Research On Priority Of The Right Of Claim For Actual Constructor From The Perspective Of Bankruptcy Law

Accounts receivable pledge is a common financing method in the construction industry.However,according to Article 43 of the "Judicial Interpretation II on the Application of Laws in the Trial of Construction Contract Dispute Cases" issued by the Supreme People’s Court,the actual constructor can directly claim the accounts receivable from the employer.Therefore,when the contractor enters bankruptcy proceedings,the pledgee and the actual constructor may declare bankruptcy claims against the contractor or directly claim the corresponding rights from the employer.For the bankruptcy administrator,it is not clear whether the actual constructor,with its breakthrough rights,should also be given priority over other creditors in the bankruptcy proceedings,and what the realization path would be.For the employer,it is unclear whether the nature of the actual constructor’s right to claim compensation is superior to the direct collection rights of the pledgee,and whether the former needs to be prioritized over the latter in realization.At the same time,the bankruptcy administrator and the actual construction party may both claim the right to payment for the project from the employer,and existing legal rules cannot clarify whether there is a priority difference between the claims of the actual constructor and the contractor.This article attempts to explore the normative purpose of the actual constructor’s right to direct claim compensation from a legal perspective and construct a legal model that can better balance the interests of all parties within the existing civil and commercial legal system.Apart from the introduction,the article is divided into four chapters.The main contents of each chapter are as follows:Chapter 1 introduces the conflicts between the rights of actual constructor and the rights of pledgees when accounts receivable in construction projects are pledged.This chapter discusses the rights enjoyed by different entities and the exercise of these rights when the contractor enters bankruptcy proceedings.Both the pledgee of accounts receivable and the actual constructor can exercise their rights directly against the employer without being affected by the contractor’s bankruptcy,making it difficult to determine the priority of the employer’s performance.When the pledgee and the actual constructor submit their claims to the bankrupt contractor,the pledgee’s preferential rights will take precedence over the ordinary claims of the actual constructor,revealing the absence of a clear priority rule under bankruptcy law.Chapter 2 explores the normative purpose of the actual constructor’s breakthrough right granted by the judicial interpretation.First,it introduces the special background in which this right emerged and the issue of unpaid wages of migrant workers that it seeks to address.Secondly,through an analysis of the concept of the actual constructor and the priority right to payment for the project,the chapter summarizes the value measurement of prioritizing the protection of migrant workers’ wages in the construction industry in China.It then summarizes the court’s tendency to favor the actual constructor in its judgment rules when it comes to the group of actual construction workers,including the fact that the priority right to payment for the project does not need to be expressly exercised,the actual constructor’s creditor’s rights with the employer take precedence over those of the contractor,and the priority of the migrant workers’ right to payment for the project over the guarantor’s rights.Chapter 3 analyzes the theories that underlie the actual constructor’s rights and their exercise effects in bankruptcy law,as well as whether they can make the actual constructor the priority creditor.The theories of unjust enrichment are flawed in their requirements,the factual contract theory goes against the original intent of the concept,the right succession theory lacks recognition legitimacy,and the substitute right theory as a common theory restricts the exercise conditions and constitutes a duplicate provision.Therefore,none of these theories should be directly adopted.Chapter 4 proposes a legal model of the actual constructor’s right to claim compensation as a statutory special right.Firstly,compared with the contractor,the actual constructor has a higher priority over the creditor’s rights of the employer.Secondly,when the actual constructor claims his right to the employer,the engineering payment debt between the contractor and the employer will change accordingly.The creditor’s rights will change into the range of the actual constructor’s claim against the employer and the employer’s debt to the contractor.The employer should directly pay the actual constructor,and if paid to the contractor,the contractor will receive unjust enrichment.Thirdly,the direct claim right and the priority payment right are two sides of the same coin,and the actual constructor can be paid ahead of the engineering guarantee property right holder.In the bankruptcy procedure,the unjust enrichment can be used as a common debt to be repaid to the actual constructor at any time.