Exploring The Difficult Issues Of The Priority Right For Construction

Since the Contract Law created the system of priority right to payment for construction works,this system has been regarded as an effective solution to the problem of default payment by contractors in the field of construction works and is closely related to the protection of the rights and interests of migrant workers.Article807 of the Civil Code confirms this system;the Supreme People’s Court has also issued a new judicial interpretation in the field of construction contracts,integrating and updating a number of judicial interpretations and approvals in the past.However,there are still a large number of unresolved issues in the practice of the system.Although the right of contractors to be paid in priority is currently granted through legislation,the relevant laws do not provide in detail the nature of the right,the subject of the right and the conditions of application;there is also no legal basis for how to deal with the competing relationship between the right of contractors to be paid in priority and the right of consumers of commercial properties to survive.Through theoretical and empirical research,we attempt to discuss the main controversies arising from the application of this system on the premise of clarifying the nature of the priority right to be paid for construction works.Due to the long absence of further detailed provisions in the legislation on the application of the system of priority right of payment for construction works,the system of priority right of payment for construction works has generated some representative problems in theory and practice.As a result,the system of priority of payment for construction works still has research value,so the difficult problems in the application of the system are selected as the object of research.First of all,a correct definition of the nature is a prerequisite for the application of a system.For a long time,the controversy on the nature of the priority right to receive construction money has not been eased in the academic circle.After several arguments,three views on this issue have been formed,namely,lien,statutory mortgage and statutory priority.From the perspective of the existing legislation in China,and after examining the situation of overseas legislation,we prefer to adopt the statutory priority theory.Second,The current legislation only provides that the contractor has the right of priority in payment.However,in judicial practice,it is controversial whether the actual constructor and the construction money transferee are eligible subjects;under the mode of general contracting,the scope of the contractor’s right is not clear either.Based on the perspective of balancing the interests of multiple subjects and safeguarding the public interests of the society,it is inappropriate for both the actual constructor and the construction money transferee to be identified as qualified subjects.Among the existing general contracting modes,the scope of the priority right of the general contractor in EPC mode and D+B mode includes not only the construction price but also the design and survey price;in EPCM mode,the construction subcontractor,not the general contractor,shall enjoy the priority right of payment.Third,only if the works meet the quality standard,the contractor is entitled to exercise the priority right to payment for the works.Regarding the question of how to determine whether the unfinished works and the works for which the parties have made special agreement on the quality are qualified,the former shall be deemed to be of qualified quality when the contractor has no evidence to prove that the quality of the works is not qualified;the latter shall be determined in accordance with the national standards for the quality of the works.In addition,construction works prohibited by law and of public interest shall be classified as "works not suitable for discount or auction",and the contractor shall not be entitled to priority payment.The contractor’s prior waiver or restriction of the right to priority payment is invalid,but the parties shall be allowed to waive it afterwards.Last,the laws and judicial interpretations in the field of construction engineering have not yet made proper arrangements for the competing relationship between the two,and in practice,they are mainly handled according to the judicial interpretations in the field of execution.From the perspective of safeguarding the public interest of society and protecting the rights and interests of survival,the legislation should be adopted to determine that the right of survival of eligible consumers of commercial housing has priority subordination.The Supreme People’s Court has confirmed this through its reply to the question.At the same time,the new advance registration system established by the Civil Code should be brought into play to strengthen the protection of the rights and interests of consumers of commercial property by means of advance registration.