Abstract:
This dissertation considers the potential impact the Expropriation Bill 23-2020 will have on commercial banks. The novelty of the Expropriation Bill 23-2020 is that it introduces the concept of expropriation without compensation into South Africa’s law of compulsory acquisitions. The problem on which this dissertation focuses is the expropriation of immovable property, subject to a mortgage bond in favour of a commercial bank, without compensation. The legislative framework of the Bill is structured in such a manner that when the property is expropriated, should this Bill become the law, that ownership will transfer to the state without the said mortgage bond. If an act of expropriation has taken place without any compensation payable, the dissertation identifies a risk for commercial banks; namely, it loses its underlying security for a loan but also stands to suffer a financial loss given that the property owner is not compensated, therefore rendering the settlement of any outstanding amounts due, impossible.
Having established that this risk can materialise, this dissertation establishes that the bank will not have a recourse to recover its potential losses either at common law or under our current constitutional understanding of the compulsory acquisition of rights under section 25 of the Constitution, 1996.
The dissertation hypothesises that the doctrine of constructive expropriation can be applied under our understanding of section 25 of the Constitution 1996 and presents the argument that the doctrine can be used to enforce a claim for compensation against the state for any losses
