Getting Land Acquisition Right

"Eminent domain" (also known as "appropriation", "compulsory purchase" or "expropriation" in some countries), the legal principle under which a government can take over private property for public purpose after paying due compensation - even if the private owner does not wish to sell – has a long and often controversial history.

No one denies that governments have used the doctrine for legitimate purposes - to build highways, hydroelectric projects such as dams, airports, and other major infrastructure projects that serve a public purpose.

As such projects are for the greater common good, or the national interest, individuals – or communities – are expected to give up their property rights providing they receive proper compensation.

"Eminent domain" (also known as "appropriation", "compulsory purchase" or "expropriation" in some countries), the legal principle under which a government can take over private property for public purpose after paying due compensation - even if the private owner does not wish to sell – has a long and often controversial history.

No one denies that governments have used the doctrine for legitimate purposes - to build highways, hydroelectric projects such as dams, airports, and other major infrastructure projects that serve a public purpose. As such projects are for the greater common good, or the national interest, individuals – or communities – are expected to give up their property rights providing they receive proper compensation.

But the eminent domain doctrine continues to cause controversy. Last week, Pfizer, the global pharmaceutical giant which had set up research facilities in New London, Connecticut in the U.S. after plots of land were acquired amidst protest, decided to close shop, eliminating the 1,400 jobs that the investment had brought.

Pfizer’s decision is the latest chapter in a story going back to a 2005 U.S. Supreme Court case known as Kelo vs New London. It involved a project to build an office complex and condominiums for private developers. The public benefit was supposed to be the jobs that would be generated, and the contribution investors would make to the local economy. U.S. laws generally offer strong protection to individual property rights, but in this case, the court ruled in favor of local authorities, agreeing with its argument in using “eminent domain,” giving the concept a new extension and reach, and stretching the meaning of “public purpose.” Many legal scholars were surprised by the narrow, 5-4 verdict.

The public benefit of the project, if any, proved to be short-lived. Pfizer, for its part, has said it played no role in the related litigation; it sought certain terms from the town, including tax concessions, and authorities were willing to offer them. As a New York Times report shows, many in New London are now saying: “I told you so.”

The objective of New London officials was to boost the local economy, for which it was willing to acquire land and offer it to investors which would create jobs and bolster other opportunities in an economy suffering from downturn. But the economic situation has changed. Pfizer says it is moving to cut costs and because it needs to reorganize its operations. The move has angered many local residents who see the company as having come to reap benefits and now is leaving when things get tough.

But New London’s invoking of eminent domain raises larger important questions about the role of the state in acquiring private property – individually or collectively held – for commercial projects.

Nowhere is the eminent domain debate more passionate than in India. The Tata group chose to leave the state of West Bengal, where it had planned to build the world’s cheapest car, Nano, after sustained protests from local farmers who opposed the project. Tata sought to set up the project in a town called Singur, where the state acquired the land on Tata’s behalf. The farmers did not want to move, and the state used force against the farmers. Pointing out the declining security situation, Tata decided to move its factory to the western state of Gujarat.

Amnesty International has criticized the role of the state government in this and another high-profile case of an export zone, in Nandigram. Eminent domain is also the driving force behind the Indian Supreme Court letting the bauxite mining project of UK-based Vedanta Resources in another eastern state, Orissa, to go ahead, which has caused widespread activism and protests.

A key human rights principle stresses the importance of free, prior, and informed consent, a notion that draws its origins from the struggles of indigenous communities, and which has now been codified under Art. 10 of the UN Declaration of the Rights of Indigenous Peoples. Any property transaction that is respectful of rights should occur only with the freely-obtained, prior, informed consent of the individuals or groups from whom the land is being acquired.

The Declaration is, however, not hard international law, and even Convention 169 of the International Labour Organisation, which deals with indigenous peoples, does not grant any community the right to veto a particular project. This gives governments and companies the leeway to make the process of seeking consent perfunctory, and in some cases leading to outcomes that do not respect, protect, or fulfill human rights. Numerous examples show how such processes may be deeply flawed, and at times, even leading to force being used against those who do not wish to move.

Under human rights law, the right to property is qualified – in that while the right exists, people can be deprived of property under due process. Those involved in the New London case in the U.S. can argue that due process was followed, leading to the matter being decided in the Supreme Court. Indian companies, which let the state acquire land for their commercial purposes, would similarly argue that they are developing a project with the state’s consent and agreement, and acquiring land is a problem the state has to deal with.

This has led to arbitrary steps, and in India, it has led to violation of civil and political rights, and in the United States, of economic, social and cultural rights. Clearly, this is an untenable situation.

At the Institute for Human Rights and Business we are engaged in a process to better understand issues related to land and water, and as part of that work, we are exploring the area of eminent domain and the consequences of its use on human rights.

As the U.S. and Indian examples show, the impact of eminent domain is felt in highly urban parts of the developed world, as well as in remote regions and farmlands of a developing country. In each case, there is a robust civil society; and in each instance, the rule of law generally prevails. And yet, in each instance, courts have ruled in ways that do not necessarily advance protection of human rights.

How businesses develop approaches that are sensitive to these issues and comply with laws, and how governments act as neutral and impartial regulators, will determine how fundamental rights are protected in the long run. The issue can no longer be ignored.

You can find some of our early thinking on these issues in a new draft working paper - Preventing Conflicts over Land: Exploring the role of business and the value of human rights approaches. We invite experts from all sectors to join us in developing a shared framework on this important issue that respects human rights.

Photo: Flickr/Mike Prince