With the passage of the Electricity (Common Carrier) (Declaration) Regulations, 2020, Statutory Instrument No. 57 of 2020 by the Minister of Energy, declaring the transmission and distribution lines operated by the Copperbelt Energy Corporation (CEC) commons carriers, many questions from investors and bystanders alike have been asked whether this is some of expropriation by the state.
For certain, the Minister of Energy has powers under section 15 of the Electricity Act No. 11 of 2019 to declare any distribution or transmission line a common carrier. So this article does not delve into the legalities of the declaration, but rather sheds light on what expropriation is and its numerous types.
Definition of expropriation
According to UNCTAD, expropriation generally refers to property-specific or enterprise-specific taking where the property rights remain with the State or are transferred by the State to other economic operators.
Synonyms of Expropriation
Other synonyms of expropriation are taking, nationalization, deprivation and dispossession. However, nationalization usually refers to massive or large-scale takings of private property in all economic sectors or on an industry – or sector-specific basis.
So what are the types of expropriation?
Direct expropriation means a mandatory legal transfer of the title to the property or
Its outright physical seizure and normally, the expropriation benefits the State itself or a State-mandated third party.
Indirect expropriation involves a total or near-total deprivation of an investment but without a formal transfer of title or outright seizure and its judicial and arbitral recognition internationally includes the Chorzów Factory case.
Creeping expropriation may be defined as the incremental encroachment on one or more of the ownership rights of a foreign investor that eventually destroys (or nearly destroys) the value of his or her investment or deprives him or her of control over the investment.
From the above, what is clear is that a determination of whether there is expropriation or not in any single instance is not an easy one. All factors are required to be considered.
Client Legal Alert – Equitas Legal Practitioners@2020
*This scholarly article is a general guide and does not contain definitive legal advice. Readers considering taking action on any of the issues discussed should speak to their legal advisors before taking any such action. Equitas disclaims any liability whatsoever arising from acting on this article.