Study Of Issues Relating Conflicts Of Rights Concerning Reimbursement Priority Of Construction Works Payment

With a view to solving the social problem of severe delay in payment of construction works and protecting lawful rights and interests of the contractor, the law establishes reimbursement priority of construction works payment in Article 286 of the Contract Law of the People's Republic of China and "the Official Reply to Issues of Reimbursement Priority of Construction Works Payment". But as there are no proper stipulations of this right in current laws and judicial interpretations, there arise difficulties and issues in practical legal application. This paper studies relevant laws, judicial interpretations and usual practices, analyzes the relations and issues concerning reimbursement priority of construction works, and concludes that there are six types of conflicts around this priority: conflict with hypothec, conflict with consumers'rights, conflict with alienee's ownership of the construction works, conflict with rights of original house owners, conflict with special claims of creditors, and conflict between consumers'rights and hypothec. The author thinks the main problem bringing on practical difficulties is that it lacks in legal determination of the nature of reimbursement priority of construction works and in legal requirement of public notice. The author studies the contentions over the nature of reimbursement priority of construction works, consults the laws and regulations of Japan and France, and explicitly concludes that reimbursement priority of construction works is, in nature, a special priority of real property. The author proposes, as some scholars do, that it is necessary we should make reference to priority systems in foreign laws and establish in China a comprehensive priority system under property law, and contrary to present regulations, registration is required for reimbursement priority of construction works in order to protect business safety and to eliminate conflicts. As far as the special characteristics of creditors'right hypothecated by reimbursement priority of construction works is concerned, the author proposes a public notice for this priority shall be one combining primary registration and registration of transfer. In the final part of this paper, the author presents approaches of resolution to solve the six types of conflicts as listed in the paper.