Property Rights and Expropriation under the Chilean Constitution
Article 19 No. 23: Freedom to Purchase Goods
This law, along with economic freedom, is integral to a neoliberal market economy. It is a prerequisite for economic freedom’s development. This article focuses on the individual’s right to purchase goods, distinct from the socialist concept of social property ownership seen in past Soviet republics, where individuals often lacked the minimum resources for a dignified life. This right is also known as the right to property, differentiating it from socialist interpretations. It is the individual’s right to acquire property as they see fit, using established methods of ownership acquisition.
Right to Purchase vs. Right to Ownership
It’s important to distinguish the freedom to purchase goods from the right of ownership or domain. The latter only applies when an asset is already incorporated into an estate. Conversely, the right to property is exercised over any property yet to be incorporated into an individual’s estate. It is a precursor to ownership.
Restricted Goods
Under the 1925 Constitution, the State could reserve ownership of certain goods (natural resources or capital goods). The 1980 Constitution prohibits this, aligning with economic freedom and the right to acquire goods. The Constitution exhaustively lists goods that cannot be privately acquired:
- Assets deemed common to all (e.g., sea, air, celestial bodies).
- National property for public use (e.g., streets, plazas).
- Property designated as non-ownable by other constitutional standards (e.g., mineral deposits, groundwater, certain weapons).
Goods with Restricted Availability
Some goods are available but with limitations, purchasable based on national interest and Qualified Quorum Laws (LQC). Examples include mining concessions (restricted for judges and close relatives) and goods under litigation.
Article 24: Right of Domain or Ownership
This article defines the most complete right one can have over a thing. The 1980 Constitution recognizes this right for both tangible and intangible property, encompassing all present and future forms. Constitutionally, it relates to any economic benefit with assessable value. Examples include:
- Ownership of professional titles, employment, or prestige (e.g., student grades). This indirectly protects the right to education.
- Ownership of any economic or pecuniary advantage. For example, a lessee doesn’t own the property but has the right to its use and enjoyment, protected by the Constitution.
Contract Laws
Contracts between the State and private companies (often foreign) grant special tax treatment in exchange for investment. These require legal approval. Historically, debate existed on the State’s ability to unilaterally modify contracts. The 1971 amendment to the 1925 Constitution allowed modifications under specific conditions:
- A law authorizing the State to amend the contract.
- Compensation for any direct, certain, and severe damages.
The 1980 Constitution is silent on this, implying rights become vested upon creation.
Limits on Property Rights
Article 19 No. 26 establishes limits on property rights, categorized as:
- Individual limits: Benefitting owners (e.g., inheritance laws, easements).
- Social limits (social function of private property): Harmonizing private interests with societal interests. The Constitution lists justifications for these limits:
- National interest.
- Public utility.
- Public health.
- National security (e.g., democracy, counter-terrorism).
- Environmental heritage preservation.
Limitations vs. Expropriation
Limitations restrict private domain but do not extinguish it. Expropriation, however, transfers ownership to the public domain.
Expropriation
Expropriation is a unilateral state act, authorized by law, transferring specific property from private to public domain for public or national interest, with compensation for actual damages.
Key Elements of Expropriation
- Unilateral State Act: Not a contract, but a state action.
- Authorization by Law: Protects against abuse and ensures legal certainty.
- Cause: Must be in the national interest or for public utility.
- The Expropriated Property: Can be total or partial, transferring ownership to the public domain.
- Compensation: For actual property damage, not moral damage. Determined by agreement or by courts. Paid prior to physical possession, or provisional compensation is paid.
Reasons for Legal Claims
- Amount of compensation.
- Legality of the expropriation act.
- Existence of national/public interest.
- Request for full expropriation if partial renders remaining property economically useless.