Topic:
ECONOMIC DEVELOPMENT; REAL PROPERTY; CONSTITUTIONAL LAW; EMINENT DOMAIN; INTERNATIONAL AFFAIRS;
Location:
EMINENT DOMAIN;

OLR Research Report


November 22, 2005

 

2005-R-0321

EMINENT DOMAIN

By: Kevin E. McCarthy, Principal Analyst

You asked for a discussion of eminent domain law in other states and nations. You were specifically interested in whether they limit the use of eminent domain for economic development purposes or have provisions not found in Connecticut law that benefit or protect property owners. This report addresses these issues with regard to other countries.

SUMMARY

OLR report 2005-R-0559 (enclosed) addresses eminent domain laws in other states. This report discusses eminent domain laws in other English-speaking countries, and in Germany, India, and several other countries. It focuses on national or federal law, rather than the laws of subdivisions such as states or provinces. It does not discuss laws granting eminent domain powers to specific entities e.g., transit authorities. Much of the information in this report is taken from Nichols on Eminent Domain, a standard treatise in this area.

Eminent domain law varies widely by country. Germany and Australia's constitutions, for example, bar uncompensated takings. In contrast, Canada's constitution does not contain the equivalent of the Takings Clause, and eminent domain is solely a matter of statute law. This is also the case in the United Kingdom, which does not have a constitution.

All of the countries discussed in this report allow their governments to take property for a broad range of public purposes. Most, if not all of these countries allow the use of eminent domain for economic development. On the other hand, the Czech Republic does not currently allow the use of this power for economic development, although legislation is currently pending in the parliament to allow the use of eminent domain for the establishment of privately-owned industrial parks.

Several of the countries covered in this report have provisions that benefit property owners that go beyond those contained in Connecticut law. For example, Canada's law requires that extra compensation be paid, in certain cases, when the property being condemned is occupied by the owner or is used as a residence. In Germany, the equivalent of the Supreme Court has ruled that (1) a taking is unconstitutional if the property to be taken is not yet needed, (2) only those parcels actually needed for a public project can be taken, and (3) if property that is taken is no longer needed for the public purpose, it must revert to its former owner. In the United Kingdom, the former owner must be given a right of first refusal, in some cases, if the acquiring agency no longer needs the property. Australia's law entitles the owner to the amount of compensation needed to allow him to occupy a reasonably equivalent dwelling, even if this exceeds his property's market value.

CANADA

Canada does not have an equivalent to the Fifth Amendment's Takings Clause and neither the federal nor provincial governments are under any constitutional obligation to pay compensation for expropriated property although there are such requirements in statute. Section 1(a) of the Canadian Bill of Rights does state that “the right of the individual to … the enjoyment of property, and the right not to be deprived thereof except by due process of law.” But the bill of rights is only a federal statute, and there is no comparable provision in the Constitution Acts of 1867 and 1982. In addition, the Canadian definition of a taking is narrower, with regard to regulatory takings, than the American definition. See Mariner Real Estate Ltd. v. Nova Scotia (Attorney-General) (1999), 178 N.S.R. (2d) 294; (1999), 177 D.L.R. (4th) 696.

At the federal level, eminent domain (expropriation) is governed primarily by the Expropriation Act (R.S. 1985, c. E-21 ). This law is broadly similar to Connecticut's eminent domain law, in that it allows condemnations for “public purposes” as well as “public works.” It entitles the property owner to compensation and the right to appeal the amount of compensation to the courts.

However, the act has some provisions that are not contained in Connecticut law, notably with regard to compensation. Normally, the property owner is entitled to the fair market value of his property under Connecticut and Canadian law. But, under the Canadian law, additional compensation must be provided if the owner occupied the property at the time of the taking or used it as his residence. In the case of land occupied by the owner, the owner must be compensated for the value of any special economic advantage he receives from occupying the land. This could provide additional compensation if the property's location gave the owner an advantage that could not be replicated in a new location. In the case of residences, if the fair market value is insufficient to allow the owner to buy a new residence reasonably equivalent to his former residence, the amount of compensation must be increased to cover the difference. The Canadian law also has a provision that protects holders of security interests, e.g., a bank holding a mortgage, from losses due to changes in interest rates.

The provinces and territories have their own laws governing expropriations procedures, which are available at http://www.expropriationlaw.ca/expro005.asp. In addition, provinces have specific laws authorizing expropriations. For example, the Saskatchewan Planning and Development Act of 1983 allows municipalities to prepare development plans to address a wide range of issues ranging from infrastructure and public facilities to renewal, rehabilitation, and improvement of neighborhoods and urban core areas. The act allows the municipality to acquire land to implement the plan, and to expropriate it if the municipal council cannot purchase the land at a fair price or otherwise acquire the land with the owner's consent.

EUROPEAN COUNTRIES

General Provisions

Article 8 of the European Convention on Human Rights provides that "everyone has the right to respect for his private and family life, his home and his correspondence" and prohibits interference with this right by the state, unless the interference is in accordance with law and necessary in the interests of national security, public safety, economic well-being of the country, prevention of disorder or crime, protection of health or morals, or protection of the rights and freedoms of others. This right is

expanded by Article 1 of the First Protocol to the Convention, which states that “every natural person or legal person is entitled to the peaceful enjoyment of his possessions”. Again, this is subject to exceptions where the deprivation of private possessions is in the public interest and is in accordance with law.

The Convention thus generally allows takings for the purpose of economic development, as long as the taking is authorized by law and promotes the public interest. The relationship between the Convention and the laws of the member states varies by country and is evolving.

Germany

Article 14 of Germany's Basic Law (constitution) provides:

1. Property and the right of inheritance shall be guaranteed. Their content and limits shall be defined by the laws.

2. Property entails obligations. Its use shall also serve the public good.

3. Expropriation [condemnation] shall only be permissible for the public good. It may only be ordered by or pursuant to a law that determines the nature and extent of compensation. Such compensation shall be determined by establishing an equitable balance between the public interest and the interests of those affected. In case of dispute respecting the amount of compensation, recourse may be had to the ordinary courts.

Germany's Constitutional Court (the equivalent of the U.S. Supreme Court) has developed a four-part proportionality test to determine the constitutionality of takings. Under this test:

1. there must be legal authority for the purpose of the taking;

2. the taking must be an appropriate means of accomplishing the government's purpose;

3. the taking must be necessary and government must use the least intrusive means possible to accomplish its purposes; and

4. the taking must pass a balancing test, in which the value of the public interest advanced by the taking outweighs the owner's property interests.

Under the necessity prong of the test, the Court has held that only those parcels actually needed for a public project can be taken. It has held that a taking is unconstitutional if the property to be taken is not yet needed. If property that is taken is no longer needed for the public purpose, it must revert to its former owner. Finally, the Court has held that a taking of property in fee simple is unconstitutional if the government's purposes could be accomplished by acquiring a lesser interest in the property, e.g., an easement.

The Court has also held that the constitution bars takings for purely private purposes. Thus, it has found that the taking of property owned a business was unconstitutional when the property was transferred to another business because the latter was thought to be more likely to stimulate the economy. On the other hand, the Court has upheld a taking in which the property was subsequently resold to a private company for a jobs-producing construction project.

A number of federal statutes authorize takings in specific area. For example, the federal Planning Code allows for takings to manage and control land uses in the public interest, as well as to develop municipal infrastructure. In addition, the individual states (Laender) have their own laws on takings.

United Kingdom

The United Kingdom does not have a formal constitution and courts do not have general statutory authority to award damages for governmental harm to private property rights. Moreover, the Crown (the national government) is the ultimate owner of all land.

The law governing takings is a series of statutes, including the Compulsory Purchase Act of 1965, the Acquisition of Land Act of 1981, the Town and Country Planning Act of 1990, and the 2004 Planning and Compulsory Purchase Act. The uses for which property may be taken are spelled out in each individual act, which usually describe the allowable uses in general terms. For example, the Town and Country Planning Act of 1990 allows local authorities (municipalities) to take land in order to properly plan the affected area. The individual act defines the acquisition procedure and specifies how compensation is determined.

Under these acts, various local authorities and other public bodies have been granted general powers to take land in order to fulfill their functions. But the body must obtain the approval of the central government in order to take a specific parcel.

The law allows takings for economic development. For example, the 2004 act allows a local authority to take land in order to help developers assemble sites for redevelopment and major urban development projects. Under the act, a local authority may acquire land if it thinks that this will facilitate the carrying out of development, redevelopment or improvement of the land and is likely to contribute to the promotion or improvement of the economic, social or environmental well being of its area.

Crown bodies and certain other agencies which acquire land by or under threat of compulsion must offer land that was taken by eminent domain if the land has subsequently becomes surplus to the original owner (or successors) at current market value.

COMMONWEALTH COUNTRIES

General

Most commonwealth countries include a right to property in their constitutions, which generally provide that property may not be taken except for a public purpose and upon payment of adequate compensation. For example, the Kenyan constitution allows property to be taken only if it is “necessary in the interests of defense, public safety, public order, public morality, public health, town and country planning or the development or utilization of property so as to promote the public benefit.”

The commonwealth constitutions vary in whether they allow takings only for “public uses” or for the broader “public purposes” or “public benefits.” However, in his Right to Property in Commonwealth Constitutions (2000) Thomas Allen argues that it is becoming increasingly unlikely that courts would declare any eminent domain legislation invalid on the basis that it violates any of these clauses. Allen found no recent cases in commonwealth countries where laws authorizing takings had been found unconstitutional for failing to serve a public purpose.

India

In Arnold Rodricks v. Maharashtra, (A. I. R. 1966 S. C. 1788; [1966] 3 S. C. R. 885) the Indian Supreme Court upheld a law that allowed states to condemn land for economic development purposes and resell the land to private buyers. The Court found that a shortage of residential and industrial sites made it imperative for the government to act. The

decision acknowledged that the allotment of the sites directly benefited individuals but determined that it served a public purpose because the law's 'main idea' in expropriating the land was not private advantage but rather the general public good.

Australia

In Australia, s51(xxxi) of the Constitution permits the federal government to make laws with respect to “the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws.” The definition of “public purpose” under the Lands Acquisition Act (Commonwealth), the primary federal eminent domain law, is equally broad.

On the other hand, Australia's law has several provisions regarding compensation that are not found in Connecticut statutes. In determining compensation, the condemning authority must consider several factors in addition to the property's market value, including (1) the value of any financial advantage that the owner receives incidental to his ownership of the property and (2) the owner's expense in obtaining advice regarding the acquisition and the amount of compensation. In the case of condemnations of residences, the law entitles the owner to the amount needed to acquire a reasonably equivalent interest in land that entitles him to occupy a reasonably equivalent dwelling. The law also allows an owner and agency who cannot agree on compensation to submit the matter to arbitration.

The state and territorial constitutionals are silent on takings, according to Nichols. However, there are statutory requirements for compensation in state laws such as the Land Acquisition (Just Terms Compensation) Act in New South Wales. In the state of Victoria, the law requires that additional compensation of up to 10% of a property's market value be provided to the owner for “intangible and non-pecuniary disadvantage resulting from the [property's] acquisition.” In practice agencies such as VicRoads (the equivalent of the Department of Transportation for Victoria) will pay the reasonable fee of attorneys and appraisers to help the owners of land subject to a taking in their compensation negotiations with the state.

JR:ts