Investor: Don't be alarmed by Expropriation Act, 2025

Key points for foreign investors to know about the new Expropriation law in relation to their existing or future investments in South Africa: 

• The Expropriation Act, 2025 - although assented to by the President on 24 January 2025 has not yet commenced. 
• The old Expropriation Act, 1975 remains law until such time as the President in a government gazette determines that the 2025 Act becomes law (in whole or in part). The President has the option that only certain provisions are gazetted to become operative.
• Any expropriation of property done in terms of the Expropriation Act 2025 must be tested in accordance with the provisions contained in section 25 of the Constitution. Section 25 of the Constitution provides for the guarantees of property rights, subject to the limitations set out therein. The Expropriation Act, 2025 does not change these constitutional guarantees.
• The Expropriation Act, 2025 also makes that clear and was brought into enactment to align the Expropriation Act, 2025 with the Constitution (i.e., section 25)
• The Expropriation Act, 2025 contrary to popular believe actually provides for very onerous obligations on the state or an expropriating authority before it may expropriate property or property rights either for a public purpose or in the public interest. 
• Any person affected by a decision to expropriate property by the state or an expropriating authority has several legal remedies available to them during the expropriation process, including to challenge the compensation amount determined by the state or an expropriating authority.
• The Expropriation Act, 2025 acknowledges that there may be circumstances where it would be just and equitable to expropriate property for public interest (land reform) at zero compensation. However, expropriation without compensation it is only applicable if the circumstances which give rise to the expropriation are considered to be just and equitable. This is really in highly exceptional circumstances that the state will be able to expropriate any person's property or property rights without compensation. Investments in key sectors of the South African economy (mining, energy, Oil & Gas, transportation, telecommunications and other infrastructure) are not contemplated as part of any potential expropriation by the state without compensation.  
• Investment protection for any investments will continue to be provided by the South Africa government under the Protection of Investment Act, which specifically refers to section 25 guarantee under the Constitution. Section 25 of the Constitution remains unaltered despite the constitutional amendments process that was embarked-up during 2018/2019 and 2020. 
• Investors with investment flows from foreign states with whom South Africa still have valid and enforceable Bilateral Investment Treaties (such as South Korea, China etc) or in respect of terminated BITs (in respect of investment prior to the termination date) remain protected under the sunset provisions of such BITs (such as the United Kingdom, the Netherlands etc). The investment protection under these BITs typically include guarantees against unlawful expropriation (i.e. expropriation without compensation).
• Investors that are considered "African investors" under the AfCFTA Investment Protocol when it comes into effect in the coming months will be provided with a level of guarantees against unlawful expropriation (both direct and indirect).
• Similar to most expropriation legislations in other jurisdictions, the Expropriation Act does not make provision for compensation for indirect expropriation or creeping expropriation. 

Talk to us about your concerns, and the implications of the Expropriation Act, 2025 having regard to the nature of your investment in South Africa, and what legal options are available to provide you with more comfort in respect of your investment or any investment decision you make in South Africa.