Constitutionalism is the idea that government should derive its powers from a written constitution and that its powers should be limited to those set out in the constitution, as is the case in Namibia. The constitution of the Republic of Namibia dictates that the rules of the constitution are binding on all branches of the government.  Differently framed, any law or conduct that is not in accordance with the constitution, either for procedural or substantive reasons, will therefore not have the force of law.  Therefore, the question whether the Namibian government can expropriate property, especially land can only be answered with reference to the Namibian Constitution.    

From the outset, it needs to be cleared that private ownership of natural resources, including land, is not absolute because the State still retains permanent sovereignty (PSNR) over its natural resources.   The State’s permanent sovereignty over its wealth and natural resources has its origin in the United Nations (UN) General Assembly Resolution 1803(xvii) adopted on December 14, 1962.   The underlining principle of PSNR is that natural wealth and resources are basic constituents of the right to self-determination, economic independence and development, therefore, a cardinal component of state sovereignty.   This is true, especially in cases of newly independent States or formerly colonised nations where the wealth and natural resources still remain in the hands of colonial masters; hence inevitable need to address economic inequalities borne out of colonial sins.  Resolution 1803 (XVII) stipulates not only that PSNR must be exercised in the interest of national development and well-being of the people concerned, but also lays out basic rules concerning the treatment of foreign investors.  Linked to the sovereignty, the principle gives states the right to possess, use and dispose freely of any surface and subsurface natural resources connected to their territory, and for this purpose, they may not only regulate their economy but also nationalise or expropriate property both of nationals and foreigners.  Thus, the State has an inalienable right to freely exercise its permanent sovereignty over its natural wealth and resources in the interest of national development and of the wellbeing of its people and such free and beneficial exercise must be furthered by the mutual respect by other States based on the principle of sovereign equality.   

Therefore, both international and municipal law recognizes the Namibian government’s sovereign authority to expropriate or nationalise property whether owned by Namibian or an alien on grounds of public interest, in a non-discriminatory manner, in accordance with the due process of law and against the payment of compensation. However, the issue of compensation and the question concerning the evaluation of expropriated or nationalised property has been at the centre of a vortex of scholarly articles influenced by ideological inspired differences. Developed states (capital exporting) supported the norm of ‘full compensation’ while developing states (capital importing) preferred ‘appropriate compensation’.  The question is where does Namibia belong in this dichotomy?

Article 16(2) of the Namibian Constitution refers to “just compensation”. In expropriation proceedings, just compensation is defined as full and fair equivalent of the property taken from its owner by the expropriator.  The measure is not the taker’s gain but the owner’s loss.  The word “just” is used to intensify the meaning of the word compensation and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full and ample.   The constitutional limitation of just compensation is considered to be a sum equivalent to the market value of the property, broadly defined as the price fixed by the seller in the open market in the usual and ordinary course of legal action and competition; or fair value of the property; as between one who receives and one who desires to sell it, fixed at the time of the actual taking by the government.  Compensation is said to be just if the owner receives for his property a sum equivalent to its market value.

Viewed from this perspective, “just compensation” as contemplated by Article 16(2) of the Namibian Constitution and supplemented by Section 25(1)(a)(i)(ii) of The Agricultural (Commercial) Land Reform Act (Act 6 of 1995), refers to full compensation, which connotes Hull standard of compensation enunciated by United States Secretary of State Cordell Hull in 1938.   Hull standard requires that compensation must be prompt, adequate and effective.  In a nutshell, this means that the expropriating state should make payment in a currency that can readily be used and that should reflect the full value of the expropriated property including the future lost profits and that it must be handed over within a reasonable time after the expropriation, failing which interest should be paid.

Capital importing states (developing states) rejected the full compensation because it does not consider the financial constrain of the expropriation state, the reasons and purpose of expropriation, history of the acquisition, use of the property and national security implications if the evils of colonial injustice is not addressed. 

On the other hand, ‘appropriate compensation’ is viewed as a flexible criterion and implies compensation that is fair and reasonable taking into account all circumstances that the State considers pertinent. ‘Appropriate compensation’ received unanimous support in international instruments such as Resolution 1803 (XVII), Charter of Economic Rights and Duties of the States (Resolution 3171 (XXVII)) and the Resolution on the New International Economic Order.  All these and other United Nations (UN) seeks to give each State the sole right to determine the ‘amount’ of possible compensation taking into account circumstances that the State consider pertinent. The radical nature of these instruments is that it provides that compensation ‘should’ be paid and is quite explicit in declaring that the expropriating state has the exclusive authority to decide how much compensation shall be tendered.

In nutshell,  ‘appropriate compensation principle’ is a flexible standard, which could range from the payment of full compensation, the amount of future profits lost, payment of lump sum to the payment of no compensation.   All these will depend on the pertinent circumstances prevailing in the expropriating State.

* Helmuth Naweseb is a holder of LL.B, LL.M (Int. Economic Law) (Unisa), MSc IR (UZ).