Legal protection of private property

As the legal framework has evolved, from the Organic Statute of 1856, the Constitution of 1857, and up to the Constitution of 1917, the protection of private property has been weakened. Below is an interpretation.

First, the Provisional Organic Statute of the Mexican Republic issued in 1856 by President Ignacio Comonfort and which constitutes the antecedent of the Constitution of 1857. The Statute established the following regarding private property:

Art. 63. Property is inviolable, whether it consists of goods, rights or in the exercise of a profession or industry.

Art. 65. Private property may be occupied if required by the public utility, legally verified, and through previous and competent compensation.

Art. 66. Public utility works are those whose purpose is to provide the nation with uses or enjoyments of common benefit, whether executed by the authorities, or by private companies or companies, competently authorized. A special law will establish the way to prove the public utility, the terms in which the expropriation will be made, and all the points concerning it and the compensation.

Three comments. First, by considering private property inviolable, it is recognized as a natural right and as the support of individual freedom. Second, it can only be expropriated for reasons of public utility and, for it to proceed and occupy the property, the authority has to pay the compensation and it has to recognize the market value of the expropriated property. Third, the expropriated good had to be used to offer pure public goods, that is, those that meet the condition of non-exclusion in consumption (it is enjoyed even if it is not paid for) and non-rivalry in consumption (the amount consumed by a individual does not reduce the amount available to other consumers).

The Constitution of 1857, for its part, in article 27 established: “Persons’ property cannot be occupied without their consent, but for reasons of public utility and prior compensation. The law will determine the authority that must carry out the expropriation and the requirements with which it must be verified.

Three comments. First, unlike the Statute, private property is no longer considered a natural right. Second, it establishes that the authority that decreed the expropriation had to demonstrate to the owner, legally and financially, that the property to be expropriated would be used to offer public goods before occupying it and assuming ownership of it. Third, unlike the Statute, the Constitution no longer established that the compensation had to reflect the market value of the expropriated property.

Finally, in the 1917 Constitution, article 27 states: “The property of the lands and waters included within the limits of the national territory, correspond originally to the Nation, which has had and has the right to transmit ownership of them to individuals, constituting private property.

Expropriations may only be made for reasons of public interest and through compensation.

Four comments. First, private property is not considered a natural right, but one derived from the property of the Nation, so the definition of private property rights is vague and inefficient. Second, unlike the Statute and the Constitution of 1857, the 1917 Constitution no longer establishes that there must be prior compensation, but that one must mediate, which allows the expropriating authority to defer payment over time , in addition to being conditioned on the availability of fiscal resources. Third, according to article 10 of the Expropriation Law, the compensation will be at commercial value, which may not be less than the cadastral or fiscal value.

Fourth, like the 1857 Constitution, the 1917 Constitution does not establish what should be understood as “public utility”; for this, it is necessary to resort to the Expropriation Law. Article 2 establishes that the cause of public utility will be based on technical opinions (whatever that might mean). The causes of public utility are defined in article 1 of the Law and include everything from pure public goods, through the existence of a monopoly, the means used for national defense or for the maintenance of public peace, the conservation of natural resources and even the creation, promotion or conservation of a company for the benefit of the community (it does not matter that it is bankrupt).

The causes of public utility are so broad that, for practical purposes, any good or resource owned by an individual can be expropriated and its domain pass into the hands of the government (not the Nation) and the only thing that can be challenged is the amount of the compensation. Thus, private property is not efficiently defined, guaranteed, or protected, even less if the ruler despises private property or, worse still, believes that communism does work. Consequently, the expropriation risk is very high and the cost is less investment, economic growth and well-being.

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