miss mingkwan chawankon - TU e-Thesis (Thammasat ...

LEGAL CONTROL OF ADVERSE ECONOMIC IMPACTS FROM THE E.E.C. PROJECT: FOCUSING ON LAND PROBLEM

BY

MISS MINGKWAN CHAWANKON

A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF LAWS IN BUSINESS LAWS (ENGLISH PROGRAM)

FACULTY OF LAW THAMMASAT UNIVERSITY

ACADEMIC YEAR 2018 COPYRIGHT OF THAMMASAT UNIVERSITY

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LEGAL CONTROL OF ADVERSE ECONOMIC IMPACTS FROM THE E.E.C. PROJECT: FOCUSING ON LAND PROBLEM

BY

MISS MINGKWAN CHAWANKON

A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF LAWS IN BUSINESS LAWS (ENGLISH PROGRAM)

FACULTY OF LAW THAMMASAT UNIVERSITY

ACADEMIC YEAR 2018 COPYRIGHT OF THAMMASAT UNIVERSITY

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(1) Thesis Title LEGAL CONTROL OF ADVERSE ECONOMIC

IMPACTS FROM THE E.E.C. PROJECT: FOCUSING ON LAND PROBLEM

Author Masters of Laws Miss Mingkwan Chawankon Degree Thesis Advisor Masters of Laws Major Field/Faculty/University Business Laws (English Program)

Faculty of Law Thammasat University

Thesis Advisor Assistant Professor Ph.D Somkiat Worapunyaanun Academic Years 2018

ABSTRACT The Eastern Economic Corridor, as known as the E.E.C. project, is Thailand’s special economic zone covering the area of three eastern provinces with the objective to attract foreign investment in order to stimulate state’s economic growth. The E.E.C. project needs to gain land from people by compulsory acquisition for developing the project. Although both the Constitution of the Kingdom of Thailand B.E. 2560 and Immovable Property Expropriation and Acquisition B.E. 2562 require just compensation for expropriation to the land owner, yet the compensation which is assessed by the committee still causes unfairness to the land owner and the society due to the fact that compensation for land expropriation is lower than the market price and cannot be considered as ‘just compensation’, therefore, unjust compensation is contrary to the Constitution. The research found out that the appraisal prices set by the government authority, which are the factors in the criteria to assess the compensation and damages in the Immovable Property Expropriation and Acquisition Act B.E. 2562, do not reflect the real market value of the expropriated land, and pull down the compensation to be unjust and contrary to the Constitution. The provision concerning list of person with the right to get compensation is also not clear enough

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(2) to provide just compensation to affected people. The principle of just compensation in accordance with the Constitution is also not included in the guideline for the committee to set the preliminary price for expropriation.

Comparing to foreign expropriation laws, they mainly focus on the real market value and do not consider the appraisal price. Furthermore, they provide more protection to redress the damage happened to dispossessed people by giving compensation for non-pecuniary damage to compensate severe mental suffering, as well as compensation for loss of goodwill to compensate the business loss resulted from the expropriation.

Due to the fact that the E.E.C. project is a huge project which can generate high income to the state and it is the purpose of land expropriation in the E.E.C. area, this purpose should be the main factor to consider the compensation. The compensation should focus more on how to create just compensation in order to bring about fairness in the society. Besides, in consideration of compensation, the removal of some unfair factors and the addition of some beneficial factors are also recommended. Keywords: E.E.C. Project, Expropriation, Compensation

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ACKNOWLEDGEMENTS

This thesis would not have been successfully accomplished without valuable and meaningful support from all of my surrounding persons, therefore I would like to express my appreciation to them.

First of all, I would like to express my deepest gratitude to my thesis advisor, Assistant Professor Dr. Somkiat Worapunyaanun for his excellent guidance, his dedication, and his kindheartedness toward me. I am also thankful for the Chairman of Committee, Professor Dr. Amnat Wongbandit, and the member of Committee, Dr. Suntariya Muanpawong, for their compassion and helpful advice. Also, I would like to thank you Dr. Lalin Kovudhikulrungsri for always caring and supporting.

I would like to thank all of my LL.M. friends, especially Ms. Warangkana, Ms. Theodora, Ms. Krittika, Ms. Chaowaporn, Ms. Karnkamon for their help and support through hard time of doing this thesis. I am also grateful for Ms. Nantaporn, Ms. Chulee, Ms. Waree, Mr. Pattarapon, Ms. Malintorn and all of the LL.M. officers for their generous help.

Most importantly, I would like to give special thanks to my beloved family. Thanks to my mother for always listening, understanding and supporting me in everything. Thanks to my brother for his all-time help and support. Thanks to my youngest sister for always being supportive. Especially, thanks to my beloved father on heaven for being the greatest role model and best inspiration for me. This thesis is contributed to them.

Miss Mingkwan Chawankon

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TABLE OF CONTENTS Page

ABSTRACT (1) ACKNOWLEDGEMENTS LIST OF TABLES LIST OF FIGURES

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CHAPTER 1 INTRODUCTION 1.1 Background of the study 1.2 Objectives of the study 1.3 Hypothesis of the study 1.4 Scope of the study 1.5 Research methodology 1.6 Expected outcome of the study

CHAPTER 2 PRINCIPLES, FACT AND EXISTING LAWS IN THAILAND

2.1 Principles 2.1.1 Human rights 2.1.2 Balance of interests 2.1.3 Proportionality 2.1.4 Special value

2.2 Existing laws in Thailand 2.2.1 Constitution of the Kingdom of Thailand B.E. 2560 2.2.2 Immovable Property Expropriation and Acquisition Act B.E. 2562

2.2.2.1 Expropriation process

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10 11 12 15 15 20

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2.2.2.2 Persons with the right to receive the compensation 2.2.2.3 Consideration of preliminary price assessment for land expropriation 2.2.2.4 Other types of factors for compensation

2.3 Fact

CHAPTER 3 FOREIGN LAWS 3.1 The United States of America 3.2 European Convention on Human Rights 3.3 Malaysia

CHAPTER 4 LEGAL ANALYSIS

4.1 Goodwill as the consequential damage from the expropriation according to the U.S. expropriation law 4.2 Compensation for the non-pecuniary damage according to the European Convention on Human Rights 4.3 Differences and changes in provision in Constitution of the Kingdom of Thailand B.E. 2540, B.E. 2550, B.E. 2560 concerning the compensation for expropriation. 4.4 Rationale and purpose of expropriation according to section 20 subsection 5 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 4.5 The appraisal value for paying either land and building tax or for collecting juristic transaction fee according to section 20 subsection two and three of the Immovable Property Expropriation and Acquisition Act B.E. 2562 4.6 Persons who are entitled to compensation according to section 40 of the Immovable Property Expropriation and Acquisition Act B.E. 2562

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42 42 51 68

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(6) CHAPTER 5 CONCLUSION AND SUGGESTIONS REFERENCES APPENDICES BIOGRAPHY

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LIST OF TABLES

Tables Page 2.1 Comparison of the Constitution of the Kingdom of Thailand B.E. 2540, B.E. 2550, and B.E. 2560 2.2 Comparison between appraisal prices set by the government authority and the real market price of the land in Bangkok

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LIST OF FIGURES

Figures Page 2.1 The principle describing the land use plan in E.E.C. project 40

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CHAPTER 1 INTRODUCTION

1.1 Background of the Study Lately, in the 21st century, numerous countries all over the globe have

faced a state of the sluggish economy, and each state seeks for its own way to cope with and strengthen the economy in a country by diversified approaches. One of the strategies to stimulate economic growth, which has been universally in demand among various nations, is to draw some areas within a country in order to set up a specific region named a “Special Economic Zone”.

The overall picture of Thailand’s economy in the past few years was continually weak and hardly grew. Foreign investors neither feel secured nor believe in Thailand’s economic stability and certainty. As a result, the Thai government sought for the new supportive policy to help re-boosting economic growth, and the concept of Special Economic Zone was found interesting to be the answer. Thailand’s Special Economic Zone was established under the name of “Eastern Economic Corridor”, or can be shortly called the E.E.C. project. This project covers parts of three provinces in the Eastern of Thailand which are Chonburi, Rayong, and Cha-cheong-sao. The state policy concerning this project was just recently enacted in May 2018 under the act officially named “Eastern Special Development Zone Act B.E.2561”, or as known as the E.E.C. Act.

According to the content of the E.E.C. Act, it has brought several changes in law and structure into the selected three provinces. One of the outstanding controversial issues among those changes is the change of the urban planning. Transforming an ordinary community into a welcoming hub for investment to correspond with the concept of Special Economic Zone requires a new urban plan to serve the purpose of business and investment better.

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Once there is the change of urban planning and land use in town, some areas that used to be the community and living place for people according to the previous urban plan have to be changed into places for other purposes in order to prepare themselves to be the hub for foreign investment, such as to be the industrial area. When the communities are required to be changed into industrial places in accordance with the government’s policy to stimulate country’s economy, people who normally live in the particular areas have to lose their homes and workplaces undeniably and inevitably. When the government needs to acquire land or real estate from people, it can be done through different methods either by compulsory acquisition with the use of state power, or acquisition by purchase. Regardless of the approaches, dispossessed people will get paid back in terms of money for their losses of land.1

In the case of expropriation, the government authority expropriated private’s land by granting compensation in exchange of the expropriation, which the criteria to consider the monetary compensation is already prescribed in the law of expropriation. However, it is found that some amount of people were not voluntarily to be dispossessed from their lands or workplaces, and this circumstances bring about the conflict between the government and people. There occurs the problem about the unfairness of compensation due to the accusation from dispossessed people who lost their lands.

From the change of town planning, apart from the affected community which its land use has to be changed, there also affects the green area for agriculture that got the adverse consequences from the development of E.E.C. economic project as well. For example, the environment in the surrounding area inevitably encounters the effects from the occurring and the development of industry in terms of pollution in soil, water, air, noise, or the industrial waste.

1 Immovable Property Expropriation and Acquisition Act B.E. 2562

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Another consequence of the economic and social development in Thailand in the last decade is injustice and inequality in Thai society. According to the study of “The Concentration of Wealth in Thai Society” 2 which compiles statistic from the Department of Land and analyses the difference between owning various kinds of property and the Gini Coefficient for more understanding about inequality in Thai society, it obviously reflects that there is a high level of inequality among Thai people in the overall picture in holding a property, especially land, and even higher than the inequality of income. The high level of wealth concentration among people is mainly shown in terms of the ability of landholding.

One of the most fundamental but crucial human rights is the right to access to land, yet this right is continually being destroyed because of the government’s demand for land through expropriation.3 A huge amount of lands in Thailand are in hands of only certain groups of people, both rich people, and investors, while a great number of farmers do not have or have only a few amounts of land and workplace. This situation brings about the disparity and inequality among people.

The problem of inequality between the rich and the poor is not likely to be solved by the E.E.C. Act, and still have a tendency to further become worse by the result of the change of urban plan of this Act, since the land expropriation by the government makes land’s price in a particular area becomes more expensive. The higher land’s price is, definitely, the fewer

2 Duangmanee Laowakul [2556] “The Concentration of Wealth in Thailand” (“การกระจุกตัวของความมั่งคั่งในสังคมไทย” ในรายงานวิจัยฉบับสมบูรณ์ โครงการ “สู่สังคมไทยเสมอหน้า การศึกษาโครงสร้างความมั่งคั่ง และโครงสร้างอ านาจเพื่อการปฏิรูป”) 3 Demelash Shiferaw Reta, “A Human Rights Approach to Access to Land and Land Dispossession: An Examination of Ethiopian Laws and Practices” [2016] volume 9: Issue 2

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opportunities the poor can access to land owing to the monetary factors, especially in the rural area due to the fact that most people’s occupations rely on agricultural land. The writer realizes the importance of the problem of inequality and holds an opinion that no one should be left behind from the state’s investment and business advancement.

Even though the E.E.C. project is considered as a project with economic development and investment promotion purposes, yet can be noticed that this project mainly focuses on the economic and business side. Nevertheless, considering the principle of sustainable development, according to the Sustainable Development Goals from the United Nations, the objectives of state development do not have only economic terms, but also the good and sustainable quality of life of people in the community as well.

The change of town planning of the E.E.C. project brings about the land expropriation of Thai people to especially support the foreign business and investment, yet Thai people do not get enough compensation and life development as they are entitled to. The benefits from developing economic and business unfortunately fall in the foreign investors’ hand who spoil lands in our country for their investment. This cause the injustice upon Thai people who inevitably lost the rights in their lands. It gives too much priority on the business and economic development, whilst overlooking an importance of people’s rights and quality of life. Furthermore, unless people are compensated for their losses, it will worsen people’s life and will reinforce that the E.E.C. project is the development for foreign investment but leave Thai people behind. It will also reinforce that the E.E.C. project does not conform to the Sustainable Development Goals, and does not truly benefit the state.

In order to make the state’s development sustainably, the writer realize the importance of development without leaving someone behind, which means it should be the development in terms of economy together with the

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protection of people’s rights and quality of life. The development of these two sides together can be done by having the balance point between the two sides’ benefit, without unfair damage on any side. The justification and balance between the economic development of the Special Economic Zone and the protection of right of people in the surrounding area are the interesting issues for the sustainable economic development of the country.

To summarize the points, the main issues which the writer would like to focus and do further research in this study are as follows:

1. Just monetary compensation for dispossessed people who are affected from the expropriation.

2. Theory behind the balance and fairness between the state’s economic development and people’s rights, and social and economic inequality. 1.2 Objectives of the study

1. Study the principles behind the criteria of just monetary compensation

for people in case of land expropriation according to the land expropriation law both under Thai law and foreign laws.

2. Study the theories to create balance and fairness between the economic development from the Special Economic Zone and the protection of people’s rights. 1.3 Hypothesis of the study

In the process of land expropriation for developing Special Economic

Zone, can people’s rights be protected and fairly compensated whilst the economy of the state be developed at the same time?

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1.4 Scope of the study The study focuses on the concepts and principles of land expropriation and just compensation for Special Economic Zone, both in Thailand and foreign countries. Besides, the study will also pay attention to how to create balance of interest, and fairness between state’s economic development and people’s rights. 1.5 Research methodology

The study is based on documentary research, by searching and analyzing Thai and foreign countries’ legal regulations concerning expropriation and criteria for just compensation consideration from government documents, and also academic journals, articles, textbooks, scholars and experts’ opinions. Other relevant information on the internet and documents, concerning Special Economic Zone, will also be studied, and also news and reports from local people in the involved area as well. 1.6 Expected outcomes of the study

1. Propose the fair and reliable compensation for Thai people in case of land expropriation according to the land expropriation law

2. Understand the theories to create balance and fairness between the economic development from the Special Economic Zone and the protection of people’s rights.

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CHAPTER 2 PRINCIPLES AND EXISTING LAWS IN THAILAND

2.1 Principles

Before the further consideration of the necessary legal principles concerning compensation for injured persons from expropriation case, it is essential to understand what kind of damage which is entitled to the compensation is. Therefore, firstly the writer would like to provide fundamental ground of damage. According to

the definition in the Oxford English Dictionary, ‘damage’4 means:

(1) Physical harm caused to something which makes it less attractive, useful or valuable;

(2) Harmful effects on somebody or something. In the Civil Code of Austria, the definition of ‘damage’ is provided as harm

caused to the property, rights, or person of another. The limitation to harm which is

caused to property, rights, or the individual clearly means compensatable damage. 5

Another definition of ‘damage’ which the writer finds it is interesting is clearly provided by Benjamin C. Zipursky. He explained that “damages” refer to the monetary payment that a person or entity is obligated to pay to a victim who successfully prosecutes a civil action against that person or entity, while “damage”, “harm”, or “loss”, refers to setbacks or adverse effects that a person might suffer, whether as the result of wrongful conduct or other causes. These effects include bodily harms (including death), harm to tangible property, out-of-pocket expenditures, loss of present and future wealth, loss of reputation, loss of privacy, pain and suffering, emotional distress, and loss of enjoyment.6 From the

4 Oxford Learner’s Dictionaries <https://www.oxfordlearnersdictionaries.com/definition/english/damage_1?q=damage> accessed 12 July 2019

5 § 1293 s.1 Allgemeines bürgerliches Gesetzbuch 6 Benjamin C. Zipursky, “Civil Recourse, Not Corrective Justice”, 91 GEO. LJ. 695, 748-49 (2003)

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aforementioned meanings of damage, it can be concluded and interpreted that damage is the harm which causes adverse and negative suffering in detriment to something or someone, and such suffering effect, no matter in what pattern it is, brings about the right to be compensated for the detriment of value which is adversely diminished by that harm. To consider in the context of expropriation, which is the action done by the government to take an acquisition of people’s immovable properties, it can be seen that the situation when there occurs the damage is when a person has lost lands, immovable properties which he or she possess or has a right to ownership, or any other loss and suffering resulted from the government authority in the process of expropriation in accordance with the law. Such loss of people is considered as detriment which is one of ‘damage’ upon the person whose property is expropriated as well. As a result, such person is entitled to be compensated for what he or she has lost from the government’s property acquisition. When a person who has to lose his or her property is entitled to get the compensation in accordance with the law, it is due to the fact that the possession of a person upon any property is one of the rights which are universally guaranteed and protected by legal principle of Human Rights. Therefore, the writer would like to provide legal principles which are related to the issue of compensation for expropriation, as follows:

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2.1.1 Human Rights a. Equality

In the stage of international human rights law, the principle of Equality is one of the general but fundamental in this context. Such principle guarantees that people in equal circumstances are treated in the same way equally under the law and practice. The state has to take affirmative action in accordance with the Equality principle in some situations so as to decrease and get rid of factors which partly bring about discrimination among people. Equality as human rights prohibits discrimination on the grounds of race, color, gender, language, religion, political or other opinion, national or social origin, property, birth and other statuses such as age, gender disability, nationality, and sexual orientation.7 Equality which has been guaranteed for the equal treatment upon people irrespective of their differences covers all circumstances and perspectives in human life. According to the Universal Declaration of Human Rights (UDHR), there are a number of rights which people, as human being, ought to enjoy, including the basic civil, cultural, political, social and economic rights.8

b. Economic Rights Economic Rights and Social Rights guarantee that all human beings as a

citizen of the state are afforded conditions which they are able to meet their conditions and their needs. Normally, economic and social rights include the right to education, the right to food, the right to health, the right to housing, the right to social security, the right to social security, and the right to work.9

7 Icelandic Human Rights Centre, ‘The Right to Equality and Non-discrimination’ <http://www.humanrights.is/en/human-rights-education-project/human-rights-concepts-ideas-and-fora/substantive-human-rights/the-right-to-equality-and-non-discrimination> accessed 12 July 2019 8 ESCR-Net, ‘Introduction to Economic, Social, and Cultural Rights’ <https://www.escr-net.org/rights> accessed 4 June 2019 9 NESRI, ‘Economic and Social Rights’ <https://www.nesri.org/human-rights/economic-and-social-rights> accessed 11 June 2019

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c. Right to Land While there are numerous human rights which have been established in the

ground of international law, there is no specific provision for ‘right to land’ being codified elsewhere in the international human rights law. Yet, whilst various types of rights are literally guaranteed, access to land broadly affects some of the fundamental human rights, such as right to housing, right to food, right to water, right to health or right to work, due to the fact that those rights require availability of land resources. All of those rights are connected to access to land. Therefore, land is a crucial condition which fundamental human rights mainly need. However, as known as a limited natural resource, land are not enough for everyone to be able to access to land, and that could bring about problems in landlessness and inequality among people. 10

2.1.2 Balance of Interest As a limited natural resource, land plays a major role in all parts in human

rights, including international and national context so that land policy is established to manage it for government and private sector, and a number of human rights are consequentially affected by that. Both state and individual needs land; the state needs land for public demands, while individual also needs land to satisfy human needs. The compulsory acquisition takes place when the government tries to take control of people’s land so there comes the problem of balancing of public and private interests. It can be said that striking the right balance between the public and private interests is the purpose of compulsory land acquisition. So as to do compulsory land acquisition, the government ought to develop the whole society, which means land compulsory acquisition can be considered as one of the greatest method to establish the right balance between public and private interest.11

10 Elisabeth Wickeri and Anil Kalhan, “Land Rights Issues in International Human Rights Law” Institute for Human Rights and Business [2010] 11 Phan Trung Hien, “Striking the Right Balance between the Public and Private Interests in Compulsory Acquisition of Land in Vietnam”, Land grabbing, conflict and

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2.1.3 Proportionality The essential idea of the principle of proportionality is that individual

freedom of action should only be limited to the extent that it is necessary for the public interest. In its simple form, proportionality means that a state measure must be commensurate with the objective Pursued. In its more elaborate form, proportionality involves a three-prong examination: an analysis of the suitability (or appropriateness) of the challenged measure to achieve the goal pursued; a necessity test to verify whether the measure was necessary in light of available alternatives, and a stricto sensu assessment of proportionality to ascertain that the benefit of realizing the measure’s objective outweighs the harm it causes, that the effect of the measure is not ‘disproportionate’ or excessive when compared to the interests affected. Sometimes a fourth step is added, an evaluation of the legitimacy of the measure’s objective. Proportionality analysis is a well-established feature of the jurisprudence of the European Court on Human Rights. It is particularly relevant to the European Court on Human Rights’s examination of the rights in Articles 8-11 of the European Convention on Human Rights, but it is also relevant to the protection of property under Article 1 of the First Protocol to the European Convention on Human Rights. This provision states that:

‘Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of

agrarian-environmental transformations: perspectives from East and Southeast Asia, An international academic conference, Chiang Mai University, Conference Paper No. 39 [2015]

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property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.’12

2.1.4 Special Value Principle The principle of land valuation assessment for land expropriation differs from

the principle of land valuation assessment for normal transaction which applies the open market’s principle. The open market’s principle is an economic term to describe the system of free market activity with naturally functioning operations without or limited interference or outside influence from governmental agencies or others. The price of goods in an open market is driven by the principle of demand and supply among willing buyer and willing seller. As a result, such price which the willing buyer and willing seller voluntarily agree upon is considered as the ‘Market Value’.13 However, in expropriation, the landlords or immovable property’s owners are not voluntary to sell the land their immovable properties. When it comes to the expropriation or compulsory transaction, the land owner is entitled to the right to get the compensation which is higher than the market value, and it is called ‘the Special Value to the Owner’ (or shortly called ‘S.V.’).14 The Special Value to the owner requires to take certain special issues into consideration, as follows:

12 Catharine Tit, “Refining the Expropriation Clause: What Role for Proportionality?”, Forthcoming in Julien Chaisse (ed.) China-European Union Investment Relationships: Towards a New Leadership in Global Investment Governance?, Cambridge University Press [2017] 13 Troy Segal, “Open Market” <https://www.investopedia.com/terms/o/open-market.asp> accessed 13 June 2019 14 Dr. John Keogh, “The ‘Special Value’ of Land in Compulsory Acquisition Cases: A summary of the legal approaches to a contentious issue in valuation practice”, Pacific Rim Real Estate Society Seventh Annual Conference [2001]

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1. The land owners are not voluntary to sell their lands, therefore they deserve persuasive price for them to sell it.

2. The land might be incline to have more expensive price in the future and the owners would like to keep it in order to wait for the higher land price, yet the owner lose the opportunity to sell due to the expropriation.

3. The monetary compensation is not able to purchase the same kind of land anymore.

4. There is a difference between the special value, which is the enhanced property valuation, and the compensation for damage, which is the costs for disturbance and re-instatement.15

The consideration of monetary compensation for the expropriation, based on the principle of special value to the owner needs to take into consideration these following matters:

1. Market Value The market value must be the price on the date that the royal decree of

such expropriation comes into force 2. Severance Damage The severance damage is the damage on parts of the land which are left after

some parts of the land have been expropriated, and such damage is another amount of monetary compensation apart from the price of the expropriated land.

3. Injurious Affection The injurious affection is the adverse consequence, which is one of the

damages of the land which is left from the expropriation 4. Consequential Damage The consequential damage is the damage resulted from the removal from

the expropriated land. This consequential damage is comprised of ‘Disturbance’, ‘Loss of profits’, ‘goodwill’, and ‘Reinstatement’.

15 Ibid

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5. Betterment The betterment is the increased value of the land which is left from the

expropriation, and this betterment will be deducted from the assessed compensation by virtue of the law.16

When the land has the special value to the owner over the market value, the land owner is entitled to be compensated for what the land was worth to them. This principle is shown in the case of Pastoral Finance Association Ltd v Minister that: “That which the appellants were entitled to receive was compensation not for the business profits or savings which they expected to make from the use of the land, but for the value of the land to them. The most practical form in which the matter can be put is that they were entitled to that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it.”17 The dispossessed owner is entitled to either market value or its special value to the

owner. 18 From this case, the principle is established that the market value of the land may not necessarily be the real value of the land to the dispossessed owner. However, value to the owner is the value of the land at the time of the expropriation, with all its existing advantages and possibilities, but excluding any advantage due to the carrying out of the project which the land has been acquired for.19

16 Subhaporn Sittikorn, ‘Property owner satisfaction with compensation for expropriation of residential property: A case study of Ram Intra-Ad Narong expressway’, (Housing Development thesis, Chulalongkorn University 1997) 17 Pastoral Finance Association Ltd v Minister [1914] AC 1083 at 1088 18 Dr. John Keogh, “The ‘Special Value’ of Land in Compulsory Acquisition Cases: A summary of the legal approaches to a contentious issue in valuation practice”, Pacific Rim Real Estate Society Seventh Annual Conference [2001] 19 Ibid

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2.2 Existing laws in Thailand concerning the problems The Immovable Property Expropriation and Acquisition Act B.E. 2562, which

has been recently enacted on 29 May 2562, is partly related to Thai Constitution due to the fact that the Immovable Property Expropriation and Acquisition Act include certain provisions concerning the restriction to the rights and liberties of a person. Section 26 together with section 33 and section 37 of the Thai Constitution says that such actions of the restriction to the rights and liberties of a person can be done by the authority of the legislation provided by the Constitution.

From the aforementioned statement in the Immovable Property Expropriation and Acquisition Act B.E. 2562, certain actions by virtue of the Act might concern the restriction of the rights and liberties of a person, however such restrictions are able to be accomplished by the authority of the Constitution, which means such restriction is allowed only if it is not contrary to the provision in the Constitution. Therefore, it is necessary to consider deeply in details about the particular provisions in the Thai Constitution B.E. 2560 which are related to the restriction of the rights and liberties of a person in order to jointly consider with the Immovable Property Expropriation and Acquisition Act B.E. 2562 about the legality of the Act.

2.2.1 Constitution of the Kingdom of Thailand B.E. 2560 Specific legislations of the Thai Constitution B.E. 2560 which are related to the restriction of rights and liberties of a person, according to the Immovable Property Expropriation and Acquisition Act B.E. 2562, will be provided as follows: 1. Section 26 of the Thai Constitution states that:

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“The enactment of a law resulting in the restriction of rights or liberties of a person shall be in accordance with the conditions provided by the Constitution. In the case where the Constitution does not provide the conditions thereon, such law shall not be contrary to the rule of law, shall not unreasonably impose burden on or restrict the rights or liberties of a person and shall not affect the human dignity of a person, and the justification and necessity for the restriction of the rights and liberties shall also be specified.

The law under paragraph one shall be of general application, and shall not be intended to apply to any particular case or person”. 2. Section 33 of the Thai Constitution states that:

“A person shall enjoy the liberty of dwelling. Entry into a dwelling without the consent of its possessor or a search of a dwelling or private place shall not be permitted, except by an order or a warrant issued by the Court or where there are other grounds as provided by law.” 3. Section 37 of the Thai Constitution states that: “A person shall enjoy the right to property and succession. The extent and restriction of such right shall be as provided by law. The expropriation of immovable property shall not be permitted except by virtue of the provisions of law enacted for the purpose of public utilities, national defense or acquisition of national resources, or for other public interest, and fair compensation shall be paid in due time to the owner thereof, as well as to all persons having rights thereto, who suffer loss from such expropriation by taking into consideration the public interest and impact on the person whose property has been expropriated, including any benefit which such person may obtain from such expropriation. The expropriation of immovable property shall be made only insofar as it is necessary for the purposes provided in paragraph three, except for an expropriation to use the expropriated immovable property to compensate and restore fairness to the owner of property expropriated as provided by law.

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An immovable property expropriation law shall specify the purpose of the expropriation and expressly prescribe a period of time for the use of the immovable property. If the immovable property is not used to fulfill such purpose within such period of time or there is immovable property remaining from the use, and the original owner or his or her heir wishes to have such immovable property returned, it shall be returned to the original owner or heir. The time period for requesting return of expropriated immovable property which has not been used, or of the remaining immovable property, to the original owner or his or her heir, as well as the return thereof and the reclaiming of the compensation paid, shall be as provided by law. The enactment of an immovable property expropriation law which specifically sets out immovable properties or owners of immovable property subject to the expropriation as necessary, shall not be deemed contrary to section 26 paragraph two.”

From the aforementioned provisions of the Thai Constitution B.E. 2560 which are related to the expropriation in accordance with the Immovable Property Expropriation and Acquisition Act B.E. 2562, it can be concluded that the restriction of the rights and liberties of a person is not able to contradict any of the legislations in the Constitution. Any restriction of the rights and liberties of a person with respect to land expropriation, according to the Immovable Property Expropriation and Acquisition Act, should not be applied only upon any specific person but ought to be used in general. The particular restriction is also required to take not only Constitution provisions into consideration, but also needs to include Rule of Law and Human Rights as well, due to the fact that individual person’s rights and liberties in property and dwelling are strongly protected under the universal principle of Human Rights as well as the Rule of Law.

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As the Constitution B.E. 2560 just recently come into force in Thai legal system, there are previous Constitutions B.E. 2540 and B.E. 2550 which were used prior to this Constitution. The Constitution B.E. 2540 and B.E. 2550 also have the specific provisions for protection of people’s right concerning expropriation and compensation as well. Nevertheless, the provisions of such protection are different in these three Constitutions, including B.E. 2540, B.E. 2550, and B.E. 2560, in certain wordings which make their meaning changed and different from each other. The writer would like to show the differences by comparing those three provisions of the Constitution concerning protection of citizen’s right about expropriation and compensation in the following table.

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Constitution of the Kingdom of Thailand B.E. 2540

Constitution of the Kingdom of Thailand B.E. 2550

Constitution of the Kingdom of Thailand B.E. 2560

Section 49 The expropriation of immovable property shall not be made except by virtue of the law specifically enacted for the purpose of public utilities, necessary national defense, exploitation of national resources, town and country planning, promotion and preservation of the quality of the environment, agriculture or industrial development, land reform, or other public interests, and fair compensation shall be paid in due time to the owner thereof as well as to all persons having the rights thereto, who suffer loss by such expropriation, as provided by law. The amount of compensation under paragraph one shall be fairly assessed with due regard to the normal purchase price, mode of acquisition, nature and situation of the immovable property, and loss of the person whose property or right thereto is expropriated.

Section 42 The expropriation of immovable property shall not be made except by virtue of the law specifically enacted for the purpose of public utilities, necessary national defense, exploitation of national resources, town and country planning, promotion and preservation of the quality of the environment, agricultural or industrial development, land reform, conservation of ancient monument and historic sites, or other public interests, and fair compensation shall be paid in due course to the owner thereof as well as to all persons having the rights thereto, who suffer loss by such expropriation, as provided by law. The amount of compensation under paragraph one shall be fairly assessed with due regard to the normal market price, mode of acquisition, condition and location of the immovable property, loss of the person whose property or right thereto is expropriated, and benefits that the State and the person whose property or right thereto is expropriated may receive from the use of the expropriated property.

Section 37 The expropriation of immovable property shall not be permitted except by virtue of the provisions of law enacted for the purpose of public utilities, national defense or acquisition of national resources, or for other public interest, and fair compensation shall be paid in due time to the owner thereof, as well as to all persons having rights thereto, who suffer loss from such expropriation by taking into consideration the public interest and impact on the person whose property has been expropriated, including any benefit which such person may obtain from such expropriation. The expropriation of immovable property shall be made only insofar as it is necessary for the purposes provided in paragraph three, except for an expropriation to use the expropriated immovable property to compensate and restore fairness to the owner of property expropriated as provided by law.

Table 2.1 Comparison of Provisions from Constitution concerning compensation in expropriation. Source: Constitution of the Kingdom of Thailand B.E. 2540, B.E. 2550, and B.E. 2560

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2.2.2 Immovable Property Expropriation and Acquisition Act B.E. 2562 Apart from the regulations in the Thai Constitution B.E. 2560 with regard to

the restriction of rights and liberties concerning expropriation and compensation problems, another existing regulation which is related to the particular problems is the Immovable Property Expropriation and Acquisition B.E. 2562. This Act is the main regulation that describes in details of expropriation process including monetary compensation from expropriation. In this study, the writer would like to present this Act by dividing clearly between expropriation and monetary compensation for expropriation, as well as present by dividing between expropriation process and the compensation for expropriation, and explaining clear factors and criteria in considering compensation for expropriation according to this Act in order to be more convenient for further studying.

2.2.2.1 Expropriation Process

The expropriation process begins when the government finds it is necessary to acquire any land or immovable property for certain activities with purposes to be beneficial for the state, the government can expropriate the particular land or immovable property by virtue of the Immovable Property Expropriation and Acquisition Act B.E. 2562 together with a Royal Decree to specify essential details of such expropriation. Purposes of expropriation for the benefit of the state include public utilities, national defense, obtaining natural resources, or other public utilities including town planning, promotion and conservation of resources quality, agricultural development, land reform, land readjustment, conservation of historic site, industrialization, and developing a Special Economic Zone.20 The Royal Decree’s essential details include the purpose of the expropriation, period of time which the Royal Decree will be enforced, land boundary which is to be expropriated, period of time to begin the survey, the expropriation officer, and the map or the plan showing

20 Section 7 of the Immovable Property Expropriation and Acquisition Act B.E. 2562

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the expropriated land boundary.21 Such Royal Decree shall be generally displayed in public so that people can acknowledge the expropriation.22

Prior to the expropriation, the officer can enter to the land within the boundary which is specified to be expropriated for the survey of the land or measuring the land. The land owner or possessor must be informed about the entry not less than 15 days before the entry or the measure, and the land owner is also entitled to the compensation for any damage caused by such performance.23 The officer is required not only to explain expropriation information for more understanding of people but also to receive people’s feedbacks and opinions for consideration.24

In the consideration process of the preliminary valuation assessment, the preliminary price of expropriated land and the monetary compensation will be assessed by a committee, which is comprised of representatives of the officer, the Treasure Department, the Department of Land, as well as the Amphoe chief officer and other related local chief officer.25 The land price will be assessed within 180 days from the date of appointing the committee, by means of considering criteria of compensation for the expropriation under section 21 of the Act which will be studied further in the next topic.26 The committee can negotiate with the land owner for purchase yet the price cannot exceed the price which is already set by the committee.27 The expropriation will take place when such negotiation fails28, but the officer will be enable to possess or use the immovable property only after the

21 Section 8 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 22 Section 11 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 23 Section 12 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 24 Section 14 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 25 Section 19 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 26 Section 21 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 27 Section 25 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 28 Section 28 of the Immovable Property Expropriation and Acquisition Act B.E. 2562

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compensation is deposited or paid to the owner.29 The compensation must be paid within 120 days from the date of making a contract in case of purchase30, or within 120 days from the date which the Act on immovable property expropriation is enforced in case of expropriation. 31 Once the ownership of immovable property belongs to the officer, the officer shall inform the land officer about the acquisition of property for registration. 32

When the person who is entitled to the compensation is not satisfied with the amount of compensation set by the committee, such person has the right to appeal to the Minister within 90 days from the date of receiving compensation either from the officer or from the deposit. Not less than 5 legal scholars who are specialized in immovable property appraisal will be appointed by the Minister, and they will be responsible for assessing compensation and providing opinions for the Minister within 180 days from the date of receiving the appeal. 33 If the person is still not satisfied with the decision of the Minister or has not received the Minister’s decision by the time specified, the person has the right to bring the case to the court within 1 year from the date of receiving the decision or from the overdue date.34 Any piece of land which is acquired by virtue of the Act must be used in accordance with the purpose of the expropriation which was listed in the Royal Decree, and the use of such expropriated land for that purpose must also begin not exceed 5 years from the overdue date of time period for the Royal Decree enforcement, or within the specified period of time prescribed in the Immovable Expropriation Act, as the case may be.35 However, in case the expropriated land is not used according to the purpose of the expropriation within the specified period of time, or the land is left

29 Section 31 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 30 Section 25 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 31 Section 45 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 32 Section 62 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 33 Section 49 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 34 Section 50 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 35 Section 51 of the Immovable Property Expropriation and Acquisition Act B.E. 2562

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from the use, the owner or the heir of owner shall have the right to ask for the return of the land within 3 years from the overdue date in each case. The former owner or the heir does not have the right to ask for return of the land once it is overdue or once the land is already used in accordance with the expropriation purpose and later becomes unnecessary for the use of such purpose. 36

The aforementioned process of expropriation is the process in accordance with the Immovable Property Expropriation and Acquisition Act B.E. 2562. Any expropriation which is done correspondingly is considered as ‘just expropriation’ according to the law since it is done correctly and legally under the due process which is authorized by the Constitution, and the right of dispossessed owner to get the compensation will arise from the lawful and just expropriation. On the other hand, any expropriation which does not conform to the process prescribed in the Act will not be considered as expropriation, or can be called unjust expropriation, and will not establish the right to get compensation, due to the fact that only just expropriation can bring about compensation in accordance with the Immovable Property Expropriation and Acquisition Act B.E. 2562.

These following court decisions are some of the expropriations which are not conform to the legal expropriation process in accordance with the law and considered as illegal expropriation, and that illegal expropriation does not establish any result of the lawful expropriation, including the right to the compensation for expropriation due to the fact that it does not fall under ‘expropriation’ according to the law at the first place.

The case of slaughterhouse construction on the land which was expropriated for expansion of Bangkok harbor.37

1. Court Decision no. 1081/2494 The plaintiff brought the case to the court for suing Ministry of Transportation

as a defendant and accusing that plaintiff’s land was expropriated by the defendant

36 Section 53 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 37 Thai Supreme court decision number 1081/2494

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for the purpose of Bangkok harbor expansion, as described in the Expropriation Act, yet the defendant did not use the expropriated land for the purpose within 5 years. The defendant argued that the expropriated land was already used by feeding cattle and building bunkhouses cattle and building bunkhouses for the purpose of expanding the area of a slaughterhouse, which is one of the projects of Bangkok harbor expansion according to the Expropriation Act.

The Supreme court ruled that the dispute is whether the defendant used the expropriated land in accordance with the purpose mentioned in the Expropriation Act for Bangkok Harbor Expansion or not, and the initial issue is that the slaughterhouse is the harbor’s affair or not. After the consideration, it was found out that after the land expropriation process and harbor expansion, the military unit asked to share some area of the expropriated land to build the slaughterhouse but the land was not enough for such purpose, so they enacted another Act to acquire more lands claiming that for the purpose of Bangkok harbor expansion, but in fact it was for the slaughterhouse expansion which the defendant considered it as one of the projects for Bangkok harbor that wants to include the industry.

The court stated that the slaughterhouse could not be considered as part of the harbor, it ought to be only located nearby the harbor for supporting the harbor. The slaughterhouse just asked for permission to use parts of the land, but it was not a part of the harbor at the beginning of expropriation. Therefore, it is conclusive that the slaughterhouse is not considered as the affair in accordance with the purpose of expropriation for harbor expansion. Even though there was a construction of cattle and bunkhouses, but according to the Immovable Property Expropriation Act, the expropriation can take place only for the affairs of public utility which is beneficial to the public, such as railway, trolley, canal, water supply, irrigation, power plant, or other affairs related to public safety and commonweal. Therefore, killing animals for sale is just commercial affair but not a public utility. As a result, land expropriation for killing animals for sale is not allowed, and when the expropriated land was not used for exceeding 5 years, the plaintiff was entitled to ask for the return of the land. This court decision is an example of applying the law for the case that requires the

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application in accordance with the legislation literally or with the intention of such legislation.

2. Court Decision no. 558/249638 From the same fact of expropriation case, the fact is conclusive from the

previous case (Court Decision no. 1081/2494) that the slaughterhouse is a commercial not public utility, meanwhile it is also conclusive that slaughterhouse is not a part of the harbor. The plaintiff in this case asked the court to cancel the expropriation of plaintiff’s land by claiming that such expropriation has the true intention to use the plaintiff’s land for being cattle which is not public utility, therefore the defendant has no authority to expropriate and also asked the court to affirm that the ownership of the land is still owned by the plaintiff. Although the defendant argued that cattle is part of the harbor project, but it can be concluded, by using the conclusive fact from the previous cast, that in this case the purpose of expropriation is to expand the cattle business is not public utility, therefore such expropriation was contrary to the Immovable Expropriation Act B.E. 2477 which also required the expropriation to be only for public utility like the current version of Immovable Property Expropriation and Acquisition Act B.E. 2562 does. Besides, such expropriation was also contrary to the Thai Constitution B.E. 2494. When it is found that the true intention was not to expropriate for harbor expansion which is for public utility, but the true intention was for cattle business which is not the public utility, as a result, such expropriation was ineffective under the law. The expropriation by virtue of the Act of expropriation for Bangkok harbor expansion was ineffective in accordance with the Immovable Property Expropriation B.E. 2477 which was enforced at the time of the case, and the ownership of the land were not transfer to the defendant at all.

The difference between the two cases is that the plaintiff in the first case (1081/2494) asked for the return of the expropriated land, but the plaintiff in the second case (558/2496) did not ask for the return of the expropriated land, but asked for the cancellation of expropriation Act of the plaintiff’s land. However, according to

38 Thai Supreme court decision number 558/2496

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the second case which the court ruled that land expropriation for cattle business is ineffective under the law, the result of expropriation in the first case would also be ineffective as well. Yet, the plaintiff in the first case was only asking for the return of the land because the land was not used in accordance with the purpose, the court decision, as a result, was made accordingly as the plaintiff’s request.

In both cases, they were not complete as a legal expropriation, and the result were the cancellation of expropriation and the return of the land as restitution. Such restitution and returning properties are not considered as a compensation according to the Immovable Property Expropriation law, since they originated from the illegal action and did not fall under the expropriation at the beginning, so the lawful compensation for expropriation was not established in such cases.

2.2.2.2 Persons with the right to receive the compensation

When the expropriation is completely and legally done according to the process prescribed in Immovable Property Expropriation and Acquisition Act B.E. 2562, the dispossessed land owner will have the right to get the monetary compensation for the expropriated land. 39 However, according to Act, not only the dispossessed owner of the expropriated land will get the compensation, but also specific persons which are listed in the Act which include the following persons:

1. An owner of land to be expropriated. 2. An owner of tenements, structures or other immovable properties which

exist on the land on the date that the Royal Decree is enforced, or it is constructed afterwards by approval of the officer.

3. An owner of a perennial plant located on the land on the date that the Royal Decree is enforced.

4. A lessee or a sub-lessee of the land, tenement, or other structure to be expropriated.

39 Section 40 (1) of the Immovable Property Expropriation and Acquisition Act B.E. 2562

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5. A person who lose the benefit of using roads, installing water pipes, drainpipes, electricity lines, or other similar items through the land to be expropriated, according to section 1349 or section 1352 of the Civil and Commercial Code.

6. An owner or lawful possessor who resides or performs commerce or lawful business at the immovable property to be expropriated, and such person suffers damage caused by being removed from the expropriated immovable property.

2.2.2.3 Consideration of preliminary price and compensation assessment for land expropriation

Considering section 20 of the Immovable Property Expropriation and Acquisition Act B.E.2562 which prescribes the criteria for the preliminary valuation assessment for the expropriated land, it requires to the combined consideration of price, nature of the land, rationale and purposes concerning the following issues:

1. Market price of the expropriated land which is used for the transaction on the date that the royal decree by virtue of section 8 come into forced.

2. Appraisal price of the land which the government authority has set for the benefit of land and building tax collection.

3. Appraisal price of the land for the transaction and juristic act fee collection according to the Land code.

4. Nature and location of the land; and 5. Rationale and purpose of the expropriation. 40 The consideration for preliminary valuation assessment in section 20 of the

Act B.E. 2562, which just recently come into force, has totally the same content as the Immovable Property Expropriation Act B.E. 2530 which was the previous applicable expropriation law. In the Immovable Property Expropriation Act B.E. 2530, there is also the same criteria in consideration for preliminary valuation assessment as well in section 21.41

40 Section 20 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 41 Section 21 of the Immovable Property Expropriation Act B.E. 2530

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During enforcement of the previous Expropriation Act B.E. 2530, there was a guideline from the Order of the Ministry of Interior42 concerning the consideration of the compensation especially for assuring that the compensation assessment by officers within the same organization follows the same guideline and stays alike. Such guideline was made specifically for applying with section 21 of the previous Act B.E. 2530, yet due to the fact that section 20 of the new Act also shares totally the same content with the previous one, therefore the writer thinks that it can be applied with section 20 of the new Act B.E. 2562 mutatis mutandis. Such order include the guidelines for criteria of monetary compensation consideration for the immovable property in according with the Immovable Property Expropriation Act B.E. 2530. The guideline describes details of criteria for preliminary valuation assessment for land expropriation in each factor one by one, and consider together with the factors of criteria prescribed in section 20 of the Immovable Property Expropriation and Acquisition Act B.E. 2562, as follows:

Section 20 (1) the ordinary market value in the real estate expropriation market, in accordance with section 20 subsection one of the Immovable Property Expropriation and Procurement B.E. 2562, shall consider the following:

1.1 The price which the buyer informed to the Department of Land within the surrounding area before the date that the royal decree comes into force.

1.2 The registered mortgage list of the land and building from the Bank or financial institute.

1.3 The proposed price in the surrounding market, and the study of the decrease of each type of market into consideration.

42 Consideration guideline for the organization subsidiary to the Ministry of Interior and Bangkok concerning the immovable property compensation, at the end of the order of Ministry of Interior no. 290/2541 (19 June 2541) (แนวทางเกณฑ์การพิจารณาเงินค่าทดแทนอสังหาริมทรัพย์ตามพระราชบัญญัติว่าด้วยการเวนคืนอสังหาริมทรัพย์ พ.ศ.2530 ของหน่วยงานในสังกัดกระทรวงมหาดไทยและกรุงเทพมหานคร ท้ายค าสั่งกระทรวงมหาดไทย ที่ 290/2541 ลงวันที่ 19 มิถุนายน 2541)

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1.4 The sale price of the land, or the sale price of the land and building within the surrounding area, in order to calculate backward to know the ordinary land price.

1.5 Avoid the land price before the date which the royal decree comes into force, or the expropriated land’s price is sold in the transaction with unusually high price.

1.6 The information from the Department of Land concerning the continual sale price shall be taken into consideration.

Section 20 (2) the appraisal price for the local maintenance tax If such appraisal price to be used, it is needed to get the real price prior to

the use. Section 20 (3) the appraisal price for collecting the juristic transaction fee 3.1 The appraisal price for juristic transaction fee which is applied on the date

which the Royal Decree comes into force, or the date which the committee agreed. The one that is higher shall be taken into account.

3.2 In case there is no such price according to 3.1, the appraisal price of the surrounding piece of land which its nature and conditions is the most analogous on the date which the royal decree comes into force, or the date which the committee agreed. The one that is higher shall be taken into account.

3.3 If the lands’ price within the same area were assessed differently, the calculation of each part is needed in order to find the average price per square two-meters, then the valuation assessment shall be determined.

Section 20 (4) Nature and location of the immovable property 4.1 Compare the nature and location of the land which is used to be the

reference with the expropriated land, by considering each factor which affects the land price, such as wideness of the road, conditions of the traffic surface, distance from the main road, land use plan, soil coverage or other sources of information in order to adjust the fair price.

4.2 The expropriated land must be considered the nature and its location on the date which the royal decree comes into force. For example, before the

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expropriation, it was a single piece of land, but after the expropriation, another piece of land was bought. The valuation assessment shall be made separately.

4.3 The land surface is destroyed after the date which the royal decree comes into force, the date which the government authority pay for the compensation shall be used.

4.4 The land with servitude and return, the compensation must be deducted proportionately.

4.5 Private road shall be calculated by 50 percent of the price of the adjacent land

4.6 The road made after the royal decree comes into force shall be considered as no road.

4.7 Many pieces of adjacent land owned by a single owner shall be deemed as a single piece of land.

Section 20 (5) Rationale and purpose of the expropriation The rationale and purpose of the expropriation in the case of expropriation

for public utility, the highest compensation prescribed by the law shall be paid, but in the case of expropriation for other benefits of the state with the concession, the criteria might be made further with the permission from the council of ministers.

From the aforementioned guideline according to the Order of Ministry of Interior, such guideline can be applied with the new Act B.E. 2562, due to the fact that section 21 of the previous Act shares the same content with section 20 of the new Act, and at the present, there is still no any specific guideline or the amendment of guideline for specifically applied with the new Act B.E. 2562. As a result, for performing duty of the officers who are subsidiary to Ministry of Interior concerning the valuation assessment for expropriation compensation, the details about guideline may be applied by the officers to consider the valuation assessment according to section 20 in practice.

Nevertheless, from the factors in consideration, there are problems happened in practical term of valuation assessment under section 20 of the Act which is the assessed value set by the committee is quite low and less than the market price in open market, and that will cause injustice for persons whose land or immovable

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properties are expropriated due to the fact that the compensation which is paid to them is lower than the price that they will get from the sale of such land or immovable property in the market. The following table shows the difference between appraisal price set by the Treasury Department and the market price in reality.

Table 2.2 Comparison between appraisal prices set by the government authority and the real market price of the land in Bangkok. Source: The Agency for Real Estate Affairs (AREA) (ศูนย์ข้อมลูวิจัยและประเมินคา่อสังหารมิทรพัย์ไทย บจก. เอเจนซี่ ฟอร์ เรยีลเอสเตท แอฟแฟร์ส)

These following cases are the Thai Supreme Administrative Court Decision which show that the compensation which was set by the committee under section 21 of the Immovable Property Expropriation Act B.E. 2530, which can be compared to section 20 of the Immovable Property Expropriation and Acquisition Act B.E. 2562, is less than the market price and bring about consequential unfairness and injustice to the expropriated immovable property’s owner in terms of unfair compensation.

1. The case between J.R.W. Utility Company Limited and Expressway of Thailand.

This case the plaintiff as the owner of expropriated land brought the case to the administrative court for not agreeing with the amount of compensation, accusing

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that the compensation is unjust since it is lower than the market price, and asking for more compensation and damages from the Expressway of Thailand. The fact of the case is that the committee has assessed the compensation for the plaintiff, which is the injured person whose land is expropriated, by using the appraisal value of the immovable property which is for the purpose of collecting fees for registering rights and juristic acts to be considered together with section 22 and 24 of the Immovable Property Expropriation Act B.E. 2530. The committee claimed that such appraisal value was set by the Treasury Department by considering potential of each land and other components including condition and location of the immovable property, as well as cause and purpose of expropriation as prescribed in section 21 paragraph one (1) to (5) of the Act. The committee also claimed that there was no reliable market price of any piece of land to assess the compensation for the plaintiff, because of the trading price are always informed by parties of the sale contract as equal as an appraisal value, so the committee found it unable to know the market price. In this case, the committee set the valuation assessment for the plaintiff by using only the appraisal price under section 21 paragraph one (3) of the Act B.E. 2530, and ignoring other factors in section 21 despite it is required to be considered.

As a result, the court ruled that this valuation assessment is illegal, inappropriate and unjust. The just compensation firstly should conform to the Constitution which guarantee that the just compensation consider the market price, the acquisition, condition and location of the immovable property, as well as injury that injured person get. Moreover, it should be calculated not only by considering factors and principles in accordance with the expropriation law under section 21 of the Immovable Property Expropriation Act B.E. 2530, but also needs to consider the compensation for other pieces of land nearby the plaintiff’s land which the condition and location of the lands are similar. If both lands are located at the same location with the similar condition, the compensation for both lands should be set equally. However, other land prices which come from the transaction after expropriation, the buyer must have seen the appropriateness of the land and building which is beneficial for the future use in terms of business, so such price cannot be compared for the plaintiff’s valuation assessment in this case. The court

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ruled that just compensation should consider both legal factors for consideration as prescribed in section 21 and also consider the compensation provided for nearby land as well, and finally awarded more compensation for the plaintiff equal to compensation of the land nearby.43

2. The case between Leb Khoon-rong and the Department of Irrigation44 The plaintiff in this case is the land owner in Hatyai with Nor Sor 3 Gor which

later became the land within the area to be expropriated for the purpose of canal and floodgate construction in accordance with the flood mitigation project of the government. The preliminary price assessment of such area was made by the committee by using the former criteria which the committee of Hatyai had set the appraisal value for collecting juristic transaction fee from the Department of Land, and adding 25 percent of each price to be the preliminary valuation of the the to-be-expropriated land. The plaintiff which is the expropriated land owner was not satisfied with the compensation by such preliminary valuation set by the committee, and brought the case to the court accusing that the compensation was unjust and unlawful.

The Supreme Court found out that such preliminary set by the committee by using the appraisal value for collecting juristic transaction fee from the Department of Land, was set without any proof that the committee had monitor thoroughly for the market price in the market of the land on the date which the Royal Decree came into force in accordance with the Immovable Property Expropriation Act B.E. 2530, section 21, which can be compared to section 20 of the Immovable Property Expropriation and Acquisition Act B.E. 2562. Therefore, the preliminary price of the expropriated land was a preliminary price that did not consider the market price of the land, which was contrary to section 21 of the Immovable Property Expropriation Act B.E. 2530 which was applicable at that time, as well as contrary to section 20 of

43 Supreme Administrative Court decision red case number 340/2558 (ค าพิพากษาศาลปกครองสูงสุดที่ อ.340/2558) 44 Supreme Administrative Court decision red case number 60/2553 (ค าพิพากษาศาลปกครองสูงสุดที่ อ.60/2553)

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the Immovable Property Expropriation and Acquisition Act B.E. 2562 as well. Besides, the compensation paid for expropriated land by not considering market price of the land was also contrary to the Constitution of the Kingdom of Thailand B.E. 2540 which was the applicable Constitution at a time of Royal Decree enforcement. The Constitution B.E. 2540 section 49 paragraph one and two requires that the compensation for the expropriation needs to be fair compensation paid in due course and also requires to consider market price of the expropriated land as well as acquisition, location, and damage that happened to the expropriated person.

The unfair compensation which was contrary to section 49 of the Constitution of the Kingdom of Thailand B.E. 2540 is also contrary to section 37 of the Constitution of the Kingdom of Thailand B.E. 2560 due to the fact that section 37 of the Constitution of the Kingdom of Thailand B.E. 2560 requires the compensation for expropriation to be fair compensation paid in due course to the land owner and other persons affected by the expropriation by considering public benefit, the effects occur upon the expropriated person, including the benefit which the expropriated person might got from the expropriation. The compensation made without considering market price and came out lower than market price is considered as unjust compensation, as a consequence, it is contrary to section 37 of the Constitution of the Kingdom of Thailand B.E. 2560 as well.

2.2.2.4 Other types of factors for compensation Apart from the main valuation assessment consideration which its factors for

consideration are prescribed in section 20 of the Act, there are also other types of money which is the compensation, as follows:

1. Compensation in section 37 Section 37 explains about the consideration for compensation for the case of

expropriation of land only, and also the case of expropriation of both land and other immovable properties attached to the land, as follows:

In the first case when expropriation takes only the land, the compensation is composed of land price, demolition cost, portage, construction cost for buildings and other immovable properties which are attached to the land, and other damages which the owner suffers from being vacated from the immovable property. However,

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if the owner of the land wants the immovable properties attached to the land to be expropriated as well, the officer shall perform in accordance with the owner’s wish.

While in the other case when expropriation takes both land and immovable properties attached to the land including housing and building, the compensation is composed of land price, cost of the buildings and other immovable properties which are attached to the land, and other damages which the owner suffers from being vacated from the immovable property.45

Factors and consideration to assess the land price under section 37, the officer shall apply the consideration of preliminary valuation assessment according to section 20 mutatis mutandis. For the consideration of demolition cost, portage, construction cost for buildings and other immovable properties which are attached to the land, compensation for deprivation of right to use the property, and other damages which the owner suffers from being vacated from the immovable property in accordance with section 37, shall follow the ministerial regulations.46

2. Compensation according to section 40 (6) Apart from the main valuation assessment consideration which its factors for

consideration are prescribed in section 20 of the Immovable Property Expropriation and Acquisition Act B.E. 2562, there is also another type of money which is the compensation for consequential damage according to section 40 of the Act, which states that: “Compensation shall be set for the following persons:

45 Section 37 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 46 Section 38 paragraph 1 and 2 of the Immovable Property Expropriation and Acquisition Act B.E. 2562

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(1) an owner of land to be expropriated; (2) an owner of a tenement or other structure which exists on the land to be

expropriated on the date the Royal Decree under section 8 is enforced, or if it is constructed afterwards by approval of the Officer;

(3) an owner of a perennial plant located on the land on the date the Royal Decree under section 8 is enforced;

(4) A lessee or sublessee of the land, tenement, or other structure to be expropriated;

(5) A person who loses the benefit of using roads, installing water pipes, drainpipes, electricity lines, or other similar items through the land to be expropriated, as per section 1349 or section 1352 of the Civil and Commercial Code47;

(6) An owner or any person who resides at, or perform commerce or lawful business at, the immovable property to be expropriated, and that person gets damaged from being removed from the immovable property”. The owner of land to be expropriated, the owner of a tenement or other

structure which exists on the land to be expropriated, the owner of a perennial plant located on the land, the lessee or sublessee of the land, tenement, or other structure to be expropriated, the person who loses the benefit of using roads, installing water pipes, drainpipes, electricity lines, or other similar items through the land to be expropriated, and the owner or any person who resides at, or perform commerce or lawful business at, the immovable property to be expropriated, and that person gets damaged from being removed from the immovable property.

47 Mr. Watthana Suksitipakonchai, Council of State of Thailand’s Law for ASEAN project, ‘Unofficial Translation of the Immovable Property Expropriation Act, B.E. 2530 (1984)’

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Such compensation for damage in section 40 (6) can be compared to section 21 of the Immovable Property Expropriation B.E. 2530 in the last paragraph, which both of them share the same content in providing damages and compensation for an owner or any person whose dwelling or business workplace are located on the to-be expropriated immovable property in case that person gets damages from being removed from the immovable property by expropriation. In the guideline from the Order of the Ministry of Interior, there is also the specific guideline concerning the compensation for damage from removal according to section 21 of the Act B.E.2530. As a result, the writer thinks that the guideline for compensation in section 21 of the previous Act can be applied with section 40 (6) mutatis mutandis.

The guideline states that such amount of monetary compensation shall be added due to the removal from the immovable property, but shall not be exceed 10 percent of the monetary compensation of the immovable property itself. Furthermore, if the land, which was legally used as a resident or workplace, is partly expropriated and causes the other parts left separately into two parts and brings about inconvenience for works during expropriation process, the monetary compensation shall be granted by calculating from such inconvenience. 48

From the provided regulations, it can be seen that criteria and consideration of the preliminary price assessment and compensation for expropriation under Thai law mainly base on the damage occurred to injured person who gets damaged from expropriation in accordance with the principle of Special Value principle. It covers the pecuniary damage which is material and factual so the substantial damage are covered, yet an abstract damage, such as psychological damage or emotion, are not included. Such pecuniary damage needs to be calculatable in terms of money so that the compensation can be considered by using such damage as a legal ground for compensation calculation. As a result, the compensation under Expropriation law will be granted only for the pecuniary and substantial damage, excluding non-pecuniary damage.

48 Order of the organization subsidiary to the Ministry of Interior and Bangkok, at the end of the order of Ministry of Interior no. 290/2541 (date 19 June 2541)

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2.3 Facts People in the affected area within the three Eastern provinces in accordance

with the E.E.C. project have submitted their complaints to related organizations regarding their grievances and concerns about the adverse consequences which are resulted from the development of E.E.C., Special Economic Zone project, and the requirement of people which they have to sacrifice their dwellings and workplaces from government expropriation for the development of the E.E.C. project. People who are affected participated the seminar49 concerning land problems which was held at Thammasat University on 18-19 November 2018, and stated the problems of unjust monetary compensation which was not enough to cover the adverse impacts which occur upon those affected people in the particular surrounding area within three Eastern provinces of the E.E.C. project. According to a great number of accused problems which people in the particular area are worried about, monetary compensation seems to be most worrying among affected people due to the fact that some of them have not got the monetary compensation for losing their lands in the land expropriation process by the government, while some of them got certain amounts of money for the compensation but they hold opinions that such amounts are too low when compared to what they have lost in exchange, and such compensation might not conform to the legislation of the law relates to land expropriation.

Thanks to the great opportunity, the writer had a chance to take part in the particular seminar as one of the audiences. These following information are the facts from the affected people’s points of view, which are collected by the independent entity who normally takes care of complaints from people and acts as a spokesperson of injured person’s voices, under the name ‘P-move’. Once the writer realized people’s anxiety which are reflected through their complaints about the negative impacts they have got from the expropriation for the E.E.C. project, especially the issue of unfair monetary compensation, the writer would like to search for concrete and reliable proofs which show that the people’s complaints

49 “มหกรรมที่ดินคือชีวิต ฝ่าวิกฤตที่ดินไทย” [18-19 November 2018]

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concerning unfair compensation and their living conditions due to the land expropriation are in urgent stage to be take care of. It is necessary to seek for the reliable academic study to prove people’s complaints and accusations concerning the fairness of compensation from the expropriation law. According to the land use plan, made by the Public Work and Town Planning Department of the Ministry of Interior, which is made as an ‘Eastern Special Development Zone’s Development Plan’ for the area specifically of E.E.C. Project, the land within the area of three eastern provinces were separately set in the land use plan to support the development. The details of land use plan in the Development Plan is clearly shown in the following picture.

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Figure 2.1: the principle to specify the land use plan in E.E.C. project Source: the conference of the policy committee of the E.E.C on 5 August, 2019

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Some lands and Immovable Properties in the area of the three eastern provinces of E.E.C. project, according to the Development Plan in Figure 2.1, are in the specified area of expropriation for the development of E.E.C. Project. Due to the fact that changing the structure of the town planning required huge amount of land in the particular area for development as specify in the plan. The land acquisition with the purpose for the governmental project development can be considered as the benefit of the state in accordance with the purpose of expropriation legislation in Thai law.

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CHAPTER 3 LESSONS LEARNED FROM FOREIGN LAWS

3.1 THE UNITED STATES OF AMERICA

The Fifth Amendment of the United States of America establishes a great number of rights which relates to both criminal and civil legal proceedings. It also requires that “life, liberty or property” of the citizen are protected, and requires the government to compensate citizens when it the government takes private property for public use.50 In the Fifth Amendment of the United States of America’s Constitutional Law, it is partly prescribed that “private property shall not be taken for a public use without just compensation.”51 This clause has been prescribed in the Constitutional Law of every states of the United States. There are rights of the government to use private property for the benefit of the state, and one of them is the right to expropriate. While the federal government has a constitutional right to take private property for public use, the Fifth Amendment’s Just Compensation Clause requires the government to pay just compensation, interpreted as market value, to the owner of the property, valued at the time of the takings. In the US, every state has its own regulations concerning the property expropriation to be applied within the state itself, by guaranteeing that the government cannot seize

50 Legal Information Institute (LII) Cornell Law School, “Fifth Amendment” <https://www.law.cornell.edu/constitution/fifth_amendment> accessed 1 June 2019 51 Fifth Amendment of the United States Constitutional Law: “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation”.

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private property without making a due compensation at the market value of the property. 52 The U.S. Supreme Court has defined ‘fair market value’ as the most probable price that a willing but unpressured buyer, with the fully knowledgeable of both the property’s good and bad attributes, would pay for.

Apart from the general regulations, there are still the specific law which set the specific procedures for each affair, such as for the expropriation in order to build highways, railroads, airports, or other infrastructure projects.53 In the specific law which will be prescribed shall not be able to contradict to the provision of the Fifth Amendment of the United States of America’s Constitutional Law, and shall not destroy the right of the property’s owner to gain the just compensation. It is generally acceptable that the expropriation of a person’s property can be done by the governmental power with certain amounts of limitation which means that the property owner must be paid by the government for the seizure of his property. This application of authority is considered necessary for the government, even though the legislative power has an authority to limit the edge of expropriation, yet still cannot limit so severe that the government is not able to expropriate.

In the U.S. legal system, there is a legal doctrine known as "Eminent Domain" which provides the legal foundation for expropriation. U.S. courts have accepted the doctrine as a power of the government by suggesting it is implied by the Fifth Amendment clause covering compensation. Under this rationale, the Amendment's statement that property cannot be expropriated without proper compensation implies that property can be taken.54 When the power of eminent domain is exercised, it can only be done by giving the party whose property is taken or whose use and enjoyment of such property is interfered with, full and adequate compensation, not excessive but just compensation. The just compensation required

52 Legal Information Institute (LII) Cornell Law School, “Fifth Amendment” <https://www.law.cornell.edu/wex/fifth_amendment> accessed 1 July 2019 53 Will Kenton, “Expropriation” <https://www.investopedia.com/terms/e/expropriation.asp> accessed 1 July 2019 54 Ibid

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by the Constitution is that which constitutes “a full and perfect equivalent for the property taken.” Just compensation is measured by reference to the uses for which the property is suitable, with regard to the existing business, the desires of the community or reasonably expected in the immediate future, but imaginary uses of its proprietor are excluded.

For an element of compulsory negotiation before using compulsory acquisition powers in the U.S. law, land owners have the right to negotiate before compulsory acquisition and this was made mandatory in the land acquisition procedures. Municipalities are required to prove that negotiations have failed before leave to proceed through the courts is granted.55

The principle applicable to the assessment of just compensation is by using the market price to be the criteria for assessing property’s value, which the fair market price is the price that an owner willing to sell and a purchaser willing to buy. 56 For the date which the just compensation is paid, in some states consider that it shall be paid when the property is expropriated. Moreover, in the Constitutional Law of certain states still requires to pay the compensation when the particular property is expropriated or is damaged. 57

3.1.1 The criteria for the compensation assessment In the U.S., the court plays a significant role in determining the just

compensation for the person whose property is expropriated by using the principle of valuation assessment for the compensation, with the essential principles as follows:

1. Just compensation means the amount of monetary compensation equal to the value of the expropriated property. It requires the need to consider the value in

55 Anuar Alias and Md Nasir Daud, “Payment of Adequate Compensation for Land Acquisition in Malaysia” [2006] 56 American Jurisprudence, supra note, p. 55 57 Lewis Orgel, Valuation Under The Law of Eminent Domain, second edition, volume 1, pp. 70-71 [1953]

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terms of ‘what the owner has lost’. As a result, the meaning of just compensation in accordance with the Constitution is what the owner has lost, and not what the condemner has gained. 58

If the expropriated property has a price that can be fixed precisely in accordance with the market price, so the market price shall be used as a general measure to calculate the compensation. In case the property’s price has been raised higher extraordinarily due to certain circumstances, such as war, it is prohibited to apply such price to be the criteria to calculate the compensation.59

However, in case the land is expropriated for some special purposes, such special purposes are required to be taken into consideration as one of the components of the land price. For example, the land was normally used for the scout camp, but such land is expropriated in order to build the expressway instead.60 In this case, the expropriated land has the limitation in application, or can be said on the other hand that the expropriation is resulted in the highest and best use of property of such property.

2. If the expropriated property does not have a precisely fixed value in accordance with the market price, the nearest price might be used to be taken into consideration, such as the original cost, the price of developed land, the rental fee, the cost of opportunity to be developed in the future, as well as the opinion of the expert who is specialized in valuation assessment.61

3. In order to calculate the monetary compensation for the property’s owner, if only a part of the land is expropriated, the assessment should take the importance of such expropriated part toward the land as a whole. For example, if the expropriation bring about the impact upon the right of superficies, the valuation assessment shall consider the value of the affected rights as well. Apart from the

58 Sackman Van Bruny and Russel D. Van Brunt, supra note 83, p. 33 59 United States v. Ferlin & Co., 334 U.S. 624 (1948) 60 Newton Girl Scouts Council, Inc. v. Massachusetts Turnpike Authority, 335 Mass 189, 138 NE2d 769 61 American Jurisprudence, supra note 72, p. 58

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land owner or the land possessor according to the law, other rights’ owner can also be the interested person in such expropriated land and is entitled to be compensated as well, such as the servitude or the mortgagee, etc.

4. The increased benefit upon the other part of land left from the application of governmental development shall be counted in consideration for the valuation assessment as well. Therefore, in case the expropriation bring about benefits to the land owner, such benefit shall be deducted from the compensation of the expropriated part of land.62

5. Damage which is resulted from the business affairs or the business profit are not considered as one of the components of the damage from the land expropriation. However, damages in this context nowadays has been considered by using the principle of fair market price. 63 For the damage which is resulted from expropriation, such as the cancellation of the business or the loss of profit. For the damage which is originated from the removal from the expropriated land, there will be an amount of monetary compensation, or it can be called the compensation for the removal cost from the immovable property which is the workplace. Furthermore, compensation for the expense for the transfer and expense for searching for the new residence shall be awarded. However, the damages or the loss of goodwill is under the authority of the legislative authorities to set goodwill as one of the components of monetary compensation.64

The following cases are the interest court decisions showing that loss of goodwill is considered for recovery when property is taken by eminent domain under the Eminent Domain law of the United States’ laws. Besides, interesting issues about goodwill are also included.

62 Bauman v. Ross, 167 U.S. 548 (1897) 63 American Jurisprudence, supra note 72, pp. 83-86 64 American Jurisprudence, supra note 72, pp. 88

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5.1 Los Angeles County Metropolitan Transportation Authority v. Yum Yum Donut Shops, Inc.65

This is an interest example to show that the loss of goodwill was paid for the recovery from the Eminent Domain. Yum Yum ‘store 58’, as one of the Yum Yum donut shops, had a prime location in Los Angeles and it reached scored highly on Yum Yum’s list due to its location’s benefit, such as being on the morning traffic side of a heavily trafficked street leading to a freeway; easy access for ingress, parking, and egress; good visibility from the street; near a signalized intersection; and located in a densely populated area with favorable demographics. The Los Angeles County Metropolitan Transportation Authority (MTA) sued Yum Yum Donut Shops, Inc. (“Yum Yum”) in eminent domain to take one of Yum Yum’s donut shops that was in the path of a proposed MTA rail line. The Court of Appeal held that a remedial statute that should be construed liberally, with the goal of providing just compensation to the condemnee. The statute uses a two-step process: first, the court determines whether the landowner is entitled to compensation for lost goodwill; second, a jury determines the amount of the loss. The determining factor in the first phase regarding entitlement is whether the landowner has suffered some unavoidable loss of goodwill.

Thus, the court held, if the condemnee would lose any goodwill even if it relocated its business or otherwise reasonably mitigated the loss, “the condemnee satisfied its threshold burden.” “The purpose of the entitlement phase is to discern whether the condemnee suffered ‘some‘ loss of goodwill”. The court instructed the trial court to enter a new order finding that Yum Yum established its entitlement to compensation for lost goodwill, and to hold a jury trial to determine the value of that loss. The court noted that at the jury trial phase, Metropolitan Transportation Authority could assert an offset for the portion of lost goodwill that could have been avoided by reasonable mitigation efforts, including relocation.

65 Los Angeles County Metropolitan Transportation Authority v. Yum Yum Donut Shops, Inc. No. B276280 (26 February 2019)

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In summary, a business losing its location through eminent domain proceedings can recover for lost goodwill under Code of Civil Procedure section 1263.510 by showing that some lost goodwill is unavoidable due to the taking. The owner’s failure to mitigate some of those damages through relocation will not absolutely bar recovery for lost goodwill, but instead, it is one factor for a jury to consider in determining the amount of lost goodwill.66

5.2 The case of People ex rel. Department of Transportation v. Dry Canyon Enterprises67

Dry Canyon's flagship wine was not profitable, as every year its liabilities exceeded its assets, Caltrans' goodwill appraiser concluded the business possessed no goodwill prior to the taking, and consequently there could be no loss. The Court held that before a jury can determine the amount of a business' goodwill loss, in addition to satisfying the three express statutory conditions described above, the business must also prove to the judge that it had goodwill before the taking. While the existence of pre-taking goodwill has always been an implied essential condition to recovery (as there can be no loss if there is no goodwill in the first place), adding such a finding to the list of court-determined preconditions is a new requirement. In contrast, Dry Canyon's appraiser utilized two appraisal methodologies and concluded that the business suffered a $240,000 loss of goodwill.

Under the business appraiser's first methodology, the "cost to create" approach, the appraiser calculated the loss by adding up all the costs the business incurred (not just the costs associated with the 1,466 vines) in the first four years of its operations, and then divided the figure by four since the 1,466 vines represented approximately 1/4 of the vines destined for the cabernet. These expenditures, according to the appraiser, established what it cost to create the business' goodwill.

66 Kevin Brodehl, Patton Sullivan Brodehl LLP, ‘California Court Clarifies Recoverty of Goodwill in Eminent Domain Cases’ <https://www.jdsupra.com/legalnews/california-court-clarifies-recovery-of-79180/> accessed 5 July 2019 67 People ex rel. Department of Transportation v. Dry Canyon Enterprises, No. B234198 (28 November 2012)

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Under the business appraiser's second methodology, a newly invented "premium pricing" approach, the appraiser determined the premium that the flagship wine would generate per bottle versus a hypothetical wine grown at an inferior location. The expert then multiplied this premium (about $10 per bottle) by the number of estimated bottles of wine that would be lost over the next 15 years due to the take. The appraiser concluded that this loss of premiums represented the "lost goodwill."

The Court of Appeal explained that while a business has the right to have a jury determine the amount of goodwill loss, this right only attaches if the business meets the qualifying conditions for such compensation. As set forth expressly by statute, the qualifying conditions include (i) that the loss was caused by the taking, (ii) that the loss could not be prevented by relocation or other reasonable mitigation efforts, and (iii) that compensation for the loss will not be duplicated through recovery under another source such as relocation benefits. 68

6. The monetary compensation in the case that the interested person of the expropriated land get damaged from the separation certain parts of land from the other part despite the same owner, which is called the severance damages. When the land is expropriated only in some parts, the land owner will be entitled to not only the value of the expropriated part of land, but also entitled to the compensation for the other part of land which is left from the expropriation as well. However, the land owner does not have the right to the compensation for the devaluation of the land price compared to the full price in market, depending on which part of the land is expropriated.69

7. The land owner is not entitled to the compensation from the proposal or the expectation for the future development. Therefore, the expected value, which

68 Brad Kuhn, Ben Rubin, Nossaman LLP, ‘Court Decision on Loss of Goodwill Results in Sourt Grapes for Business Owners’ < https://www.jdsupra.com/legalnews/court-decision-on-loss-of-goodwill-resul-36008/> accessed 26 July 2019 69 American Jurisprudence, supra note 72, pp. 125-127

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not yet exists at the time of taking, will not be able to be awarded for compensation. But if there is no clear circumstance whether the particular area of land will be developed by any project, the increased land price of the surrounding area will be taken into consideration for the valuation assessment. 70

Besides, in the United States of America, there are some governmental actions in certain situations that are not considered as land expropriation in accordance with the law, yet such actions have an effect upon people’s property rights, as follows:

First is the case when the property is expropriated in reality without the formal eligible process in accordance with the law of expropriation, or the government determination which makes the economic value of the land owner decrease, and cause the unusual and unreasonable application upon their property right. It can be said that such action of the government is considered as the property expropriation in terms of ‘inverse condemnation’. In such circumstance, the land owner shall have the right to be compensated for the damage, and such right is guaranteed by the Constitutional Law to get the just compensation. 71

Another case is when the public service by the government disturbs the right to property application of the private. Such disturbance which is entitled to the compensation that occurred is not limited only to the physical damage upon the property itself, but also include the damage which devaluate the property’s value. For example, the damage upon the adjacent land which is resulted from smoke, noise, or even vibration. There is the U.S. precedent court decisions that if the government construction devaluate other surrounding private properties, but such damage is not such a severity which make it unable to use the land ordinarily, the land owner is not entitled to the compensation.

For the disturbance that makes it unable for the owner to use the land ordinarily, the owner shall be entitled to the compensation, which cause the land either not appropriate for dwelling, or dangerous for dwelling in the land. It is

70 American Jurisprudence, supra note 72, pp. 79-81 71 American Jurisprudence, supra note 72, pp. 411

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broadly acceptable in several court decisions that the public service that cause the similar consequence as the expropriation does, is considered a liability according to common law system, despite the damage happened to the adjacent land is resulted from the cautious construction or the public service without negligence. Therefore, it seems that such principle is established especially to help the government authority who perform duty legally in accordance with the law.72 3.2 EUROPEAN CONVENTION ON HUMAN RIGHTS (ECHR) AND THE EUROPEAN

COURT ON HUMAN RIGHTS The Right to Property: Article 1 of Protocol No. 1 states that:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

Article 1 comprises three principles: 1. The principle of the peaceful enjoyment of property 2. The principle that the deprivation of property can only occur subject to specific conditions, as states in the second sentence of the first paragraph. 3. The principle of interference; that states are entitled to control the use of property in accordance with the general interest, as states in the second paragraph.

The three principles are connected. From Article 1 of the Protocol No. 1, it can be interpreted that in this context that the person’s possession in property is protected, yet there are still exceptions for the protection of the property rights, which is aimed to focus on public interest or conditions provided by law. The right to peaceful enjoyment of possessions was included in Protocol No.1. In general, Article

72 American Jurisprudence, supra note 72, pp. 421-422

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1 of the protocol applies when a natural or legal person complains of interference with his property. Such applicants are considered as the direct victims in the case law. The purpose of Article 1 was explained that recognizing that everyone has the right to the peaceful enjoyment of his possessions, Article 1 is in substance guaranteeing the right of property.73

There are relevant principles which are able to be applied when considering reasonableness of an interference contrary to Article 1, as follows: 1. Although the margin of appreciation available to a national legislature under Article 1 is quite broad, the measure imposed must have a legitimate aim, in the sense of not being “manifestly without foundation”. 2. Where a measure has a legitimate aim, there must be a reasonable relationship of proportionality between the means and the purpose. 3. A fair balance must be struck between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights. This balance will not be struck if the measure results in a person or a section of the public having an individual or excessive burden.

The European Convention on Human Rights, together with the first protocol, guarantees the right to peaceful enjoyment of possessions in all states party to the Convention. These states have an obligation to guarantee this right, an alleged violation of which can be examined by the European Court of Human Rights. The European Court of Human Rights (ECHR; French: Cour européenne des droits de l’homme) is an international court which was established by the European Convention on Human Rights. If the Court finds a violation of the right, just satisfaction, including the payment of compensation, can be awarded. The European Convention on Human Rights and its first protocol proved their effective and strong protection on Human Rights which relates to the property rights by having the European Court of Human Rights judgment, in the following case.

73 European Court of Human Rights (Eur. Court H.R.), Marckx judgment of 13 June 1979, Series A no.31, para. 63

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In Zubani v. Italy case, the applicants had been deprived of land used to build housing for low income occupants, and were awarded full compensation for the damage they had suffered. The court acknowledged that the reparation made was satisfactory, but in terms of awarding “just satisfaction” itself, allowed for the fact that the dispute compensation had lasted more than eight years which was too lengthy and seemed unjust. From this case, it is clearly shown that the fundamental rights to just satisfaction are so strongly important that the court would like to effectively protect them, and it insists that the rights must be effective.74

In the Guillemin v. France case, the court recalls the need for a compensation procedure to be prompt if it is to be effective. The applicant suffered from expropriation in a procedure that failed to conform to French law. At the end, he still received the compensation for expropriation, but the proceedings were considered to have been still too lengthy and it is considered unjust as well.75

The strong intention to protect equality of the Human Rights relates to the right of the property was again reinforced by the European Court of Human Rights in the Bramelid and Malmstrom case. The Court explained that it must be made sure that in determining the effects on property of legal relationships between individuals, the law does not create such inequality that one person could be arbitrarily and unjustifiably deprived of property in favor of another.76 3.3.1 Types of interference with property There is still an exception for the protection of Human Rights toward property rights offered by Article 1 of Protocol No. 1, since the interference with property has been established. There are 2 types of interference with property covered by Article 1 of Protocol No. 1, which are the deprivation of property, and the control of the use of

74 Eur. Court H.R. Zubani v. Italy judgment of 7 August 1996, Collection of judgments and decisions, 1996-IV, No.14 75 Guillemin v. France judgment (21 February 1997, Collection of judgments and decisions 1997-I, No.29) 76 Bramelid and Malmstrom v. Sweden, application No. 8588/79 and 8589/79

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property. Focusing on the deprivation of the property, it can be divided into 2 types, as follows:

1. Deprivation involving transfer of property Measures whose purpose is direct dispossession of the owner constitute deprivation. This applies to expropriation and nationalisation, which involve the direct transfer of a property title to a public body or another private individual. It also applies to forced sales when the transfer of property originates in action by the public authorities, but actually it was affected by the owner himself in the case of Hakansson and Sturessone.77

The deprivation must be justified as being in the public interest, which requires: 1.1 It must be for a legitimate purpose; 1.2 the achievement must strike a fair balance between the demands of the general interests of the community and the requirements of the protection of the individual’s fundamental rights and must not impose an excessive burden on the individual; 1.3 Although a state enjoys a certain margin of appreciation with regard to the need to resort to the deprivation of property, the measures imposed must not be arbitrary or manifestly without reasonable foundation.

2. De facto expropriation The effect of de facto expropriation are equivalent to those of formal

expropriation. Yet there is a difference between the formal expropriation and De facto expropriation, which is De facto expropriation is not based on a legal procedure. It was stated in Sporrong and Lonnroth case that “In the absence of a formal expropriation, which is a transfer of ownership, the European Court of Human Rights considered that it must look behind the appearances and investigate the realities of the situation which is complained. Since the Convention is intended to

77 Eur. Comm. H.R., report of 13 October 1998, Hakansson and Sturesson v. Sweden, No. 11855/85

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guarantee rights that are ‘practical and effective’, it has to be ascertained whether that situation amounted to a de facto expropriation”. 78

An interference must achieve a ‘fair balance’ between the demands of the general interests of the community and the requirements of the protection of the individual’s fundamental rights. The concern to achieve this balance is reflected in the structure of Article 1 as a whole, including the second paragraph. Once interference with property has been established, it is needed to consider its lawfulness in accordance with Article 1 of Protocol No. 1 whether interference is justified and proportionate, which its further interpretation in compliance can be found in European Court of Human Rights’ decisions.

3.3.2 Permissibility of the interference with property rights There are 2 conditions to be considered concerning the permissibility of the

interference with property rights according to Article 1 of Protocol No. 1, as follows: 1. Justifications for interference with property

Interference with property is justified only when it satisfies two conditions. It is required to be lawful in accordance with domestic law, and it is also required to be legitimate. In other words, compliance with domestic law and procedures is not enough, according to Article 1, interference must also conform to the public interest and the general interest, which means the deprivation of property and the control of the use of property.

1.1 Lawfulness of interference Article 1 of Protocol No. 1 states that deprivation of property must be “subject to the conditions provided for by law” and that control of use must be based on “such laws as the state deems necessary”. This requirement of lawfulness is intended as a safeguard against arbitrary measures. The reference is to domestic law, which may be written in terms of laws, decrees, or regulations. The European Court of Human Rights also laid down the requirements in the James judgment that law assumes the existence of domestic regulations which are sufficiently accessible and precise.79

78 Sporrong and Lonnroth judgment, Series A no. 52, para. 63 79 James judgment, paragraph 67

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1.2 Legitimacy of interference The legitimacy of interference with property needs to consider the following issues:

1.2.1 Meaning of the terms “public interest” or “general interest” The public interest could be the interest of another individual. “A taking of property effected in pursuance of legitimate social, economic or other policies may be ‘in the public interest’, even if the community at large has no direct use or enjoyment of the property taken.'' 80

1.2.2 Monitoring legitimacy The European Court of Human Rights only plays a subsidiary role in

supervision in terms of legitimacy. The Court further ruled that national authorities are in a better place than the international judge to appreciate what is ‘in the public interest’. The Court will respect the national legislature’s judgment as to what is ‘in the public interest’ unless that judgment is manifestly without reasonable foundation. Therefore, it means that the Court’s supervision still extends to the appropriateness of interference with property.

2. The proportionality of interference with property In the context of supervision of proportionality, the Court ruled that it is

necessary to determine whether a fair balance was struck between the demands of the general interests of the community and the requirements of the protection of the individual’s fundamental rights. The search for this balance is inherent in the whole of the Convention and it is also reflected in the structure of Article 1. In other words, it can be said that all types of interference with property must respect proportionality. The supervision of proportionality by the Court involves establishing whether a measure is both appropriate for achieving its goal and not disproportionate.

Proportionality must be assessed with reference to the “the severity of the restriction”. In other words, the level of concern of private interests depends on the degree of interference with property. It also seems to suggest that application of the

80 James judgment, paragraph 45

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proportionality principle as a means of supervision might be varied in case by case. In case of deprivation of property, proportionality is respected if the dispossessed owner is awarded compensation, as the court stated in the judgment of Lithgow and Others case that “Clearly, compensation terms are material to the assessment whether a fair balance has been struck between the various interests at stake and whether or not a disproportionate burden has been imposed on the person who has been deprived of his possessions.” 81 However, the strictness with which proportionality is supervised still depends on the type of interference concerned. The European Court of Human Rights acknowledged a violation of the fair balance between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights.82 A fair balance principle is obviously reflected in this following case; Matos e Silva Lda and others v. Portugal.

The fact is that the Portuguese government withdrew a concession over part of the land which the applicants had worked for over a hundred years and passed rules prohibiting the applicants from building, changing the use of the land, and starting up any new agricultural or fish farming activities. The Court ruled that there had been no formal expropriation, which is considered as De facto expropriation, and held that there had been an interference with the applicant’s peaceful enjoyment of their possessions. The Court further explained that the measures pursued the public interest of town and country planning and the protection of environment. The government had violated applicant’s enjoyment of their land for over 13 years, yet no compensation had ever been paid for such violation, and it was impossible for the applicant to sell the land. The Court concluded that there was a violation of the first sentence of Article 1 as the applicant had to bear an individual and excessive

81 Eur. Court H.R., Lithgow and Others judgment of 8 July 1986, Series A no. 102 paragraph 120 82 Luke Clements, Nuala Mole, Alan Simmons, “European Human Rights: Taking a Case under The Convention” Second Edition (1999)

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burden which disturb the fair balance between the requirements of the general interest and the protection of the right to peaceful enjoyment of possession. 83

In accordance with the Convention and Article 1 of Protocol No. 1, there are 2 forms of reparation for the interference with property, which are “compensation” and “damages”. Both of them are based on different legal foundations. Compensation is based on Article 1, second sentence of Protocol No. 1. Compensation is a condition for deprivation of property. It proves the difference between property rights and other Human Rights in the sense that the property rights can be calculated in cash, and interference with the property rights does not violate Article 1 of Protocol No. 1 if the owner receives compensation. While damages are a form of compensation in the form of “just satisfaction” according to Article 50 of the Convention. Damages are awarded to the owners when the conditions for interference with property have not been respected. The European Court of Human Rights provides that the court should award compensation only “if necessary”.84

In the standard protection, the Court laid down rules on damages about the right to reasonable compensation and the manifestly reasonable valuation method. The right to reasonable compensation was established in the proportionality that the taking of property without payment of an amount reasonably related to its value would normally constitute a disproportionate interference which could not be considered justifiable under Article 1. According to the proportionality rule, the Court ruled that compensation must be an amount reasonably related to the value of the property. However, it is also stated by the Court that Article 1 does not guarantee a right to full compensation in all circumstances, since legitimate objectives of ‘public interest’, such as pursued in measures of economic reform or measures designed to achieve greater social justice, may call for less than reimbursement of the full market value. It means that the state is logically discharged from making restitution if the

83 Judgment of September 16, 1996, Series A, No. 52 1982 Matos e Silva v. Portugal 24 E.H.R.R. 573 84 Barbra Fontana, “Damage Awards for Human Rights Violations in the European and Inter-American Courts of Human Rights”, Volume 31 Santa Clara L. [1991]

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state can prove that it is mainly for the general interest, yet the state is not exempted from offering appropriate compensation anyway.

The standard of compensation required in a nationalization case may be different from which required in regard to other takings of property.85 For the damages, or can be called ‘just satisfaction’ under Article 1 of Protocol No. 1, it is based on restoration of the previous situation (restitution in integrum). It is the principle which the International Court’s decisions on damages are based on.

3.3.3 Just Satisfaction Article 41 of the European Convention on Human Rights states that:

“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party”.86

The Convention identifies the idea of ‘just satisfaction’ with the entire spectrum of reparation available to an injured party with the purpose to place the injured party in the position which he or she would have been in if the violation had not occurred, for pecuniary and non-pecuniary damage, as well as reimbursement of costs and expenses. It is required by Article 41 to consider whether the applicant is entitled to any compensation and/or costs. There is no formal procedure assessing the amount of costs and the Court has wide discretion on what it allows. The award can only relate to those costs “actually incurred, necessarily incurred”, and which are “reasonable as to quantum”.87 The Court cannot award anything other than compensation and costs, since the Court do not have authority under the

85 Eur. Court H.R., Lithgow and Others judgment of 8 July 1986, Series A no. 102 paragraph 121 86 Article 41 of the European Convention on Human Rights 87 Luke Clements, Nuala Mole, Alan Simmons, “European Human Rights: Taking a Case under The Convention” Second Edition (1999)

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Convention to order the state to do any action.88 When the Court has given judgment of “just satisfaction’, the domestic courts may reopen a case and assess compensation. In such case, the Court will take into account the domestic award, but nevertheless make up its own mind on what the appropriate level of damages should be. If the Court finds out that that domestic court fails to add sufficient compensation, in the European Court of Human Rights’ view, the Court will make an additional shortfall. 89 Just satisfaction is the reparation which must wipe out all the consequences of the illegal act and re-establish the situation which would have existed if that act had not been committed.90 In the case concerning expropriated land, the Court ruled that “the award of the existing buildings would then fully compensate them for the consequences of the alleged loss of enjoyment.” However, just satisfaction is not equivalent to full satisfaction, and most of the time it is less because in the process of fixing redress, not only the human factor intervene, but the objective elements such as the nature of the harm. Nothing will totally erase the consequences of a violation and can fully restore the situation which existed before.91

The standard of “just compensation” is seen in the form of ‘the full equivalent of the property taken’, and the Court proposed compensation in an amount equal to the fair market value. In Amoco case, the Tribunal further declared that “just compensation” has generally been understood as a compensation equal to the full value of the expropriated assets, but there is no proper formula for determining the full equivalent.92 However, international judges and arbitrators generally put much effort to use their discretion about what represents appropriate

88 Brozicek v. Italy, 13 E.H.R.R. 371; December 19, 1989; Series A, No.167 89 Schuler-Zgraggen v. Switzerland (1995) 90 Permanent Court of International Justice, 13 September 1928, Factory at Chorzow, Series A no. 17, p. 47 91 Octavian Ichim, “Just Satisfaction under the European Convention on Human Rights” [2015] 92 Ibid

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redress, since the Court have to convince the parties and public opinion of the fairness of their decisions.

In general, there must be a clear causal link between the damage claimed and the violation alleged. The Court will not be satisfied only by weak connection between the alleged violation and the damage, or only by speculation as to what might have been. Even though there is no express reference to causal link in the text of Article 41 provision, but the whole logical rationale of reparation for unlawful conduct implies the existence of causality.93 Compensation for damage can be awarded in so far as the damage which is the result of a violation is found. No award can be made for damaged caused by events or situations that have not been found to constitute a violation of the Convention, or for damage related to complaints declared inadmissible at an earlier stage of the proceedings. The purpose of the Court’s award in respect of damage is not intend to punish the Contracting Party responsible, but it is to compensate the applicant for the actual harmful consequences of a violation. Damage can be divided into 3 categories as follows:

1. Pecuniary damage Pecuniary loss includes such items as loss of earnings, expenses, the lost

value of an asset resulting from government action, etc.94 The principle with regard to pecuniary damage is called “restitutio in integrum”, which says that: ‘reparation must, as far as possible, wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed’. The injured person should be placed in the position which he or she would have been in if the violation had not taken place. This can involve compensation for both loss actually suffered (damnum emergens) and loss, or

93 Ibid 94 Luke Clements, Nuala Mole, Alan Simmons, “European Human Rights: Taking a Case under The Convention” Second Edition (1999)

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diminished gain, to be expected in the future (lucrum cessans). 95 It is the duty of an applicant to show that pecuniary damage has resulted from the violation or violations alleged. The applicant should submit relevant documents to prove, as far as possible, not only the existence but also the amount or value of the damage. Normally, the Court’s award will reflect the full calculated amount of the damage. However, if the actual damage cannot be precisely calculated, the Court will make an estimate based on the facts at its disposal. The Court will allow compensation for pecuniary loss when the applicant can demonstrate that the violation has made a significant and financially quantifiable difference to his circumstances. The Court is reluctant to allow compensation when the loss is hypothetical.96 On the other hand, if the Court finds out that the pecuniary damages are directly attributable to the violation, the award will generally extend to the full loss.

2. Non-pecuniary damage The Court’s award in respect of non-pecuniary damage is intended to provide

financial compensation for non-material harm. The Court may order compensation for non-pecuniary loss in the case concerning compensation which is occasioned by the breach of the Convention, such as prolonged anxiety, feelings of frustration, stress and anxiety, including damages for ill-treatment or other such pain and suffering or unlawful imprisonment. It is in the nature of non-pecuniary damage that it cannot be precisely evaluated or calculated. If the existence of such damage is established, and if the Court considers that a monetary award is necessary, it will make an assessment on an equitable basis, having regard to the standards which emerge from its case-law. In determining the non-pecuniary damages, the Court will have regard to the level of domestic awards.97 However, the Court is not bound by the domestic awards, and still retain the right to assess the reasonableness of the

95 Octavian Ichim, “Just Satisfaction under the European Convention on Human Rights” 2015 96 Mats Jaconsson v. Sweden, 13 E.H.R.R.79; June 28,1990; Series A, No. 180-A 97 Z.v. Finland (1997) 25 E.H.R.R. 371

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revised domestic award. In case the domestic award fails to take account of the effects of inflation or lost interest, it will make an award to make up the difference.98

3. Costs and expenses The Court can order the reimbursement to the applicant of costs and

expenses which he or she has incurred – first at the domestic level, and subsequently in the proceedings before the Court itself – in trying to prevent the violation from occurring, or in trying to obtain redress therefor. Such costs and expenses will typically include the cost of legal assistance, court registration fees and suchlike. They may also include travel and subsistence expenses, in particular if these have been incurred by attendance at a hearing of the Court. Le Secretariat of the Department for the execution for Court’s judgments registers information received from the respondent governments or from the applicants concerning payment of just satisfaction or from a possible internal debt and controls this information in case of dispute from the applicant. The Committee of Ministers ensures, if necessary, that the sum awarded by the Court, is indeed paid to the applicant.99

In the writer’s point of view, one of the most distinctive parts in legal principles made by the European Court of Human Rights, which is different from Malaysia and the United States of America, is that the Court gives protection to the right of the property not only for compensation of the financial damage, but also laid down the principle in the court decision for non-pecuniary damage, which is not financially assessable, as well. The aforementioned court decisions refer to the expropriation case which relates to damages based on financial ground, yet the European Court of Human Rights still further established another property’s rights protection on the ground of non-pecuniary damage and loss, as shown in the following cases:

98 Luke Clements, Nuala Mole, Alan Simmons, “European Human Rights: Taking a Case under The Convention” Second Edition (1999) 99 Council of Europe Portal, <https://www.coe.int/en/web/execution/article-41> accessed 3 July 2019

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1. The case of Lallement v. France 100 The European Court of Human Rights held that there had been a violation of

Article 1 of Protocol No. 1 to the European Convention on Human Rights in this following fact. The applicant, a French farmer, complained that expropriation of part of his family farm made it not possible to continue to farm the remaining portion of land and led to loss of income financially. Such interference of property deprived an individual of his source of income which could be considered a violation of Article1 of Protocol. The compensation which was awarded to the applicant was in fact deemed unreasonable and had not covered the specific loss because it did not take into account that the expropriated land was his “working instrument”, that it would have been impossible for him to find the same area another, similar piece of land, and that, as a result of this, he would have been unable to provide an adequate living for his family. The compensation did not bear a reasonable relation to the value of the expropriated property. At the end, the applicant was awarded for both pecuniary and non-pecuniary damage as claimed.

2. The case of Matheus v. France101 The applicant in this case is the owner of land in Guadeloupe which the land

was leased out, but the tenants illegally made a dwelling on the land which was considered as unlawful occupiers. The applicant brought the case to the court in order to terminate the lease agreement and to evict the unlawful occupiers with police assistance if necessary. In 1988 the judicial decision was made in his favor, and the decision also ordered to destruct such illegal dwelling. But the tenant refused to leave the land, so the applicant asked for the police assistance to enforce the decision in the applicant’s favor by evicting the unlawful occupiers. Yet the police assistance could not be obtained since the state authority feared that the presence of the police might disturb public order. The European Court on Human Rights found that there was a violation of Article 1 of Protocol No. 1 and awarded compensation for the loss of enjoyment of the applicant’s property and the problems happened in

100 Lallement v. France, No. 46044/99 (11 April 2002) 101 Matheus v, France No. 62740/00 (judgment of 31 March 2005, final on 1 July 2005)

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the applicant’s life for 16 years, from 1989 to 2002. The court also considered that the refusal to provide the police assistance in the absence of any public interest justification had resulted in a form of private expropriation which the unlawful tenant had benefited from. The applicant had received huge amount of sums for the compensation for the loss of use of the land and for the serious offence committed by the state authority. The European Court on Human Rights also awarded the applicant just satisfaction in respect of the non-pecuniary damage which the applicant suffered for 16 years.

3. The case of X v. United Kingdom 102 This case concerning the expropriation of a home which was alleged to cause

emotional stress and anxiety to the injured person. In Article 3 of the Convention, torture, inhuman or degrading treatment or punishment in absolute terms are prohibited. However, in this case the Court ruled that the emotional stress due to an expropriation of someone’s house would not reach the required degree of severity of mental suffering required for Article 3’s applicability. Although Article 3 obviously refers not merely to physical but also to mental suffering. The factors taken into consideration include the duration of the treatment and its mental or physical effects, the victim’s position (age, gender, state of health etc.). The Article does not seem to offer much to members of minorities in their fight against certain policy decisions of the state that counter their pursuit of the protection and promotion of their minority identity. The Commission has clearly stated that not every single measure of the state with certain emotional consequences for an individual can be considered to infringe Article 3, only cases of severe mental suffering would.103

102 X v. United Kingdom No. 9261/81 (3 March 1982) 103 Kristin Henrard, “Devising an Adequate System of Minority Protection, Individual Human Rights, Minority Rights and the Right to Self-Determination” [2000]

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4. The case of Mazelie v. France104 The case concerns interference with the applicant’s right to respect for

property which was considered as a violation of Article 1 of Protocol No. 1. In 1966, the applicant purchased a property on the site of a former feudal castle. The property, on which he built a house in 1967, was located on a flat area surrounded by ramparts. Having been mistakenly identified by the local authority as owner of these ramparts, he was assigned responsibility for their repair. This gave rise to protracted litigation which affected the market value of the property actually owned by the applicant and his ability to dispose of it. Today it is clear, however, as acknowledged by the French courts, that the ramparts at issue are owned by the state whose duty it is to look after their upkeep. The European Court was surprised that it had taken over 30 years and several lawsuits to arrive at a finding which seemed self-evident. In particular, it had difficulty in understanding how the state, cited as third party as from 1973 in proceedings the object of which was precisely to identify the owner of the ramparts, had not come to this conclusion at an early stage. It perceived in this posture gross administrative negligence which had had significant adverse consequences for the applicant. Since the interference with the applicant’s right to respect for property was founded on an error of law ascribable entirely to the authorities, the Court held that it did not have a proper legal basis. Prior to the European Court on Human Rights, the applicant claimed just satisfaction as redress for all pecuniary damage resulted from the violation. The Court found that it was a violation of Article 1 of Protocol No.1 without concerning of forced sale of the applicant’s property or the damage done to it by the state. Finally, it dismissed all the applicant’s claims in respect of pecuniary damage. On the other hand, the European Court awarded the applicant just satisfaction in respect of the non-pecuniary damage caused by anxiety and tension during long period of time.105

104 Mazelie v. France No.5356/04 (judgement of 27 June 2006, and final on 23 October 2006) 105 Bailii ‘European Court of Human Rights’ <https://www.bailii.org/eu/cases/ECHR/2010/1446.html> accessed 9 August 2019

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Even the European Court of Human Rights allow the applicable of non-pecuniary to be taken into consideration as one of the damages, but not every single case that claimed will be awarded for the mental or psychological damage. It can be seen clearly from the provided decision that the severity of the mental suffering is still needed to be considered case by case, and only cases with severe mental suffering will be considered as non-pecuniary damage and bring about right to be compensated for the non-pecuniary loss under the regulation of the European Convention on Human Rights. Especially in the case that caused severe mental suffering to the injured person, it would be considered as more severe. As a result, the factors to consider the non-pecuniary damage include severity of the damage and period of time which injured person had suffered.

The writer strongly agrees with the European Court on Human Rights in this point that in certain cases which land expropriation cause harm with non-pecuniary damage upon affected people, the fact and severity of the claim for non-pecuniary ought to become essential factors in consideration for granting compensation. Yet the Court needs to analyze factors into consideration in accordance with the fact deliberately whether which case is unjustifiably cause severe suffering on mental health and is in the state which really need more compensation on the non-pecuniary term to compensate the loss, in order to protect and balance between Human Rights and public interest as well. The Court discretion to determine the severity of the fact is also necessarily required when it comes to the consideration for compensation in order to control the limit of severe non-pecuniary damage not to be too trivial. Otherwise all applicants in every case will claim for their consequential emotion and feeling from the expropriation as a reason for the compensation without appropriate cause.

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3.3 MALAYSIA In the Malaysian Constitutional Law, there is the right of an individual to

property as a Constitutional right. Yet, such Constitutional right is still subject to the government’s right to acquire land for adequate compensation. The land ownership which is guaranteed by Article 13 of the Malaysian Constitution 1957, as follows:

Article 13 (1) of the Federal Constitution provides explicitly that no one shall be deprived of property save in accordance with the law.

Article 13 (2) follows to state that no law shall provide for the compulsory acquisition of a property without adequate compensation.

From article 13, it means that although a property owner enjoys a right to property which is granted in the Federal Constitution, such right to property is still not considered as an absolute right by virtue of the law, and the property owner is entitled to adequate compensation as stated in the Federal Constitution.106 The precedent court decision explained that ‘compensation is the amount of money which the owner would have got if he sold the land in an open market, including other losses resulted from the consequence of the land acquisition, in order to place the dispossessed owner in the same position with neither worse nor better situation.107

Clear statute proof that affects people’s constitutional rights to property is the Land Acquisition Act 1960 which has recently been certain amendments with the purpose to improve the land acquisition process. In Land Acquisition Act 1960, it is explained that the State Authority may acquire any land which is needed for any public purpose, economic development which is deemed to be the Malaysian public, or for purpose of mining, agricultural, commercial, industrial or recreational purposes. Section 3 of the Malaysian Land Acquisition Act 1960 provides that the

106 Land Acquisition in Malaysia <https://www.tehyulegal.com/articles/seafield-temple-issue-land-acquisition-in-malaysia> accessed 28 June 2019 107 Anuar Alias and Md Nasir Daud, “Payment of Adequate Compensation for Land Acquisition in Malaysia” [2006]

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State Authority may acquire any land which is needed for any public purpose, economic development deemed to be beneficial to the Malaysian public, or for purpose of mining, agricultural, commercial, industrial or recreational purposes.108 However, the term ‘public purpose’ is not defined in this Land Acquisition Act but in the precedent court decision, such as the following case:

In the case of S.Kulasingam & Anor v Commissioner of Lands, Federal Territory & Ors, it was held that ‘public purpose’ does not have its own precise definition. In order to determine that the acquisition of any land is for public purpose or not, it is needed to consider that the acquisition serves the general interest of the community or not.109

According to the Land Acquisition Act 1960, there are certain factors to be considered in assessment of the monetary compensation which are prescribed clearly in paragraph 2 First Schedule of the Land Acquisition Act, as follows:

(a) The market value as determined in accordance with section 1 of this Schedule;

(b) Any increase, which shall be deducted from the total compensation, in the value of the other land of the person interested likely to accrue from the use to which the land acquired will be put;

(c) The severance damage: the damage, if any, sustained or likely to be sustained by the person interested at the time of the Land Administrator’s taking possession of the land by reason of severing such land from his other land;

(d) The injurious Affection: the damage, if any, sustained or likely to be sustained by the person interested at the time of the Land Administrator’s taking possession of the land by reason of the acquisition injuriously affecting his other property, whether movable or immovable, in any other manner;

108 Ibid 109 S.Kulasingam & Anor v. Commissioner of Lands, Federal Territory & Ors [1982] 1 MJ 204

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(e) Removal Expenses: if, in consequence of the acquisition, he is or will be compelled to change his residence or place of business, the reasonable expenses, if any, incidental to such change; and

(f) where only part of the land is to be acquired, any undertaking by the State Authority, or by the Government, person or corporation on whose behalf the land is to be acquired, for the construction or erection of roads, drains, walls, fences or other facilities benefiting any part of the land left unacquired, provided that the undertaking is clear and Enforceable”. 110

From this point, the writer would like to point out that In Malaysia, business losses are allowed under compensation claims as stipulated in section 2(e) of First Schedule but they do not cover loss of goodwill and loss of earnings as the United States’s law does.

The general concept which the consideration of compensation based on is the ‘market value’ of the expropriated land. Market value is defined as the price that would pay by a willing purchaser to a willing seller in an open market in circumstance where both parties are actuated by fair business principles and there is no disinclination on the part of the vendor to sell and the purchaser is not compelled by any urgent necessity to buy. In the process of assessment of the market value, this following issues are essential to be taken into consideration:

1. Size, shape, condition and location of the land 2. The use which the land will be put to 3. The development potential of the land; and 4. Market conditions at the material date of the valuation.111

110 Land Acquisition First Schedule paragraph 2 “Matters to be considered in determining compensation” 111 Section 8 (1) of the Land Acquisition Act 1960

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Besides the considerations which are required to be taken into account, according to the Malaysian Land Acquisition Act 1960, there are also the matters to be excluded and neglected in determining compensation are prescribed as well, as follows:

(a) The degree of urgency which has led to the acquisition; (b) Any disinclination of the person interested to part with the land acquired; (c) Any damage sustained by the person interested which, if caused by a

private person, would not be a good cause of action; (d) Any depreciation in the value of the land acquired likely to result from

the use to which it will be put when acquired; (e) Any increase to the value of the land acquired likely to accrue from the

use to which it will be put when acquired; (f) Any outlay on additions or improvements to the land acquired, which was

incurred after the date of the publication of the declaration under section 8, unless such additions or improvements were necessary for the maintenance of any building in a proper state of repair and unless, in the case of agricultural land, it is any money which has been expended for the continuing cultivation of crops on it.112

In the issues which are necessary to be considered in the monetary compensation, there is a word “Market value” prescribed. Its definition is prescribed in Paragraph 1 First Schedule of the Land Acquisition Act, as follows: 1. (1) for the purposes of this Act the term “market value” where applied to any scheduled land shall mean the market value of such land;

(a) at the date of publication in the Gazette of the notification under section 4, provided that such notification shall within twelve months from the date thereof be followed by a declaration under section 8 in respect of all or some part of the land in the locality specified; or

(b) In other cases, at the date of the publication in the Gazette of the declaration made under section 8.

112 Land Acquisition First Schedule paragraph 3 “Matters to be neglected in determining compensation”

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(1A) In assessing the market value of any scheduled land, the valuer may use any suitable method of valuation to arrive at the market value provided that regard may be had to the prices paid for the recent sales of lands with similar characteristics as the scheduled land which are situated within the vicinity of the scheduled land and with particular consideration being given to the last transaction on the scheduled land within two years from the date with reference to which the scheduled land is to be assessed under subparagraph (1).

(1B) Where only a part of the land is to be acquired, the market value of the scheduled land shall be determined by reference to the whole land as shown in the document of title of the scheduled land and after having regard to the particular features of that part.

(1C) In assessing the market value of any scheduled land, regard shall not be had to the evidence of any sales transactions effected after the date with reference to which the scheduled land is to be assessed under subparagraph (1).

(1D) Where the scheduled land to be acquired is held under a title for a period of years, in assessing the market value, regard may be had to the date of expiry of the lease as shown in the document of title, but regard shall not be had to the likelihood of a subsequent alienation to the person or body who is the proprietor thereof immediately before the expiry of the lease. (2) In assessing the market value,

(a) The effect of any express or implied condition of title restricting the use to which the scheduled land may be put; and

(b) The effect of any prohibition, restriction or requirement imposed by or under the Antiquities Act 1976 [Act 168] in relation to any ancient monument or historical site within the meaning of that Act on the scheduled land, shall be taken into account.

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CHAPTER 4 LEGAL ANALYSIS AND SUGGESTIONS

4.1 Goodwill as the consequential damage from the expropriation according to

the U.S. expropriation law According to the Immovable Property Expropriation and Acquisition Act B.E.

2562 itself, including the Immovable Property Expropriation Act B.E. 2530, it mainly protects the value of tangible immovable property in the process of land expropriation, yet there are other rights and properties which are also adversely affected by the expropriation for E.E.C. development but they are still not covered under the legitimate protection according to the criteria of monetary compensation that the Immovable Property Expropriation and Procurement Act B.E. 2562 has provided.

The fundamental concept of compensation for the owner of the property or the injured person who is affected as prescribed under section 40, which mentions a person who is entitled to the compensation from the expropriation, only lies on the ground of value of the property itself which is tangible. The proof of such concept is shown in a group of people who are entitled to the compensation according to section 40 of the Immovable Property Expropriation and Acquisition Act B.E. 2562. From the name list of the person who is entitled to the compensation, it shows that only injured person who gets the damage, which can be calculated in terms of money, resulted from the suffering on the expropriated immovable property itself or the use of such expropriated immovable property.

Considering from the perspective of damage upon the expropriated property itself, the protection of property rights of a person in terms of tangible property is the fundamental rights which every citizen shall have in accordance with the Constitutional Law that guarantee the property rights. The right related to immovable expropriation is also one of them which are tangible property as well. If the study only considers within the Thai legal system, it might lead to the understanding that it

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is enough to consider the compensation based only on concrete property which is affected by the expropriation.

However, in the reality, damage which is resulted from the expropriation is not limited only to the damage upon the immovable property which is the object of the expropriation, but also negatively affect other properties and rights of an injured person, especially when comparing Thai compensation matters for land expropriation with the U.S. law, it can be seen that there is a distinctive difference which is the U.S. law award the compensation for goodwill. Comparing to the concept of the U.S. law which has set several types of consequential damage, and one of them is goodwill, or the damage from losing business reputation that is considerably crucial in terms of business affair.

According to the definition of ‘damage’, its meaning is quite broad that is able to cover several kinds of loss, including goodwill and reputation as well. Due to the fact that goodwill or any other kind of reputation in terms of business can be considered as a person’s property and can also bring about wealth in terms of money to the owner. The loss of goodwill or reputation in terms of business, as a result, is considered as damage which also needs to be protected and compensated by the law.

In consideration of Thai law in the Immovable Property Expropriation and Procurement B.E. 2562, there is a provision mentioned the right to the compensation for the owner of the property or any person who has a residence or legally works in the expropriated property, and gets damaged by the removal from such expropriated immovable property113, which is the statement of damage in terms of business value in a broad format.

From the reported fact from people in the surrounding area of the E.E.C. project, some amounts of people loss their lands which include their workplaces. Even though the study cannot specifically name business or affair which affected

113 Section 40 (6) of the Immovable Property Expropriation and Acquisition Act B.E. 2562

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people are working in, but it is undeniable that the broad area within the three provinces of E.E.C. project that are expropriated definitely include people’s workplaces and businesses, such as a company or a store, together with its goodwill.

Nevertheless, having study the way of Thai Administrative Court decisions concerning the monetary compensation for the immovable property expropriation upon the damage in terms of business value, the study found that Thai Administrative Court does not recognized and never established the concept of losing goodwill in business affairs in the decisions. The principle which Thai Administrative Court has established in the decisions are only business damage concerning the loss of opportunity cost or loss of income, whilst in the reality, the loss of goodwill also exists and gets damaged but has never been awarded the monetary compensation, due to the fact that the factors to be considered under Thai Expropriation law, since the Immovable Property Expropriation Act B.E. 2530 to the Immovable Property Expropriation and Procurement B.E. 2562, has never laid the foundation to guarantee this type of business reputation.

Therefore, the writer would like to suggest the amendment to the provision in the Immovable Property Expropriation and Procurement B.E. 2562 in section 40 subsection 6 by adding goodwill or business reputation as one of the damages so that the one who loss goodwill or business reputation will be entitled to the monetary compensation in order to make it become more specific in the consideration when calculating the compensation for injured person who is suffering from the expropriation. If such provision is amended, the gap between the loss and the compensation will be reduced, and it will bring about more justification in consideration of compensation in expropriation case. 4.2 Compensation for the Non-pecuniary damage according to the European

Convention on Human Rights According to the explanation in the previous topic that the criteria and factor

of consideration of the monetary compensation for expropriation under Thai expropriation law mainly based on the monetary and calculatable damages. It means

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that the expropriation legislation would like to protect the damage or injury which is tangible, countable, can be seen and able to be calculated exactly in terms of monetary compensation, as well as Malaysia and the United States of America.

According to the study, the European Convention on Human Rights has set the criteria and factors to be used as a factor of consideration of compensation for disturbance of property rights. The factors for consideration for disturbance of property rights include pecuniary damage, non-pecuniary damage, and cost and other expenses. One of the factors of consideration is ‘non-pecuniary damage’. However, not every case of non-pecuniary damage will be entitled to the monetary compensation. The European Court on Human Rights has laid the norm for court decisions related to Human Rights and property rights, but not directly concerning the expropriation case, to award the compensation for non-pecuniary damage in the case that injured persons get such a severe mental impact that affects a person’s health, such as anxiety and stress.

It can be seen from the European Court on Human Rights decisions that even though the non-pecuniary damage is included as one of the factors to be taken into account, but European Court on Human Rights does not often award the compensation for the non-pecuniary for the applicant, only certain cases which the Court, by using court discretion, found it was severe enough so that the Court grant the compensation.

As a result, from the writer’s point of view, it would be better for Thai Administrative Court to include an additional factor concerning the non-pecuniary damage as one of the criteria of consideration that matters to award the monetary compensation, but does not need to be compulsory factor to always be included. Alike the European Court on Human Rights did, the award for non-pecuniary damage will be granted by depending on the severity of the damage in the fact. Therefore, the writer suggest to make it the Court’s discretion which shall be considered case by case.

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4.3 Differences and changes in provision in Constitution of the Kingdom of Thailand B.E. 2540, B.E. 2550, B.E. 2560 concerning the compensation for expropriation.

In Constitution of the Kingdom of Thailand, both in section 49 of the Constitution of the Kingdom of Thailand B.E. 2540 and section 42 of the Constitution of the Kingdom of Thailand B.E. 2550, the provisions concerning compensation for expropriation states clearly about the factors which should be taken into consideration for the compensation, as well as other factors including the normal market price, mode of acquisition, nature and situation of the immovable property, as well as condition and location of the immovable property.

Even though the Constitution was changed in some parts of the legislation from the Constitution of the Kingdom of Thailand B.E. 2540 to the Constitution of the Kingdom of Thailand B.E. 2550, but the essential factors to consider the compensation which bring about fairness to dispossessed people who lost their lands and immovable properties for the expropriation according to the law. Even some of the wordings of the legislation between these 2 sections might be slightly different, but the main idea of the factors still stays completely the same.

The factors of the consideration bring about fairness to injured persons whose lands or immovable properties are expropriated because when it takes those factors into consideration of assessing the compensation, the assessed compensation will be assessed by considering the value of such property which the owner would have got in case the property is sold in the open market, the purpose of expropriation, as well as nature and location of the expropriated property. All of these internal factors are able to determine the proper value which the owner should get in exchange with the loss of immovable property in expropriation.

Concerning the legal status, the Constitution is the highest law in the state, while the Act is subordinated to the Constitution. The result of such status is the subordinated legislation cannot be made or used contrarily against to the Constitution. If any legislation is found out that it is contradict to any provision of the Constitution, such legislation will be considered unlawful. In this context, when the

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Constitution does not include consideration factors of expropriation in the provision, it means the essential factors for the compensation consideration, including the normal market price, mode of acquisition, nature and situation of the immovable property, as well as condition and location of the immovable property, are not legally guaranteed in the Constitution of the Kingdom of Thailand. As a result, any assessed compensation according to the Immovable Property Expropriation and Acquisition Act B.E. 2562 without market price is still considered lawful by virtue of the Constitution since it does not contrary to any legislation of the Constitution.

When there is the lack of market price as a factor to consider the compensation of expropriated immovable property, the compensation for expropriated law would be lower than the market price in open market of such immovable property. According to the principle of Special Value to the owner, the land or immovable property’s owner should get compensation even more than the market price due to the fact that in the compulsory expropriation, the land or immovable property’s owner is not voluntarily sell the land. As a result, the factors for the consideration of compensation should also be included in the legislation of the Constitution of the Kingdom of Thailand B.E. 2560 as well, in order to prevent the problem of unjust compensation.

4.4 Rationale and purpose of expropriation according to section 20 subsection

five of the Immovable Property Expropriation and Acquisition Act B.E. 2562 The application of rationale and purpose of expropriation to be included as

one of the criteria for consideration of monetary compensation for land expropriation, purposes of the expropriation which are prescribed in accordance with Thai Constitutional Law B.E. 2560 must be taken into account. According to the legal principle which is guaranteed by Thai Constitutional Law B.E. 2560 section 37, the expropriation of immovable property can be allowed only for the purpose of public utilities, national defense or acquisition of national resources, or for other public interest.

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Furthermore, purposes of the expropriation are also listed in more details under section 7 paragraph one and two of the Immovable Property Expropriation and Acquisition B.E. 2562. Such purposes include the public utilities, national defense, national resources acquisition or other public interest. The other public interests include the urban planning, the promotion and conservation of national resources, the agricultural development, the land reform, the archaeological conservation, the industry and the Special Economic Zone.

Those aforementioned purposes of the expropriation according to the Thai Constitutional B.E. 2560 and the Immovable Property Expropriation and Acquisition Act B.E. 2562, apart from being the condition to permit the expropriation, they can also be applied as factors to be considered and assessed for the monetary compensation in expropriation case as well. Some of the purposes are to protect the state and the existing natural resources, while some of them are to support the progressive development of the state, such as the land reform, the industry and the Special Economic Zone.

From the writer’s perspective, the purposes of the expropriation which lead to the direction of progressive development of the state are not only to secure the existing national resources, but also to pave the way for future wealth of the state. The writer consider these purposes as a positive purpose in terms of state development especially in terms of economy. Expropriation for economic development, especially the Special Economic Zone, can bring about more income and wealth into the country. When the state gets more income from the economic development, the state should have more financial competence to compensate for people who sacrificed themselves for the economic development.

In the E.E.C. context, it is a huge project of the government for economic and investment development which the state will gain huge amount of money in return. Due to the large amount of reward from the E.E.C. project, people who make a sacrifice of their properties in order to let the project grow should be entitled to gain huge amount of compensation according to the proportion of the purpose of this huge national project.

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This is also conform to the principle of the balance of interests between the state and people. When the state disturb people’s properties and rights for the benefit of the state, once the state gain benefit in return, such benefit should be distributed to people in the country especially injured persons whose rights were invaded by the state.

As a result, the writer hold an opinion that in case the rationale and purpose of the expropriation are taken into consideration as one of the factors to assess the monetary compensation in expropriation case, people whose properties were expropriated should have the right to gain more monetary compensation, apart from the value of the expropriated immovable property itself, according to the benefits which the state gets in return from the expropriation.

4.5 The appraisal value for paying either land and building tax or juristic

transaction fee according to section 20 subsection two and three of the Immovable Property Expropriation and Acquisition Act B.E. 2562

From the study of foreign regulations about the criteria and factor which are taken into consideration of monetary compensation for expropriation, the writer has not found the existence of the similar concept of the appraisal value using for paying land and building tax or for collecting juristic transaction fee to be applied as a factor to assess the monetary compensation in other countries’ expropriation legislation. As a result, from this point, the writer holds an opinion that the concept of using an appraisal value for paying land and building tax or for collecting juristic transaction fee only exists in Immovable Property Expropriation under Thai legal system, comparing among the factors for considering of compensation for expropriation only from the selected foreign laws which are chosen in this study, including the United States of America, the European Convention on Human Rights, Malaysia, and Thailand.

Nevertheless, as shown in Chapter 2 of the study that the appraisal value for paying land and building tax and appraisal value for collecting juristic transaction fee in Thailand are quite low, and even lower than the real market value which is the

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normal price using in transaction in the open market. Such land and building tax and juristic transaction fee are calculated by using the price which people inform to the state authority, yet due to the fact that people try to avoid paying high amount of tax and transaction fee, so people conceal the real transaction price and inform the lower made-up transaction price, so that they do not have to spend high amount of money for paying land and building tax and juristic transaction fee.

From the unreal informed price in order to lower the amount of money for paying tax and fee, it becomes the appraisal value which the government agencies often use as one of the factors of consideration of monetary compensation for expropriation, as a result, the appraisal value from these two factors are lower than the real market value and lower the overall amount of the compensation for expropriation, and they make injured person whose properties are expropriated get the compensation lower than the reality which they are entitled to be compensated.

Due to the fact that, from the study, other foreign countries’ regulations which are chosen by the committee on compensation for expropriation, those foreign laws also do not use appraisal value for paying land and building tax and juristic transaction fee as the factors to assess the compensation for expropriation, and the fact that the appraisal value make the overall compensation for the expropriation is even lower than real market value, therefore the writer would like to make a suggestion to remove these two factors from the criteria to consider the compensation for expropriation.

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4.6 Persons who are entitled to compensation according to section 40 of the Immovable Property Expropriation and Acquisition Act B.E. 2562

According to list of persons who are entitled to compensation in section 40 of the Act, it provides that listed persons are entitled to the compensation from the expropriation including The owner of land to be expropriated, the owner of a tenement or other structure which exists on the land to be expropriated, the owner of a perennial plant located on the land, the lessee or sublessee of the land, tenement, or other structure to be expropriated, the person who loses the benefit of using roads, installing water pipes, drainpipes, electricity lines, or other similar items through the land to be expropriated, and the owner or any person who resides at, or perform commerce or lawful business at, the immovable property to be expropriated, and that person gets damaged from being removed from the immovable property

However, the provision only broadly mentions list of persons who are entitled to the compensation in each subsection. If the fact turns out that within one piece of expropriated land, there are more than one person who are entitled to the compensation from each different subsection at a time, there is no clear explanation whether such compensation shall be paid to only one person from one subsection or it can be distributed to many different persons from different subsections in section 40. If the compensation can be distributed to several persons who are entitled to the compensation, it means that every injured persons who are mentioned in the list in section 40 shall definitely be compensated for the damage from expropriation. If every injured person is entitled to be paid for losses, this section will be considered legally conform to section 37 of the Constitution of the Kingdom of Thailand since it provides fairness to all persons who are affected by expropriation. On the other hand, if it can be paid to only one person from only one subsection, it means if there is more than one person who is affected by expropriation, not every person shall be paid. Some of the affected people might be left unfair without getting compensation which he or she deserves to be compensated, and that will cause unfairness from the interpretation of the law. As a

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consequence, such unfairness which is brought by section 40 of the Act will cause the contradiction to the protection in section 37 of the Constitution of the Kingdom of Thailand.

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CHAPTER 5 CONCLUSION AND RECOMMENDATIONS

The Eastern Economic Corridor Project (E.E.C. Project) is a Special Economic

Zone which Thai government use as an economic instrument to stimulate economic growth of the country and prepare the state for welcoming the investment from foreign investors. The E.E.C. Project covers the area of three eastern provinces of Thailand including Rayong, Chonburi, and Cha-Cheong-Sao. According to the Eastern Special Development Zone Act B.E.2561”, or as known as the E.E.C. Act, there bring about a number of changes to the area of the three provinces.

According to the content of the E.E.C. Act, it has brought several changes in law and structure into the selected three provinces. One of the outstanding controversial issues among those changes is the change of the urban planning. Transforming an ordinary community into a welcoming hub for investment to correspond with the concept of Special Economic Zone requires a new urban plan to serve the purpose of business and investment better. From the change of urban plan by virtue of the E.E.C. Act, it transforms and affects the structure and the land use of the applicable town which people are living. In some area which used to be the area for living, it is required to be turned into the area for investment and industry for supporting the coming investment from the E.E.C. Project. Definitely, such change of urban plan to support the foreign investment requires the process of expropriation for people’s land in the particular area.

The expropriation process brings about problems, conflicts and no satisfaction to the people in the expropriated area. While the expropriation by the government forces people to leave their hometowns and properties, the compensation which people get in exchange with their sacrifice is not considered as just compensation which the land or immovable property’s owners are entitled to get compensated. To consider the fair compensation for expropriation, the applicable legislation is the Constitution of the Kingdom of Thailand B.E. 2560, and the Immovable Property Expropriation and Acquisition B,E, 2562. Some provisions in the Constitution

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and the Immovable Property Expropriation and Acquisition Act bring about the problems of unjust compensation, and it will cause inequality in the society.

Unjust compensation which will be granted to the dispossessed owner is lower than real value of the immovable property due to the fact that the provision of factors to consider compensation for expropriation causes some problems in practical term. Some factors are not included in certain cases as seen from the court decisions, while some factors lower the overall assessed price of compensation. Also the legislation in the Constitution concerning the compensation for expropriation also does not guarantee the necessary factors to be considered for the compensation assessment. From such problems, the writer would like to suggest as follows:

5.1 Remove the appraisal price for paying tax and fee from the legal criteria and factors to consider the compensation from expropriation in section 20 of the Immovable Property Expropriation Act B.E. 2562. Due to the fact that it is the factor that pull down the overall amount of compensation to be lower than market value in reality, which is not considered as a just compensation. Also, according to the study of foreign laws, it is also not included in foreign laws to calculate the compensation. Removing this factor can solve the problem of unjust compensation since in the process of valuation assessment by the committee, no need to wait to be assessed and awarded by the court.

5.2 The purpose of expropriation: In the E.E.C. context, section 20(5) should be the main factor in the process to consider the compensation from expropriation. Due to the fact that the E.E.C. is the huge project which can induce huge amount of investment fund from foreign investment to the state. Such benefits should firstly be distributed to affected people in the E.E.C. area, since they sacrificed themselves for the project and they are negatively affected. Sharing benefits conform to the principle of conflict of interest, to make it more balance and help reduce the gap between the rich and the poor that cause inequality in the society.

5.3 Persons with the right to compensation according to section 40 of the Immovable Property Expropriation and Acquisition Act B.E. 2562: It should states

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more clearly in the provision itself that the persons who are entitled to get compensated can be more than one person which their rights originated from different subsection at the same time in order to adjust section 40 to be conform to section 37 of the Constitution of the Kingdom of Thailand B.E. 2560, due to the fact that damage can occur in several forms at the same time from the expropriation, therefore it should not limit that only one person in section 40 of the Immovable Property Expropriation and Acquisition Act B.E. 2562 shall be paid for the compensation

5.4 The consideration of the Thai Supreme Administrative Court in expropriation case, not only in the context of the E.E.C. but also every expropriation case, should consider both section 37 of the Constitution of the Kingdom of Thailand B.E. 2560 which is applicable at the present. Due to the fact that section 37 includes the protection of people’s right in property and in expropriation process to get just compensation in exchange with the loss of their properties. The writer also would like to suggest further that section 37 about the just compensation should be added to be the guideline for the committee who set the preliminary price for expropriation case, and such price should be re-checked again by another committee for the conformation to fair compensation in section 37 of the Constitution of the Kingdom of Thailand B.E. 2560, so that the preliminary price would bring about less problems and less cases to the Administrative court.

5.5 Add goodwill to be one of the factors in criteria to consider compensation, by specifically adding goodwill into the section 40(6) of the Immovable Property Expropriation Act B.E. 2562. It is a consequential loss from expropriation in terms of business loss, but the interpretation of consequential loss by Thai administrative court was limited to be only either loss of opportunity cost or loss of income.

5.6 Add non-pecuniary damage to be one of the factors in criteria to consider compensation, but better to leave it to be the court’s discretion, as the European Court on Human Rights, to consider the severity of the fact in each case, due to the fact that if it is not included in the law, it will be difficult for the court to apply in

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some necessarily severe case because there is no legal ground to support the compensation for non-pecuniary damage.

5.7 Make the definition of “damage” to be broader to include loss of goodwill and non-pecuniary damage, in order to provide more protection for people who are affected from the expropriation to get compensation for their losses, so that the court can grant more compensation to people who lost their business benefit by losing goodwill, and to people who severely suffered from unjust expropriation and compensation.

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REFERENCES Books and Book Articles Clements L, Mole N, Simmons A, “European Human Rights: Taking a Case under The Convention” Second Edition (1999) Ichim O, “Just Satisfaction under the European Convention on Human Rights” [2015] Protection K, Individual Human Rights, Minority Rights and the Right to Self-Determination” [2000] Tit C, “Refining the Expropriation Clause: What Role for Proportionality?”, Forthcoming in Julien Chaisse (ed.) China-European Union Investment Relationships: Towards a New Leadership in Global Investment Governance?, Cambridge University Press [2017] Articles Alias A and Daud MN, “Payment of Adequate Compensation for Land Acquisition in Malaysia” [2006] Fontana B, “Damage Awards for Human Rights Violations in the European and Inter-American Courts of Human Rights”, Volume 31 Santa Clara L. [1991] Orgel L, Valuation Under The Law of Eminent Domain, second edition, volume 1, pp. 70-71 [1953] P-move “มหกรรมที่ดินคือชีวิต ฝ่าวิกฤตที่ดินไทย” [18-19 November 2018] Reta DS, “A Human Rights Approach to Access to Land and Land Dispossession: An Examination of Ethiopian Laws and Practices” [2016] volume 9: Issue 2 Zipursky BC, “Civil Recourse, Not Corrective Justice”, 91 GEO. LJ. 695, 748-49 (2003) Electronic Media Bailii ‘European Court of Human Rights’ <https://www.bailii.org/eu/cases/ECHR/2010/1446.html> accessed 9 August 2019

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Brodehl K, Brodehl PS LLP, ‘California Court Clarifies Recoverty of Goodwill in Eminent Domain Cases’ <https://www.jdsupra.com/legalnews/california-court-clarifies-recovery-of-79180/> accessed 5 July 2019 ESCR-Net, ‘Introduction to Economic, Social, and Cultural Rights’ <https://www.escr-net.org/rights> accessed 4 June 2019 Icelandic Human Rights Centre, ‘The Right to Equality and Non-discrimination’ <http://www.humanrights.is/en/human-rights-education-project/human-rights-concepts-ideas-and-fora/substantive-human-rights/the-right-to-equality-and-non-discrimination> accessed 12 July 2019 Kenton W, “Expropriation” <https://www.investopedia.com/terms/e/expropriation.asp> accessed 1 July 2019 Kuhn B, Rubin B, Nossaman LLP, ‘Court Decision on Loss of Goodwill Results in Sourt Grapes for Business Owners’ < https://www.jdsupra.com/legalnews/court-decision-on-loss-of-goodwill-resul-36008/> accessed 26 July 2019 Land Acquisition in Malaysia <https://www.tehyulegal.com/articles/seafield-temple-issue-land-acquisition-in-malaysia> accessed 28 June 2019 NESRI, ‘Economic and Social Rights’ <https://www.nesri.org/human-rights/economic-and-social-rights> accessed 11 June 2019 Oxford Learner’s Dictionaries <https://www.oxfordlearnersdictionaries.com/definition/english/damage_1?q=damage> accessed 12 July 2019 Segal T, “Open Market” <https://www.investopedia.com/terms/o/open-market.asp> accessed 13 June 2019 Reports Laowakul D, [2556] “The Concentration of Wealth in Thailand” (“การกระจุกตัวของความมั่งค่ังในสังคมไทย” ในรายงานวิจัยฉบับสมบูรณ์ โครงการ “สู่สังคมไทยเสมอหน้า การศึกษาโครงสร้างความมั่งคั่ง และโครงสร้างอ านาจเพ่ือการปฏิรูป”) Wickeri E and Kalhan A, “Land Rights Issues in International Human Rights Law” Institute for Human Rights and Business [2010]

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Thesis Sittikorn S, ‘Property owner satisfaction with compensation for expropriation of residential property: A case study of Ram Intra-Ad Narong expressway’, (Housing Development thesis, Chulalongkorn University 1997) Other Materials Consideration guideline for the organization subsidiary to the Ministry of Interior and Bangkok concerning the immovable property compensation, at the end of the order of Ministry of Interior no. 290/2541 (19 June 2541) (แนวทางเกณฑ์การพิจารณาเงินค่าทดแทนอสังหาริมทรัพย์ตามพระราชบัญญัติว่าด้วยการเวนคืนอสังหาริมทรัพย์ พ.ศ.2530 ของหน่วยงานในสังกัดกระทรวงมหาดไทยและกรุงเทพมหานคร ท้ายค าสั่งกระทรวงมหาดไทย ที่ 290/2541 ลงวันที่ 19 มิถุนายน 2541) Hien PT, “Striking the Right Balance between the Public and Private Interests in Compulsory Acquisition of Land in Vietnam”, Land grabbing, conflict and agrarian-environmental transformations: perspectives from East and Southeast Asia, An international academic conference, Chiang Mai University, Conference Paper No. 39 [2015] Keogh J, “The ‘Special Value’ of Land in Compulsory Acquisition Cases: A summary of the legal approaches to a contentious issue in valuation practice”, Pacific Rim Real Estate Society Seventh Annual Conference [2001] Order of the organization subsidiary to the Ministry of Interior and Bangkok, at the end of the order of Ministry of Interior no. 290/2541 (date 19 June 25

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APPENDICES

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APPENDIX A พระราชบัญญัติว่าด้วยการเวนคืนและการได้มาซึ่งอสังหาริมทรัพย์ พ.ศ. ๒๕๖๒

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BIOGRAPHY

Name Miss Mingkwan Chawankon Date of Birth December 20, 1993 Educational Attainment 2016 : Bachelor of Laws

Chulalongkorn University 2017 : Lawyer license

Publication Mingkwan Chawankon, ‘Legal Control of Adverse Economic Impacts from the E.E.C. Project: Focusing on Land Problems’, (Law Thesis, Thammasat University 2019)

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