South Africa - International Franchise Association

Racially discriminatory property laws during apartheid resulted in highly distorted
patterns of land ownership in South Africa. In August 2011, South Africa tabled a
“Green Paper” on land reform in an attempt to address this inequality. The Green
Paper’s “three pillars” include a land management commission, a land valuer-general
and a land rights management board, with local management committees. These would
collectively keep track of land sales, ensure there were proper records, and "facilitate
productive land usage and an equitable land distribution". Certain provisions in the
Green Paper have generated controversy including proposed "severe limitations" on
private land ownership, the powers granted to a proposed “valuer-general” to determine
the value of land, the proposed commission’s powers to invalidate title deeds and
confiscate land, and the state’s right to intervene regarding the use of land. Additionally,
the government has suggested that it would pursue legislation that would limit foreign
land ownership in South Africa. Proposals for expropriation of land continue to surface
from time to time.
In several restitution cases, the government has initiated proceedings to expropriate
white-owned farms after courts ruled that the land had been seized from blacks during
apartheid and that the owners subsequently refused court-approved purchase prices. In
most of these cases, the government and owners reached agreement on compensation
prior to any final expropriation actions. The government has twice exercised its
expropriation power, taking possession of farms in Northern Cape and Limpopo
Provinces in March 2007 and December 2007 after negotiations with owners collapsed.
The government paid the owners the fair market value for the land in both cases.
Mineral rights have also been the subject of expropriation claims. The Mineral and
Petroleum Resources Development Act 28 of 2002 ("MPRDA") replaced private
ownership of mineral rights with a system of licenses controlled by the South African
government. Under the MPRDA, investors that held pre-existing mineral rights were
granted the opportunity to apply for licenses provided they met certain criteria, including
the achievement of certain BEE objectives.
Nationalization of mineral resources continues to be debated at the highest political
levels in South Africa. Proponents of the idea suggest that it would help redistribute
wealth and tackle economic inequality in South Africa. Critics suggest that
nationalization would not be tenable or workable in South Africa due to the potential cost
of compensating mine owners and the broader impact that it would have on foreign
investment.
Dispute Settlement Return to top
South Africa is a member of the New York Convention of 1958 on the recognition and
enforcement of foreign arbitration awards, but is not a member of the World Bank's
International Center for the Settlement of Investment Disputes. South Africa recognizes
the International Chamber of Commerce, which supervises the resolution of
transnational disputes. South Africa applies its commercial and bankruptcy laws with
consistency and has an independent, objective court system for enforcing property and
contractual rights. South Africa’s new Companies Act also provides a mechanism for
alternative dispute resolution.