Brazil’s Federal Supreme Court (STF) last month ruled that the government can expropriate private rural property if it does not fulfill its “social function.”
The ruling came in response to a legal challenge by the National Confederation of Agriculture (CNA) concerning the country’s Agrarian Reform laws. According to Article 184 of Brazil’s Federal Constitution, the government is permitted to seize such property via compulsory purchase for “social interest”:
The Union is responsible for expropriating for social interest, for the purpose of agrarian reform, rural property that is not fulfilling its social function, through prior and fair compensation in agrarian debt securities, with a clause preserving the real value, redeemable in the period of up to twenty years, starting from the second year of its issuance, and whose use will be defined by law.
To meet the definition of “social function,” a property must meet all the following requirements:
I – rational and adequate use;
II – adequate use of available natural resources and preservation of the environment;
III – compliance with the provisions that regulate labor relations;
IV – exploitation that favors the well-being of owners and workers.
But the CNA pointed to Article 185, which states that the government may not expropriate land which is the sole property of its owner or any land that is “productive.” Productive land, the clause says, should have different standards when it comes to fulfilling its “social function”:
The law shall guarantee special treatment for productive property and shall establish rules for the fulfillment of the requirements regarding its social function.
Therefore, the CNA argued, the government should be prohibited from expropriating land that is productive, even if it does not meet its “social function” as defined by Article 184.
But STF Justice Minister and rapporteur Edson Fachin dismissed the CNA’s argument, ruling that a property that is productive can still be held to social function requirements. Should it fail to meet those criteria, the government can seize it through compulsory purchase if it is in the “social interest” to do so, though the term “social interest” remains open to interpretation.