Eminent Domain in Argentina, Brazil, and Mexico

Eminent Domain in Argentina, Brazil, and Mexico

Arun Shankar (Faculty of Management Studies, National Law University, India) and Rituparna Das (Faculty of Policy Science, National Law University, India)
Copyright: © 2015 |Pages: 17
DOI: 10.4018/978-1-4666-6551-4.ch016

Abstract

All states cherish eminent domain, which is the power to assert dominion over the resources in their territory. How eminent domain is exercised in a region may be used as a test to gauge the attitude of a state to business. Eminent domain also has deeper influence on the economy of a state beyond direct percepts. Invoking eminent domain scintillates social crisis. How a state manages its social crisis marks the difference between continued growth and economic collapse. This chapter anatomizes a few relevant and recent eminent domain developments in the Latin American states of Argentina, Brazil, and Mexico, contrasting it with the scenario in the USA wherever appropriate.
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Background

Latin America, a Collective Sovereign

Latin America represents economies responding to surrounding flux and evolving in the process. Latin America has the potential to emerge as a collective of sovereign republics with common interests and identities (McPherson, 2013). The stature of Latin America was probably first recognized when the USA in 1914 invoked the aid of Argentina, Brazil, and Chile, dubbed the so-called “ABC Powers”, to diplomatically mediate the crisis the USA had with Mexico at the time. This invocation, due to its unprecedented nature, had raised enough sensation by then (Ellis, 2004). Much study has since emerged analyzing these nations to demonstrate the homogeneity and diversity of Latin America.

The average Latin American motif can be sketched as having no long-term pattern of convergence to the living standards of rich countries; slow modernization process, with high levels of inequality; relatively undiversified economy based on natural resources; oligarchic frontier expansion in the 19th century; populism in the 1950s and 1970s; and restricted democracy, military coups, and civil wars (Robinson, 2013). While the aspiration to achieve modernization in Latin America is widespread, the process of development often disrupts the established order and introduces new conflicts and problems (Sloan, 1984). Liberalization processes in Argentina, Brazil, and Mexico have contributed to more stable stock markets, which are similar to markets in developed nations (Edwards, Biscarri, & Gracia, 2003). The repressive regimes prevailing in these countries perhaps helped to erase some of the preceding country-to-country differences that the ensuing process of transition to democracy reinforced similarities (Schneider 2010: 386).

Resources, Whether a Boon or a Bane

Resources are important for the growth of any economy and the Latin American region is rich in resources, particularly in natural resources. How the resources stand distributed and how they remain utilized are the relevant factors in exuding its economic growth. Resources captivate sovereigns and investors while the subjects of the State represent the third relevant group. The interests of these three groups often come into conflict with one another. An economy’s dependence on natural resources has also given rise to conflicting views, whether it constitutes a boon or a bane.

An argument is that natural resources trigger resource curse – the paradox of how countries with rich resources often develop more slowly, more corruptly, more violently, and with more authoritarian governments than others (Sachs & Warner, 1995). However, later studies based on Latin America counter this argument and establish that natural resources are neither a curse nor a blessing. These later studies establish that “resource curse, including its Latin American ‘crude democracy’ variant, is another example of a clever—yet flawed—theory that must now be confronted by a set of inconvenient facts” (Haber & Menaldo, 2012).

Key Terms in this Chapter

Regulatory Chill: The idea that obligation to pay compensation for regulatory changes may make it difficult for host States to regulate in socially desirable areas.

ICJ: The International Court of Justice, popularly known as the World Court, is the judicial organ of the United Nations.

Mathews Test: A test of logic to ensure that in the name of due process, efficiency of a State is not hindered. It is derived from the decision of the US Supreme Court in Mathews v. Eldridge 424 U.S. 319.

Mosconi Report: A report brought out by the Argentine government to justify the use of eminent domain powers on YPF SA.

YPF: An Argentine oil company formed in 1922, originally owned by the State.

Eminent Domain: The idea of property remaining in the government. Deprivation, acquisition, taking and condemnation are all concepts intertwined with eminent domain.

Peronism: The ideology propounded by the Argentine leader Juan Domingo Perón, who founded the political group, Justicialist Party.

Resource Curse: The paradox of how countries with rich resources often develop more slowly, more corruptly, more violently and with more authoritarian governments than others.

ICSID: International Centre for Settlement of Investment disputes, an international arbitration institution under the World Bank.

Public Use: The reason for invoking eminent domain. Traditionally, it meant purposes like building roads or schools. However, its frontiers have expanded, making it a controversial, grey area. Practically, anything that directly or indirectly benefits even a section of the society can now be brought under the public use definition.

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