introducing provisions that allow for land expropriation without compensation under certain conditions. This legislative move aims to accelerate land reform and redress historical injustices highlighted in section 25 of the South African Constitution. However, the execution of these provisions could stand in stark contrast to various international commitments.

The Constitution of South Africa mandates that compensation for expropriation should be "just and equitable," weighing public interest against the interests of those affected. This includes consideration of the property's use, history, market value, and state investment, underlining a national commitment to reform. Nevertheless, section 12(3) of the Expropriation Act raises potential international legal conflicts by enabling nil compensation for land under specific circumstances, such as lack of utilization or abandonment.

This stance on compensation could breach South Africa's obligations under several international frameworks. Notably, the Southern African Development Community's (SADC) Protocol on Finance and Investment, to which South Africa is a signatory, demands that expropriation be paired with fair and adequate compensation. Similarly, bilateral investment treaties with countries like China, the US, and EU members, typically stipulate market-value compensation, placing South Africa at risk of international arbitration claims.

Furthermore, the African Continental Free Trade Area Protocol on Investment emphasizes that expropriation must serve a public purpose and occur through due processes, accompanied by fair compensation decided on a case-by-case basis. These standards echo the principles laid out in the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYCREFA) and the International Centre for Settlement of Investment Disputes (ICSID), which also underline the adherence to local laws but within the frame of fair compensatory practices.

The Expropriation Act's provision for nil compensation significantly diverges from these international norms and could lead to legal challenges under these treaties. If arbitral awards arise due to these breaches, they might clash with South African public policy, specifically if the Constitutional Court upholds these provisions of the Act in alignment with the Constitution.

South Africa's move to advance land reform through expropriation without compensation, while domestically popular for addressing inequalities, could isolate it on the international stage, complicating foreign investment inflows crucial for economic growth. It highlights the delicate balance between sovereign legislative authority and compliance with global legal standards, a balance pivotal to maintaining healthy international relations and economic stability.