Elmien du Plessis analyses the difference between state custodianship and nationalisation after the matter was debated in Parliament recently.
Last week, as I listened to the section 25 hearings, the difference between custodianship and nationalisation came up. It invoked memories of my late friend and colleague Phephelaphi Dube.
Phephelaphi would always tell you her name means "where do I seek refuge?" And how apt! Because in this conversation, I find my refuge in our friendship and our working relationship over the years.
This is not the first time that I have missed my friend while listening to the section 25 deliberations. Phephelaphi did her LLM on the possibility of pre-1913 claims and the so-called aboriginal title in South Africa when I did my LLD.
So when the EFF called for the deletion of the 1913 date from the Constitution (something my colleague Johan Lorenzen will say seems strange, as their approach is not a rights-based approach but a needs-based approach that ends private ownership), I thought of her important work in this regard.
And I missed our conversations on land, the Constitution and politics.
State custodianship
Phephelaphi was enrolled for a doctorate I was supervising with Professor Elmarie van der Schyff, looking into whether there is room for the state to be custodian outside the sphere of natural resource management. This article is based on that proposal.
State custodianship was introduced into South African law through the National Water Act 36 of 1998. The concept is not new. It established what is also referred to as "public trusteeship".
This was followed by the National Environmental Management Act (NEMA), the Mineral and Petroleum Resources Development Act (MPRDA), the Biodiversity Act and the Integrated Coastal Management Act. These are all pieces of legislation that deal with natural resources.
There was an attempt to do the same with agricultural land in the Draft Preservation and Development of Agricultural Land Framework Bill, but state custodianship was removed in the final version that is now back in Parliament.
But what does this mean? In terms of this construct, the state must act as "trustee" or "custodian" of the particular resource. American scholar Joseph Sax explains that the underlying idea of this construct is that "certain interest are so particularly the gifts of nature's bounty that they ought to be reserved for the whole of the populace".
Government holds the resources in trust for current and future generations. The state is not the owner, as it would be in the case of nationalisation. The state cannot alienate the resources. The state is strictly bound to regulate the resources regarding the legislation that bestows this trusteeship, or custodianship, on it. This is typically done through permits or licences.
Novel construct
This concept is thus relatively novel as a statutory construct in South African law. Still, some scholars make the argument that this is not a novel concept in terms of customary law (where water, for instance, has been part of the commons and, in that sense not privately owned) and Roman law (the idea of res nostro patrimonio, as Justinian would have it).
So, what does this mean for property rights? Well, it removes certain specific forms of property, as clarified in legislation, from the realm of private law and places it in the arena of public property. But it stops short of nationalisation.
Case law, such as the HTF Developers case, states that the effect of environmental law is that landowners could not use their land as they wish, but had to use the land in such a way so that future generations may also benefit from it.
The AgriSA case, dealing with old order mineral rights, makes clear that in terms of the MPRDA, the state does not acquire the minerals. In other words, unlike with nationalisation, the state is not the owner of the resource.
When the state places a resource under its custodianship, compensation is not due as it is not an expropriation (as per AgriSA).
But that does not mean the state can place all kinds of resources under state custodianship to bypass the duty to pay compensation. These powers are restricted.
Transformation
In my opinion to the Presidential Panel on Land Reform and Agriculture, I indicated that such an institutional change – in other words changing the resource from private property to public property – will be permissible if it seeks to transform the old system of inequality and injustice in line with constitutional goals of equal sustainable use of scares natural resources. In the words of the late André van der Walt, such a scheme will have to be "rationally legitimate and procedurally just".
There will have to be good policy reasons for such a change. It must be legitimate and convincing. It needs to be authorised by the Constitution or a law (such as the MPRDA). And the rules of administrative justice will be applicable. Also, if the effect of such a change disproportionately lands on one individual or a small group of people, without providing for some form of compensation (damages or expropriation), it will (at least in the current wording of section 25) be unconstitutional.
Phephelaphi's doctorate was set out to determine whether custodianship of anything other than natural resources is possible in our law. Note that this is a legal inquiry and does not dwell on the desirability of such a scheme from a governance or economic perspective. There are valid questions to be asked in that arena, especially in light of the problems in water management and whether such a system really leads to transformation in the sense of "people on the ground" benefiting.
Phephelaphi did not get to finish the project, and we are poorer for that – as we are poorer because this amazing person is no longer with us. And in a sense, I feel like I just had a conversation with her on this topic in the form of this piece.
And as always, her views were helpful, and the memory of her being provided refuge.
- Elmien du Plessis is associate professor of law at North-West University.