Discussion on the legal issues of the actual construction person's claim to the contractor.

Content abstract: under the background of protecting the interests of migrant workers, article 26 of the interpretation on the application of legal issues in the trial of construction contract disputes stipulates that the actual builder can directly claim rights from the employer within the scope of the project payment owed. this provision has positive significance under the specific background. however, due to the vague and rough provisions of the interpretation, many problems have arisen in judicial practice, therefore, it has been criticized by many scholars, this paper from the definition of the actual construction person, through the actual construction person to the contractor to claim the rights of the legal basis of the analysis, the actual construction person to the contractor to claim the rights of the relevant issues to make a corresponding analysis.

Keywords: the actual construction of the contractor subcontractor illegal subcontractor owed to pay the project.

Definition of Actual Construction Person of 1.

The term "actual construction person" is a concept created by the Supreme People's Court in 2004 promulgated and implemented the "Interpretation on the Application of Legal Issues in the Trial of Construction Contract Disputes" (hereinafter referred to as the "Interpretation"), but the "Interpretation" The concept of actual construction person does not make clear provisions.

The drafter of the "Interpretation" said in response to a reporter's question: "From the perspective of the construction market, after the contractor and the contractor have entered into a construction contract, they often subcontract or illegally subcontract the construction project to a third party., The third person is the actual builder."^[1]

The Supreme People's Court Construction Project compiled by the People's Court of the Supreme People's Court.Construction enterprises signed with others in the name of the constructionengineering contractThe contractor, not qualified to borrow qualified.The book "Understanding and Application of Judicial Interpretation of Construction Contract" makes a clear explanation of the concept of actual builder: the actual builder expressed in the Interpretation is juxtaposed with the general contractor and subcontractor in the Contract Law, and should not be repeated with the general contractor and subcontractor in the connotation of the concept, but refers to the contractor who subcontracts or contracts illegally, it is an expression used to distinguish it from a legal builder as stipulated in the Contract Law. The actual construction in this interpretation refers to the contractor of the invalid contract, such as subcontractor, illegal.SUBCONTRACTof the contractor.^[2]

However, it should be noted that not all people involved in the construction are actual constructors, and the actual constructors cannot be simply understood as all people engaged in the construction of the project. For migrant workers who participate in the construction of the construction project due to legal relations such as labor subcontracting, contracting, and employment, the Interpretation cannot be simply applied. In the case of Xu Yongxiang v. Cixi Urban Development Co., Ltd., Cixi Chengguan Construction Co., Ltd. and Xu Jiayu construction project construction contract dispute published in the "Selected Cases of the People's Court" published in March 2009, the plaintiff Xu Yongxiang was sentenced to claim creditor's rights against the custom-made Xu Jiayu in the name of the contractor, but could not claim creditor's rights against the employer as the actual builder.

To sum up, the author believes that the actual construction of the following categories^[3]:

1. The subcontracting contractor;

2. Contractor of illegal subcontracting;

3. Contractors who do not have qualifications and engage in construction projects in the name of qualified construction enterprises.

Some scholars think that as long as the contractors of invalid construction contracts are all actual constructors, the author thinks it is inappropriate. After all, the actual constructors were created by the Interpretation, and the relevant systems of the actual constructors have made great breakthroughs in the original Contract Law and related judicial interpretations. The concept of actual constructors should be strictly explained, that is, only the three situations involved in the Interpretation.

2. the actual construction person's right of action against the contractor.

However, can all actual constructors claim their rights against the Employer according to Article 26, paragraph 2, of the Interpretation?

According to the provisions of Article 26 of the Interpretation: "If the actual builder sues the subcontractor or illegal subcontractor as the defendant, the people's court shall accept the case in accordance with the law. If the actual builder claims the rights of the contractor as the defendant, the people's court may add the subcontractor or illegal subcontractor as a party to the case. The contractor shall only be liable to the actual builder within the scope of the unpaid project price." Obviously, according to this article, the construction person should be a specific subcontracting, illegal subcontracting contractor, and did not list the circumstances of other contracts such as invalidity, if the actual construction person here does not specifically refer to subcontracting and illegal subcontracting in the case of the contractor, in logic can not be explained.

Second, judging from the original intention of the "Interpretation", the "Supreme People's Court Construction Project"Construction enterprises signed with others in the name of the constructionengineering contractThe contractor is not qualified to borrow a qualified contractor." The book uses "such as subcontractors, illegal."The book "Understanding and Application of the Judicial Interpretation of Construction Contracts" states: "The actual construction in this interpretation refers to the contractor of an invalid contract, such as the subcontractor, the illegalSUBCONTRACTThe contractor of the subcontract "rather than" including ", that is to say, the actual builder is a general pronoun in the Interpretation and does not have a fixed extension.

Third, the judges of the Supreme Court have written an article to discuss that the issue of qualification affiliation is not explicitly covered in Article 26 due to its various forms, but will be dealt with by the presiding judge according to the specific circumstances.

Therefore, the author thinks that the actual construction person who is simply attached to the qualification cannot directly exercise the right of action to the contractor.

Definition of 3. Employer

The contract issuing party in the chapter of construction project contract in the Contract Law generally refers to the construction unit of the construction project. According to the Interpretation of the Provisions of China's Contract Law edited by Li Guoguang, the former vice president of the Supreme People's Court, the contract issuing party also refers to the general contractor in legal subcontracting (in the case of legal subcontracting, the general contractor becomes the contractor of the subcontracting project), however, the general contractor here refers to the general contractor of the construction project rather than the general contractor of the construction project.^[4]

In fact, the speech and discussion of Feng Xiaoguang, vice president of the Supreme Court, also proves this point. When discussing the actual construction person's claim of rights to the contractor, it is expressed by the contractor or the general contractor, such as: "In principle, the actual construction person is not allowed to file a lawsuit with the contractor or the general contractor who does not have a contractual relationship as the defendant."^[5]

4. the legal basis analysis of the actual construction person's claim to the contractor.

To clarify the legal basis of rights, on the one hand, is to seek the legitimacy of rights, on the other hand, it is also convenient to better exercise and safeguard rights. Although Article 26 of the Interpretation protects the right of action of the actual construction person, what legal relationship does the actual construction person use as the legal basis for claiming his rights in the litigation?
In response to a reporter's question at the beginning of the "Interpretation", the Supreme Court pointed out: "According to the principle of contract relativity, the actual builder should settle the project payment to the previous family with which it has a contractual relationship, and should not claim the project payment from the contractor. However, from the actual situation, some contractors did not carry out the project settlement or did not claim the right to the project settlement after subcontracting the project to collect a certain management fee. Because the actual builder has no contractual relationship with the employer, the actual builder has no way to obtain the project payment, while the actual builder cannot obtain the project payment, which directly affects the payment of migrant workers' wages".^[6]Many theoretical and practical people believe that Article 26 of the Supreme Court's Interpretation breaks through the principle of contract relativity. In fact, relevant people in the Supreme Court have recently expressed their approval of this view.^[7]. The author believes that, although under the current legal framework, allowing the actual construction person to directly claim rights to the employer does break through the restriction of contract relativity, the author believes that this problem cannot be explained simply by breaking through the contract relativity, breaking through the contract relativity is only a result, and the legal reasoning and value consideration of breaking through the contract relativity is what we need to explore, this statement still does not solve the problem of the legal basis for the actual construction person to claim the right to the contractor, simply attributed this legal problem to a breakthrough in the relativity of the contract, lack of corresponding legal reasoning and value consideration, is a kind of academic laziness.

The author thinks that from the legal point of view, the actual construction person's right to the contractor should be a kind of subrogation right. The so-called creditor's subrogation right refers to "the right of a creditor to directly exercise the debtor's rights in its own name in order to preserve its claim when the debtor neglects to exercise its rights and endangers the realization of the creditor's rights."^[8]

Article 73 of China's Contract Law establishes the system of subrogation of contract creditors, while the (I) of the Supreme People's Court on the Interpretation of Certain Issues Concerning the Application of the the People's Republic of China Contract Law (hereinafter referred to as Interpretation I of the Contract Law) further stipulates in more detail the conditions for the establishment of subrogation and its exercise.

There is a contractual relationship between the actual builder and the subcontractor or the illegal subcontractor, and the contract is invalid for violating the prohibition of law. Based on the invalid contract, the actual construction person has the right to request the subcontractor or illegal subcontractor to return the labor and building materials put into the project, and because the labor and building materials put into it cannot be returned by nature, the actual construction person can only request discount compensation. The actual builder and the subcontractor or the illegal subcontractor, in violation of the law, subcontracted or illegally subcontracted the project, usually both parties are at fault. The other party shall also bear the corresponding fault liability for the losses suffered by both parties as a result of the performance of the contract. Therefore, the actual construction party in accordance with the invalid subcontracting or illegal subcontracting contract to the subcontractor or illegal subcontractor mainly enjoy the discount compensation and compensation for the loss of the claim. However, the invalidity of the subcontract or illegal subcontract does not affect the validity of the construction contract between the subcontractor or illegal subcontractor as the original contractor and the contractor, and the validity of the construction contract signed by the contractor is still determined in accordance with the Contract Law and relevant laws and regulations. Therefore, the subcontractor or illegal subcontractor is entitled to the contractor on the basis of the construction contract between it and the contractor, such as the payment of the project price or the discount compensation arising from the invalidity of the contract. For the actual builder, the contractor is the debtor of its debtor (subcontractor or illegal subcontractor), I .e. the sub-debtor (or third party). If the subcontractor or illegal subcontractor does not actively settle the project after obtaining the benefits of subcontracting or illegal subcontracting, or does not actively claim the right when the contractor owes the project price, and then affects the settlement of the debts of the actual builder, the behavior of neglecting to exercise the right has harmed the realization of the creditor's rights of the actual builder, and the actual builder, as a creditor, can fully exercise the right of subrogation, exercise the rights of the debtor, I .e. the subcontractor or the illegal subcontractor, in its own name, to assert its rights against the sub-debtor, I .e. the contractor, and to safeguard its own interests.

The subrogation system of various countries is mostly stipulated in the debt law or the debt chapter of the civil code, which is widely applicable to all kinds of property claims.^[9]However, China's subrogation rights are stipulated in the Contract Law, and there is no clear stipulation on whether the subrogation rights can be applied to claims outside the contract. According to the provisions of the existing subrogation right in our country, only the contract claim can enjoy the subrogation right, that is, only when the contract is valid can the creditor exercise the subrogation right on the claim above the contract. Therefore, the Interpretation provides that the actual construction person can claim rights to the contractor, which has a positive effect. On the one hand, it is a measure taken to prevent subcontractors or illegal subcontractors from improperly reducing their liability property and thus damaging the rights and interests of the actual builder, affirming the subrogation of the actual builder as a creditor, expanding the subrogation to apply to claims other than contractual claims, so that the legal rights of the actual builder are more effectively protected by law. On the other hand, in the past judicial practice, local courts and parties tend to pay more attention to the relativity of debt, while ignoring the external effect of debt, that is, the legal effect of creditors based on the effect of debt for third parties other than the debtor, so the actual construction of the case of subrogation litigation is extremely rare. It is clear that the actual construction person can claim the rights to the contractor based on the subrogation right, give full play to the external effect of the debt, which is conducive to solving the current construction field generally faced with the "triangular debt", "debt collection difficult" problem.

5. the scope of rights that the actual builder can claim

The scope of rights that the actual builder can claim depends on the scope of rights that can be exercised by the subrogation right, I .e. the debtor's existing rights that can be exercised against the sub-debtor (the doctrine is called the object of the subrogation right). There is a subrogation system. The civil law of civil law countries has a wide range of provisions on the object of subrogation, except for rights that belong exclusively to the debtor and are not transferable according to the nature of the right itself. Based on the above-mentioned theory of subrogation, the rights claimed by the actual builder in exercising the subrogation right to the contractor may be all property rights of the debtor, I .e. the subcontractor or the illegal subcontractor, to the existing entity of the contractor, except for the rights that belong exclusively to the debtor and are not transferable according to the nature of the rights themselves. While China's Contract Law limits the object of subrogation to the debtor's due claims, the Contract Law further interprets its limitation as a due claim or a monetary claim with the content of monetary payment.

The object of subrogation is narrow, which leads to many disputes in the theoretical and practical circles. The narrow scope of the object of subrogation will lead to a large number of rights with general property as the content of payment can not be protected by the subrogation system, resulting in the purpose of subrogation in practice can not be realized. The Supreme People's Court also held that "this issue is still worth studying, and the scope of application of the subrogation system can be expanded in the future litigation practice to be explored and summarized by the people's courts at all levels."^[10]This time, Article 26 of the Interpretation breaks through the provisions of the Contract Law and is of great progressive significance.

First of all, it is affirmed that the actual construction person can exercise the subrogation right of the subcontractor or the illegal subcontractor.

Whether the subrogation right itself can become the object of the subrogation right, although the nature of the creditor's subrogation right is controversial in the theoretical circle. However, subrogation is a substantive law right based on the effect of debt, and its content lies in the exercise of the debtor's rights. The right that the debtor may exercise on behalf of the debtor is a right on the property that is not exclusive to the sub-debtor, and thus the debtor's right of subrogation is also a right that is not exclusive to the debtor, therefore, "the right of subrogation is both a right and not an exclusive right, and is the object of the right of subrogation."^[11]By analogy, in the debt chain, there may be a situation where the creditor passes through multiple subrogation rights to achieve the purpose of creditor preservation. Moreover, from the jurisprudence of Taiwan and Japan, the right of subrogation is necessary and operable. Thus, the actual construction person can exercise the subrogation of the subcontractor or illegal subcontractor, cross the debt chain, directly to the contractor to claim rights.

Secondly, it breaks through the limitation of due claims stipulated in the contract law, and according to the original intention of the drafters of the Interpretation,^[12]The actual construction person can not only claim the due claim to the contractor, but also directly replace the subcontractor or illegal subcontractor to exercise its right of expectation to the contractor.

As to whether the actual builder can subrogate the subcontractor or the illegal subcontractor to the contractor's right of priority compensation for the construction price. The author thinks that it is possible, although from the literal meaning of judicial interpretation, the object of China's subrogation right should not include the priority compensation right of construction project price. However, the security right is established for the realization of the secured creditor's rights. If the security right is not taken as the object of the subrogation right, the purpose of creditor's rights preservation will not be realized. Secondly, the actual constructor who exercises the creditor's rights on behalf of the subcontractor or the illegal subcontractor shall have all rights within the scope of the creditor's rights of the subcontractor or the illegal subcontractor, otherwise, the legitimate rights and interests of the subcontractor or the illegal subcontractor will be harmed for the exercise of the subrogation right.

6. the conditions and limitations of the actual construction person's claim to the contractor.

1. Conditions for the actual construction person to claim rights from the contractor

The legal nature of the subrogation right of the actual construction person to claim the right to the employer is clarified. According to the conditions for the exercise of the subrogation right, one of the conditions for the actual construction person to claim the right to the employer is that the subcontractor or the illegal subcontractor neglects to exercise its rights to the employer (including the due creditor's rights and the right of expectation), causing damage to the actual construction person, while the damage means that the due creditor's claim cannot be realized. From this point of view, the interpretation of Article 26 of the Interpretation should be restricted, which is also in line with the original intention of the drafters: "A complete and accurate understanding of the provisions of Article 26, paragraph 2, of the Interpretation should be interpreted together with the provisions of paragraph 1 of the Article. In principle, the actual builder is not allowed to bring a lawsuit against the contractor and the general contractor who do not have a contractual relationship as defendants; only when the actual construction party's contract counterparty is bankrupt, whereabouts are unknown, etc., the actual construction party does not file a lawsuit with the contractor or the general contractor as the defendant, it is difficult to guarantee the realization of rights, the actual construction party is allowed to file a lawsuit with the contractor or the general contractor as the defendant. A complete and accurate understanding of the provisions of Article 26, paragraph 2, of the Interpretation should be interpreted in conjunction with the provisions of paragraph 1 of that article. Only in this way can this provision be correctly applied."^[13]   

2. Definition of "project payment in arrears"

Article 26 of the Interpretation stipulates: "The contractor shall only be liable to the actual builder within the scope of the unpaid project price." Through the above analysis of China's subrogation system and the Interpretation, we know that not only can the actual constructors claim rights for the "overdue project funds" that have been settled and should be paid but have not been paid when due, but also can still claim rights (expectation rights) for the project funds that have not been settled or have been settled and have not yet expired.

In judicial practice, there is also a problem in the definition of "unpaid project funds" that the actual builder can claim is the scope of the unpaid project funds owed by the contractor or only for the actual construction part of the project funds? The author thinks that it should be all the project funds owed by the contractor, because the actual construction person exercises the right of subrogation and has the right to exercise the right within the scope of the rights of the subcontractor or the illegal subcontractor, which is in line with the starting point of the Interpretation to protect the legitimate rights and interests of the actual construction person, and is also conducive to safeguarding the legitimate rights and interests of the subcontractor and the illegal subcontractor.

Moreover, after the actual construction person filed a lawsuit, the contractor should not privately pay the project to the subcontractor or illegal subcontractor without the permission of the court, otherwise, it will give the subcontractor or illegal subcontractor and the contractor to circumvent the law of the operating space, the "interpretation" to give the actual construction person's rights have no practical significance.

3. Litigation status of subcontractors and illegal subcontractors

Paragraph 2 of Article 26 of the Interpretation stipulates: "If the actual builder claims rights as the defendant with the contractor, the people's court may add a subcontractor or an illegal subcontractor as a party to the case. The contractor shall only be liable to the actual builder within the scope of the unpaid project price." But what about the litigation status of the subcontractor and the offending subcontractor here?

The Supreme People's Court Construction Project, edited by the People's Court of the Supreme People's Court.The understanding and application of judicial interpretation of construction contract explains this: "considering that the trial of the case involves two legal relationships, if the subcontractor or illegal subcontractor does not participate in the litigation, the facts of many cases cannot be found out, so the people's court can confirm that the case situation adds the subcontractor or illegal subcontractor as the co-defendant or the third party of the case; The builder can jointly claim rights from the employer, subcontractor or illegal subcontractor. Such provisions are conducive to finding out the facts, to distinguish the responsibilities of the parties, and to facilitate the actual construction of the exercise of their rights."^[14]Obviously give the actual construction of the abuse of the right of action, malicious litigation, to circumvent the jurisdiction of the operating space. And some local high courts directly stipulate: "If the actual construction person requests payment for the project by the contractor as the defendant, the people's court shall generally add the subcontractor or the illegal subcontractor to participate in the lawsuit as the defendant."^[15]

The author thinks that the above practice is inappropriate, and it is not conducive to the parties to better exercise the right of action.

Because after all, the subrogation dispute between the actual builder and the employer and the project payment dispute with the subcontractor or illegal subcontractor are essentially two legal relationships. If there is a dispute between the actual builder and the illegal subcontractor's creditor's rights and debts, and there is no clear case, the author thinks that it should be decided according to the situation: if the courts in both cases have jurisdiction, the subcontractor or illegal subcontractor should be listed as the defendant, otherwise, it shall be ruled to suspend the trial of the subrogation lawsuit, inform the actual construction person to sue the subcontractor or the illegal subcontractor separately, and resume the trial after the case is over. On the one hand, this protects the right of action and legitimate rights and interests of the subcontractor or illegal subcontractor, on the other hand, it also prevents the actual builder from abusing the right of action and circumventing the provisions of the Civil Procedure Law on jurisdiction. Of course, if the rights and obligations of both legal relationships are clear, only the subcontractor or illegal subcontractor can be listed as a third party.

This article won the first prize of 2011 Jinan lawyer business paper selection

References:

[1] "Protecting the rights and interests of the parties in accordance with the law and promoting the healthy development of the construction market --- Huang Songyou, Vice President of the Supreme People's Court, answers questions from reporters on relevant judicial interpretations", "Legal Daily", October 26, 2004.

[2] Huang Songyou, Editor-in-Chief: "Supreme People's Court Construction Project"Understanding and Application of Judicial Interpretation of Construction Contracts, People's Court Press, November 2004, p. 218.

[3] Huang Jianfeng and Wang Aiqin: "Protection and Restriction-On the Legal Status of Actual Constructors of Construction Projects", "Practice of Real Estate Lawyers for Construction Projects", August 2009, p. 92.

[4] Unless otherwise specified, the contractor in the following includes the contractor as the construction unit and the general contractor as the contractor.

[5] Feng Xiaoguang: "Looking Back and Looking Forward-Written on the Third Anniversary of the Promulgation and Implementation of the Interpretation of the Supreme People's Court on the Application of Legal Issues in the Trial of Disputes over Construction Contracts", "Guidance and Reference for Civil Trials" 2008 Episode 1; Feng Xiaoguang, "Cannot Expand the Scope and Conditions of Application of" Actual Constructors ", Construction Times, February 9, 2009.

[6] "Protecting the rights and interests of the parties in accordance with the law and promoting the healthy development of the construction market --- Huang Songyou, Vice President of the Supreme People's Court, answers questions from reporters on relevant judicial interpretations", "Legal Daily", October 26, 2004.

[7] Feng Xiaoguang: "Looking Back and Looking Forward-Written on the Third Anniversary of the Promulgation and Implementation of the Interpretation of the Supreme People's Court on the Application of Legal Issues in the Trial of Construction Contract Disputes", "Guidance and Reference for Civil Trials" 2008 Episode 1; Feng Xiaoguang's "Cannot Expand the Scope and Conditions of Application of" Actual Constructors ", Construction Times, February 9, 2009.

[8] Fang Shaokun, editor-in-chief: "Civil Law", Renmin University of China Press, 2009 edition, p. 333.

[9] Zheng Yubo, "General Introduction to Civil Law Debt (2nd Edition)), China University of Political Science and Law Press, 2002 edition, pp. 291-296.

[10] Chen Xianjie: The Supreme People's Court<关于适用〈中华人民共和国合同法〉若干问题的解释(一)>"Civil Trial Guidance and Reference", Law Press, 2000 (Volume 1), p. 142.

[11] Wang Zejian, "The Subrogation of Subrogation", "Civil Law Theory and Case Study (Volume V)", China University of Political Science and Law Press, 1999 edition, p. 242.

[12] Huang Songyou, Editor-in-Chief: Supreme People's Court Construction ProjectUnderstanding and Application of Judicial Interpretation of Construction Contracts, People's Court Press, November 2004, p. 223.

[13] Feng Xiaoguang: "Looking Back and Looking Forward-Written on the Third Anniversary of the Promulgation and Implementation of the Interpretation of the Supreme People's Court on the Application of Legal Issues in the Trial of Construction Contract Disputes", "Guidance and Reference for Civil Trials" 2008 Episode 1.

[14] Huang Songyou, Editor-in-Chief: Supreme People's Court Construction ProjectUnderstanding and Application of Judicial Interpretation of Construction Contracts, People's Court Press, November 2004, p. 223.

[15] Opinions of the Higher People's Court of Jiangsu Province on Several Issues Concerning the Trial of Disputes over Construction Contracts for Construction Projects.