Eminent domain is the right of a government to expropriate private property, by fiat, for what it deems is ‘public purpose’. Historically, it has often been subsumed within sovereignty and counted as its attribute. Eminent domain comes from the Latin phrase dominium eminens, taken from Hugo Grotius’s legal treatise, De Jure Belli et Pacis (on The Law of War and Peace), written in 1625. It allows the government to transfer or reallocate private property rights against the payment of ‘just compensation’.
Though the concept has evolved over time, it is distinctly different from forceful acquisition of property in an exhibition of power, by a person at the helm of affairs of a political state. Here ‘just compensation’ becomes a defining and distinct feature of eminent domain. Eminent Domain is the right of the government and not its power, that is, rights must have limits. It is interesting to note that, while compensation has been an important feature of this right, consent was not always explicitly discussed.
It has come to become part of the later interpretations of the right and the concerned governing act or law, for most countries. We know that property rights add substantial value to a piece of property by conferring ownership, use, modification and transfer rights (among others) to the owner of it. In the absence of duress-free consent or transfer of rights, as voluntary exchange, property rights lose a part of their monetary value as well as their ability to secure the socioeconomic status of the private owner. This is especially true in case the owner derives his primary livelihood from land or is dependent on it for sustenance.
Eminent Domain lowers the bargaining power of the private owner, and yet this expropriation by law is said to be aimed at a ‘public purpose’. This statement is not to discredit the importance of a government’s ‘transcendental propriety’ (The American Law Register, 1856, 642-3) in regulating property rights of the people, in the interest of society, and also to re-allocate those rights towards creation of a social value from a product for which transaction costs are very high for private investment to exist in the market.
It is however, to focus on when eminent domain becomes imperative or best solution and if there are prerequisites for better implementation of the same. At the end of the day, it is a compulsory transfer of property rights and is not a mutually agreed transaction between two contracting parties. We look at how ‘public’ or social-value-generating must this purpose be, to justify use of eminent domain and is there is a threshold value for the same. Our discussions so far help us tie together two concepts, namely eminent domain (the right to expropriate private property) and public purpose (the justification behind invoking the right).
Public purpose remains a limitedly defined term within most acts governing implementation of Eminent domain, within different countries. In India, the concerned legal framework is laid down by the Right to fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR 2013, hereon). Section 2(1)(a-f) of the Act outlines what is meant by Public Purpose in six indicative, not exhaustive, sub-clauses. These sub-clauses are fairly broad, in that they cover items like infrastructure projects, projects for industrial corridors, tourism, projects for residential purposes, among others.
This makes the scope of public purpose’ broad enough to incorporate a large variety of projects, affectively reducing the threshold level of net social value, that the projects must be able to generate to be considered as fulfilling ‘public purpose’. How do we justify eminent domain if not on the basis of a strong ‘public purpose’? The subsequent sections will discuss the concept of eminent domain and how it developed with time; the need for it (or not); its effects and problems. The scope of this paper is limited to the Indian scenario, save the examples that have been taken from certain other countries to establish context.
The paper will focus on the nature and effects of eminent domain in India, particularly its socio-economic effects. Eminent domain: The philosophy behind it and its evolution as a legal concept Eminent domain, by virtue of its definition, may have followed two important changes in history- the institution of benevolent rule or government that was responsible for creating public works/goods like roads and water-sewage syste ms; and the establishment of demarcated property rights with the people (The American Law Register, 1856, 642-3).
Clear property rights must be characterized by the bundle of rights allowed to owner of the property-use rights, right to exchange etc. ; or by benefit of exclusion- one person’s property right excludes all others in ownership and sharing of benefits arising out of ownership. Keeping this in mind we will attempt to answer two questions- i) What is the basis of eminent domain in terms of property rights and ii) how important are private property rights to the proper implementation of eminent domain.
A lot has been said about property rights of individuals and their relationship with the society and state, mostly in political contexts and later involving legal connotations. Several aspects of these have been covered in the writings of Plato, Aristotle, Hegel, Grotius, Hobbes, Locke, Rousseau, Hume, Marx, and Mill. Aristotle’s Athenian Constitution (discovered in 1891) is one of the earliest accounts of discussion on expropriation by fiat and payment of compensation.
It talks about “… he adjustment of a dispute between the cities of Athens and Eleusis, among the agreements of settlement was one providing for the transfer of property in Eleusis to the Athenians, on terms that imply the use of an existing rule for the valuation of private property by representatives of the city” (The American Law Register, 1856, 642-3). The same extract within the American Law Register also discusses the Roman interpretation of the same. For the Romans also the property rights were political matter and expropriation was the symbol of power of the state. However, the requirement of compensation and consent was observed.