Construction Environmental Capital Law Review (Phase V) The issue of determining the validity of the contract for the transfer of prospecting rights without approval and registration is discussed.

--- Take a case of a dispute over a contract for the transfer of prospecting rights as an example.

[Abstract] As a usufructuary right, the biggest difference between prospecting right and other real rights is that the object of prospecting right holder's right is not clear at each exploration stage, the exploration fund is invested in risk, and the commercial risk is large. The author starts with a case of dispute over the contract for the transfer of prospecting rights, analyzes the problem of determining the validity of the contract for the transfer of prospecting rights without approval and registration, and puts forward the corresponding principles and opinions.

【Key words】prospecting right  Contract of Assignment  Effectiveness

1. brief
 

2014Year1Month23On the same day, A geological company and B mining company signed the "prospecting right transfer contract", agreed that Company A will be a gold mine detailed prospecting right to transfer to B company, the main terms of the contract are as follows: the first article of the contract on the transfer of the basic situation of the prospecting right agreement, the contract transferred the gold mine prospecting right in.2004Year7Month30The Japanese company applied for registration and establishment, with an initial area8.56square kilometres, valid from2012Year4Month11Day2014Year3Month31On the day, the survey stage is a detailed investigation, and the issuing authority is the Provincial Department of Land and Resources. Article 2 The agreed transfer price520The parties agree that after the signing of the transfer contract.10Within days B company a one-time payment. At the same time, the contract stipulates the scope of the transfer of prospecting rights, that is, the scope stipulated in the prospecting certificate, which shall be subject to the examination and approval of the provincial competent department of land and resources. Article 3 of the contract stipulates that Company A shall assist Company B in the transfer of prospecting rights, and after the transfer of prospecting rights is completed.10Within working days, Company A shall submit geological data in the mining right area. The contract also stipulates that Company B shall, after the signing of the transfer contract.10Submit the application materials required for the transfer of prospecting rights within working days, and handle the procedures for the transfer of prospecting rights in a timely manner. Article 4 of the contract is stipulated in the effective terms of the contract, and the contract shall take effect from the date of approval by the competent department of land and resources. The liability for breach of contract stipulates that if one party defaults, the breaching party shall transfer the total amount of the contract.5%Payment of liquidated damages to the non-compliance party.

2014Year1Month26On the day, Company B paid Company A.520The transfer price of ten thousand yuan,2014Year3Month31On the same day, the prospecting rights expired and the area was reduced6.09Square kilometers, but the contract for the transfer of prospecting rights has not been approved by the Provincial Department of Land and Resources, nor has it been registered for the transfer of mineral rights.2015Year11In January, Company B reduced the area of the prospecting right (compared to the area agreed upon in the transfer contract.2.47square kilometre, with a reduction ratio28.86%), on the grounds that the purpose of the contract could not be realized, filed a lawsuit with the court of first instance, requesting a judgment to terminate the "Contract for the Transfer of Exploration Rights" and return the transfer price.520Ten thousand yuan, and require Company A to pay liquidated damages.26Ten thousand yuan.

2. referee gist
 

The court of first instance held that the contract for the transfer of prospecting rights was the true intention of both parties, the content did not violate the mandatory provisions of laws and administrative regulations, and the contract was legal and valid, and the judgment rejected the litigation request of Company B. Company B refused to accept it and appealed to the court of second instance. The court of second instance ruled to revoke the judgment of first instance and send it back for retrial on the grounds that the court of first instance did not clearly determine the basic facts of whether the contract came into effect after it was established according to law.

Company B changes the claim and requests the court to confirm that the parties are in.2014Year1Month23The contract for the transfer of prospecting rights signed on the same day did not take effect, and Company A returned the transfer price.520million, requesting the court to award Company A compensation for its loss of interest.925590.2Yuan, calculated at the bank loan interest rate for the same period to the date of the actual return of Company A.

The court of first instance held that the contract for the transfer of prospecting rights signed by both parties was the true intention of both parties, the content did not violate the mandatory provisions of laws and administrative regulations, and the contract was established in accordance with the law. According to Article 10 of the administrative measures for the transfer of prospecting rights and mining rights, "the examination and approval authority shall receive the transfer application40Within days, a decision is made to grant or deny the transfer, and the transferor and transferee are notified, and if the transfer is approved, the transfer contract shall take effect from the date of approval ". Therefore, the legal entry into force of the contract for the transfer of prospecting rights is that the transfer of prospecting rights has been approved by the relevant examination and approval authorities, and at the end of the court debate in this case, the contract for the transfer of prospecting rights involved has not yet gone through the examination and approval procedures, so the contract was established in accordance with the law but has not entered into force. The failure of the contract to enter into force is a legal fact, which is not controversial and justiciable, and the court of first instance shall not handle the lawsuit of Company B's request to confirm that the contract has not entered into force. According to the relevant provisions of Article 2 of the Notice of the Ministry of Land and Resources on Further Regulating the Management of Prospecting Rights, "Xinli Prospecting Rights are valid3Year, each continuation for a maximum2years, and should be raised to meet the requirements of the specification of the geological survey stage. If it is really necessary to extend the time of this exploration stage, the registration authority at or above the provincial level shall organize experts to demonstrate, and may be allowed to continue the exploration stage once, but the exploration area shall be reduced, and the exploration area reduced each time shall not be less than the exploration area specified in the first exploration license.25%". Company B, as a professional mining company, should be aware of this, and the prospecting right is about to expire when the contract for the transfer of prospecting rights is signed, the contract has clearly agreed that Company B has a detailed understanding of the relevant situation of the prospecting right when the prospecting right is transferred, so the legal consequences and risk losses should be borne by itself. In view of company B since2015It has been a year and a half since the end of the court debate in the court of first instance, and Company B has made it clear by its conduct that it refuses to perform the contract for the transfer of prospecting rights, and the contract has actually been terminated, and Company A should return it.520The transfer price of 10,000 yuan, but the right to claim compensation for the loss, because the contract was established in accordance with the law is legally binding on both parties, Company B terminated the performance of the contract is caused by its breach of contract, so its claim for interest loss of the litigation request of the court of first instance does not support.

Company B refuses to accept the first instance judgment, appeal request: cancel the second item of the first instance judgment, change the loss of interest paid by Company A.925590.2Yuan, calculated at the bank loan interest rate for the same period to the date of the actual return of Company A.

Company A refuses to accept the judgment of the first instance and appeals to rescind the judgment of the first instance and change the judgment according to law to reject the claim of Company B.

The court of second instance held that the contract for the transfer of prospecting rights signed by both parties was established in accordance with the law, but did not go through the examination and approval procedures, the contract was established in accordance with the law but did not take effect, the contract did not take effect was not legally binding on both parties, and the area of prospecting rights in this case had been reduced. The main terms of the contract have changed and the conditions for performance are no longer met.520The transfer price of 10,000 yuan shall be returned to Company B. According to Article 8 of the Measures for the Administration of the Transfer of Exploration Rights and Mining Rights, "when applying for the transfer of exploration rights or mining rights, the following materials shall be submitted to the examination and approval authority:1.Application for Transfer;2.Contract of Assignment;3.Documents certifying the qualifications of the transferee;4.Report on the exploration or exploitation of mineral resources;5.Other information required by the approval authority ". In this case, Company B has actually paid all the transfer price and has no reason to be lazy in cooperating with the examination and approval. It is the obligation of the transferor to handle the examination and approval. Therefore, it should be determined that Company A is at fault for the failure of the contract to take effect. Company A passively handled the formalities of extending the license renewal, resulting in the reduction of the exploration area, violating the principle of good faith and the consequences of the failure to perform the contract, the second-instance judgment, in addition to upholding the first-instance judgment that Company A refunded the full transfer price, also ruled that Company A should compensate Party B for the loss of interest at the bank's loan interest rate for the same period.

Company A refused to accept the judgment of the second instance and applied to the provincial court for a retrial, requesting to revoke the judgment of the second instance and to change the judgment to reject Company B's claim. At the same time, Company A submitted the new exploration license for prospecting rights, the establishment of prospecting rights and the registration of successive renewals and other relevant evidence to prove that Company A does not have a negative continuation and that the contract still has the conditions for continued performance.

The provincial court retrial held that the focus of the dispute in this case was whether Company A should return it to Company B.520million and compensation for interest losses. According to Article 6 of the "Interpretation of the Supreme Court on Several Issues Concerning the Application of Law in the Trial of Mining Rights Dispute Cases", "the mining rights transfer contract shall be legally binding from the date of its establishment in accordance with the law". The court of second instance found that the contract had not entered into force and thus was not legally binding, which was an error in the application of law, and the judgment was corrected. Company B shall provide Company A with the information required for the transfer of mineral rights within the time agreed in the contract, but shall bear the legal consequences of failing to provide evidence that it has submitted the information to Company A. The Notice of the Ministry of Land and Resources on Further Regulating the Management of Exploration Rights and other issues clearly stipulates that the reduction of the area of the exploration right complies with the law. Company B shall be able to make an expected judgment on the exploration stage of the mining right involved and the possible reduction of the area after the renewal of the certificate. In this case, the transfer contract is still signed, and the resulting risk losses and legal consequences shall be borne by itself. The court of second instance found that Company A was at fault for the failure of the contract to take effect, and should compensate Company B for the loss of interest, which was a factual error.

Analysis of 3. jurisprudence
 

This case is a typical case of dispute over the transfer of prospecting rights, which focuses on the determination of the validity of the contract for the transfer of prospecting rights without approval and registration.

The first point of view is that the provisions on the examination and approval of the transfer of mining rights in the administrative measures for the transfer of mineral rights are mandatory provisions of effectiveness, and the contract for the transfer of mining rights shall be deemed invalid without approval.

The second view is that, according to Article 15 of the Property Law, "the conclusion of a contract between the parties relating to the establishment, alteration, transfer and elimination of real property rights shall, unless otherwise provided by law or otherwise agreed in the contract, be effective at the time of the establishment of the contract; failure to register property rights shall not affect the validity of the contract". The Measures for the Administration of the Transfer of Mineral Exploration Rights and Mining Rights belong to administrative regulations and do not belong to the proviso clause of Article 15 of the Property Law, which is "otherwise provided by law". The contract for the transfer of mineral exploration rights belongs to a civil contract.32Therefore, the contract for the transfer of mining rights shall take effect from the time of its establishment.

The third view is that the contract for the transfer of mining rights is established but not effective. The provisions of the Measures for the Administration of the Transfer of Prospecting Rights and Mining Rights on the approval of the transfer of mining rights are administrative mandatory provisions, which shall not apply to the invalidation of the contract in the fifth paragraph of Article 52 of the Contract Law in violation of the mandatory provisions of laws and administrative regulations, but shall be in accordance with the provisions of Article 44 of the Contract Law, "A contract established in accordance with the law shall enter into force". Therefore, the contract should be considered as not effective.

The fourth view is that the contract for the transfer of mining rights is not in force, but the terms of the obligation to report for approval are valid separately. This clause is valid for the performance of the contract and should not be affected by administrative approval.

The author believes that the validity of the mining right transfer contract without approval and registration should distinguish between the establishment of the contract and the validity of the two levels.

(I) With regard to the formation of a contract, according to Article 32 of the Contract Law, "If the parties conclude a contract in the form of a contract, the contract shall be established when the parties sign or seal it." The establishment of a contract is only a matter of fact, and its significance is to identify whether a certain contract has existed. The establishment of a contract has nothing to do with the will of the state. As far as the mining right transfer contract is concerned, the transferor and the transferee reach an agreement on the contract terms such as the price, payment terms, change registration, formalities handling and liability for breach of contract of the transferred mining right. The contract is established when both parties sign or seal, as for whether the contract is legally binding on the parties after its establishment, it is a legal value judgment after the contract takes effect. Its significance lies in identifying whether a contract conforms to the spirit and provisions of the law, so as to obtain the effect of legal recognition. Therefore, the establishment and entry into force of the contract is essentially the adjustment of the relationship between the expression of the parties' intention and the will of the state. The establishment of a contract is a prerequisite for the entry into force of the contract, and only the contract that has been established has the question of whether it is effective.

(II) With regard to the determination of the validity of the contract, Article 6 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Mining Rights Dispute Cases stipulates: "The contract for the transfer of mining rights shall be legally binding from the date of its establishment in accordance with the law. If the parties request to confirm the invalidity of the transfer contract only on the ground that the application for the transfer of mining rights has not been approved by the competent department of land and resources, the people, the people's court shall not support". This provision negates the view that the contract for the transfer of mineral rights is invalid without the approval of the competent department of land and resources, and if the court finds that the contract involved in the case is invalid, both parties can refuse to perform the relevant obligations without justifiable reasons according to the change of circumstances, and the transfer contract will never "take effect". In this way, the legally established contract will lose its significance, which will inevitably cause great damage to the contract-keeping party, and encourage the continuous occurrence of malicious breach of contract and dishonest behavior, and is not conducive to protecting the stability of the contract and maintaining the order of market transactions. "The doctrine that the establishment of a contract has not entered into force lacks the corresponding type of effect in the Contract Law and related laws, and is contrary to the law that is legally binding after the establishment of the contract, which is likely to lead to basically the same legal consequences as the invalidity of the contract".[1]Of course, "before the provisions of Article 10 of the administrative measures for the transfer of prospecting rights and mining rights on the examination and approval of mining rights transfer contracts have not been amended or abolished, the people's court should not determine that the contract has come into effect. Before the application for the transfer of mining rights is not approved, if the party requests to confirm that the transfer contract has not come into effect, the people's court may change the name of the party, If the party refuses to reject".[2]

Although the (III) mining right transfer contract cannot be directly recognized as valid without the approval of the competent department of land and resources, it can be determined that it has been legally binding on the parties. Based on the basic principle of good faith, both parties shall, in accordance with the contract, handle the obligation to apply for the transfer of mineral rights, and provide the materials for approval in a timely manner, and if the party who fails to perform the obligation of approval claims that the contract for the transfer of mineral rights without approval is invalid, it shall not be supported. The contract-abiding party has the right to require the party that fails to actively perform the obligation of approval to continue to perform the obligation and bear the liability for breach of contract. At this time, the mining right transfer contract only temporarily does not produce the effect of the change of the real right of the mining right transfer, that is, the parties cannot temporarily register the change of the mining right based on the transfer contract, but the transfer contract still has binding force and determination.

It can be seen that with regard to the validity of the contract for the transfer of mining rights without approval, the Supreme people's Court has made a clear distinction and maximum cut between the contract act and the administrative examination and approval act in the judicial interpretation of mining rights disputes, so that it is more in line with the provisions of the property Law. Therefore, it is of great significance to discuss the establishment of the contract for the transfer of prospecting rights and the status of its validity after its establishment through the study of this case.

References:

[1]Du Wanhua.Understanding and Application of Judicial Interpretation of the Supreme People's Court in the Trial of Mining Rights Disputes[M].Beijing: China Legal Publishing House, No.098Page.

[2]Du Wanhua.Understanding and Application of Judicial Interpretation of the Supreme People's Court in the Trial of Mining Rights Disputes[M].Beijing: China Legal Publishing House, No.110Page.