administrative agreement

【Key words】

Business environment, administrative commitment, administrative compensation, honest government

【Case summary】

The meeting minutes of a certain municipal government agreed that a real estate company had reached an agreement with the masses on the issue of land acquisition compensation. The real estate company would increase the compensation. The government department would give the company preferential treatment and compensation for the additional compensation costs and economic losses in terms of land transfer, floor area ratio and other policies. A real estate company paid increased compensation fees to the masses according to this plan, but the compensation promised by the government was not fully "fulfilled." A real estate company filed an administrative lawsuit against the government for failing to fulfill its compensation obligations as promised in the meeting minutes. Neither the first-instance nor the second-instance courts supported a real estate company’s claim. In the retrial, the Supreme People’s Court applied the provisions of Article 70 of the Private Economy Promotion Law of the People’s Republic of China for the first time and ruled that the government should pay more than 8 million yuan in compensation to the real estate company.

【Details】

In July 2010, the people's government of a certain city issued the [2010] No. 49 meeting minutes, agreeing that a real estate company should reach an agreement with the land-expropriated people on the compensation issue of the land involved in the case, and the real estate company should increase the compensation based on the original compensation standard. For the additional compensation costs and economic losses caused by a real estate company, the relevant departments of a certain municipal government will provide preferential treatment and compensation in terms of land transfer, floor area ratio, supporting fees and other policies. In April 2012, a real estate company reached a mediation agreement with the people whose land was expropriated, and a municipal government stamped the mediation agreement. Later, a real estate company filed an administrative lawsuit on the grounds that a certain municipal government failed to fulfill its compensation obligations as promised in the meeting minutes, requesting a judgment that a certain municipal government should pay the land acquisition compensation, young crop compensation and occupied capital costs advanced by it. The court of first instance ruled to reject the lawsuit filed by a real estate company. The court of second instance dismissed the appeal and upheld the judgment of first instance.

The Supreme People's Court's retrial held that strengthening the construction of government integrity is an important part of the construction of the social credit system and is of great significance for further enhancing the government's credibility and cultivating a trustworthy society. Administrative agencies should keep their promises and create a more stable, fair, transparent, and predictable legal business environment. In this case, after the [2010] No. 49 meeting minutes were issued, a certain municipal government actively created conditions and worked hard to fulfill its administrative commitments such as transferring 40 acres of land and adjusting the floor area ratio, which deserves full recognition. However, when the "providing preferential treatment and compensation in terms of floor area ratio, supporting fees and other policies" promised in the [2010] Meeting Minutes No. 49 was actually unable to be fulfilled, a certain municipal government failed to actively negotiate and communicate with a real estate company from the perspective of better establishing the image of a law-based government, an honest government, and a service-oriented government, and further promoting the construction of a legal environment and business environment in the region. It should bear certain compensation liability for the losses suffered by a real estate company in accordance with relevant legal provisions. Article 70 of the "Private Economy Promotion Law of the People's Republic of China" stipulates: "Local people's governments at all levels and their relevant departments shall fulfill the policy commitments made to private economic organizations and the contracts concluded with private economic organizations in accordance with the law, and shall not breach the contract or break the contract on the grounds of adjustment of administrative divisions, change of government, adjustment of institutions or functions, and replacement of relevant personnel. If policy commitments or contract agreements need to be changed due to national interests or social public interests, they shall be carried out in accordance with legal authority and procedures, and private economic organizations shall be compensated for the losses suffered thereby." Therefore, based on factors such as the background and causes of the losses involved in the case, the magnitude of the responsibilities of both parties, and the profits of the real estate projects involved in the case, the Supreme People's Court ordered one party of a certain municipal government to bear half of the 16.82 million yuan losses involved in the case, or 8.41 million yuan.

【Typical meaning】

This case is the first administrative case adjudicated by the Supreme People’s Court applying the Private Economy Promotion Law. In accordance with Article 70 of the Private Economy Promotion Law of the People's Republic of China, from the perspective of maintaining government integrity and protecting the legitimate rights and interests of private enterprises, the court evaluates and regulates the failure of administrative agencies to fulfill administrative promises and fails to take remedial measures, and establishes the adjudication rules of "review of administrative promises - determination of failure to perform - quantification of compensation liability", which fully embodies the court's use of judicial trials to practice the concept of "the rule of law is the best business environment", allowing the majority of private enterprises to feel reassured and to develop with peace of mind.