This was presented at the Stocktaking Conference on Palestinian Refugee Research in
Ottawa, Canada, June 17-20, 2003
Survey of Palestinian Refugee Real Estate Holdings
in Israel
Legal Mechanisms after 1948 which Enable Accurate Identification of
Real Estate Owned by Palestinian Refugees
And a Proposed Compensation Model accordingly
Dr. Roby Nathanson
May 2003
Abstract
The policy adopted by the State of Israel regarding the lands of Arab refugees (or
absentees) who had fled their homes in response to the establishment of the State of Israel
was to expropriate them. We describe the legal mechanisms adopted by the State of Israel
in order to expropriate the property of the Arab refugees, providing an introduction to the
four main laws legislated for that purpose (the Absentees’ Property Law, the
Development Authority (Transfer of Property) Law, the Land Acquisition (Validation of
Acts and Compensation) Law, and the Absentees’ Property (Compensation) Law), and to
the two major institutions founded in accordance with those laws, the Custodian of
Absentees Property and the Development Authority.
In order to guarantee the status of the transferred land, it was stipulated that the Custodian
could transfer those properties only to the Development Authority that, as an agency
operating in good faith, could acquire even wrongly vested land and make further
transfers according to the State’s various policy goals. The interaction between those two
establishments is the basis to our proposed research methodology, providing us a glance
to the specific lands acquired by the Custodian of Absentees Property, and transferred to
the Development Authority. Hence, through an examination of the documents found in
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the archives of the Custodian of Absentees’ Properties, we could obtain information on
the mechanism employed to locate absentees’ properties. The seven mechanisms are:
Generalisation, “Where there is no claimant, there is no owner”, Abandoned Land, Direct
transfers to government agencies, The Development Authority and the Land Acquisition
(Validation of Acts and Compensation) Law, Locating Fields, Informants and Coercion.
In light of the information we gather, based on our research methodology we propose a
compensation model to calculate each expropriated parcel’s worth. The basic assumption
underlying the model is that the proposed compensation does not include the possibility
of the absentees’ return to their land. We also refer solely to real estate property.
The Proposed Compensation Model
The basis for the proposed compensation model is the value of the land at the time of its
expropriation by the State of Israel (with the addition of interest accrued), which is the
approach suggested by the International Court of Justice regarding the compensation of
refugees whose property was legally expropriated. In order to determine the level of
compensation according to this approach, the establishment of property values was based
on the property tax ledger entries made during the British Mandate.
We decided to add 20% to the 1948 value of the properties as the average difference, we
believe, between the market price of a property and the valued place upon it by the
absentees the majority of whom, as stated, did not agree to sell their property at the
market price. This addition is required for properties used for agricultural as well as
industrial purposes.
After calculating the appropriate compensation effective for 1948, we were required to
adjust that amount to the fact that the compensation would be awarded 55 years after the
date of expropriation. The significance of the delayed compensation is expressed on two
dimensions:
a. The value of the amount has eroded in response to inflation. In response to this linkage,
the value of the property in 1948 is to be multiplied by a factor of 307,259.8 (1948-
2003).
b. The compensation was unavailable to the absentees in the interim between the
time of the expropriation and the present; hence, the absentees lost the interest that
might have been earned on that amount over a period of 55 years. The coefficient
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obtained from payment of 4% interest during 55.33 years is 8.76 higher than the
original sum (i.e., 1.04^55.33).
Calculation of Compensation According to the 1948 Value of the Property, Linked
to Israel’s Consumer Price Index: An Example
The taxes levied on one dunam1 of citrus grove in 1948 was 100 mil
(or .100 Palestine Pounds).
1. Multiply by 3002 in order to obtain the value of the 300 PIL 0.100 = PIL 30
property in 1948 in Palestine Pounds:
2. Add 20% in order to account for the property’s value PIL 30 1.2 = PIL 36
for the absentee:
3. Multiply by the rate of inflation and divide by PIL 36307,259/10,000 =
10,000 (currency adjustment) NIS 1,106.14
4. Multiply by the interest coefficient of 8.76 NIS 1,106.14 8.76=
NIS 9,689.74
5. Divide by the NIS/US$ rate of exchange effective NIS 9,689.74/4.5= US$
April 2003 2,153.28
Conclusion: According to the proposed compensation model, the amount of
compensation to be received for one dunam of citrus grove is US$2,153.28 (effective
April 2003).
The Alternative Compensation Model
The alternative compensation model presented in the preceding involves the application
of the compensation model specified in the Absentees’ Property (Compensation) Law
(1973).
The model adopted in the law regarding agricultural land is based on the appraisals made
by a committee of experts appointed by the UN Conciliation Commission for Palestine.
We fully linked the indicated value (for 1973) to the Consumer Price Index . To this
figure we added an additional sum, equivalent to the amount earned at a real interest rate
1
One dunam equals 1,000 sq. meters.
2
Multiplication of the sum by 300 is meant to compensate for the temporary decline in the level of tax
levied on citrus groves, which was, in 1948, 400% lower that the standard tax rate levelled on citrus groves
(i.e., a decline from 400 mil to 100 mil).
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of 4% for each of the years 1973-2003; that amount was then divided by 10,000 in order
to adjust for conversion of the Israeli Pound (IL) to the NIS and by 4.215 in order to
arrive at the amount of compensation correct for April 2003.
Calculation of the Compensation: An Example
The compensation suggested for a dunam of citrus groves in 1973 was 900 IL.
1. Multiply the sum by the rate of inflation (annual (38,218.50900) / 10,000
average) between 1973 and April 2003 (inflation = NIS 3,439.665
coefficient: 38,218.50); divide by 10,000 to
account for the conversion from the IL to the NIS
2. Add real interest, at a rate of 4% accrued annually for NIS 3,439.665
30.33 years 1.04^30.3= NIS
11,302.86
3. Divide by the rate of exchange of the NIS to the US$ NIS 11,302.86/4.5=
effective for April 2003, i.e., 4.5 US$2,511.75
Conclusion: According to the model presented in the Absentees’ Property
(Compensation) Law (1973), the compensation for a dunam of citrus groves, in April
2003, equalled US$2,511.75.
Summary
The research methodology we suggest enables an accurate identification of each of the
Palestinian refugees’ real estate property expropriated by the state of Israel.
Combined with the appropriate model for direct compensation of each refugee, or his
heirs we believe is the only suitable basis to promote a feasible and just solution to this
problematic issue.
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