The Supreme People's Court ("SPC") has recently issued the Interpretations (II) on Issues Concerning the Application of Law in the Trial of Construction Project Contract Dispute Cases (the "Interpretations"), with effect from February 1, 2019. SPC

The Interpretations provide for the validity of construction project contracts, the settlement of payments for construction projects, authentication for construction projects, the priority right to claim for payments for construction projects, protection of rights of de facto constructors. With regard to the determination of the amount of compensation for losses incurred from a void construction project contract, among others, the Interpretations adhere to the principle of awarding compensation to the extent of actual losses, adding that a party concerned may require to determine the degree of losses by reference to the quality standard, construction period, the agreed time when payments will be made for the construction project, and other factors set out in the contract, if there is a difficulty in working out the amount of actual losses. As for civil liability for the construction project contract signed by a contracting party having the loan of others' qualifications, the Interpretations clarify that where an entity or individual without relevant qualifications signs a construction project contract in the name of a qualified construction enterprise, the party contracting out the construction shall have the right to claim that the qualification lender shall, together with such entity or individual using its qualifications, bear joint and several liability for compensating losses attributed to the loan of qualifications that are incurred from the substandard quality of the construction project.

(Source: SPC)