## Facts

- Beginning in 1979, the French Socialist Party pursued a program to nationalize major parts of the French economy through ordinary legislation rather than constitutional amendment.
- After the Socialist Party won national elections in 1981 and formed the government, Parliament adopted a sweeping nationalization statute targeting major sectors of industry, banking, and commerce.
- By early 1982, the state’s acquisitions had produced near-total public control of the financial and investment sectors: the government owned all major banks, controlled roughly 85% of outstanding credit, and had taken over 13 of the 20 largest corporations.
- The expanding public sector controlled a large share of investment and production in big industry, a significant portion of exports, a portion of domestic retail activity, and a substantial segment of employment.
- Opposition members of Parliament (meeting the constitutional threshold under Article 61 of the 1958 Constitution) referred the statute to the Conseil constitutionnel for pre-promulgation abstract review.
- The referral argued that the statute violated constitutional property protections, especially Article 17 of the 1789 Declaration of the Rights of Man and of the Citizen, which permits deprivation of property only for public necessity and with just, prior compensation.
- The challengers also raised objections based on equality and on the statute’s mechanisms for indemnification and related governance features connected to the transfers of enterprises and assets to and from the public sector.

## Issues

1. Whether large-scale nationalization by statute is constitutionally permissible under Article 17 of the 1789 Declaration, which protects property as an inviolable and sacred right subject only to public necessity and just, prior indemnity.
2. Whether the legislature’s judgment that the nationalizations met a “public necessity” requirement was subject to constitutional review, and if so, under what standard.
3. Whether the statute’s compensation and valuation mechanisms assured a “just and prior” indemnity for affected owners and respected equality among similarly situated rights-holders.
4. Whether certain connected provisions (including mechanisms affecting the management and disposition of nationalized assets and potential transfers involving the public sector) were constitutionally adequate, and whether defects in those provisions required invalidation of the entire law.

## Decision

- The Conseil constitutionnel held that nationalization is not unconstitutional in itself: a transfer of enterprises to the public sector can comply with Article 17 if it is justified by public necessity and conditioned on a just and prior indemnity.
- The Council reaffirmed the constitutional force of the 1789 Declaration’s protection of property, treating Article 17’s guarantees as fully binding in constitutional review.
- On “public necessity,” the Council accepted that the legislature has broad authority to assess economic and social needs; absent a manifest error, that assessment would not be rejected, particularly where it was not shown that the transfers would shrink private property and freedom of enterprise to a level incompatible with constitutional guarantees.
- The Council found that core parts of the statute’s indemnification system did not reliably ensure a just and prior indemnity within the meaning of Article 17, including by producing unjustified disparities in how compensation was determined for different categories of owners and interests.
- The Council also censured related provisions tied to the structure and administration of the nationalizations (including aspects connected to disposition or transfers involving public assets) for lacking constitutionally sufficient safeguards.
- Because the unconstitutional provisions were central to the statute’s overall structure and financial balance, the Council concluded that severance was not appropriate and declared the law not in conformity with the Constitution in its entirety (“non conformité totale”).

## Legal Principles

- Article 17 of the 1789 Declaration has constitutional value: property is protected as an inviolable and sacred right, and deprivation is permitted only when public necessity is legally established and compensation is just and paid in advance.
- Nationalization is treated as a form of compelled transfer of property; it can be constitutionally valid if Article 17’s conditions are satisfied.
- The legislature’s determination of public necessity receives substantial deference; constitutional review focuses on whether the determination is tainted by manifest error and whether the overall measure would reduce private property and freedom of enterprise beyond constitutional limits.
- “Just and prior” compensation is a substantive requirement: the law must provide valuation and payment mechanisms capable of producing fair compensation, not merely formal or indeterminate promises.
- Equality constraints apply to compensation design; distinctions among owners or rights-holders must rest on objective and rational criteria connected to the law’s aims.
- When unconstitutional provisions are interdependent with the statute’s overall design or financial equilibrium, the constitutional judge may invalidate the entire statute rather than excise discrete clauses.

## Conclusion

The Conseil constitutionnel confirmed that Parliament may nationalize enterprises by ordinary statute consistent with Article 17 of the 1789 Declaration, so long as the measure is justified by public necessity and provides a just, prior indemnity, but it held the 1981 nationalization law unconstitutional in full because its compensation framework and connected mechanisms failed to secure constitutionally required protection and equal treatment for affected property holders.


French Nationalization Case, No. 81-132 DC of 16 Jan. 1982 (1982)