Eminent domain means the governmental power to expropriate private property for public use. Such expropriation is also called taking, appropriation, condemnation, or compulsory acquisition.
The phrase “eminent domain” comes from the early modern Latin expression “dominium eminens” (supreme ownership) (Waelkens 2015: 297). Since this power is an apparent restriction on property rights, Grotius in On the Law of War and Peace, II. 14. 7. required that “in order that this [taking] may be done by the power of eminent domain, the first requisite is public advantage; then, that compensation from the public funds be made, if possible, to the one who has lost his right” (Neff 2012: 226). Those dual requirements of (1) public advantage and (2) compensation are reflected in many liberal constitutional codes today. Thus, the Fifth Amendment to the US Constitution provides, “nor shall private property be taken for public use, without just compensation,” and the third paragraph of Article 29 of the Japanese Constitution provides, “private property may be taken for public use upon just compensation thereof.” (For similar restrictions, see, e.g., Article 14, paragraph 3 of the German Constitution; Article 26, paragraph 2 of the Swiss Constitution; and Article 23, paragraph 3 of the Korean Constitution.) Those requirements are regarded as strong bulwarks against governmental infringements of private citizens’ rights.
There are several interpretative problems regarding the takings clause, however. First, when is private property taken for public use? If it is taken for the interest of other citizen(s), can that redistributive taking be for public use? And if so, when and why is the taking for public use? Or, put another way, can a forced transfer of private property to another private party satisfy the requirements? The recent US Supreme Court’s controversial decision in Kelo v. City of New London (2005) is an example of this problem, where a 5–4 majority held that the Connecticut City’s appropriation of residential neighborhoods to a private nonprofit entity for the stated purpose of economic development did not violate the requirement of public use.
Second, when a government does not physically take private property but regulates its use and enjoyment by its owner by, for example, environmental and zoning regulations, does this “regulatory taking” require compensation? In addition, is the eminent domain clause applicable not only to real and personal property but also to contractual rights, choses in action, and intellectual property? If the concept of eminent domain is interpreted in such a wide sense, taking and taxation are hardly distinguishable in theory (Epstein 1985).
Third, how should “just compensation” be decided? Does it mean market value, or should the valuation take into account the owner’s subjective use value and attachment? If the former approach is adopted, then the owners might be forced to sell their property at much lower price than they would accept without eminent domain.
Different normative legal theories attempt to answer those questions in different ways (Munzer 1990: chapters 14 and 15; Alexander and Penalver 2012: chapter 8). Utilitarian theory of property and its cousin, economic analysis of property law, tend to permit takings when they are expected to increase the aggregate utility on the whole by overcoming such problems as holdout and transaction costs. To use Calabresi and Melamed’s terminology, private property is protected by the liability rule here, rather than the property rule. Rawlsian liberal egalitarian theory may allow takings for purely distributive purposes, possibly even without compensation for affluent owners, unless taxation is a more appropriate way of distribution. Hegelian personhood theory of property would distinguish personal property, which is considered indispensable to personal development, and fungible property, which is interchangeable and impersonal. Only the latter kind of property is liable to taking. While those approaches to property law are often quite permissive of the governmental power of taking, Lockean (and other types of) libertarian theory of property is skeptical of eminent domain in both its theory and practice and requires that the concepts of public use and just compensation be strictly interpreted. In fact, the most forceful opposition to the Kelo decision comes from this side (e.g., Epstein 2008; Benson 2010). The reasons libertarians criticize the decision include, among others, the governmental or legislative abuse of eminent domain to confer benefits on politically powerful interest groups at the expense of the politically weak, imprudent expenditure of public money on unproductive projects, the impossibility to correctly estimate owners’ essentially subjective valuations of their property, and the general loss or diminution of citizens’ economic and personal freedom and security.
In these ways, eminent domain is a touchstone and battleground of diverse approaches to property law today.
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