Amendment to the Law of Eminent Dom

On 21 April 2018, the President signed into law an amendment to Law No. 10 of 1990 on the Expropriation of Property for Public Interest (eminent domain). The law regulates the State’s power in taking private property for public use. The amendment provides for a 20% premium of the assessed value of the property to be offered as part of the compensation for seizure under eminent domain. It requires that notifications of expropriation and compensation be affixed to expropriated property for a period of one month instead of 15 days, and grants Governors the power to temporarily seize private property in emergency and disaster situations.

Background

The right to private property is a fundamental right that has been protected in most cultures and in varying degrees throughout history. In modern times, the Universal Declaration of Human Rights enshrines that principle where it states: “Everyone has the right to own property alone as well as in association with others. No one shall be arbitrarily deprived of his property.” Nevertheless, in the State’s dual role of trying to balance individual property rights with the use of property for public good, most legislative cultures around the world allow the government to sometimes appropriate private property -under specific and defined circumstances – in order to protect or enhance a public interest. Globally, the jurisprudence is that this land acquisition by the State is in order as long as just compensation is provided in exchange for the infringement on the right to private property. In its Article (35), the Egyptian 2014 Constitution states that: “Private properties shall be protected, and the right to inheritance thereto is secured. It is not permissible to impose guardianship thereon except in the cases defined by Law and by virtue of a court judgment. Expropriation shall be allowed only in the public interest and for its benefit, and against fair compensation to be paid in advance according to the law.” This power of a government to appropriate private property for public interest is typically referred to as eminent domain, land acquisition, compulsory purchase/acquisition, or expropriation.

Law No. 10 of 1990 on Expropriation of Property for Public Interest (“Law 10/1990”)[1]

In Egypt, Law 10/1990 was passed to replace Law No. 577 of 1954 which used to regulate this matter. Under the Law, the President is the only authority with the power to appropriate land for public interest.

• Public Interest

So, what constitutes public interest that trumps a right to private property? Article (2) of the Law provides a list of activities that are determined a “public interest act”. These include constructing or expanding roads or neighbourhoods, water and sewage projects, irrigation and waste, energy projects, bridges and subways, transportation projects, urban planning and improvement of public utilities. Article (2) also provides that anything that is considered an act of public interest in another law shall be determined as an act of public interest. It further states that the Cabinet may add to the list of public interest acts provided in the Law. Determining public interest is undertaken through a presidential decree which must include a memorandum detailing the desired project, and the plans (drawings) of the total project as well as the required property. Seizure could include “in addition to property required for the original project, any other property that the enforcing entity deems necessary for achieving the goals of the project or determines that if left as it is [the property in question] will not be in line with the required improvement”. The appropriation decree must be published in the Official Gazette, along with the memorandum and plans of the project. The Law also provides that the decree must be posted in municipal administration units, the police station or mayor’s office, and at the preliminary court where the property lies. The government body enforcing the appropriation has the right to enter the property as soon as publication has taken place in the manner described.

• Notification

The Law mandates that a committee – mainly composed of government employees – is to conduct an inventory of real estate that is to be appropriated and inform owners whose properties will be expropriated. Said notification is to be affixed at the local municipality office, the mayor’s premise, and sent to the stakeholders by registered mail. The Law places the burden on the owners and right holders to then present themselves before the committee to point out their property. Following valuation of the property, the enforcing body prepares another inventory containing the compensation amounts determined and notifies the owners in the same method. This notification is to be affixed as described for at least 15 days. Owners are then notified of evacuation within five months.

• Valuation

Valuation committees are formed on the Governorate level by the Minister of Public Works. A valuation committee is composed of representatives from the Land Surveying Authority, the Agricultural Department, the Housing and Utilities Department, and the Real Estate Tax Department in the Governorate. The Law states that compensation is determined according to “prices that are common at the time of the issuance of the expropriation decree”. The government entity requesting the expropriation then remits the compensation amounts to the government body enforcing the expropriation, and compensation can be given to owners in kind or cash (subject to the owner’s consent).

• Challenging the ِِAbove Decisions

In addition to the owners’ right to challenge the above decision in court, the Law provides for a mechanism for challenging the inventory decision at the enforcing government body, or the Governorate. In addition, either the governmental body or the owner may contend the valuation committee’s decision before court. It is worth noting that the Law states that a challenge does not negate the owner’s right in receiving the determined compensation.

The Amendment

The amendment to Law 10/1990 was passed by virtue of Law No. 24 of 2018.[2] It extends the power to issue an expropriation decree from the President only, to the President and anyone he delegates. Furthermore, it adds with respect to notification of the expropriation decree and the properties included in the inventory for expropriation, that said information should also be affixed to the properties that are going to be expropriated for a month instead of 15 days. The most noteworthy insertion however, is in Article (6) which concerns the assessment of the compensation. Where the Article used to read “the assessment of the compensation will be according to common prices at the time of the issuance of the expropriation decree”, the amendment adds “in addition to 20% of the value of the assessment”. Moreover, the Article now requires that the compensation amounts be deposited by the government body requesting the appropriation in a bank account that generates interest to the account of the government enforcing body. Prior to amendment the rule was to deposit the amount in the enforcing body’s treasury. The amendment also adds that a challenge to a valuation decision does not negate the owner’s right in receiving the compensation amount “in addition to accrued interest”. Finally, where the Law had given the relevant Minister the power to temporarily seize property in emergency situations and disasters, the amendment has given that power to the Governor instead.

Conclusion

The matter of eminent domain in Egypt has been criticized both by civil society and international financial institutions. While there are civil society claims that the eminent domain principle is applied disproportionately to the detriment of underprivileged communities,[3] both ends of the spectrum agree that the manner of determining what constitutes public interest is an issue of contention that leaves room for a lot of uncertainty. In a 2017 Policy Note, the World Bank cites limitations regarding land acquisition as challenges to doing business in Egypt.[4] These limitations include “the absence of a comprehensive land administration system”, and “a lack of a coherent and transparent approach to land acquisition”. The report also cites the lack of an agreed upon set of criteria to determine what constitutes public interest. Indeed, in addition to authorizing Cabinet in introducing new activities deemed to be in the public interest, Article (2) of the law contains a vague provision which states that public good works could also be “any public interest works provided under another law”. The manner of valuation of compensation is another challenging area. In this respect, the World Bank Policy Note cites the lack of independent members on the valuation committee as a red flag, in addition to the lack of a transparent and systematic methodology for the valuation process, and a lack of compensation for economic displacement.   [1] Law No. 10/1990 on the Expropriation of Property for Public Interest, Official Gazette, Issue No. 22 (cont.), 31 May 1990. [2] Law No. 24/2018 amending certain Provisions of Law No. 10/1990 on the Expropriation of Property for Public Interest, Official Gazette, Issue No. 16 (bis) (a), 21 April 2018. [3] Tadamun, “The Right of Private Property in the Egyptian Constitution”, Available through this link. ^[4] The World Bank, “Egypt – Policy Note on Public Land Acquisition and Institutional Reforms: Application of Eminent Domain Principles”, Available through this link.