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Recently, Tian Qiuying and Wei Wei, partners at JAVY Law Firm, represented a client in a dispute concerning the recovery of construction payments by an actual contractor. The case involved complex legal relationships and settlement arrangements involving multiple parties; the two lawyers ultimately secured a comprehensive victory for their client, with the court upholding the client’s claim for over 3.2 million yuan in construction payments and the corresponding interest on late payments.

I. Background to the Case

In 2020, the client, Mr A (pseudonym), was the actual contractor for a municipal road and drainage construction project undertaken by the defendant, a subsidiary of China Communications Construction Company. He provided labour and supplied materials for the project. As Mr A did not possess the necessary construction qualifications, and at the request of the defendant’s project department, he settled payments for materials through eight ‘settlement agents’ with whom the defendant had already contracted, and retroactively signed labour subcontracting agreements in the names of two labour companies. Upon receiving payments from the defendant, the respective nominal contracting parties transferred the full amounts to Party A’s account; Party A was the actual contractor and the actual recipient of the funds for the project.

Following completion of the project and mutual verification by both parties, it was established that the defendant still owed Party A a total of over 3.2 million yuan in settled project payments. After repeated unsuccessful attempts to recover the debt, Party A instructed this firm to bring legal proceedings.

II. Case Challenges and Representation Strategy

The core dispute in this case centres on whether Mr A can be recognised as the ‘actual contractor’ in legal terms, thereby circumventing the principle of contractual relativity to assert his rights directly against the defendant. The defendant contended that Mr A was not a party to any of the contracts; that the relationships between the defendant and the respective nominal contracting companies were independent contractual arrangements; and that Mr A lacked standing as a plaintiff.

Faced with complex cash flow patterns and multi-layered contractual relationships, lawyers Tian Qiuying and Wei Wei focused on the following tasks:

Comprehensive collection and construction of a complete chain of evidence: The two lawyers systematically collated key evidence, including WeChat chat records between Mr A and the defendant’s project finance manager and chief economist; ‘settlement reconciliation statements’ sent by personnel appointed by Mr A; and bank transaction records showing transfers from the various nominal contracting companies to Mr A. This clearly reconstructed the entire process: ‘payment by the defendant – receipt by the nominal company – transfer to Mr A – actual construction by Mr A’.

Precise application of judicial interpretations: Closely adhering to the provisions on the protection of rights for actual contractors set out in Article 43 of the ‘Interpretation (I) of the Supreme People’s Court on Issues Concerning the Application of Law in the Trial of Disputes Arising from Construction Engineering Contracts’, they argued that although Mr A had entered into the contract under another person’s name, he had actually invested funds, organised the construction work and borne the risks, thereby meeting the statutory requirements for an actual contractor.

Forceful rebuttal of the defendant’s defences: In response to the defendant’s defences—including ‘lack of standing on the part of the claimant’, ‘duplicate claims’ and ‘part of the claim having already been brought by another party’—the legal representative provided evidence to refute each point individually, pointing out that the defendant’s project finance manager had raised only formal objections to the reconciliation statements submitted by Mr A’s side and had not actually made any payments; therefore, the defendant should bear the liability for payment.

III. Judgment

After hearing the case, the court held that the available evidence was sufficient to establish that Mr A was the actual contractor for the project in question and was entitled to claim the construction payment directly from the defendant; the fact that the defendant owed the construction payment was clear, and the amount was specified; regarding the disputed amounts raised by the defendant, as the defendant failed to provide evidence proving that payment had actually been made, the court upheld Mr A’s claims. The court ordered the defendant, a certain subsidiary of China Communications Construction Company, to pay Mr A over 3.2 million yuan in construction costs within ten days of the judgment coming into effect, together with interest on late payment from the date of filing the claim until the date of full settlement.

IV. Summary

This case is a typical example of an actual contractor overcoming the principle of contractual relativity and successfully asserting their rights against the project owner. In the construction sector, it is very common for actual contractors to enter into contracts under a nominee’s name and settle payments through third parties due to a lack of qualifications; once a dispute arises, their legal standing is easily denied. In this case, lawyers Tian Qiuying and Wei Wei, drawing on their meticulous organisation of evidence and profound understanding of judicial interpretations, successfully reconstructed the complete chain of facts—‘nominal contracting—actual construction—funds flowing back’—and effectively safeguarded the legitimate rights and interests of the actual contractor.

Moving forward, JAVY Law Firm will continue to specialise in the fields of construction and dispute resolution, upholding justice through professionalism and fulfilling its mission through practical action, thereby contributing further to optimising the legal environment of the construction market and protecting the legitimate rights and interests of workers and builders.