ABSTRACT:
The legal regime of expropriation requires significant changes in order to become an effective instrument, both to ensure the social character of property and to safeguard the rights of those expropriated.
KEYWORDS:
Property rights, compulsory expropriation, public utility, social interest, expropriated, expropriator, real estate.
The right to property, enshrined in all democratic constitutions, cannot be seen in absolute terms. This right is fundamentally limited by the social function that property serves for the benefit of the community. In the Dominican Republic, expropriation is instituted in Article 51.1 of the Constitution, which states the following: The State recognizes and guarantees the right to property. Property has a social function that implies obligations. Everyone has the right to the enjoyment, use, and disposition of their property.
- No person can be deprived of their property except for justified reasons of public utility or social interest, with prior payment of its fair value, determined by agreement between the parties or by judgment of a competent court, in accordance with the law. In the event of a declaration of a State of Emergency or Defense, compensation may not be prior. On this point, the Spanish Constitution establishes in Article 128.1 that "All the wealth of the country in its various forms and regardless of its ownership is subordinated to the general interest."
According to Colina Garea, cited by Dominican jurist Eduardo Jorge, "although expropriation is a limit to private property by reason of social interest or public utility; on the other hand, it represents a solid property guarantee because no one can be deprived of the goods that belong to them if all and each of the necessary requirements for expropriation are not met."
Understanding that expropriation has its roots in the social interest of property, it is necessary to define the concept. In the absence of a definition in Dominican legislation, I refer to the definition provided by Spanish expropriation law, which in Article 1 defines it as: "any form of singular deprivation of private property or legitimate rights or interests, regardless of the persons or entities to which they belong, agreed upon imperatively, whether it involves sale, exchange, annuity, lease, temporary occupation, or mere cessation of its exercise."
In accordance with the Spanish Constitutional Court, expropriation is the "singular deprivation of private property or legitimate rights or interests imperatively agreed upon by the public authorities, for justified reasons of public utility or social interest." (STC 227ç1998).
Law 344 of 1943 on Forced Expropriation (LEF) complements the legal regime of expropriation in the Dominican Republic. It is worth noting that this law has been modified on several occasions, specifically by Law 700 of 1974, Law 486 of 1964, and Law 670 of 1965, and most recently by Law 195-08.
Despite the successive modifications to the LEF, it remains tied to the principles of the 1942 Constitution, which responded to an eminently conservative constitutional model, typical of a dictatorship. Consequently, this legal regime is deficient in protecting the rights of the expropriated.
Article 51.1 of the Dominican Constitution of 2010 expressly enshrines the social function of property and establishes the limits of expropriation, namely:
- It has as its sole causes public utility or social interest.
- The payment must be fair.
- Payment must be made prior to the expropriation act.
- The price must be fixed by mutual agreement between the parties or, failing that, by a competent court.
- Exceptionally, and in the event of an emergency or national defense, payment may be made after the expropriation act.
Despite the advances made in the 2010 constitution, the procedural legal framework remains unchanged since 1943, except for some modifications to procedural aspects.
From the analysis of the LEF, it is concluded that it is a normative instrument of the expropriation procedure but it overlooks fundamental aspects of the regulatory norm such as the definition of the conceptual framework of expropriation, as well as its scope and limits. Likewise, it lacks precision in the determination of the actors, determination of the fair price, payment procedure, among other aspects.
As the LEF lacks a definition of the concept of forced expropriation, it is difficult to understand its scope and differentiate it from other similar figures such as forced purchase, confiscation, easements, etc.
In the field of environmental protection, acts limiting the right to property sometimes result in de facto expropriations. This occurs when privately owned land is declared a protected area or zone, and consequently, the Ministry of Environment intervenes by regulating its use, even to the extent of occupation and usufruct in the interest of preserving natural resources, but all this in the absence of a formal expropriation act. Both Law 64-00 on Environment and Natural Resources and Law 202-04 on protected areas establish the obligation on the part of the executive branch to compensate individuals affected by the limitation of the use of their property as a result of a declaration of protected areas.
Therefore, I recommend that in a future modification to the expropriation law, cases of de facto expropriatory acts be regulated, which occur based on special or sectoral laws such as environmental laws and the law on protected areas, which allow the administration to limit the use and enjoyment of a specific property to the point of rendering the right to property completely useless and valueless to the owner.
Other modifications and improvements to the expropriation regime pertain to the aspects we outline below:
Actors in Expropriation
LEF in an imprecise wording indicates as expropriating entities the State, the municipalities, and the National District. Municipalities and the National District are limited in their rights as expropriating entities since they must have express authorization from the Executive Branch to carry out the expropriation act, thereby violating the principle of municipal autonomy, enshrined in the Constitution and Law 176-07 of July 1, 2007.
In my opinion, what is consistent with municipal autonomy is that within its demarcation, the municipality enjoys full prerogatives to carry out the expropriation act without the need for permission from the Executive Branch. However, such a faculty also entails equal responsibility on the part of the municipality to indemnify the expropriated entity fairly prior to expropriation.
The LEF establishes that the beneficiary of the expropriation is the expropriating entity (the State and municipalities), excluding the possibility that individuals may benefit from the expropriation act. Regulations on expropriation in other countries such as Spain allow expropriation for the benefit of individuals, who are obliged to bear all the costs of the expropriation act.
Expropiable Assets
According to an era in which movable assets lacked significant material value, the LEF only contemplates the expropriation of real estate. Currently, the value of movable assets in many cases exceeds the value of real estate, so it is necessary that in a modification to the LEF, parameters for the expropriation and payment of movable assets be included.
An important aspect that must be addressed by the LEF is related to the partial expropriation of real estate. On many occasions, when only a part of the property is expropriated, the rest may lose its value because its use or exploitation is economically unfeasible. In these cases, it is necessary for the legislature to intervene, obliging the expropriating entity to acquire the entirety of the expropriated property, thus avoiding causing additional inconvenience and disruption to the expropriated parties.
Cause
Doctrine points out that the cause or "cause expropiandi" is a fundamental element of the expropriatory power: expropriation must be legitimized by a precise cause, assessed and estimated by law, which excludes any free use of such power by the Administration. Hence, Spanish law expressly establishes that "for forced expropriation to proceed, the prior declaration of public utility or social interest will be indispensable."
In accordance with constitutional precepts, the LEF establishes public utility and social interest as the causes of the expropriatory act. In both cases, the expropriating entity must endorse and justify its action. However, the LEF does not establish a definition of these causes, making it difficult to monitor and control the expropriating entity. A new expropriation law must clearly and precisely define the concepts of public utility and social interest, indicating also the prerequisites for compliance with the cause.
Although, as we have pointed out, the LEF does not define the concepts of social interest or public utility, part of Dominican constitutional doctrine considers that in light of our constitution it is possible to "promote expropriation proceedings against the owner who: (i) disputes or denies the cause of public utility or social interest of the property or rights to be affected by the expropriation; (ii) even admitting the public utility or social interest, understands that the total or partial expropriation of certain property or rights is not necessary or convenient..." (Jorge Prats, 2012).
Fair Price
The compensation of the expropriated through the payment of a fair price is an essential element of the expropriatory institution; if it is not present, we will be facing a fundamentally different institution (confiscations, seizures, generalized socializations, etc.). Through this element, it has been repeatedly stated that expropriation is a technique for converting rights: the expropriated property becomes its economic value, which remains in the expropriated party's patrimony; the loss of the expropriated property is compensated, in a theoretical balance of the expropriated party's patrimony, with a credit for its fair price, for the same, identical value.
According to the current legal regime, the price must be defined by mutual agreement between the parties; otherwise, the price will be determined by the competent court, which will base its decision on the opinion of one or more experts.
Although the fair pricing regime is administered by the judiciary, which is undoubtedly an advancement over the previous regime where the expropriating entity (Executive Branch) set the price, the law is still deficient since it does not establish the criteria under which the experts will assess and determine the fair price, nor does it establish which elements or values compose the price. A modification to the expropriation law must address this and other aspects, such as the inclusion within the price calculation of loss of earnings and goodwill.
Prior Payment and Exceptions to the Rule
The constitutional regime establishes as a general rule that payment of the price must precede the expropriation act. Thus, the lack of prior compensation prevents the occupation of property and rights subject to expropriation. Compensation must precede expropriation.
This rule has 2 exceptions in cases of emergency and defense, cases in which payment of the price will be made after the expropriation act.
The legal regime of expropriation does not define the state of emergency or defense, facilitating the arbitrariness of the expropriating entity, which generally invokes the emergency exception in all expropriation processes, without there being any control to determine if the expropriation actually responds to an emergency or cases of defense.
When the State invokes the emergency exception, one of the great dramas of the expropriation process is that payment occurs years after the expropriating entity takes possession of the property, so it would be appropriate for a modification to the law to define the period within which payment must be made and in case of non-compliance, penalties should be applied to the expropriating entity. This is because it is not fair for the expropriated party to bear the financing of the expropriation.
Conclusion
The legal regime of expropriation requires significant changes in order to become an effective instrument, both to ensure the social character of property and to safeguard the rights of the expropriated.
In a State where the administration is prone to violate and disregard the rights of citizens, a legal framework that guarantees and protects the rights of the expropriated is indispensable. This is achieved by reducing the margin of discretion of the administration when determining the cause expropiandi or the exceptions to the rule of prior payment - emergency or defense.
The current expropriation regime does not meet the needs of an economy that demands the participation of private capital in large-scale construction projects. Legislation is required that allows private entities to act as beneficiaries of expropriation and consequently bear their costs. Under this scheme, public-private development initiatives are made viable, allowing the State to carry out a significant number of projects of social interest.
It is necessary for the legal regime to limit the discretion of the expropriating entity when establishing the causes of expropriation and even more so when using the exception of prior payment. This strengthens the rule of law and private investment in the development of the nation.