Expropriation

[Cf. F. expropriation.]
The act of expropriating; the surrender of a claim to exclusive property; the act of depriving of ownership or proprietary rights. W. Montagu.

The expropriation of bad landlords.

The act of removing property from an owner.

Investopedia Says:
Typically, expropriation refers to the action of a government taking away a private business from its owners. This mainly occurs in countries where property laws are not concrete and well defined. Expropriation also occurs when there are legal implications.

Seizure of private property for public use by an entity with such legal authority. See Condemnation, Eminent Domain.

noun

The act of taking quick and forcible possession of: confiscation, seizure. See give/take/reciprocity.

The taking of private property for public use or in the public interest. The taking of U.S. industry situated in a foreign country, by a foreign government.

Expropriation is the act of a government taking private property; eminent domain is the legal term describing the government's right to do so. In the United States, this right is granted, indirectly, by the Fifth Amendment to the Constitution, which states, in part, that "private property [shall not] be taken for public use, without just compensation." The courts have interpreted this clause's limitation of the power to expropriate as implying the existence of the power itself.

Two well-known cases of the U.S. government's expropriating private property occurred during labor troubles after World War II. In the spring of 1946, President Harry S. Truman found it necessary to seize control of the nation's railroads to postpone an imminent strike. He justified this action by declaring that the welfare of the country was at stake. Five days after the president's action, the workers went on strike for three days, until union and management reached an agreement. Truman hastened the agreement by threatening to draft all railway employees who refused to go back to work.

In 1952, faced with an impending strike by steelworkers, President Truman signed Executive Order No. 10340, 17 Fed. Reg. 3139, expropriating eighty-eight steel mills across the country. Again, the president defended his action by declaring that the welfare of the country was at stake. He supported this argument by stressing the demands of the war in Korea. He believed that a steel strike would endanger the lives of U.S. soldiers. This time, Truman's action caused a constitutional crisis that went to the U.S. Supreme Court. In Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 72 S. Ct. 863, 96 L. Ed. 1153 (1952), the Supreme Court ruled 6-3 that the president did not have the power to take private property to settle a labor dispute. The steelworkers' strike began the same day as the ruling and lasted seven weeks.

International law recognizes the right of countries to seize private property to further national welfare, but it requires that both citizens and aliens be treated in the same manner. The issue of just compensation in return for expropriated property differs from country to country. The United States and most Western countries maintain that the expropriating country should pay prompt, adequate, and effective compensation.

U.S. businesses were expropriated by the governments of both Cuba and Chile during socialist movements in those foreign countries. In May 1959, after Fidel Castro took over the Cuban government, the seizure of many large U.S. properties began. Before the revolution, U.S. corporations had controlled most of Cuba's resources and over half of its sugar production. In 1960, the first shipment of Soviet oil arrived in Cuba. Under the advice of the U.S. Treasury Department, U.S. oil companies on the island refused to refine it. These refineries were then taken over by the Cuban government. The expropriation of U.S. property in Cuba and Cuba's alliance with the Soviet Union eventually led to the United States' breaking off all diplomatic relations and instituting an embargo.

In 1971, the Chilean people elected a socialist president, Salvador Allende. Soon afterward, the Chilean government began to expropriate U.S. businesses located in Chile. The primary U.S. business in Chile at this time was copper mining. When U.S.-owned mines were seized, in most cases, their owners were provided with adequate and prompt compensation. The El Teniente mine of the Kennecott Company was seized by the government for a much higher price than the book value. In 1970, government control over the industrial sector in Chile had been at 10 percent. One year after the election of President Allende, it was at 40 percent. By 1973, private banks; U.S. copper mines; the steel, cement, and coal industries; and all other vital areas of industry were in the hands of the Chilean state.

In both Cuba and Chile, the seized properties remain under the control of the foreign government.

See: Presidential Powers.

The taking over of private property by a government, often without fair compensation but usually with a legal assertion that the government has a right to do so.

For the 1972 film, see The Expropriation.

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 ^[1]

The term often refers to nationalization campaigns by communist states, such as dekulakization and collectivization in the USSR ^[2]. It may also refer to robberies by revolutionaries to fund their political activities, such as robberies by Joseph Stalin and Kamo in Russian Empire ^[3].

Contents 1 Socialism 2 Expropriation and foreign investment 3 Canada 4 References 5 See also

Socialism

Trotsky

The traditional interpretation of Marxism holds that all large-scale industries and private properties should be expropriated and held by the state. Leon Trotsky even absolutely rejected any payment to the private owners.^[4] Trotsky was very adamant on the issue of not compensating private owners.

Trotsky has written

The program of the equal distribution of the land thus presupposes the expropriation of all land, not only privately-owned land in general, or privately-owned peasant land, but even communal land.^[5]

Expropriation and foreign investment

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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^{[citation needed]} 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..^[6]

References

1. ^ Orlando Figes. A People's Tragedy: Russian Revolution. 1996, ISBN 0-7126-7327-X.
2. ^ Richard Pipes Property and Freedom, Vintage Books, A division of Random House, Inc., New York, 1999, ISBN 0-375-70447-7, page 214.
3. ^ Edvard Radzinsky Stalin: The First In-depth Biography Based on Explosive New Documents from Russia's Secret Archives, Anchor, (1997) ISBN 0-385-47954-9, pages 256-259
4. ^ "Marxism, nationalization and expropriation". http://www.workerspower.com/index.php?id=141,1243,0,0,1,0. 
5. ^ Permanent Revolution & Results and Prospects
6. ^ see overview in: http://www.rslawyers.com/pdf/initial.pdf

See also

• Eminent domain
• Redistribution
• Compulsory purchase order
• Nationalization

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