The case of Sanya XX Forum Development Co. Ltd., Sanya XX Forum Construction Co., Ltd. v. XX Municipal People’s Government over administrative agreement
The case of Sanya XX Forum Development Co. Ltd., Sanya XX Forum Construction Co., Ltd. v. XX Municipal People’s Government over administrative agreement
[Keywords]
administrative, land transfer fee, transfer of State land use right
[Case summary]
On July 16, 2012, the former Sanya Haitangwan Administration and Sanya XX Forum Development Co., Ltd. (“Forum Development Company”) signed a project cooperation document and a supplementary agreement on the project of “Sanya Financial Forum Center”, in which the two parties agreed that Haitangwan administration, before the start of the project construction, shall apply to the superior authorities for refunding 30% of the total paid-in land transfer fees, i.e., 212,400,000 yuan, to the Forum Development Company or Forum Construction Company in the name of special-purpose support fund. A later audit affirmed that this refund violated the relevant stipulations of the Measures for the Management of State Land Use Right Transfer Incomes and Expenditures. On September 29, 2016, XX municipal government, as per the relevant rectification requirements, issued to the Forum Development Company and Forum Construction Company a Notice on Returning Before Deadline the Illegally Received Financial Funds (“Notice”), notifying the companies to return the sum of 212,400,000 yuan. The two companies rejected the notice, and applied to Hainan Provincial People’s Government for administrative reconsideration. On December 31, 2020, the provincial government made out the administrative reconsideration decision, which sustains the Notice of XX municipal government. The two companies, again, rejected the decision, and brought an administrative action to the court, requesting the cancellation of the Notice and the administrative reconsideration decision. The court heard the case, and decided to reject the requests of the two companies. The two companies then applied to the Supreme People’s Court for retrial, and were not supported. The two companies then brought again an administrative action to the court, requesting to affirm that the arrangement in the project cooperation document and the supplementary agreement on refunding 212,400,000 yuan is lawful and valid.
[Verdict]
The court heard the case and made out the (2022) Qiong 72 Xing Chu No. 62 administrative judgment, which rejected the litigation requests of the two companies. The two companies rejected the judgment, and appealed to Hainan High People’s Court. During the second-instance trial, Hainan High People’s Court organized reconciliation sessions for the parties, the two companies withdrew the case and appeal, and Hainan High People’s Court made out the (2023) Qiong Xing Zhong No. 423 administrative judgement.
[Significance]
In this case, the dispute arose out of the signing and performance of an administrative agreement between administrative organ and real estate companies. At the time the event took place, the parties agreed in the agreement involved to refund 30% of the total paid-in land transfer fees, i.e., 212,400,000 yuan, to the Forum Construction Company, and the audit later affirmed the arrangement violated the rules and demanded rectification. XX municipal government, as per the rectification requirements, served the Notice to the Forum Development Company and Forum Construction Company, which is an act of rectification. After the relevant authorities had determined the nature of the issue, and the court had made out valid judgement, the two parties brought several rounds of actions to Hainan High People’s Court and the Supreme People’s Court, which does not help the resolution of the administrative dispute, and has led the project construction and operation into a deadlock. In this case, the parties accepted the court’s coordination opinions during the second-instance trial, and acted earnestly in consultations; the XX municipal government borne its responsibility and actively took part in coordination; a reconciliation scheme was reached, and the two companies withdrew the case from the court; the administrative dispute was finally resolved in a substantive manner, relieving the parties of the litigation burdens, saving judicial resources, resolving the conflict between the government and the people, keeping the government credibility intact, and achieving good social effect.
