A Man's House is His Castle': An Economic and Comparative Approach to Compensation and Gain Sharing in Public and Private Takings

Author:Geir Stenseth
Position:Professor Dr. Juris, Inland Norway University of Applied Sciences at Lillehammer; in the fall of 2017, the author joined the Faculty of Law at the University of Oslo
Pages:55-73
SUMMARY

Takings compensation in North America and Europe has generally been related to "market value" in its various conceptions. The U.S., however, has experienced a wave of compensation increases on the state level lately, in particular when homes are taken ("subjective value") and for takings motivated by "economic development". On the European continent, influential jurisdictions like France and... (see full summary)

 
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Ancilla Iuris, 2017 Lagen des Rechts Article E-ISSN 1661-8610
Constellations of Law DOAJ 1661-8610
Ancilla
Iuris
“A Man’s House is His Castle”:
An Economic and Comparative Approach to
Compensation and Gain Sharing in Public
and Private Takings
Geir Stenseth*
GEIR STENSETHA MANS HOUSE IS HIS CASTLE
ANCILLA IURIS 2017, 11 12
Abstract
Takings compensation in North America and
Europe has generally been related to “market value”
in its various conceptions. The U.S., however, has
experienced a wave of compensation increases on
the state level lately, in particular when homes are
taken (“subjective value”) and for takings motivated
by ”economic development”. On the European conti-
nent, influential jurisdictions like France and Ger-
many are still reserved from granting any addi-
tional compensation in situations like these, but in
Scandinavia Sweden stands out as a notable excep-
tion. And on the British Isles they have begun rein-
troducing bonuses for subjective value in recogni-
tion of the fact that the owner is being forced to sell.
This article gives an account of the international
trends in takings compensation and compares the
trends to insights from experimental economics in
its explorations of the ultimatum game and the
endowment effect.
I.
INTRODUCTION AND PERSPECTIVES
Three years ago the Norwegians celebrated the
bicentennial of their Constitution, including the
protection of property rights. The Property Protec-
tion Clause (§ 105) was (as was the Constitution in
general) inspired by both the Anglo-American and
the French constitutional documents of the late
18th century. Like the Takings Clause of the Fifth
Amendment, the Norwegian Constitution ensures
that if property is taken for public needs, just com-
pensation is to be granted.
Property is a fundamental legal concept. It has long
represented one of the cornerstones of Western
legal cultures, acquiring renewed traction with the
advent of 16th century liberalism. As nobility and
privileges went out of fashion, absolute ownership
and free trade were to convey economic prosperity
for all. Inspired by John Locke’s idea of property as
a fundamental human right, the concept of legal
property was embraced by the revolutionary move-
ments in the American colonies as in France. Limi-
tations on the power of eminent domain – expropri-
ation – were carefully crafted in the ensuing
constitutions.
George Mason’s Virginia Declaration of Rights,
which was included in the State Constitution of
June 12, 1776, listed “acquiring and possessing
property” as one of the “inherent rights” of man-
kind. The Virginia Declaration of Rights was the
basis for Thomas Jefferson’s draft of the Declara-
tion of Independence, formally adopted less than a
month later. Jefferson, who had thoroughly studied
the origins of English property law, claimed that the
Saxons had brought a purified tradition of inde-
pendent and equal ownership of land, which in turn
had been displaced by an oppressive Norman feudal
system.1 By this, Jefferson was able to bridge his lib-
eral vision of the unrestricted – “allodial” – property
rights of the Virginian farmer to a historic “golden
age” in English property law history.
On expropriation in particular the Virginia Decla-
ration of Rights, section 6, declared that no one can
be “deprived of their property for public uses with-
out their own consent or that of their representa-
tives so elected … assembled for the public good”.
The Virginia Declaration of Rights was copied by
other American colonies and strongly influenced
James Madison when he drafted the Bill of Rights
(ratified as Amendments to the U.S. Constitution
December 15, 1791), including the Property Clause
of the Fifth Amendment: “[…]; nor shall private
property be taken for public use, without just com-
pensation.”
The French Revolution also brought the idea of
property to prominence. The Declaration of Human
Rights of 1789 and the Constitution of 1791 listed
property as one of the basic human rights – in fact,
property was protected as “sacred”. The sacred part
was rescinded in the Declaration of the Rights of
Man and Citizen of 1793, which in its section 19 was
more in line with the American Constitution: “No
one may be deprived of the least portion of his prop-
erty without his consent, unless a legally estab-
lished public necessity requires it, and upon condi-
tion of a just and previous indemnity.”
The property rights protection in the Norwegian
Constitution of May 17, 1814 was inspired by the
American and French human rights documents.
The most influential draft (named the “Adler-
Falsen draft” after its co-authors) provided strong
protection of property rights; the expropriation
1*Professor Dr. Juris, Inland Norway University of Applied Sciences at Lil-
lehammer; in the fall of 2017, the author joined the Faculty of Law at the
University of Oslo.
The research for this article was conducted at the Center for the Study of
Law and Society (CSLS), UC Berkeley School of Law, where I had the
pleasure of being a Fulbright Visiting Scholar for the academic year
2014–2015. I have greatly benefited from the multidisciplinary and
international research milieu at UC Berkeley, and would in particular
like to thank the CSLS administration, affiliates and fellow visiting
scholars for their support and insightful discussions. The research has
been presented at the CSLS Summer Speaker Series and at the Third
Annual Private Law Consortium, hosted by McGill University, Faculty of
Law. It has also been presented at the Ph.D. Seminar in Law and Econo-
mics at the University of Oslo, Faculty of Law, and at a seminar on Land
Consolidation and Expropriation at the Norwegian University of Life
Sciences. I wish to thank all the participants, along with anonymous
reviewers at Ancilla Iuris, for helpful comments. Thanks to Johann
Koehler as well, who helped me complete the manuscript, especially
with respect to linguistic matters.
1Christopher Michael Curtis, Jefferson’s Freeholders and the Politics of
Ownership in the Old Dominion (2012), pp. 24–27 and 60–67.

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