Revisiting the Transitional Arrangements of the Mineral and Petroleum Resources Development Act 28 of 2002 and the Constitutional Property Clause: An Analysis in Two Parts

• Jurisdiction: South Africa
• Pages: 22-51
• Published date: 27 May 2019
• Author: PJ Badenhorst
• Date: 27 May 2019

REVISITING THE TRANSITIONAL

ARRANGEMENTS OF THE MINERAL AND

PETROLEUM RESOURCES DEVELOPMENT ACT

28 OF 2002 AND THE CONSTITUTIONAL

PROPERTY CLAUSE: AN ANALYSIS IN TWO

PARTS

PART TWO: CONSTITUTIONALITY OF THE MINERALS AND

PETROLEUM RESOURCES DEVELOPMENT ACT’S TRANSITIONAL

PROVISIONS

PJ Badenhorst

BLC LLB (UP) LLM (Wits) LLM (Yale) LLD (UP)

Professor of Law, University of Port Elizabeth

Consultant at Bowman Gilfillan, Inc

Hanri Mostert

BA LLB LLM LLD (Stell)

Associate Professor of Law, Stellenbosch University

1 Introduction

This contribution is the second part of a discussion of the

constitutionality of the transitional measures in the Mineral and

Petroleum Resources Development Act 28 of 2002 (MPRD Act) in as

far as they influence the basis of mineral right holding and control in

South Africa. Part one set out the categories of rights acknowledged by

the transitional provisions, the nature and content of ‘‘old order’’ rights

with regard to minerals

1

as compared to rights of the new order, and the

requirements for transition of ‘‘old order’’ rights to ‘‘new order’’ rights. A

number of particularly problematic scenarios concluded that discussion.

As has been indicated in the first part of this contribution,

2

the

transitional measures of the MPRD Act need to be scrutinised on the

basis of the constitutional property clause, because of the far-reaching

effects the Act’s policies of economic empowerment and state custodian-

ship of natural resources may have on existing entitlements with regard to

minerals. Part two now focuses on the constitutionality of the transitional

* We would like to thank Prof Andre

´van der Walt and Prof Juanita Pienaar for reading and

commenting upon an earlier draft. The remaining errors are ours. Thank you also to Wharren Fortuin

and Ebrezia Johnson for rendering research assistance. The financial assistance of the National

Research Foundation is gratefully acknowledged. Opinions expressed should not be attributed to this

institution.

1

Rights regarding petroleum exploration and production will not be discussed.

2

Published in 2003(3) Stellenbosch Law Review, 377-400.

22

(2004) 15 Stell LR 22

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arrangements regarding ‘‘old order rights,’’

3

arising from an analysis of

their nature and content, in the light of the constitutional property clause.

1 1 Consequences of the transitional provisions

We have identified three basic sets of consequences for existing right

holders brought about by the transitional provisions of the MRPD Act.

4

The first set arises in the context of successful applications for conversion

of ‘‘old order’’ rights by current holders of such rights. The question that

needs to be asked in the context of constitutional property protection and

regulation is whether the degree of imposition on existing rights by the

conversion requirements in each separate case passes constitutional

muster. Apart from the obvious question as to whether the conversions

and concomitant restriction of the content of some of these rights amount

to (justifiable) deprivations of property, it must also be determined at

which point in the process such possible deprivations take place and must

be assessed. In some individual cases, the conversions may amount to

such severe deprivations that the issue of constructive expropriation may

arise, in which case invalidation of the particular conversions, or payment

of compensation in the alternative must be determined.

The second set of consequences arises where holders of ‘‘old order’’

rights are unsuccessful in their applications for conversion of their rights.

Accordingly the holders would lose their rights altogether in terms of the

MPRD Act. In this context, it must be determined whether impositions

of this nature on existing property rights are permitted under the

Constitution, and whether they qualify as expropriations. If this is the

case, the question of payment of compensation arises. If they are not

treated as expropriations, the issue to be determined is whether they

amount to excessive regulation of private property.

The third possible category deals with situations where a current

holder of an ‘‘old order’’ right chooses not to apply for conversion at all.In

such event, the holder would also lose the ‘‘old order’’ right altogether,

after a period of grace as provided by the transitional provisions. Thus

the question of expropriation and compensation arises in this context as

well. Further, the question as to the exact point at which a possible

expropriation might occur, needs to be considered. It may also be asked

whether the ‘‘lazy’’ holder of an ‘‘old order right,’’ who does not apply

for conversion, may at all be eligible to rely on expropriation in order to

obtain redress for rights lost on account of a refusal to abide by the

prescribed procedure for reapplication in the MPRD Act.

1 2 Course of the inquiry

Our inquiry in this second part of the contribution tests the transitional

3

Rights regarding petroleum exploration and production will not be discussed.

4

See part one, par 4.

REVISITING THE TRANSITIONAL ARRANGEMENTS 23

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