expropriation

Definition of expropriation

Etymology

expropriate +‎ -ion

Pronunciation

• Rhymes: -eɪʃǝn

Noun

expropriation (plural expropriations)

1. The act of expropriating; the surrender of a claim to exclusive property; the act of depriving of ownership or proprietary rights.

Further reading

Expropriation is the confiscation of private property with the express purpose of establishing social equality.

Unlike eminent domain, expropriation takes place beyond the common law legal systems and refers to socially-motivated confiscations of any property rather than to taking away the real estate. The term appears as "expropriation of expropriators (ruling classes)" in marxist theory, or as slogan "Loot the looters!", very popular during Russian October Revolution

The term often refers to nationalization campaigns by communist states, such as dekulakization and collectivization in the USSR. It may also refer to robberies by revolutionaries to fund their political activities, such as robberies by Joseph Stalin and Kamo in Russian Empire.

Expropriation and foreign investment

Expropriation is one of the political risks involved with foreign direct investment (FDI). It is characterized by confiscation of the foreign asset, and a pittance payment. This payment is sometimes a formality, and may not represent an acceptable reparation, because the transaction is not one to which the owners, as forced sellers, have freely consented. Moreover, adding to the complaints of the owners, the competition of any other buyers is excluded. Finally, the expropriated business is quite frequently a successful and established one, rather than one that is still highly risky or even failing. Such expropriation thus deprives the owners of their reasonable expectations of reliable returns from such a proven business. Individuals who have had their foreign property expropriated may have trouble seeking recourse in their domestic courts due to the Act of State Doctrine. A bilateral investment treaty (BIT) seeks to, among other things, redress this problem by providing a remedy to the owner of the expropriated property, against the state in question, by way of international arbitration. An arbitration award may often be enforced in a jurisdiction where the state in question has assets.

Conversely, acts of expropriation may be warranted for a variety of reasons, peculiar to the local governmental entity. Sometimes, for instance, the expropriated business owners pay little or no attention to the host country's assertion that royalty payments are too small relative to the resources being extracted from the host country. Some host country political complaints may relate to the treatment of its nationals as employees of the business. At other times, the host government may judge that strategic decisions about the business entity are simply wrong-headed and ill-advised, as applied to the host country, however right they may seem to the owners. Such judgments may also occur when the business entity fails to include the host country's interests and concerns, legitimate or not, as matters of ordinary consultation and effective participation in the operational plans of the business entity.

As a result of both direct and indirect expropriation, a just compensation must be paid. US Secretary of State Cordell Hull defined just compensation in 1938 as "prompt, adequate and effective."

Canada

Expropriation in Canada is the act of a public authority (such as federal, provincial, municipal governments or other bodies empowered by statute) taking property without the consent of an owner through a statutory or common law process. This process involves the payment of compensation to the owner by the authority and the owner having the right to claim additional compensation to be determined by the courts or an administrative board. Compensation is intended to make the owner whole, in light of the loss suffered. The term is equivalent to the power of eminent domain in the U.S..