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Part A: General Topics - 21. Miscellaneous Topics | 21.1 Expropriation

Generally, legislation authorizes expropriation when it is the public interest. Fair compensation is critical to the proper functioning of the concept of expropriation. (For discussions on land-related expropriation and the concept of eminent domain, see Part D of the Guiding Template). When a country’s constitution provides articles concerning expropriation, the mining law should reference the Constitution.

21.1 Example 1:

Article [_]

Expropriation is prohibited except as provided in [relevant article] of the Constitution.

Annotation

Drafted to reference a constitutional provision and in this case, a provision drawn from Liberia’s Constitution, Article 24, this provision simply refers to the relevant article of the constitution. In this case, the constitutional provision focuses on the right to expropriation by the government, in the event of armed conflict or where public health and safety are endangered, or for any other public purpose.

It provides for prompt payment of just compensation and offers the right to the owner of the property to freely challenge the decision before a court of law. It also offers to the former owner of the property the right of first refusal to reacquire the property in the case the property ceases to be used for public use.

The constitutional provision is replicated below:

a) While the inviolability of private property shall be guaranteed by the Republic, expropriation may be authorized for the security of the nation in the event of armed conflict or where the public health and safety are endangered or for any other public purposes, provided:

(a) that reasons for such expropriation are given;

(b) that there is prompt payment of just compensation;

(c) that such expropriation or the compensation offered may be challenged freely by the owner of the property in a court of law with no penalty for having brought such action; and

(d) that when property taken for public use ceases to be so used, the Republic shall accord the former owner or those entitled to the property through such owner, the right of first refusal to reacquire the property.

21.1 Example 2:

Article [_]

(1) The [Country] assures the safety and legal protection of the ownership of goods and rights, including industrial property rights covered by the authorised and carried out investments under the mining permit issued in accordance with this [Law][Act][Code] and other applicable legislation.

(2) When the public interest so requires and in exceptional circumstances, the holder of the mining right may undertake to expropriate buildings and land necessary for the mining work and the facilities essential for the mining operation, in accordance with the conditions set forth in the legislation in force.

(3) The holder of the mining right must pay any lawful occupant of land required for its activities, compensation for the disturbance of enjoyment suffered by such occupants

(4) In order to calculate the compensation value, the evaluation of expropriated goods and rights as well as financial losses caused to the investors by the State is made within [90] days, by mutual agreement, and undertaken by a committee constituted for that purpose or by a recognized audit company.

(5) The compensation mentioned in the preceding paragraphs shall be paid within [190] days, or another time period mutually agreed, from the date of the committee’s decision or of the presentation of the report by the audit firm, based on the evaluation made in the terms of the previous paragraph.

(6) The appreciation time for a decision on the evaluation made and submitted to the competent State authority shall not exceed [90] days from the date of delivery and receipt of the file.

(7) The compensation due for expropriation for public utility under this Article shall not, under any circumstance be less than the full amount provided for compensation relating to rights of owners set out in other areas of the [Code][Act][Law].

(8) The amount of the compensation must be reasonable enough in order not to compromise the viability of the project, and proportional to the disturbance caused by Mining Activities, in accordance with the procedures set out in the [Code][Act][Law].

Annotation

Drawn from the mining laws of Guinea (2011) and Mozambique (2014), this provision allows for expropriation only if it is in the public interest, which permits expropriation if required in the public interest and in exceptional circumstances. The provisions suggest that even if the public interest so requires, there must also be a showing of exceptional circumstances. This is important for promoting an investment friendly environment as the rights actions of the state is generally in the public interest.

It also provides for the payment of compensation for expropriation in accordance with national applicable laws, in particular by providing fair, adequate and timely payment of compensation through an independent valuation. The law also seeks to strike a balance between the mineral right holder and the owner of the expropriated property in order to ensure that the viability of the mineral project is not affected and the expropriated person receives fair compensation.