Therefore, according to the comprehensive understanding of the existing legal provisions and judicial interpretation, whether the actual constructor has the priority of compensation for construction projects has nothing to do with whether he is the “actual constructor”, but whether the contract object he signed is the employer
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This paper tries to analyze the controversial right subject, scope and exercise mode in the trial practice of the priority right to compensation of construction project price from the perspective of the actual constructor, hoping to be beneficial to the participants of construction project transaction and provide some reference and thinking for everyone
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If the object of signing the construction contract is “subcontractor”, “subcontractor”, “general contractor” and other non owner units, they have no right to claim the priority of compensation for the project price.
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Before dehenglaw offices (Chengdu) In other words, the purpose of setting up the priority compensation system of construction project price in China is to ensure that the contractor can recover the project fund based on the legal provisions after the construction is completed, so as to ensure the basic right of construction industry practitioners to obtain labor remuneration, and balance the interests of other right subjects
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If the actual construction contractor claims the rights with the employer as the defendant, the people’s court shall add the subcontractor or illegal subcontractor as the third party in the case
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Whether the actual construction contractor is the subject of the priority right to compensation
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Article 35 of the judicial interpretation of construction projects (I), which came into force on January 1, 2021, continues to follow the provisions of this article, and once again makes it clear that if a contractor who has entered into a construction contract with the employer requests the price of the construction project to be compensated preferentially in accordance with the provisions of article 807 of the civil code, the people’s court shall support it
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If the actual constructor is allowed to claim the project price from the employer, it is also allowed to claim the priority of compensation for the project price, which is equivalent to “admitting illegal subcontracting, subcontracting, lending or affiliated qualification in a disguised form”
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According to Article 807 of the civil code, the priority of compensation for the project price should be enjoyed by the “Contractor”
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This is not conducive to the standardized management of construction enterprise qualification and project construction by the competent department of construction engineering, but also completely contrary to the principles of “contract relativity” and “strict performance obligation” stipulated in the civil code
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The civil code of the people’s Republic of China (hereinafter referred to as the civil code) implemented on January 1, 2021 and the revised interpretation of the Supreme People’s Court on applicable legal issues in the trial of disputes over construction contracts of construction projects (I) (hereinafter referred to as the judicial interpretation of construction projects (I)) also establish the system of priority compensation for project prices
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In other words, “actual constructor” is an illegal contractor in an invalid construction contract
Since the establishment of the system in Article 286 of the contract law of the people’s Republic of China, the Supreme People’s court has established the theoretical framework of the system in the form of reply, reply and meeting minutes
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” In the construction contract dispute cases of construction projects, there are often many titles such as “employer”, “Contractor”, “subcontractor”, “subcontractor” and “actual constructor”
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After finding out the amount of the construction project price owed by the employer to the subcontractor or illegal subcontractor, it shall make a judgment that the employer shall be liable to the actual construction contractor within the scope of the construction project price owed
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According to Article 807 of China’s civil code, if the employer fails to pay the price as agreed, the contractor may urge the employer to pay the price within a reasonable period
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If the employer fails to pay within the time limit, the contractor may negotiate with the employer to convert the project into price, or apply to the people’s court to auction the project according to law, except that it is not suitable to convert or auction the project according to the nature of the construction project
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For the price of a construction project, priority shall be given to the price converted or auctioned for the project
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According to Article 35 of the judicial interpretation of construction projects (I): “the people’s court shall support the contractor who has concluded a construction contract with the employer and requests the price of the construction project to be repaid in priority with the price converted or auctioned according to the provisions of article 807 of the civil code.” Article 37: “if the decoration project meets the conditions for discount or auction, and the contractor of the decoration project requests the project price to be paid in priority with respect to the discount or auction price of the decoration project, the people’s court shall support it.” Generally speaking, only the contractor who has a construction contract with the employer has the right to exercise the priority of compensation for the construction project price
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However, there is no clear provision on whether the actual construction contractor who borrows the qualification or the subcontractor who legally subcontracts enjoys the priority of compensation for construction projects
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However, it is impossible to draw a clear conclusion whether the “Contractor” here includes the so-called “actual constructor”
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What is the actual constructor? Article 34 of the judicial interpretation of construction projects (I) stipulates: “if the actual constructor brings a lawsuit against a subcontractor or illegal subcontractor, the people’s court shall accept it according to law
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In fact, almost all “actual constructors” appear and specify in the name of “Contractor” in the construction contract relationship, but not all “contractors” in the construction contract are “actual constructors” in the legal sense
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Article 17 of the interpretation stipulates that if a contractor who has concluded a construction contract with the employer requests the price of the construction project to be paid in priority with the price converted or auctioned according to Article 286 of the contract law, the people’s court shall support it
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In addition, the contractor of the decoration project has the priority of compensation for the construction project price on the premise that the decoration project has the conditions of discount or auction
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According to the relevant provisions of Article 1, paragraph 2, Article 15, Article 43 and Article 44 of the judicial interpretation of construction projects (I), it can be inferred that the “actual constructor” in the construction project refers to the contractor who actually completed the project construction in the invalid construction contract, that is, the actual contractor in the case of illegal subcontracting, illegal subcontracting and borrowing qualification
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Local people’s courts have also continuously issued opinions to guide various problems in the trial of the right to priority compensation of construction project price
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In order to make up for the shortcomings of the above policies and unify the national judicial standards, the interpretation of the Supreme People’s Court on the application of law in the trial of disputes over construction contracts of construction projects (II) (hereinafter referred to as “judicial interpretation of construction projects (II)”) implemented on February 1, 2019 further limits the scope of priority indemnitees of construction projects
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In 2011, Article 29 of the minutes of the national civil trial work conference stipulates: “if the construction project contract is invalid due to illegal subcontracting, subcontracting, etc., the actual constructor’s request to exercise the priority right of compensation for the construction project in accordance with Article 286 of the contract law shall not be supported.” The minutes of the meeting are a judicial policy, which is of certain progressive significance for the actual constructors whose construction contract is invalid due to illegal subcontracting and subcontracting
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If the actual constructor has signed a construction contract with the employer (i.e
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the owner and the owner of the construction project), he shall enjoy the priority of compensation for the construction project within the legal period
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Most of the actual constructors have no direct contractual relationship with the employer
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Because the “employer” who enjoys the disposal rights such as project discount and transfer can only be the owner unit, the judicial interpretation of construction project (II) actually limits the “employer” to the owner unit on the premise of “signing a contract with the employer”; The “Contractor” who has the priority to be compensated for the project price is limited to the first-hand “Contractor” who directly signs the construction contract with the employer, but does not include the second-hand or n-hand “sub contractor”, “sub contractor” who signs the construction contract in the case of multiple subcontracting or subcontracting of the project, or the “actual constructor” affiliated with a third-party qualified enterprise
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