[Casebrief]

In May 2013, Qinhuang Tourism Culture Investment Co., Ltd., as the employer, signed a construction contract with No. 5 Engineering Co., Ltd. of CCCC First Harbor Engineering Co., Ltd. through bidding procedures. In August 2013, No. 5 Engineering Co., Ltd. subcontracted a part of the works to Hebei Port Group Port Engineering Co., Ltd., which had corresponding qualification. In April 2014, Hebei Port Group Port Engineering Co., Ltd. subcontracted a part of the works to Qinhuangdao Branch of Zhongshuilong Construction Engineering Co., Ltd.. In June 2014, Qinhuangdao Branch of Zhongshuilong authorized a representative surnamed Ma to sign a construction contract with the plaintiff Fujian Xinggang Port Co., Ltd. and to handle all matters concerned. After the signing of the contract, the plaintiff started construction using its Ship “Xinggangjun 66”. During the construction, the payment proportion of Qinhuang Investment was 57%. In May 2017, No. 5 Engineering Co., Ltd. of CCCC First Harbor Engineering Co., Ltd and Hebei Port Group Port Engineering Co., Ltd. carried out the completion settlement, with the payment proportion of 82%. In May 2017, Hebei Port Group Port Engineering Co., Ltd. settled with Qinhuangdao Branch of Zhongshuilong, with a payment proportion of 90%. In order to collect the outstanding payment, the plaintiff filed a lawsuit to TianjinMaritimeCourt.

[Judicialdecision]

The first-instance judgment of Tianjin Maritime Court is as follows: Qinhuangdao Branch of Zhongshuilong should pay the construction cost of RMB 1,991,600 and corresponding interest

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to the plaintiff; Qinhuang Investment should bear payment liability for the aforesaid debt, and after Qinhuang Investment performs the liability, the corresponding portion of the debt with respect to the construction cost among the parties under the project should be eliminated. Qinhuang Investment appealed, but Tianjin Higher People’s Court upheld the original judgment inthesecond-instancejudgment.

[Significance]

It is not uncommon for marine construction projects to be subcontracted level by level. Such cases often involve a large number of parties and have complex legal relations, making it more difficult for actual constructors to safeguard their legitimate rights and interests, and for courts to handle the cases fairly and efficiently. In this case, the Court accurately grasped the spirit of the relevant judicial interpretations of the Supreme Court, and clarified the responsibility bearing conditions and ways for each “employer” under each subcontracting. It has reference significance forhandlingof similarcases: firstly,Article 26of the Interpretationof theSupreme People’s Court on Certain Issues Concerning the Application of Law in the Trial of Cases Involving Project Construction Contract Disputes and Article 24 of the Further Interpretation of theSupreme People’sCourtonCertainIssuesConcerningtheApplicationofLawintheTrialof Cases Involving Project Construction Contract Disputes strengthens the protection of the rights of the actual constructors and the migrant workers behind them without increasing the responsibilities of the employer, and should be applicable to the cases involving multi-level illegal subcontracting; secondly, to determine the scope of liability of the employer, the outstanding payment under each illegal subcontracting contract should be considered, and the liability of the employer should not exceed the minimum outstanding amount under all the contracts, otherwise it will damage the rights of the debtor under the contract; the mode of liabilitybearingshouldbe supplementaryliability; thirdly, “employer” is a relative concept,and thegeneral contractorandillegal subcontractors that have nodirectcontractual relationshipwith the actual constructor should also bear the liabilities of “employer” in case of overdue payment ofconstructioncost.