Are there time limits for pursuing compensation claims in the event of expropriation?

According to the constitutional principle of the admissibility of expropriation, the deprivation of property rights to real estate by virtue of law may only occur in exchange for fair compensation.

The determination of compensation may occur:

 

• as part of conducted agreements (if such a procedure is provided for by law, e.g., Article 98(3) of the Real Estate Management Act (REMA), which allows for compensation to be agreed upon for plots of land taken over for public roads);
• based on an administrative decision issued in this matter (e.g., Article 12(3) and (4) of the Special Road Act.

 

It often happens that despite the transfer of ownership of real estate by operation of law, the compensation amount is neither agreed upon nor has a decision been issued in this regard. There are also cases where, despite a decision determining the compensation, the payment is not made.

In such situations, where a certain period has passed since the date of the transfer of property rights, the question arises whether the time limit for pursuing compensation claims has not already expired.

An important aspect in this matter is the issue of limitation periods, which is interpreted in two ways in judicial practice.

According to the first view, claims for compensation due to the expropriation of property rights by virtue of law do not expire under the limitation periods referred to in Articles 117 and following of the Civil Code.

This view is based on the assumption that when compensation for expropriation is determined by administrative decision, the assessment of the enforcement of such a claim – including the procedure and all legal consequences (including the statute of limitations) – should be made based on the provisions of substantive administrative law. Under administrative law, a claim determined by administrative decision can only be subject to limitation if a legal provision explicitly states so. However, neither the REMA nor the Special Road Act provide for limitation of claims for compensation for expropriated property. Thus, according to this view, the claim does not expire and may be pursued indefinitely.

The opposing view assumes that the claim for compensation due to the expropriation of property rights by operation of law is of a civil law nature, and the fact that the compensation is determined by administrative decision does not change this nature. According to this interpretation, supporters argue that such a claim is subject to the limitation rules set out in Articles 117 and following of the Civil Code.

In our opinion, the first view remains dominant, and has been upheld by authorities in cases where our law firm’s attorneys represented clients seeking compensation for expropriated properties.