Viewpoint | Concept Understanding and Identification of Actual Constructors

There are two main reasons for the emergence of "actual construction people. On the one hand, with the vigorous development of my country's construction industry, a large number of migrant workers have gathered in the construction industry, and most of the migrant workers work in construction companies with no qualifications or relatively low qualifications. On the other hand, for the sake of operating costs, construction enterprises with corresponding qualifications usually subcontract or illegally subcontract some projects with low technical requirements to construction teams that lack corresponding qualifications after contracting to construction projects, so as to complete the construction at a lower cost.

The purpose of the "actual construction person" system is to ensure that those enterprises and individuals who have fulfilled their labor responsibilities and received corresponding remuneration can receive the remuneration they deserve. We hope that this system can bring more fair and correct choices to those workers who have been violated, faced difficulties, lack of economic support and unbalanced social status. On September 29, 2004, the promulgation of "Judicial Interpretation of Construction Project I" marked the birth of the legal concept of "actual construction person", which provided a comprehensive legal basis for the trial of construction contract disputes. Since its establishment, this concept has been widely recognized and followed in judicial practice, effectively safeguarding the legitimate rights and interests of migrant workers. However, due to the fact that the actual construction person is often accompanied by subcontracting, illegal subcontracting, affiliation and other illegal phenomena, resulting in judicial practice for the "actual construction person" and the balance of rights and responsibilities of the parties to the standard is different, for the actual construction of the concept of understanding, protection of the boundary and the distribution of responsibilities between the parties to the litigation is also controversial.

Article 26 of the Judicial Interpretation of Construction Projects 1 stipulates: "If the actual builder sues as a subcontractor or an illegal subcontractor as a defendant, the people's court shall accept it in accordance with the law. If the actual builder claims rights as a defendant, the people's court shall add the subcontractor or the illegal subcontractor as the third party in the case." The original intention of the Supreme People's court is to require the employer to bear the responsibility to the labor service enterprise within the scope of the project payment arrears. However, due to the unreasonable phenomena of subcontracting, illegal subcontracting and contracting projects under the pretext of qualification in the construction market, and the lack of standardized management of actual builders, a large number of migrant workers and actual builders are lack of contractual relationship, making them unable to get the wages they deserve. This makes the outstanding problems of the protection of the rights and interests of migrant workers spill over to the illegal areas of subcontracting, illegal subcontracting and borrowing qualifications to contract projects.

On December 29, 2018, the Supreme People's Court issued the "Interpretation (II) on the Application of Legal Issues in the Trial of Construction Project Construction Contract Disputes" (hereinafter referred to as "Construction Project Judicial Interpretation II"), which stipulates in Article 24: "The actual construction If the contractor claims rights as the defendant, the people's court shall add the subcontractor or illegal subcontractor as the third party in the case, after ascertaining the amount of the construction project price owed by the contractor to the subcontractor or the illegal subcontractor, the contractor is judged to be liable to the actual builder within the scope of the construction project price owed." This provision further strengthens the guarantee of the rights of the actual construction. From the literal point of view, the clause is limited to the victims of subcontracting contracts and illegal subcontracting, and does not deal with the protection of the rights and interests of the contractor who lends the qualification.

On December 29, 2020, the Supreme People's Court issued the Interpretation (I) on the Application of Legal Issues in the Trial of Construction Contract Dispute Cases (hereinafter referred to as the Construction Project Judicial Interpretation I), Article 43 of which stipulates: "If the actual construction person sues the subcontractor or the illegal subcontractor as the defendant, the people's court shall accept it in accordance with the law. If the actual builder claims the rights of the contractor as the defendant, the people's court shall add the subcontractor or the illegal subcontractor as the third party in the case, and after finding out the amount of the construction project price owed by the contractor or the illegal subcontractor, it shall judge the contractor to be liable to the actual builder within the scope of the construction project price owed". This provision follows the original provisions of the actual construction person, and it is still unclear whether the actual construction person in the multi-layer subcontracting and illegal subcontracting relationship applies.

The actual builder borrows a qualified construction enterprise to sign a construction contract with the contractor, which actually includes two legal acts, one is a civil legal act carried out with a false meaning, that is, the construction contract signed between the construction enterprise and the contractor. The second is to express the hidden civil legal act with false meaning, that is, the actual construction person who borrows the qualification and the contractor have a substantial construction contract relationship with respect to the subject matter of the construction contract.

Article 146 of the Civil Code stipulates: "A civil juristic act performed by the perpetrator and his counterpart with a false expression of intent is null and void. The validity of a civil juristic act with a false expression of intent shall be dealt with in accordance with the relevant legal provisions."

According to the above-mentioned Civil Code, the actual builder borrows a qualified construction enterprise to sign a construction project construction contract with the contractor should be invalid, but the contractor and the actual builder actually form a series of legal relations around the conclusion and performance of the construction project construction contract. Based on these legal relations, the two parties have the right of claim in the debt law, that is, after the construction project has passed the completion acceptance, the actual construction person who borrows the qualification may directly request the contractor to pay the project price by reference to the contract. In practice, there is also a situation in which the employer is not aware of the actual construction person's borrowing of qualification, and the parties cannot prove that the actual construction person and the contractor have a borrowing qualification relationship. In this case, it should generally be recognized as subcontracting. At this time, the actual construction person can claim rights from the employer in accordance with the provisions of Article 43 of the Judicial Interpretation of Construction Project I).

Article 43 of the Judicial Interpretation of Construction Projects 1 follows the original provisions of the actual construction person, and there are still disputes in judicial practice as to whether the actual construction person in the multi-layer subcontracting and illegal subcontracting relationship can use this article.

The People's Court of the Supreme People's Court held that the interpretation involves two legal relationships between the three parties, one is the construction contract relationship between the contractor and the contractor, and the other is the subcontracting or illegal subcontracting relationship between the contractor and the actual builder. The parties shall request the debtor to bear the responsibility in accordance with their respective legal relationships. The interpretation, in order to protect the interests of construction workers, breaks through the principle of contract relativity and allows the actual builder to request the contractor to assume responsibility within the scope of the outstanding payment. However, the interpretation only regulates the relationship between subcontracting and illegal subcontracting, and does not stipulate that the actual contractor in the multi-layer subcontracting and illegal subcontracting relationship has the right to request the employer to bear the responsibility within the scope of the project payment arrears. If the final actual contractor is allowed to directly claim the arrears within the scope of the project payment arrears to the employer beyond its forehand, it may lead to the subcontractor or illegal subcontractor who has already settled the settlement in the middle to fall into disputes again, and, if the actual builder of multi-layer subcontracting or illegal subcontracting is allowed to claim rights directly to the contractor, the people's court needs to add all intermediate subcontractors or illegal subcontractors and find out their payment status, increasing the litigation burden of the relevant personnel.

The scope of the actual construction person in the Judicial Interpretation of Construction Project I should be limited to the scope of subcontractors and illegal subcontractors, and does not include the actual construction person in the relationship of borrowing qualifications, multi-layer subcontracting and illegal subcontracting. In judicial practice, we should strictly grasp the scope of the actual construction person, strictly grasp the actual construction of the identification standards, to prevent the contractor from falling into too many lawsuits and disputes.

The laws and regulations do not make a clear specification on the definition of the actual construction person, and the principle of clearly identifying the actual construction person has certain practical significance. The identification of the actual construction person is usually analyzed from the following characteristics:

To evaluate the actual construction behavior of the construction team, the "chain of evidence" must provide sufficient evidence to prove that they have invested a lot of manpower, material and financial resources in accordance with the requirements of the employer to complete the task. We need to carefully examine whether the construction team is really involved in the construction project, and whether they are only getting paid from various links, rather than getting benefits by completing a relatively independent single project.

As the plaintiff, the actual constructor claims rights to the employer and the contractor. In addition to proving that the quality of the construction project is qualified and the employer owes the contractor the project payment, the actual constructor shall also bear the burden of proving that the plaintiff conforms to the litigation subject qualification of the actual constructor. In other words, the actual construction part of the plaintiff needs to be proved to be above the scale of a single project. Otherwise, the court will not rule out rejecting the lawsuit on the grounds of the plaintiff's disqualification. For example, in the construction process of a building, a construction subject is only responsible for the "foundation and foundation engineering" in a construction project, or even only responsible for the "earthwork engineering" in the "foundation and foundation engineering", then the construction subject can not be identified as the actual construction person.

According to the principle of reciprocity of rights and the principle of fairness, the subject enjoying the status of the actual construction person can claim the project arrears to the contractor as the plaintiff, then when the contractor claims the responsibility for the quality of the project, in addition to the contractor, the actual construction person should also be the clear undertaker of the responsibility for the quality of the project. Under the premise of invalid contract, the contractor can not claim the project quality responsibility to the construction team of each specific construction division project and sub-project, but will claim the unqualified construction team that actually "generalizes and bears" the obligations of the legal contractor.

Article 55 of the Construction Law stipulates: "The subcontractor shall be jointly and severally liable for the quality of the subcontracted works and the subcontractor." From the meaning of the text, the provision does not distinguish between legal subcontracting and illegal subcontracting, but no matter from which point of view, in the case of illegal subcontracting, the subcontractor and the subcontractor shall be responsible for the quality of the subcontracted project, in the case of subcontracting, the subcontractor and the subcontractor shall be jointly and severally liable for the quality of the construction project. In short, the construction team that enjoys the rights and assumes the responsibility for the quality of the project can be recognized as the actual builder, and as the personnel employed by the contractor to engage in construction services, such as migrant workers (teams), can not be recognized as the "actual builder" in the legal sense ".