Who pays the piper after PPP land requisitions?

By Wang Jihong and Yu Li, Zhong Lun Law Firm
0
1007

With in-depth advancement of public private partnership (PPP) projects, a number of new problems have emerged. Several disputes over PPP projects that the authors have recently handled all get involved in the following question: who must pay the social security fees to peasants for land requisitions? According to the Land Administration Law and relevant laws and regulations, the state, as the subject of a land requisition, must be responsible for the land requisition, land compensation, and resettlement. Local governments above the county level must be responsible for the implementation of land requisitions and compensation issues.

王霁虹 WANG JIHONG 中伦律师事务所合伙人 Partner Zhong Lun Law Firm
王霁虹
WANG JIHONG
中伦律师事务所合伙人
Partner
Zhong Lun Law Firm

Notice of the General Office of the State Council on Forwarding the Guiding Opinions of Ministry of Labour and Social Security on the Employment Training and Social Security Work for the Land-Requisitioned Peasants (Notice No. 29) requires, “Local governments at all levels should strengthen occupational training and social security work, and take effective measures to implement occupational training and grant social security funds.” The Circular of the State Council on Intensifying the Land Control (Notice No. 31) also demands that local governments conscientiously carry out the provisions of Notice No. 29.

The Notice on Earnestly Implementing Social Security Work for Land-Requisitioned Peasants clearly stipulates, “Leaders of local governments at all levels shall take full responsibilities for the social security work of the peasants whose land has been requisitioned.” The notice issued by the Ministry of Land and Resources on Further Improving the Administration Work of Land Requisition (Notice No. 96) also emphasizes, “Municipal governments and county governments are the main authority for the organization and implementation of land requisitions, and shall take full responsibilities for incorporating the land-requisitioned peasants into the social security system.” There are similar requirements in other relevant regulations of the State Council, Ministry of Land and Resources, and Ministry of Finance.

余力 YU LI 中伦律师事务所律师 Associate Zhong Lun Law Firm
余力
YU LI
中伦律师事务所律师
Associate
Zhong Lun Law Firm

Property Law stipulates, “In case of requisition of collectively owned land, social security fees shall be paid to the peasants whose land has been requisitioned.” For the purpose of guaranteeing capital arrangements, Notice No. 29 stipulates, “The social security fees needed shall be arranged in a unified manner from resettlement subsidy that has been raised by local authorities, as well as land compensation for the peasants whose land has been requisitioned. In the event that the above expenses are not sufficient to cover their social security fees, the unbalanced part shall be supplemented by the local government from the incomes as generated from the paid use of state-owned land.” Notice No. 31 requires, “The social security fees of these rural residents shall be incorporated into the expenses for compensation and relocation upon land requisition subject to related provisions, and the unbalanced part shall be supplemented by the local government from the incomes as generated from the paid use of state-owned land.”

It is further specified in the Measures for the Management of Income and Expenditure from the Assignment of the Right to Use State-Owned Land; Notice of the General Office of the State Council on Regulating the Management of Incomes from and Expenses for the Assignment of the Right to Use State-owned Land; and a series of other documents that the unbalanced part of the social security fee of the peasants whose land has been requisitioned must be supplemented by the local government from the incomes as generated from the paid use of state-owned land.

We can conclude that, as the subject of liabilities for land requisition and housing demolition, as well as land compensation and resettlement, governments at all levels must undertake their statutory obligations to pay for the social security fees to land-requisitioned peasants, and must give an overall consideration and implementation in their budgetary expenditures of land compensation and resettlement.

WHO USES, WHO PAYS

Governments must be responsible for land requisitions and housing demolition of PPP projects, and land compensation and resettlement expenses must be borne by project investors. As part of the compensation and resettlement costs, social security fees of the peasants whose land has been requisitioned may be arranged by contracts and be undertaken by project investors instead of the governments, which also meets the requirements of China’s land administration principle.

Notice No. 96 stipulates that “the key to solving social security problems of peasants whose land has been requisitioned is to guarantee social security funds, and to stick to the principle of ‘the party who uses the land shall bear the payment’, encouraging local entities to actively explore channels of social security funds in combination with land compensation and resettlement”. Similar requests have been made in some local normative documents subsequently, such as those of Sichuan and Hunan provinces.

In actual applications, to avoid disputes, arrangements must be based on clear contracts, and it must be clearly specified in the compensation agreements of land requisitions and housing demolitions that social security fees of peasants whose land has been requisitioned must be included in the expenses of land requisition and housing demolition, and that such fees should be borne by investors. In this case, investors of PPP projects must be liable for such expenses. If there is no specific written transfer in relevant contracts and documents of PPP projects, the authors believe that local governments at all levels must still be liable for social security costs of the peasants whose land has been requisitioned.

Notice No.96 which defines the principle of “the party who uses the land shall bear the payment” was issued in 2010. Subject to provisions of Legislation Law, for projects of which contract has been signed and fulfilled before the enactment of Notice No.96, the notice shall not be retrospective. For new projects thereafter, local governments may request project investors to undertake relevant fees through contract according to the provisions of Notice No.96.

To guarantee the livelihoods of the peasants who lost land, and to avoid any disputes arising from assumption of social security fees of the peasants whose land has been requisitioned, the authors suggest that, for future PPP projects, it should clearly specify in the contract which party shall be liable for such expenses. Both government and enterprises must negotiate with each other under the principle of fairness and reasonably allocate project risks and contractual obligations.

Wang Jihong is a partner and Yu Li is an associate with Zhong Lun Law Firm

Zhong Lun Logo

北京市建国门外大街甲6号

SK大厦36-37层 邮编: 100022

36-37/F, SK Tower

6A Jianguomenwai Avenue

Beijing 100022, China

电话 Tel: +86 10 8800 4223

传真 Fax: +86 10 6655 5566

电子信箱 E-mail:

[email protected]

[email protected]

www.zhonglun.com