Land acquisition powers and land ownership restrictions in European countries: evidence review

4. Land acquisition powers – Case studies

Summary

This chapter sets out case studies of land acquisition powers from Belgium, Bulgaria, Czech Republic, Germany, and the Netherlands.

Acquisition powers are often used to pursue infrastructure projects, such a new roads or airports. There are acquisition powers in Scotland for similar purposes. Current activity across Europe demonstrates that land acquisition may also be used to pursue social and environmental rationales.

There have been challenges to acquisition powers brought to the European Court of Human Rights. Under the Court, the rationales of infrastructure, social justice, and the environment can all be deemed to fall within the public interest.

4.1 Introduction

This chapter sets out case studies of land acquisition powers from Belgium, Bulgaria, Czech Republic, Germany and the Netherlands. The case studies demonstrate the widespread practice of government land acquisitions through expropriation in Europe. The examples represent a diversity of state sizes and socio-political contexts. They also demonstrate certain shared approaches and accepted practice. Sluysmans et al^[48] provides some of the evidence basis for these case studies.

Each case study sets out:

• the relevance of the example for to the Scottish context,
• the general context of the acquisition power,
• the legal basis that is used to justify the acquisition,
• the grounds for the acquisition (i.e. public interest grounds),
• the compensation method, and
• any ECHR jurisprudence of significance that exists.

4.2 Belgium^[49]

Context

Belgium has a multi-layered federal system consisting of three territorial regions and three language-based communities. Land use and planning powers are shared across regions. The devolved nature of land use decisions may be of particular relevance to the Scottish Government considering the devolved nature of the Scottish Parliament.

According to DLA Piper:

“Expropriation of real estate in Belgium is possible only for reasons of public interest. There are strict criteria that need to be fulfilled in the relevant procedures. There is a 'normal procedure' and an 'urgent procedure' before the civil courts, that is most commonly used, each procedure involves compensation for the owner.”^[50]

Legal basis

There are two instruments used for expropriation in Belgium. Article 16 of the Belgian Constitution (previously Article 11 of the Belgian Constitution 1831) states that:

“No one shall be deprived of his property except for public necessity, in the cases and in the manner defined by law and on condition that the owner shall have been previously and equitably indemnified.”

The New Expropriation Decree 2017 for the Flemish Regions is a new piece of legislation from the regional Flemish Parliament which also permits expropriation.

Grounds

The requirements for expropriation are:

• The objective of the expropriation shall be of common interest (and can only pursue private interests on a secondary level), as in the expropriation should serve the common interest.
• The necessity of the expropriation: the objective of common interest can only be met through the expropriation of that specific property, as in the common interest cannot be achieved by means other than acquiring that specific land.
• Expropriation is only possible in exchange for prior and fair indemnification, as in there must be fair compensation attached to the taking of land.
• The expropriating authority shall indicate on what legal basis expropriation procedure is initiated, as in the expropriation will be grounded in law.

All four conditions must be met.

There is also an implicit fifth condition, in that the expropriation must be necessary.

Compensation

Compensation is provided under the following conditions:

• Just and ‘previous’ compensation (previous meaning that the expropriating administration cannot take possession of the property before having paid at least part of the compensation.)
• All damage and disadvantage suffered by the previous owner must be compensated. The previous owner's financial situation must be restored. The value of the expropriated good must be evaluated (at ‘purchase value’). Then, a so-called reinvestment-compensation will be calculated on this value, to cover the cost of purchasing an equivalent property. In addition, the loss of all rights of use has to be compensated, as well as the loss of any personal and economic benefits.
• If the expropriation intends to change the land use neither the gains nor the losses generated by the change in land use should be taken into account in calculating compensation. For example, if a plot of agricultural land is changed to housing land, the previous owner will receive compensation based on the value of the agricultural land and not on the value of building land. In Belgium this principle is known as ‘planological neutrality’, as in neutrality as to the plans for the land.

ECHR jurisprudence

Belgium’s acquisitions measures have not been challenged before the European Court of Human Rights.

4.3 Bulgaria^[51]

Context

Bulgaria has a similar land mass area and population size to Scotland. According to the OECD (Organisation for Economic Cooperation and Development);

“Despite improvements, structural challenges may be limiting further socio-economic transformation. Socio-economic convergence has been slower in Bulgaria than in its Central and Eastern European counterparts, and has not translated into sustainable and inclusive growth across the country, resulting in increased social disparities.”^[52]

Expropriation of land is permitted in Bulgaria in accordance with the Bulgarian Constitution, subject to standard conditions. The State Ownership Act and Municipal Ownership Act provide for two types of compensation: monetary (cash) compensation and property compensation.

Legal basis

Article 17, section 5, of the Bulgarian Constitution 1991 states that:

“Forcible expropriation of property in the name of State or municipal needs shall be effected only by virtue of a law, provided that these needs cannot be otherwise met, and after fair compensation has been ensured in advance.”

Grounds

Article 15, section 5, of the Bulgarian Constitution 1991 states that expropriation is allowed on the grounds of:

• Pursuance of statute law
• Necessary (state and /or ‘municipal’ needs cannot be met otherwise)
• After a prior and equivalent compensation (meaning previous and just)

Compensation

The State Ownership Act and Municipal Ownership Act provide for two types of compensation: monetary (cash) compensation and property compensation.

Monetary compensation is determined on the basis of existing use and condition and on market price.

Only the owner is entitled to compensation. Other persons, including users without formal title of ownership such as possessors or holders within the meaning of article 68 and article 69 of the Ownership Act do not have rights to indemnification.

ECHR Jurisprudence

Bulgaria also has the fifth highest incidence of A1P1 violations found at the ECtHR and has been brought before the ECtHR on 97 cases relating to the A1P1. In 58 of those cases the state was been found to be in violation of the ECHR.

Some of these cases have involved the state’s expropriation powers but the challenge was on the basis of legal certainty rather than public interest. For example:

• Kehaya and others v Bulgaria. Application nos. 47797/99 and 68698/01 2006;
• The ECtHR ruled that deprivation of agricultural property was unlawful due to lack of legal certainty and inadequate compensation;
• Decheva and others v Bulgaria. App no 43071/06 2012;
• The ECtHR ruled that lack of legal certainty (conflicting internal judicial decisions) led to violations of Art 6 (1) and A1P1, and that public interest cannot override legal certainty.

Bulgaria recently revised its expropriation laws to allow for an expedited procedure through an amendment of the State Property Act and the Municipal Property Act in 2010. The amendment meant that infrastructure projects could obtain a preferential status as a ‘site of national significance’ without full consultation with land owners. However, in 2013, the Bulgarian Constitutional Court revoked this preferential process as unconstitutional.

4.4 Czech Republic (Czechia)^[53]

Context

The Czech Republic provides a good example of how the state court can elaborate on what is covered by the public interest. Land acquisitions by the state are lawful and in accordance with the Constitution of the Czech Republic under standard conditions. Land acquisition rules were revised in 2013, following ECtHR jurisprudence to tighten up rules for compensation.

Legal basis

The Czech Constitutional Law No 1/1993 Sb., Article 11, states that:

“Everyone has a right to own property, the right of ownership has the same content and protection for every owner.”

However, Section 4 of the same Article states that:

“the expropriation or limitation of the property right is possible in the public interest, on the basis of law and for compensation.”

The Expropriation Act No186 /2006 Sb, created by both the Ministry of Regional Development and the Ministry of Justice, also regulates expropriating rights of land and real estates.

Grounds

The requirements for expropriation are:

• a legal purpose of the expropriation, which is stated in special acts;
• a public interest;
• conformity with the aims of landscape planning;
• subsidiarity – it can be used only in case the aim cannot be achieved in any other way;
• indispensable extent – it can be used only to the extent necessary to achieve the purpose of the expropriation; and
• a reasonable compensation.

All these terms must be fulfilled simultaneously.

Compensation

There is a general principle of ‘adequate and just’ compensation, at or above the market value of the existing land use. All mathematical formulas and methods for determining prices are set out in a 2013 regulation.^[54]

Until 2013, the price of the land could change in connection with its future purpose. However, the Czech Supreme Court stated otherwise in Supreme Administrative Court 7 AS 174/2014 - 44 of 23 October 2014. The Court ruled that the court of appeal cannot change the decision about compensation to the detriment of the expropriated party or the third persons. Therefore, the value of the compensation does not take any future purposes or sentimental value into consideration.

ECHR jurisprudence

The key legal challenge against acquisitions under Article 11 was Pešková v the Czech Republic (App no 22186/03). In this challenge, the European Court of Human Rights found that the Czech Government had breached A1P1 when the compensation provided to the expropriated party did not reflect the market price of the real estate at the time the property was expropriated. Consequently rules of compensation were revised in newly formulated legislation, which came into force in 2013.

In this case, the Court adopted a wide interpretation of ‘public interest’, noting that the Court will respect the legislature’s judgment as to what is in the public interest unless that judgment would be manifestly without reasonable foundation (i.e. the usual standard under A1P1). The court noted that the aim pursued by the Land Ownership Act is to attenuate the effects of the infringements of property rights that occurred under the communist regime.

4.5 Germany^[55]

Context

Germany provides an example of expropriation for social justice and redistribution. Expropriation in Germany is possible, but only where specific legislation or an ordinance related to that legislation permits it. According to DLA Piper:

“Expropriation is also only allowed when it is necessary in the public interest. The state must pay compensation to the relevant party.”^[56]

Germany’s expropriation laws are being considered to aid the re-socialisation of housing in Berlin. The campaign “Expropriate Deutsche Wohnen & Co”, proposed that companies holding 3,000 or more apartments should be expropriated in a bid to address the housing crisis. Their proposal was subject to a referendum and was backed by a majority of 56.4%. The process is on-going but it is reported that several committees in both the Federal Parliament (Bundestag) and the Senate of Berlin confirm that the expropriation request is legally valid and compatible with the constitution.

Legal basis

Article 14, German Constitution – Grundgesetz – Basic Law for the Federal Republic of Germany states that:

• “Property and the right of inheritance shall be guaranteed. Their content and limits shall be defined by the laws.” And,
• “Property entails obligations. Its use shall also serve the public good.”

Grounds

The same Article 14 of the Constitution provides the grounds for expropriation. It states that:

“Expropriation shall only be permissible for the public good. It may only be ordered by or pursuant to a law that determines the nature and extent of compensation. Such compensation shall be determined by establishing an equitable balance between the public interest and the interests of those affected. In case of dispute concerning the amount of compensation, recourse may be had to the ordinary courts.”

Compensation

Compensation to the owner for the loss of property or land is based on market value at the time of expropriation. This is usually established through price comparison. The value is dependent on the location, size, shape and infrastructure provision.

An Ordinance for the Establishment of Property Values sets out (optional) valuation procedures to assess comparative, capitalised and intrinsic values.^[57]

ECHR jurisprudence

A key relevant piece of jurisprudence in Germany is Hermann v Germany App 9300/07 (ECtHR, 26 June 2012). In this challenge, the ECtHR found that an obligation to allow hunting on a piece of land was a violation of A1P1 as the owner objected to hunting on ethical grounds. The aims of the German hunting jurisdiction were to preserve a healthy and biodiverse fauna and regional culture. Germany argued the legislation was in the public interest (environment and disease), this was accepted by the Court but they argued the disturbance was disproportionate.

The Court held that the fair balance between the protection of property rights and the public interest requirements was disturbed and an unreasonable burden was placed on the property owner; “Compelling small landowners to transfer hunting rights over their land so that others could make use of them in a way which was totally incompatible with their beliefs imposed a disproportionate burden which was not justified under the second paragraph of Article 1 of Protocol No. 1.” (At para 77.)

The Court held that despite the fact the legislation, the Federal Hunting Act, “requires private hunters to contribute to the achievement of objectives in the public interest” […] “did not alter the fact that hunting is primarily carried out in Germany by private individuals as a leisure activity.” (At para 84.)

Consequently, German law (the Federal Hunting Act, Bundesjagdgesetz, 2013) was updated to enable landowners who object to hunting on ethical grounds to have their interests considered as part of an assessment of all relevant public interests and personal interests.

4.6 The Netherlands^[58]

Context

The Netherlands provides another example of wide-ranging expropriation powers to serve a diverse range of aims under the public interest. Expropriation is permitted with clearly differentiated approaches depending on the nature of the expropriation purpose. For example, the legislation covers expropriation for:

• roads, bridges, verges, ditches and canals;
• drinking water companies or waste removal;
• the extraction of surface minerals;
• the execution of spatial plans,
• public housing, public order, and the enforcement of the Opium Act; and,
• land reorganisation.

The rationale for using expropriation powers in The Netherlands also goes beyond infrastructure projects. For example, Dutch politicians are considering using expropriation laws to acquire land from livestock farmers in order to meet climate targets. This consideration is a response to a ruling by the highest Dutch administration that the government broke EU law by not doing enough to reduce excess nitrogen in vulnerable natural areas.^[59]

Legal basis

Article 14, Dutch Constitution, states that expropriation may in principle only take place in the public interest and if compensation has been ensured in advance. Compensation need not be ensured in advance in cases of emergency. Extensive jurisprudence is also provided by the Dutch Supreme Court.

Grounds

Under the Dutch Constitution, expropriation must be in the public interest, have urgency, and necessity. There are cases where expropriation requests have been rejected because the expropriation would serve a public interest, but did not satisfy the urgency and necessity tests.

Processes vary according to the nature of the expropriation purpose.

Compensation

Compensation is provided to land owners, and can extend to third parties who may be disadvantaged by the land acquisition. The Dutch Expropriation Act does not set out rules for the determination of the actual value of compensation provided to land owners. The Supreme Court has often reiterated that the judge in an expropriation case is not just obliged to determine the compensation independently, but is also free in their choice of the valuation method that is more suitable to that particular case. The comparative method and the residual method (looks at the new use value and subtracts development costs) are the two most used valuation methods.^[60]

ECHR jurisprudence

As of 2022, there has been no challenge before the ECHR concerning expropriations in the Netherlands.

4.7 Discussion

The case studies demonstrate a cross section of widespread practice of land and property acquisition powers across European countries. The examples represent a diversity of contexts each with relevance to Scotland:

• Belgium operates on multi-level governance, like Scotland;
• Bulgaria has a similar population size to Scotland;
• the Czech Republic has useful jurisprudence before the European Court of Human Rights;
• Germany and the Netherlands are actively pursuing acquisitions to address social and environmental challenges.

Justification of acquisition powers

Acquisition powers are often used to pursue infrastructure projects, for example to build new roads or airports. However, current activity across Europe suggests that acquisition may also be used to pursue social and environmental rationales. For the purposes of this report, it should be noted that Compulsory Purchase Orders are distinct from land acquisitions.

The German case study is particularly relevant to the Scottish context as it provides an example of expropriation aimed at tackling scale and concentration of ownership to address housing shortages. The Federal Parliament (Bundestag) and the Senate of Berlin are considering a proposal that companies holding 3000 or more apartments should be subject to land acquisitions to re-socialise housing in Berlin. The Parliament and Senate have upheld that the measure would be legally valid and compatible with the constitution, but further measures have not been undertaken yet.

The Dutch case study also provides an example of an innovative acquisition measure to meet environmental obligations. Dutch politicians are considering using expropriation laws to acquire land from livestock farmers in order to meet climate targets.

Both the German and the Dutch examples show that acquisition powers may be used to pursue social and environmental rationales if deemed within the public interest to do so.

Public interest

Under the European Court of Human Rights, the rationales of infrastructure, social justice, and the environment can all be deemed to be in the public interest. This is supported by jurisprudence from the Court including the case of Pešková v the Czech Republic App no 22186/03, where it was noted that the Court will respect the legislature’s judgment as to what is in the public interest unless that judgment would be manifestly without reasonable foundation. In that particular instance the aim pursued by the Land Ownership Act to attenuate the effects of the infringements of property rights that occurred under the communist regime was deemed to be in the public interest. The Court undertakes more scrutiny in respect of the proportionality of measures to achieve the public interest, i.e. could the same objectives be achieved without rights interferences? Therefore, the issue is not so much the rationale for public interest but whether the proposed intervention is necessary for that public interest to be achieved.

Compensation

The case studies also demonstrate a range of compensation measures adopted. In the majority of cases compensation is at market value, however note that Belgium and the Netherlands have some particularities noted in the case studies above. The examples demonstrate that jurisprudence resulting from the acquisition powers has generally centred around the proportionality of compensation and /or the legal certainty of the process.