A case in which a certain company sued a certain government, claiming that its notices ordering the demolition of illegal structures within a specified time limit and its notices requiring immediate demolition were unlawful and seeking administrative compensation.

Keywords: temporary institutions, illegally constructed villas, investment promotion, administrative compensation 
Counseling Attorneys: Yang Xingquan, Liu Kai 
Basic Facts of the Case: 
The case in which a certain company sued a certain government, challenging the legality of its notices ordering the demolition of illegal structures within a specified time limit and the validity of the demolition orders themselves, as well as seeking administrative compensation, is a case that arose from the Qinling Villa Rectification Campaign launched by the Central Environmental Protection Inspection Team. After the company’s mountain resort tourism project was illegally demolished by the Leading Group for the Special Rectification Campaign targeting illegal villas in a certain district, the company filed an administrative lawsuit. Due to the complexity of the case and the sheer volume of evidence involved, the single case gave rise to multiple sub-cases. Against the backdrop of the Party Central Committee’s call to protect the private economy and the provincial party committee and provincial government’s emphasis on optimizing the business environment, and thanks to the tireless five-year efforts of the representing lawyer, courts at both the provincial and municipal levels have issued a series of fair judgments in this case, thereby safeguarding the legitimate rights and interests of the private enterprise. This case is both typical and of great significance, reflecting our province’s firm commitment to optimizing the business environment and building a society governed by the rule of law. 
The leading group for the special campaign to investigate and rectify illegal villa constructions in a certain district issued three challenged “Notices Ordering the Demolition of Illegal Buildings” on October 11, October 14, and November 1, 2019, respectively, targeting buildings owned by a certain company. The notices cited that 14 buildings owned by the company, lacking the required “Construction Planning Permit,” constituted illegal construction. Based on Article 64 of the Urban and Rural Planning Law of the People’s Republic of China, the company was ordered to demolish the buildings in question within a specified time limit. 
After the Tieling Intermediate People’s Court issued Administrative Judgment No. 68 of 2019 (Liao 12 Xing Chu 68), which merely confirmed that the specific administrative act in question was unlawful, a certain company appealed to the Liaoning Provincial Higher People’s Court, which issued Administrative Judgment No. 1010 of 2020 (Liao Xing Zhong 1010), ordering compensation for the 14 buildings constructed without the requisite construction permits and resuming the review of the “Notice of Demolition within a Specified Time” dated November 28, 2019. 
Since the government in question has consistently failed to make any compensation decision, the Tieling Intermediate People’s Court issued Administrative Judgment No. (2021) Liao 12 Xing Chu 57, ruling that the government shall bear 70% of the compensation liability for the losses incurred by 14 buildings constructed without the requisite construction permits, amounting to RMB 8,131,295.2. The Liaoning Provincial Higher People’s Court upheld the aforementioned judgment in Administrative Judgment No. (2022) Liao Xing Zhong 179. 
The “Notice of Demolition within a Specified Time Limit” was partially confirmed as unlawful by Administrative Judgment No. (2021) Liao 12 Xing Chu 26, which ordered a certain government to make a compensation decision regarding the buildings involved. The Liaoning Provincial Higher People’s Court upheld the aforementioned judgment in Administrative Judgment No. (2022) Liao Xing Zhong 383. Since the said government failed to issue a compensation decision, the Shenyang Intermediate People’s Court, in Administrative Compensation Judgment No. (2023) Liao 01 Xing Pei Chu 13, ruled that the government must compensate the company for various losses totaling 25,820,740.79 yuan, plus interest. In Administrative Compensation Judgment No. (2024) Liao Xing Pei Zhong 38, the court dismissed the appeal and upheld the original judgment. 
Case Highlights: 
This case holds certain reference value for private enterprises and government policies under the historical context of investment promotion, particularly in terms of policy guidance, administrative compensation, and compensation for illegally constructed buildings. When handling administrative litigation cases, it is essential not only to focus on the specific administrative act itself but also to conduct thorough research and make well-informed judgments on the case’s historical background, policy context, and the circumstances surrounding the issuance of the administrative act. Only by doing so can we better understand and grasp the case as a whole, thereby selecting the approach that most accurately reflects the factual situation and best serves the interests of the parties involved. 
On the basis of rigorously conducting thorough groundwork on the case, the agent conducted a comprehensive study and made careful judgments about the case’s historical context, policy background, and the circumstances surrounding the administrative actions taken. Not only did the agent provide a detailed analysis of each element of the administrative action itself, but also carried out an in-depth analysis and assessment of the historical and policy contexts, ultimately drawing well-founded conclusions that were adopted by the People’s Court. 
Typical Significance: 500–2000 words 
This case is both representative and progressive, fully embodying the fundamental principles of administrative law and reflecting Liaoning Province’s commitment to optimizing the business environment and building a society governed by the rule of law. Local governments’ implementation of the national policy that “lucid waters and lush mountains are invaluable assets” must not come at the expense of enterprises’ legitimate rights and interests; rather, they should protect and treat enterprises with care and respect. Thanks to the efforts and persistence of the representing lawyer, a favorable outcome has been achieved. The specific administrative action in this case was prompted by the need to protect water resources and the environment—thus involving the demolition of structures built in violation of environmental regulations, rather than the demolition of illegal constructions carried out as part of urban renewal or enforcement actions against unlawful buildings. Yet, the district government consistently characterized the action as the demolition of illegal constructions. From a purely demolition-of-illegal-constructions perspective, it would indeed be appropriate to classify the company’s tourism project as an unauthorized construction due to its lack of a construction planning permit. However, the company was established by the local government precisely for the purpose of attracting investment and promoting local economic development; its tourism project was not intended for residential use or habitation. Moreover, when the project site was initially developed, it was not located within Class I or Class II water source protection zones. Throughout its operation, the company repeatedly sought guidance from relevant authorities on issues related to water sources and environmental protection, and only after receiving affirmative responses did it proceed with its operations. At the same time, the company made substantial investments in environmental protection facilities to ensure that its activities would not pollute water resources. In this case, however, the local government failed to take these factors into account when making its specific administrative decision, and the original first-instance court likewise neglected to examine the factual circumstances and background of the case. By simply judging and evaluating the situation from the narrow perspective of the government’s demolition of illegal constructions, the court overlooked the broader context of protecting water resources and the adjustments made to the water source protection zones. 
Local governments, in implementing the national policy of "Lucid waters and lush mountains are invaluable assets" for ecological civilization development, must ensure that their specific administrative actions do not come at the expense of the rights and interests of enterprises and investors. On the contrary, they should protect and treat enterprises and investors with care and respect. Under these circumstances, any infringement upon the legitimate rights and interests of a particular company resulting from adjustments to water-source protection zones or changes in policies lacks legal basis. Therefore, the specific administrative actions taken by a certain government not only violate the provisions of laws and regulations but also contravene the requirements set forth by higher-level governments and leading bodies, and, more importantly, run counter to the spirit of the fundamental national policy of building a socialist ecological civilization. 
In this case, the Liaoning Provincial Higher People’s Court, guided by the principles of respecting the facts, honoring history, safeguarding the legitimate interests of enterprises, and optimizing the business environment within the province, delivered a fair judgment. Following the court’s ruling, both the Tieling Intermediate People’s Court and the Shenyang Intermediate People’s Court, from the perspective of protecting the rights and interests of private enterprises and maintaining a favorable business environment, also made impartial findings of fact and handed down just judgments. Thanks to five years of diligent efforts and unwavering commitment by the representing attorneys, the case has achieved a positive outcome. This case is both typical and of great significance, reflecting our province’s determination to optimize the business environment and build a society governed by the rule of law.

Lawyer’s Insights (Optional): In this case, the approach to handling the matter not only focuses on the specific administrative actions involved but also entails an in-depth study, analysis, and assessment of the context and policies underlying those actions. In the context of investment promotion, it is common for enterprises and projects to commence construction before obtaining approval or to proceed with construction while simultaneously seeking approval—a practice clearly evident in the mountain resort project at issue in this case. After thoroughly examining the historical context, policy background, and circumstances surrounding the issuance of the administrative actions, the representing lawyer formulated a strategic approach that yielded excellent results.