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2015 | OriginalPaper | Buchkapitel

6. Valuation and Compensation During Expropriation

verfasst von : Daniel W. Ambaye

Erschienen in: Land Rights and Expropriation in Ethiopia

Verlag: Springer International Publishing

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Abstract

Expropriation is a forced sale and is distinguished from confiscation in that the owner will be compensated for the property taken. Besides the requirement of public purpose, payment of compensation is the second, but equally important, limitation on the government’s power of expropriation.

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Vorheriges Kapitel Public Purpose

Nächstes Kapitel Conclusions and Recommendations

Betts, R. M. & Ely, S. J. 2008. Basic Real Estate Appraisal: Principles and Procedures, New York, Thomson South-Western, p. 2.

Ibid.

Id., p. 51.

Id.

Wyatt, P. 2005. Property Valuation in an Economic Context, Oxford, Wiley-Blackwell, p. 128.

UNECE 1996. Land Administration Guidlines, Geneva, United Nations Economic Commission for Europe, p. 38.

Appraisal-Institute 2001. The Apprisal of Real Estate, Chicago, Apprisal Institute, p. 63.

Sayce, S., Smith, J., Cooper, R. & Rowland, P. V. 2006. Real Estate Appraisal: From Value to Worth, Oxford, Blackwell Publishing, p. 16.

Issac, D. 2012. Property Valuation Principles, New York, Palgrave, p. 64.

Ventolo, W. L. & Williams, M. R. 2001. Fundamentals of Real Estate Appraisal, Chicago, Dearborn Financial Publication, Kahr, J. & Thomsett, M. 2005. Real Estate Market Valuation and Analysis, New Jersey, John Wiley & Sons, p. 153.

Wyatt, supra note 5.

C.J.S., supra note 11 of Chap. 3.

This position was held first by a USA Court (in Olson v. United States) and became an accepted principle in almost all countries. See details in Epstein, supra note 170 of Chap. 3, p. 182.

Ibid.

Ndjovu, C. E. 2003. Compulsory Purchase in Tanzania: Bulldozing Property Rights. Ph.D. Thesis, Kungl Tekniska Hogskolan, C.E. (2003), p. 21.

Epstein, R. A. 1993. Bargaining With The State, New Jersey, Princeton University Press, p. 6.

Sax, J. 1964. Takings and the Police Power. Yale Law Journal, 74, 36

Marcus, P. 1942. The Taking and Destruction of Property under a Defense and War Program. Cornell Law Quarterly, 27, p. 508.

Ndjovu, supra note 15, p. 21.

Kratovil and Harrison, supra note 6 Chap. 3, p. 615.

Ndjovu, supra note 15, p. 20.

McCormick, C. T. 1932. The Measure of Compensation in Eminent Domain. Minn. L. Rev., 17. No. 5, p. 465.

Picard, supra note 76 of Chap. 3, p. 57.

Bjerken, T. 1990. Expropriation in Sweden. In: Erasmus, G. M. (ed.) Compensation for Expropriation: A Comparative Study. Oxford: St. Edmund Hall University of Oxford, p. 129.

Kalbro, supra note 44 of Chap. 5, p. 59.

Kalbro, supra note 152 of Chap. 3, p. 34.

Moore, V. 1990. Compulsory Purchase in the United Kingdom In: Erasmus, G. M. (ed.) Compensation for Expropriation: A Comparative Study. Oxford: National Committee of Comparative Law. Vol. I, p. 6.

Kratovil and Harrison, supra note 6 of Chap. 3, p. 615.

Ibid.

The People’s Republic of China Land Administration Law. Available at: http://www.npc.gov.cn/englishnpc/Law/2007-12/12/content_1383939.htm.

See details infra, under Sect. 6.5.3.3.

Bin, Z. X. 2002. Compensation System in the People’s Republic of China. In: Kotaka, T. & Callies, D. L. (eds.) Taking Land: Compulsory Purchase and Regulation in Asian-Pacific Countries. Honolulu: University of Hawai’i Press, p. 93.

Land expropriation refers to the case in which the government does not have ownership of the land. For example, the land occupant has the freehold interest in the land, and the government needs to acquire ownership of the land through a compulsory acquisition process. This kind of ‘land acquisition’ is also known as a ‘compulsory purchase’. Compulsory ‘land resumption’ refers to the case in which the government, not the land occupants, has the ownership of the land. For example, the occupants only have a leasehold interest in the land. Through the compulsory acquisition process, the government acquires the user rights and gets back the land it originally owns. This kind of compulsory land acquisition is known as ‘land resumption’ (Chan, N. 2003. Land Acquisition Compensation in China – Problems & Answers. International Real Estate Review, 6., p. 138.).

Id., p. 95.

The term “just compensation” in the USA Constitution is understood by courts as “fair market value” (Paul, supra note 63 of Chap. 3, p. 81); the same conclusion is held in Europe as observed from the decisions of European Court of Human Right (Allen, T. 2007. Compensation for Property Under the European Convention of Human Rights. Michigan Journal of International Law, 28, 287–335, p. 288).

Kitay, supra note 14 of Chap. 3, p. 50.

Appraisal Institute, supra note 7, p. 22.

Wright, R. R. & Gitelman, M. 2000. Land Use in a Nutshell Minnosota West Groups, p. 157.

Id., p. 158.

Ibid.

McCormick, supra note 22, p. 462.

Id., p. 461; Paul, supra note 63 of Chap. 3, p. 81; Kratovil and Harrison, supra note 6 of Chap. 3, p. 616.

Alabama Section, supra note 94 of Chap. 3, p. 418.

Sullivan, R. M. 1990. Eminent Domain in the United States: An Overview of Federal Condemnation Proceedings In: Erasmus, G. M. (ed.) Compensation for Expropriation: A Comparative Study. Oxford: St. Edmund Hall University of Oxford. Vol. I, p. 166.

Norell, L. 2008. Is the Market Value a Fair and Objective Measure for Determining Compensation for Compulsory Purchase. Land Reform. Rome: FAO, p. 26.

Epstein, supra note 175 of Chap. 3, p. 183.

Kalbro, supra note 44 of Chap. 5, p. 59.

Norell, supra note 45, p. 21.

Kalbro, supra note 44 of Chap. 5, p. 60.

Norell, supra note 45, p. 21; Kalbro, supra note 44 of Chap. 5, p. 59, 60.

Epstein, supra note 175 of Chap. 3, p. 183.

Ibid.

Id., p. 184; Comments 1958. Eminent Domain Valuations in an Age of Redevelopment: Incidental Losses. Yale Law Journal, 67, p. 66.

Allen: 2008, supra note 49 of Chap. 5, p. 84; see also the British Land Compensation Act of 1973, ss 29–30, 33.

An Amendment to the Swedish Expropriation Act, SFS 2010:832, July 2010.

Kalbro, supra note 84 of Chap. 5, p. 60; Epstein, supra note 175 of Chap. 3, p. 184.

Kitay, supra note 14 of Chap. 3, p. 50.

The indemnity theory pays, among others, the loss of future highest and best use of the land.

See Article 7(2) of the FDRE Expropriation Proclamation.

See generally Article 7 of the FDRE Expropriation Proclamation and FDRE Compensation Regulation No. 135/2007.

The Ethiopia ethic and Anti corruption Commission has in its study declared that the valuation system during expropriation is “exposed to awkward system and vulnerable to corruption.” See details at: http://www.ethpress.gov.et/herald/index.php/herald/news/1104-land-exploration-compensation-problematic-commission.

Interview with Ato Yeneneh Simegn, Supreme Court President of Amhara Region; Interview with Ato Almaw Wole, Federal Supreme Court Judge; Interview with Ato Birhanu, supra note 33 of Chap. 4. All judges confirmed that there are increasing number of expropriation cases, most of which are related to inadequacy of compensation.

Federal Expropriation Proclamation, Article 9(1).

Id., Article 9(2) cum. 10(1), (2).

Id., Article 10(1).

Interview with Ato Mihret and Ato Teshome, supra note 11 and 29 of Chap. 4 respectively.

Amhara Valuation Directive.

Id., Article 33.

Id., Article 32.

These definitions are given based on the type and nature of properties mentioned in the Expropriation Proclamation (455/2005), Federal Compensation Regulation (135/2007), Addis Ababa Valuation Directive, and the Amhara Valuation Directive.

FDRE Constitution, Article 40(8).

Federal Compensation Regulation, Article 3.2.b.

Id., Article 10.

Id., Article 12.

Allana, supra note 46 of Chap. 4.

Look the Addis Ababa Valuation Directive, Article 16 which lists down the types of compensable properties.

Article 7(2) of Federal Expropriation Proclamation.

Id., Article 7(4).

Interview made with Ato Daniel and Ato Mikias, supra note 18 and 25 of Chap. 4 respectively.

According to the Ethiopian Central Statics Agency (CSA) and the Ethiopian Government assessments, irrespective of the impressive economic developments exhibited in the past several years, inflation still remains as the biggest challenge for policy makers. Inflation for food was reached 44 % in 2011 while it is reduced to 32 in 2013.

This conclusion was drawn from the group discussions made in Addis Ababa, the Basha Wolde Chilot displaced and in Bahir Dar city the Abay River Bank people.

This sentiment is also shared by the valuators themselves. The people, as a matter of fact, do not oppose the development work, what they oppose is the insufficiency of the compensation. What are they supposed to do with half or quarter of the compensation money necessary to build the house (Interviews made with Ato Daniel, Ato Mikias, supra note 18 and 25 of Chap. 4 respectively).

A very good example to describe this situation is to look into the property market. In a typical English news paper (Addis Fortune or Capital-the two large weekly English newspapers) one can find advertisements for sale of houses, such as this one “HOUSE FOR SALE. ADDRESS: BOLE. PRICE 4 MILLION. HOUSE TO BE DEMOLISHED.” It means the house is old and probably made of mud and wood, and a person who pays 4 million is expected to put better house on the land. Therefore, the buyer is paying 4 million not for the old and would be demolished house, but for the location or the land. This is the market and it works perfectly okay. But, assume this land is being expropriated by the municipality. The owner will get at most one to four hundred thousand (one tenth) of the market price.

Interview with Ato Gashaw Mitiku, representative of the residents, Feburuary, 2013, Bahir Dar.

Article 8(4)(a) of Expropriation Proclamation.

Interviews made with displaced people as well as the experts in the municipality.

See Ibid; Article 14 of Compensation Regulation.

See Articles 20–23 of the Addis Ababa Valuation Directive.

Information gathered from the records of Arada Sub-city Land Development, Bank and Urban Renewal Office.

Article 7(3) of the Expropriation Proclamation; Article 16.1.2 of the Addis Ababa Valuation Directive.

Group discussion made at the Jemo site with group of displaced people. The women specially complained that unlike their former residence area in the city center, they could not operate in the new settlement any small business. The people displaced from the study area are dispersed into different locations of the expansion areas of the city such as Jemo, Summit, Bole-Ayat and Gofa Camp. All these areas are on average 16 km far from the study areas, their former homes.

Interview with Mamo Hailemariam, owner and displaced from Basha Wolde.

Interview with Ato Gashaw, supra note 84.

Ato Abebe Negash, during group discussion in Jemo Condo site, January 22, 2013. Jemo and the other sites are located on average 16 km far from Basha Wolde (Arat Killo) area.

Economic displacement may cause together with physical displacement or without it. For example, if an expropriation takes farm lands without affecting the residential houses, economic displacement is said to be occurred without physical displacement, see for example the description in IFC document, supra note 37 of Chap. 4.

Expropriation Proclamation, Article 8(5).

Ato Daniel, supra note 18 of Chap. 4.

See Article 13.5 of Federal Compensation Regulation.

Article 11(13) of Amhara Valuation Directive; Article 16(8) of Addis Ababa Valuation Directive.

100

See generally Article 13 of the Federal Compensation Regulation; Article 14.1.a of Amhara Valuation Directive; Articles 16(3)–16(7) of Addis Ababa Valuation Directive.

101

Article 6(5) of the Federal Compensation Regulation. The usual types of annual crops that grow in Ethiopia are Tef, Wheat, Maize, Barley and Millet.

102

This is especially true in urban areas where the market value of building materials is neither frequently updated (see supra note 16). Unlike the building materials, though, the inflation rate for consumer goods in Ethiopia, such as crops, is highly volatile. For example in 2008 it reached 44 percent, and lowered to single digit in the next 2 years only to increase again to 32 % in 2012 (see details from the Ethiopian Central Statistical Agency at http://www.csa.gov.et).

103

For example orange, mango, sugar cane, coffee and chat trees are considered as perennial crops that give fruits from year to year.

104

Article 6 cum. 13(3), (4) of the Federal Compensation Regulation; Similar principle is included in Amhara and Addis Ababa Valuation Regulations.

105

Tulu Kapi, supra note 24 of Chap. 4.

106

Interview with Ato Teshome, supra note 29 of Chap. 4. This was explained during the meeting held in Nekemt and dealing with the Tulu Kapi Valuation procedures, supra note 24 of Chap. 4.

107

Ibid.

108

Afar is the north eastern region in Ethiopia (see map.) It is known for its hostile and hot climate. The Afar is a desert but endowed with large deposit of Potash and other minerals. The Afar people are nomads and the resources (water and grazing land) are communally owned properties.

109

See Allana, supra note 46 of Chap. 4.

110

Article 7(1) of the Federal Compensation Regulation.

111

See for example Article 14(1)(a)(vi–vii) of the Amhara Valuation Directive.

112

Interview with Ato Mihret, supra note 11 of Chap. 4. See also Articles 11(11) and 19(2) of the Amhara Valuation Regulation.

113

Ato Teshome, supra note 29 of Chap. 4.

114

Article 8 of the Federal Compensation Regulation.

115

To put one self into the original position is a rare incident for an Ethiopian farmer. Some farmers whose land was expropriated by urban municipality may be successful to regain their capacity because of the slightly different compensation package provided, as shall be seen soon.

116

Article 8(1) of the Expropriation Proclamation.

117

The People’s Republic of China Land Administration Law, supra note 30.

Ibid.

Ibid.

Ibid.

Even then, the Chinese compensation amount was criticized for “low compensation standard that does not reflect soaring prices, rigid regulations and a lack of guarantee for the farmers’ long-term livelihood and social security.” For this reason, a move to amend the law was made in 2012, at least to remove then 30 years and to assess land based on market price. This however is still in debate in parliament, see the information at: (http://news.xinhuanet.com/english/china/2012-12/24/c_132060718.htm); (http://www.reuters.com//2013/03/07/us-china-landreform-idUSBRE9260CH20130307).

122

The People’s Republic of China Land Administration Law. Article 47.

123

See supra note 80.

124

Almost all interviewed farmers have confirmed that the amount of money they received as displacement compensation was finished within a maximum period of 2 years, and they would rather prefer retaining the land to any amount of compensation. This shows that the revision of the law to increase the multiplier (like what is proposed in China) or to change the valuation method is an imperative.

125

The use of modern farming methods, inputs (e.g. fertilizer and pesticides) and development of irrigation systems enable farmers to increase the productivity of their land. For example, during my investigation of valuation of rural lands in Amhara Region, I observed that the productivity of land has been increasing with an average of 5 q/ha annually. This fact is also supported by many studies. For example, according the Ethiopian CSA data between 2004/05 and 2007/08 the average yield (annual increase of productivity per hectare) for five major grains Tef, barley, wheat, maize and sorghum was 6.2, 7.7, 4.5, 1.5, 7.8 and 8.9 % respectively (Seyoum, A., Dorosh, P. & Asrat, S. Year. Crop Production in Ethiopia: Regional Patterns and Trends. In: Ethiopia Strategy Support Program II, 2010 International Food Policy Research Institute, p. 11, http://www.ifpri.org/sites/default/files/publications/esspwp16.pdf).

126

Article 8(2) of Expropriation Proclamation.

127

There are many cases of this nature reaching regional and federal courts. For example, in the case between Worku Teshager v. Sur Construction, (West Gojam High Court, Civ. Case No. 08569) and Worku Sime v. Sur Construction (West Gojam High Court, Civ. Case No. 08724), the allegation of both plaintiffs was that the defendant, a road construction company, had despoiled their land and made it uncultivable for the next 5 years. Accordingly, they asked for 5 years compensation.

128

Mola Wondimagegn v. Sur Construction, (South Gonder High Court Civ. Case No. 29258). The court, instead of compensation money, ordered the removal of unused quarry, re-fill of pits, and the spread of topsoil.

129

Tibebu Belay v. Sur Construction, (North Gonder High Court, Civ. Case No. 31057).

130

The Koga irrigation project was an Ethiopian and African Development Bank joint project constructed at more than half a billion birr. It is found in the Mecha woreda of Amhara region in Ethiopia.

131

Daniel W. Ambaye, supra note 196 of Chap. 2, p. 27, 28.

132

Interview with Ato Bayih Tiruneh, Deputy Head of BoEPLAU, Interview conducted in 2007 and confirmed in 2012.

133

Beza Consulting, supra note 31 of Chap. 1, p. 27.

134

Article 8(3) of the Expropriation Proclamation.

135

Proclamation 133/2005 of the Amhara region under 21 provides the following as conditions of depriving holding rights: engaged in non-farming activity, disappeared from locality for 5 consecutive years, fallowed land for 3 consecutive years, caused gross damage to the land, notified the government for withdrawal from farming activity.

136

Group discussion held with 10 senior land administration experts of the Amhara Region. They worked in each zonal administration of the region and they confirmed the realities of their respective administrative zones. The only available land in the region is in the low land areas of Jawi.

137

Interview with Ato Akane, supra note 33 of Chap. 1.

138

Ibid.

139

Interview with Ato Mebit, supra note 20 of Chap. 4.

140

Ibid.

141

Group Discussion with land administration experts, supra note 136.

142

Interviews made with officials of Qunzila, Fagita, and Denbecha woredas.

143

All the cases were handled by the West Gojam High Court. The cases are (Abeje Yitayew vs. Ministry of Defense, Western Division, Civ. File No. 9600), (Awoke Addis vs. Ministry of Defense, Western Division, Civ. File No. 9587), and (Tarekegn Eskemeche vs. Ministry of Defense, Western Division, Civ. File No. 9803).

144

Article 14(3) of Amhara Valuation Directive.

145

Interview with Ato Teshome, supra note 29 of Chap. 4. He emphasized, “Farmers will be provided replacement land on the basis of the amount of land available and the policy of the region. It is not mandatory and necessary to replace the same size of land if the former holding was bigger in size.”

146

This is the case in Addis Ababa City as well as in Bahir Dar.

147

In Bahir Dar City, City municipality uses this system to discourage informality.

148

Addis Ababa City Valuation Directive, Articles 13.1.7 cum. 20.9 cum. Annex Six.

149

Id., Articles 20.10 cum. 13.1.8.

150

Id., Articles 20.11 cum. 13.1.9.

151

Group Discussion with Addisu Begashaw, Begiziew Tsehayu and Fasil Simeneh, supra note 45 of Chap. 4.

152

Innes, R. 2000. Economics of Taking and Compensation When Land and its Public Use Value Are in Private Hands. Land Economics, 76, p. 2.

153

Article 11(1) of Federal Expropriation Proclamation.

154

Addis Ababa Valuation Directive, 29.

155

Id., Article 30.

156

See for example Article 40 of the Amhara Rural Valuation Directive. Complaint is first submitted to the “Valuation Committee”. If not satisfied, the complaint may go to “Compensation Grievance Hearing Committee” established at woreda level.

157

Article 11(4) of Federal expropriation Proclamation.

158

Ethiopian Roads Authority v. Jada Biru, (Federal Supreme Court Cassation Division, Cass. File No. 57271), Dec 2010.

159

Solomon Mehari v. Mekelle City Administration, (Federal Supreme Court Cassation Division, Cass. File No. 81159), Dec 2012. In this case, the appellant alleged for the expropriation of his land by the respondent without payment of compensation. So the issue was not about insufficiency of compensation, but about payment of compensation.

160

Interview with Ato Birhanu, supra note 33 of Chap. 4.

161

Federal Supreme Court Cassation Division, (Cass. File No. 75763), Jan 2013.

162

Comments: 1958, supra note 53, p. 62.

163

Although there is no data available that shows the amount of loss, there are many people in Addis Ababa who either closed down or temporarily interrupt their business because of road constructions. Road constructions in the city take 24–48 months to finish and business such as restaurants, shops (clothing, butcher, barber) and supermarkets are usually closed for lack of customers. Only those who own the shops/houses can manage to reopen them. Those who rent usually close and forced to relocate to other places and start afresh.

164

Ethiopian Roads Authority v. Tule Abdo (Federal Supreme Court Cassation Division, Cass. File No. 63352) July, 2011.

Titel: Valuation and Compensation During Expropriation
verfasst von: Daniel W. Ambaye
Verlag: Springer International Publishing
Buch: Land Rights and Expropriation in Ethiopia
Print ISBN: 978-3-319-14638-6

Electronic ISBN: 978-3-319-14639-3

Copyright-Jahr: 2015
DOI: https://doi.org/10.1007/978-3-319-14639-3_6

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