Keywords: Civil; Compensation for Land and Housing Expropriation

Handling Attorney: Cao Yuanjun, Hu Guanglei, Han Jia

Basic Facts of the Case:

In June 2008, the plaintiff, Shenyang Chenyu Construction Group Co., Ltd. (hereinafter referred to as “the Plaintiff”), entered into a Land Demolition Compensation Agreement with the Housing Authority of Heping District, Shenyang City, and the Land and Housing Acquisition Compensation Service Center (hereinafter referred to as “the Two Defendants”). The agreement stipulated that a certain plot of land owned by the Plaintiff would be acquired, and the demolition compensation payment of RMB 53.66 million would be made in one lump sum before November 2008. After signing the agreement, the Plaintiff actively fulfilled its contractual obligations, proactively demolishing production facilities and other structures, and cooperating with the government in land clearance, site relocation, and other related matters. The Plaintiff also handed over the land in question, together with the land certificate, to the Housing Authority. However, the Two Defendants paid only RMB 27 million in compensation, leaving a balance of RMB 26.66 million unpaid. After repeated unsuccessful attempts at communication with the Defendants, the Plaintiff filed a lawsuit. Following the diligent efforts of our team of lawyers, the case was reclassified as a civil contract dispute and the Plaintiff ultimately won the case, thereby safeguarding the legitimate rights and interests of the parties involved. In the case between Shenyang Chenyu Construction Group Co., Ltd. and the Housing Authority of Heping District, Shenyang City, and the Land and Housing Acquisition Compensation Center of Heping District, Shenyang City, the Shenyang Intermediate People’s Court issued Civil Ruling No. (2018) Liao 01 Min Chu 1163 on April 25, 2019, dismissing Chenyu Company’s lawsuit. Dissatisfied with this ruling, Chenyu Company filed an appeal with this court. On October 23, 2019, this court issued Civil Ruling No. (2019) Liao Min Zhong 1479, dismissing the appeal and upholding the original ruling. After the ruling took legal effect, Chenyu Company applied to the Supreme People’s Court for a retrial. On September 21, 2020, the Supreme People’s Court issued Civil Ruling No. (2020) Zui Fa Min Zai 273, overturning both the first- and second-instance rulings and instructing the Shenyang Intermediate People’s Court to retry the case. On December 10, 2021, the Shenyang Intermediate People’s Court issued Civil Judgment No. (2021) Liao 01 Min Zai 144, supporting the Plaintiff’s claims. Subsequently, the Housing Authority of Heping District and the Heping District Acquisition Compensation Center, dissatisfied with this judgment, filed an appeal with the Liaoning Provincial Higher People’s Court. Ultimately, the Liaoning Provincial Higher People’s Court issued Civil Judgment No. (2021) Liao Min Zai 22, dismissing the appeal and upholding the original judgment.

Case Highlights:

The compensation agreement for the expropriation of houses on state-owned land falls within the scope of administrative agreements, possessing both administrative and contractual characteristics, and thus differs from ordinary administrative actions. At the same time, compared with typical civil agreements, the compensation agreement for the expropriation of houses on state-owned land exhibits certain special features in aspects such as agreement formation, performance, and even termination. These distinctive characteristics mean that, when adjudicating disputes arising from such agreements, there may be instances where both administrative and civil legal norms are applied simultaneously. Determining how to accurately apply administrative and civil legal norms is a challenging issue in judicial practice. At the initial stage of filing this lawsuit, the lawyer correctly identified the true legal relationship at stake, demonstrating a degree of innovation given the context at the time.

Typical significance:

Land resettlement compensation involves the right of the expropriated persons to sustain their livelihoods. When reviewing related cases, people’s courts should place even greater emphasis on safeguarding the immediate interests of the masses, conduct substantive trials, and avoid simply dismissing cases outright. If the review reveals that the parties have already reached a lawful and valid agreement, the people’s court should proceed with further examination as a civil case. In this case, after undergoing first-instance, second-instance, retrial proceedings, and remand for re-examination, thanks to the tireless efforts and repeated communications of the representing attorney, the situation was ultimately reversed, thereby protecting the legitimate rights and interests of the parties involved.

With regard to the circumstances of this case, Article 2 of the “Reply of the Supreme People’s Court on Issues Concerning the Acceptance of Cases Involving Housing Demolition, Compensation, Relocation, and Related Matters” (Fa Fu [1996] No. 12) provides that, “If a dispute arises between the demolisher and the demolished party over issues such as housing compensation and relocation, or if one or both parties renege on an agreement already reached without first obtaining a ruling from the administrative authority, and if the parties file a lawsuit with the people’s court solely concerning these issues of housing compensation and relocation in accordance with the law, the people’s court shall accept the case as a civil action.” This reply further clarifies that disputes over land demolition compensation agreements fall within the scope of civil litigation. On June 20, 2018, Chenyu Company filed a civil lawsuit with the Shenyang Intermediate People’s Court regarding the contractual dispute with the respondent, and the Shenyang Intermediate People’s Court duly accepted the case in accordance with the law.

Lawyer's Insights ：

In the first and second instance courts, the lawsuit was dismissed on procedural grounds. However, substantively speaking, the agreement signed by the plaintiff and the defendants had already been reached, and the two defendants had in fact fulfilled part of their payment obligations. The agreement genuinely reflected the true intentions of both parties. Even if there is a dispute between the parties regarding the validity of the agreement, it should have been resolved through civil litigation—but the courts turned a blind eye to this. Thanks to the persistent efforts of the plaintiff’s counsel, the Supreme People’s Court took up the case for retrial, and the subsequent retrial ruling determined that the case should be handled as a civil matter. As a result, the Shenyang Intermediate People’s Court, in its retrial judgment at the first instance, upheld the plaintiff’s claims. In cases involving compensation for the demolition and expropriation of houses and land, once the parties have reached a demolition compensation and resettlement agreement that is genuine and valid, such cases should be treated as civil disputes—this aligns with the original legislative intent of the Civil Code.