Analysis of the Application of "Administrative Preferential Rights" in Administrative Agreement Disputes -- From the Perspective of the Collective Land Acquisition Compensation Agreement Signed by Administrative Organs

Zhejiang Liqun Law Firm Gu Qizhi and Li Yue

In China, administrative agreements generally have dual characteristics of administrative and contractual nature. Due to the fact that the Chinese legislative branch has not yet provided a specific definition of the concept of administrative priority, it has been confirmed in relevant judicial interpretations that administrative agencies have administrative priority, which is also the most prominent manifestation of the administrative nature of administrative agreements. Administrative priority right refers to the special right recognized by law for administrative agencies to break through the limitations of contracts and exercise unilateral modification and termination of contracts under specific conditions. To clarify the connotation and application of administrative priority rights, the author will analyze the application conditions of administrative priority rights in judicial practice, combined with relevant cases and prominent issues in rural collective land acquisition compensation practice, and demonstrate and analyze how administrative agencies should apply administrative priority rights in disputes involving rural collective land acquisition compensation and resettlement.

【 Key words 】 Administrative preferential rights Rural collective land judicial review

In China, administrative priority rights are often closely linked to administrative agreements, which typically have dual attributes of administrative and contractual nature. Administrative agreements adopt the form of agreements while retaining the attributes of administrative actions, and administrative priority rights refer to the special rights recognized by law for administrative agencies to break through the constraints of contracts and unilaterally modify or terminate agreements in specific circumstances. So, what exactly is administrative privilege? What conditions do administrative agencies need to meet to exercise administrative priority rights in judicial practice? In disputes over compensation and resettlement for rural collective land acquisition, can administrative agencies exercise their administrative priority right to unilaterally change or even terminate the signed expropriation compensation agreement?

To clarify the above questions, the author intends to use the application of administrative priority rights in judicial review as the analysis basis, combined with relevant cases and prominent issues of rural collective land acquisition compensation and resettlement in practice, to conduct a detailed analysis of the application of administrative priority rights in collective land acquisition compensation agreements signed by administrative agencies.

1、 What is administrative privilege?

Administrative preferential rights refer to the special rights enjoyed by administrative agencies in the process of fulfilling administrative agreements, beyond contractual constraints, to achieve administrative management or public service purposes or to protect public interests. We can further understand the meaning of administrative priority rights through two cases. Assuming that there are two situations where administrative priority rights cannot be exercised and administrative priority rights are exercised, we can analyze whether different results will be generated.

Case 1: The people's government of a certain district carried out the work of merging villages and cities in accordance with the city's development plan and the overall requirements of merging villages and cities, including the village where Wang is located. The people's government of a certain district formulated the "Demolition Compensation and Resettlement Plan" before signing a demolition agreement with the villagers, which stipulates a transitional period of 24 months and a transitional fee payment standard of 12 yuan per square meter per month. On March 27, 2014, its subordinate project headquarters signed a "Demolition Agreement" with Wang, agreeing on a transition period of 36 months. At the beginning of 2015, the work of merging villages and cities in Wang's village was officially launched. The people's government of a certain district distributed a 24 month transition fee to Wang according to the temporary transition fee standard in the "Demolition Compensation and Resettlement Plan", but refused to pay the remaining 12 months of transition fee. The main reason why the people's government of a certain district does not pay the transition fee is that according to the "24 month transition period" stipulated in the "Demolition Compensation and Resettlement Plan," it should only pay the transition fee for 24 months, while other transition fees should be signed separately.

Case 2: The people's government of a certain city issued a land acquisition plan announcement, which involves the acquisition of land from the village where Lin is located. A certain company was commissioned by the people's government of a certain city to carry out demolition. On May 10, 2012, it signed a "demolition agreement" with Lin and notarized it. According to the demolition agreement, a certain company will demolish two houses, structures, and attachments within the demolition scope of the village where Lin is located. It is agreed that after Lin (Lin's sister) waives his right to relocate one of the three story buildings under his name, he will move on to another apartment style residential unit for Lin. Later, Lin Mouxian explicitly stated in writing to the Urban New Area Construction and Development Center under the People's Government of a certain city that he would waive the resettlement rights of houses registered on the land and property certificates, and that Lin would obtain apartment style residential suites. The people's government of a certain city, citing Lin's unreasonable property division, believes that Lin does not meet the conditions for relocating an apartment type residence. If he continues to fulfill this obligation, it will be detrimental to social and public interests. Therefore, they refuse to relocate another apartment type residence for Lin.

In Case One, although the "Demolition Compensation and Resettlement Plan" is listed in the "Demolition Agreement" as one of the basis for its signing, the transition fee standards in the resettlement plan are only guiding and cannot be used to conclude that the transition fee standards for villagers should be implemented according to the standards of the resettlement plan. Moreover, the "Demolition Agreement" is voluntarily signed by both parties and there is no invalidity or revocable situation. So, if the administrative agency argues that it cannot continue to fulfill the demolition agreement on the grounds that the content of the agreement contradicts the administrative normative documents formulated in advance, otherwise it will harm public interests. Will it receive support?

In Case 2, Lin's household did indeed engage in illegal behavior during the separation of property and played a "margin ball". According to local demolition and resettlement policies, according to Lin's resettlement conditions, they did not meet the requirements for relocating another set of housing. However, during the review by the Urban New Area Construction and Development Center under the People's Government of a certain city, they were still willing to provide resettlement, and Lin and Lin have now fulfilled their obligations under the agreements on vacating and demolishing houses. In this situation, is it legal for the government of a certain city to decide not to fulfill the obligation of relocating another suite under the demolition agreement on the grounds of violating the resettlement policy?

The author believes that whether it is Case One or Case Two, it is difficult to obtain court support by solely defending the content of administrative agreements against administrative normative documents or policy provisions formulated by administrative agencies. From the perspective of the principles of agreement signing, the parties to the agreement must adhere to the principle of honesty and trustworthiness. From the administrative aspect of the agreement, following the principle of honesty and trustworthiness can limit the arbitrary implementation of administrative rights by administrative organs. After the case enters the litigation process, simply opposing the principle of honesty and trustworthiness with "violating policy regulations" is like hitting the stone with an egg. So, assuming that government agencies consider that continuing to fulfill agreements would harm social and public interests, is it feasible to unilaterally adjust or terminate signed agreements? In judicial practice, how should administrative agencies correctly exercise administrative priority rights so as not to be deemed illegal?

2、 How should administrative agencies correctly exercise administrative priority rights?

（1） The Origin of Administrative Preferential Rights

The system of administrative privilege was first proposed in France. In 1983, the French Administrative Court first proposed in a public transportation dispute case that the administrative subject had the power to unilaterally change or terminate the agreement, and gradually developed a mature theory of administrative priority rights. The "Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Administrative Agreement Cases" implemented in 2020 in China clearly states that in cases where there is a possibility of serious harm to national interests and social public interests, if an administrative agency changes or terminates an administrative agreement, the plaintiff shall file a lawsuit, and the people's court shall not support it. Based on this, the right of administrative priority enjoyed by administrative organs has been officially confirmed in judicial interpretation.

（2） Purpose and procedural requirements for exercising administrative priority rights

As an exclusive right of administrative agencies in administrative agreements, the fundamental purpose of administrative priority rights is to safeguard and realize the public interests of the country and society. The judicial interpretation also emphasizes that administrative actions made by administrative agencies to change or terminate agreements will not be deemed illegal unless they continue to fulfill agreements that may seriously harm national and public interests. In judicial practice, many administrative agencies do not change or terminate agreements for the purpose of safeguarding and realizing the national and social public interests, but rather for other purposes. Even if the exercise of administrative priority rights by administrative agencies meets the requirements of purpose, administrative actions that often overlook changes or dismissals should still meet the requirements of procedural legitimacy.

For example, in the case of "He v. the People's Government of Machang Town, Gui'an New Area, Guizhou", during the second instance, the Machang Town government unilaterally issued a "Notice on Termination of Administrative Agreement" and a "Decision on Termination of Administrative Agreement" on the grounds of incorrect calculation of resettlement rewards, and decided to terminate the supplementary agreement signed between him and He on September 19, 2018. After the trial of the first and second instance courts, it was found that the unilateral termination of the administrative agreement by the Machang Town Government was more aimed at reducing the agreed reward fees and not at safeguarding public interests. Its approach violated the purpose requirements of the administrative organs to exercise administrative priority rights, and there was suspicion of confrontation and avoidance of first instance judgments. In fact, it was an abuse of administrative priority rights, which violated the principle of good faith that administrative organs should follow, Therefore, it is determined that the administrative act is illegal.

For example, in the "Wang v. Xinghualing District People's Government Relocation and Resettlement Plan of Taiyuan City", the Xinghualing District People's Government of Taiyuan City raised the selling unit price in the "Cost Price Purchase Contract" signed with Wang by formulating the "Relocation and Resettlement Plan", resulting in the administrative counterpart having to pay more for the purchase. This behavior is a manifestation of the exercise of administrative preferential rights by the Xinghualing District People's Government of Taiyuan City. The Xinghualing District People's Government of Taiyuan City did not consult with the administrative counterpart during the formulation and implementation of the "Resettlement Plan", depriving the counterpart of procedural rights such as statement and defense. Therefore, its unilateral change of the agreement content is illegal.

（3） Analysis of the Conditions for Administrative Organs to Exercise the Right of Administrative Advantage in Disputes over Rural Homestead Demolition and Resettlement

In disputes over the demolition and resettlement of rural homesteads, the demolition and resettlement work often has common problems such as a wide group, slow progress, and long time frame. Some demolition households may even evolve into "nail households" due to their own demolition interests being unable to be satisfied. However, behind the signing of demolition agreements by "nail households", there are often many social and political factors, which lead to the content of the demolition agreement breaking through the demolition and resettlement policies, causing administrative agencies to face a dilemma in how to fulfill the demolition agreement in the later stage. So when dealing with such cases, what conditions do administrative agencies need to meet if they want to break through contractual constraints with administrative priority rights?

Firstly, the exercise of administrative priority rights should have inevitability, that is, continuing to fulfill the agreement may seriously harm national interests and social public interests. For the determination of situations that may seriously harm national interests and social public interests, the author believes that the following points should be considered for judgment:

1. The timing of potential harm to national interests and social public interests. The conclusion of an administrative agreement is inevitably based on the specific economic conditions, legal policies, and local transaction habits of the demolition location at that time. Among them, the relevant requirements of public interest are also fixed at the time of signing the agreement, and the public interest needs at that time are the objective basis on which the agreement is established. If the situation that damages public interests already exists before the signing of the demolition agreement, the administrative agency should anticipate this risk and cannot change or terminate the agreement after the agreement is signed on the grounds that fulfilling the agreement will harm public interests. In administrative agreement disputes, administrative agencies already occupy a dominant position and take safeguarding public interests as their own responsibility. They bear the responsibility of safeguarding the basic rights and interests of citizens, which requires administrative agencies to have a higher duty of care. Before signing an administrative agreement, they need to fully consider whether the objective basis meets the conditions for signing an administrative agreement to ensure that public interests are not harmed. Only when there is a change in public interest conditions after the agreement is established and before the completion of performance, such as in Case 2 mentioned in this article, due to the limited number of resettlement suites and policy adjustments during the performance process, the area is no longer able to accommodate suites, resulting in the inability to continue performance of the agreement, can it constitute a legitimate reason for the administrative subject to unilaterally change or terminate the agreement. The administrative priority right is used to respond to temporary changes, and cannot be activated unless the situation changes.

2. The cause of harm to public interests should not be attributed to the parties to the agreement. If the administrative subject only changes or terminates the contract on the grounds that the other party violates the agreement and damages the public interest, then this behavior should be recognized as the administrative subject exercising the contractual rights rather than the administrative priority rights. Taking Case 2 of this article as an example, if it is not due to sudden and unavoidable policy adjustments or other reasons that Lin cannot be resettled, the administrative agency's failure to fulfill the resettlement obligation should be deemed a breach of contract. Even if unilateral changes or termination of the agreement are made during the performance process, it will be deemed illegal.

3. Judgment on the public interest value maintained by administrative priority rights. On the other hand, exercising the administrative priority right means that the legitimate rights of the administrative counterpart will be harmed, which requires that the public interests to be protected by exercising the administrative priority right must be significant public interests. Only when the social public interests protected by the administrative priority right are clearly superior to the private interests that will be damaged can unilateral changes or termination of agreements be adopted. As mentioned in case one earlier, the public interests that the people's government of a certain district needs to protect clearly do not belong to significant public interests, and their value is clearly equivalent to the losses of the other party. In this case, the administrative agency cannot exercise the act of unilaterally changing or terminating the agreement.

4. Administrative agencies need to bear the burden of proof for the change or termination of agreements. Due to the overly broad content and definition of "public interest", it is easy to be interpreted and applied excessively. Therefore, the protection of administrative priority rights must be directly related to public interests, and it can be proven that the beneficiaries are the unspecified majority in society. In addition, administrative entities must fully demonstrate the necessity, purpose, facts, and legal basis of their actions, and avoid confusing departmental interests, purely local financial interests, and public interests.

3、 Suggestion: Strictly grasp the use of administrative priority rights and establish a compensation and relief mechanism

The author believes that in view of the lack of corresponding regulations on the procedures and conditions for the exercise of administrative priority rights in China's legislation, in order to protect the government's credibility in front of the public, the initiation of administrative priority rights must be strictly regulated. It is recommended that administrative agencies adopt a phased deployment approach in dealing with the demolition and resettlement of rural homesteads. Before signing the demolition agreement, they should fully review whether the demolition and resettlement conditions for each relocated household are fair and just, firmly eliminate violations such as "opening the back door", and consider the issue of the ability to fulfill the agreement after signing it. In the process of fulfilling the agreement, the principle of honesty and trustworthiness should be adhered to, and the first requirement is to continue fulfilling the demolition agreement. Only when there are no other alternative solutions, negotiation and change methods that cannot achieve the goal, can the exercise of administrative priority be considered. Before deciding to exercise the administrative priority right, in order to prevent the intensification and aggravation of the dissatisfaction and resistance of the demolished object, and to avoid situations where the change or termination of the administrative agreement made by the administrative agency is deemed illegal due to procedural reasons, the administrative agency should fully listen to the statements and defense opinions of the administrative counterpart, and if conditions permit, actively hold a hearing to fully demonstrate and analyze the administrative action to be taken, Ensure that administrative counterparts have sufficient rights to know and to state and defend themselves, adhere to more consultation, communicate more, and fully fulfill their disclosure obligations, and pay more attention to procedural norms and openness. Before making a final decision on whether to exercise administrative priority rights, it is recommended to conduct collective deliberation.

In the process of rural homestead demolition and resettlement, once administrative agencies exercise administrative priority rights, the resettlement interests of villagers will be more or less affected. It is recommended to establish an appropriate compensation mechanism. Although the exercise of administrative priority rights by administrative organs to change or terminate agreements is also a helpless move, in order to balance the relationship between protecting public interests and safeguarding the rights and interests of administrative counterparts, appropriate compensation can be given to administrative counterparts. This is also beneficial to avoid administrative actions made by administrative organs that are not understood by the counterparts and may lead to administrative reconsideration or litigation.

Bibliography

[1] (Paper): Zhao Hong: "On the Principle of Good Faith in Administrative Contracts", "Research on Administrative Law", Issue 2, 2005.

[2] (Essay): Liu Taigang: "Criteria for the Recognition of Public Interest and Legislative Ideas - From the Perspective of the Conceptual Function of Public Interest", Journal of the National School of Administration, 2012, Issue 1.

[3] (Essay): Administrative Trial Division of the Zhejiang Provincial Higher People's Court: "Theoretical Basis and Exercise Rules of Administrative Advantage Rights", "Application of Law", Issue 3, 2022.

[4] (Treatise): Shen Guangming: "Judicial Determination of the Conditions for the Exercise of the Right to Unilateral Change or Termination of Administrative Agreements", "Research in Administrative Law", Issue 3, 2018.