Viewpoint... Whether the actual construction person has the right of priority compensation.
Published:
2024-03-21
In judicial practice, illegal subcontracting, subcontracting, and affiliation in the construction field are not uncommon, and as an actual builder, there are still different views on whether they can enjoy the priority of compensation for construction projects in judicial practice.
According to Article 807 of the the People's Republic of China Civil Code of China and Article 35 of the (I) of the Supreme People's Court on the Interpretation of Legal Issues Applicable to the Trial of Construction Contract Disputes, the contractor has the priority of compensation for the project price, but it does not clearly stipulate whether the actual builder has the priority of compensation for the project price. In judicial practice, illegal subcontracting, subcontracting, and affiliation in the construction field are not uncommon, and as the actual builder, there are still different views on whether he can enjoy the priority of compensation for construction projects in judicial practice.
Scope of 1. actual construction person
Before discussing this issue, the scope of the actual construction person should be clarified. The reply of the Supreme People's Court on the proposal of unifying the judicial determination conditions of "actual constructors" in construction contract disputes clearly states: "actual constructors" refers to the subjects that actually complete the construction in the construction contract that is determined to be invalid according to the law, including construction enterprises, branches of construction enterprises, foreman and other legal persons, unincorporated organizations, individual citizens, etc, it is a concept determined by the Interpretation of the Supreme People's Court on the Application of Legal Issues in the Trial of Construction Contract Disputes, with the aim of distinguishing between the legal concepts of contractors, constructors and construction enterprises of valid construction contracts.
The lawsuit brought by the actual construction party to the subcontractor, subcontractor, general contractor and employer who have no contract relationship with it shall be reviewed in strict accordance with the provisions of the law and judicial interpretation. The scope of application stipulated in the second paragraph of Article 26 of the judicial interpretation of the construction contract shall not be expanded at will, and it shall be made clear that the employer shall only be liable to the actual construction party within the scope of the unpaid project price in strict accordance with the relevant judicial interpretation.
Does the actual construction person of the 2. enjoy the right of priority compensation for the construction project?
Case 1: The actual builder has the right of priority compensation for the project price.
Case No.:(2019) Supreme Fa Min Shen No. 6085
Case:
In 2013, Blue Sky Company (the employer) and Anhui Sanjian (the contractor) signed an Agreement, agreeing that Blue Sky Company will contract the project involving Dinghui Times City (Buildings 1, 4, 5, 8, 9, 10 and 23) to Anhui Sanjian. After Anhui Sanjian and Yulong Company (the actual builder) signed a "contract", agreed that Yulong Company to contract the project involved in the case in full, Yulong Company to accept Anhui Sanjian to manage all aspects of the project. Since then, although Yulong Company does not have the corresponding construction qualification, it has borrowed the qualification of Anhui Sanjian to carry out the actual construction of buildings 1, 4 and 5 contracted by Lantian Company. After the two parties had a dispute over the project payment, Yulong claimed that as the actual contractor, it should exercise the right of priority compensation for the project.
The Court's view:
According to the relevant provisions of the Interpretation of the Supreme People's Court on the Application of Law in the Trial of Disputes over Construction Contracts, although the construction contract is invalid, the contractor still has the right to claim the price of the project from the contractor. Moreover, the contractor organizes the construction of the construction project, the same need to pay the employee labor remuneration, the same as when the contract is valid. Therefore, in the case of the invalidity of the contract, the contractor's right to claim the price of the project also needs to take precedence over the general claim to be realized, so the contractor should be considered to have the right of priority compensation.
In the case of "an unqualified actual builder borrows the name of a qualified construction enterprise", the actual builder and the construction enterprise, who is the contractor, have the right to request the price of the project and the right of priority compensation. The "contractor" listed in the contract is a construction enterprise with corresponding qualifications, that is, the affiliated person, and the actual construction person who actually performs the contractor's obligations listed in the contract is the affiliated person. What concerns the actual interests of the contractor is whether the construction project is completed and delivered to it in accordance with the standards and time agreed in the contract, as long as the construction project is delivered in accordance with the contract, it will not harm the actual interests of the contractor. However, whether or not to enjoy the right to claim the project price and the right of priority compensation is directly related to the actual interests of the other party.
In fact, it was the affiliated person who actually organized the employees to carry out the construction activities and fulfilled the contractor's obligations agreed in the contract. Therefore, because of the actual construction behavior, the affiliated person should get the project money from the contractor more than the affiliated person, and the affiliated person actually only finally gets the management fee from the affiliated person. Therefore, the affiliated person is more in line with the provisions of the law on contractors than the affiliated person, and should have the right to claim the project price and the right of priority compensation than the affiliated person. The affiliated person is both the actual construction person and the actual contractor, and the affiliated person is only the nominal contractor, and it is determined that the affiliated person enjoys the right to claim the project price and the right of priority compensation, which is more in line with the purpose of the legal protection of the right to claim the project price and the establishment of the right of priority compensation.
Case 2: The actual builder does not have the right of priority compensation for the project price.
Case No.:(2023) Supreme Fa Min Shen No. 659
Case:
Three Construction Company (general contractor) illegally subcontracted the project involved in the case to Lu Mou, who was not qualified. Lu Mou dismembered and subcontracted Lu Mou himself, Zhang Mou and Yang Mou for construction. Later Zhang advocated that he, as the actual construction person, should have the right to give priority to the discount and auction money of the project-related project completed by his construction.
The Court's view:
The Court believes that the contractor who signs the construction contract with the employer has the right to priority compensation of the project price, while the subcontractor and the actual builder who have not established a contractual relationship with the employer do not have the right to priority compensation of the project price. Secondly, Zhang claimed that even if he did not enjoy the priority right of compensation, according to the law, he could also subrogate the contractual rights of the three construction companies under the construction contract. Article 25 of the (II) of interpretation of construction works stipulates that if the actual builder, in accordance with Article 73 of the the People's Republic of China contract law, fails to exercise the due creditor's rights or the subordinate rights related to the creditor's rights to the employer, which affects the realization of the due creditor's rights, and files a subrogation lawsuit, the people's court shall support it. The prerequisite for the exercise of the right of derogation is that the actual builder has a legal and effective claim against the subcontractor or the illegal subcontractor. In this case, the three construction company is the general contractor of the project involved in the case, and enjoys the right of priority compensation of the project price, because Zhang is not a creditor of Anhui three construction company, can not apply the provisions of this article to exercise the right of priority compensation of the project price.
3. Summary
The law of our country does not give the actual construction person the right of priority compensation for the project price, but not all the actual construction people do not have the right of priority compensation. From the point of view of current judicial practice, if the actual builder and the general contractor are closely related, and the employer knows that the actual contractor signs and performs the construction contract with him by using the qualification of the nominal contractor, then this behavior is in line with the provisions of Article 925 of the Civil Code on entrustment and agency. This construction contract directly binds the actual contractor and the employer, thus forming a de facto construction contract relationship between the actual builder and the employer, the actual construction person shall enjoy the priority of the construction project price. At this time, according to Article 35 of the Interpretation (I) of the Supreme People's Court on the Application of Law in the Trial of Disputes over Construction Contracts, as the actual contractor, you may enjoy the right of priority compensation for the price of the construction project. The exercise of the right of priority compensation has a statutory time limit, and the construction person shall actively exercise the power. According to the (I) of Judicial Interpretation of Construction Works, the contractor shall exercise the right of priority compensation for the construction project price within a reasonable period of time, but not more than 18 months, from the date on which the contractor shall pay the construction project price.
The result of the discussion at the 21st meeting of judges of the Civil Division of the Supreme Court, published on April 8, 2022, was that the actual builder did not have the right to priority compensation for the construction price. Since then, many high courts have also issued relevant documents, that the actual construction person can not enjoy the construction project price priority compensation rights, this judicial view is mainly based on the actual construction people are involved in illegal construction, so from the value level should be negative evaluation, and then, the protection of its rights should not be equal to the legal contractor. Therefore, even if the contractor knows the situation of attachment, the actual construction person's claim on the construction project priority compensation right still has a greater risk, it is recommended that as far as possible in the name of the attached person to require the contractor to pay the project payment and claim the construction project priority compensation right.
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