English version translated by XU Xinyuan (Wayne)

At 2:00 p.m., June 6, 2022, Shanghai LANDING Law Offices and FACHAN jointly held an online summit forum on real estate cooperative development dispute resolution to discuss the dilemmas and resolution of real estate cooperative development. Mr. DING Xueming, Senior Partner of LANDING, acted as the moderator of the forum.

The forum was organized by LANDING’s National Dispute Resolution Professional Committee and co-organized by the Dispute Resolution Department of LANDING Shanghai and the Real Estate and Construction Engineering Department.

Since 2021, with the regulatory policies jointly tightened from both supply and demand sides, the land sales market has experienced a sharp decline. As a result, a large number of real estate enterprises have frequently defaulted due to excessive leverage ratio and approaching debt maturities, which aggravated the confidence in the market, and the disputes in the real estate cooperative development have occurred frequently. In view of this, based on our own practical experience and industry observation, LANDING National Dispute Resolution Committee carefully organized this summit forum, bringing together the wisdom of LANDING lawyers and experts in real estate industry. On the basis of sufficient research on real estate industry, this forum is aimed to provide useful reference for the dispute resolutions in real estate cooperative development.

01

Mr. LIU Yixing’s opening speech

At the very beginning, Mr. LIU Yixing, Managing Partner of Shanghai LANDING Law Offices, delivered the opening speech for the forum.

Mr. Liu said that legal professionals were always hoping that the society could make progress in rule of law, and an important factor of the progress of the rule of law depended on the harmonious communication of the community of legal professionals. Not only many LANDING lawyers but also many in-house corporate counsels of large real estate companies were invited to attend this forum. What’s more, the theme of the forum was close to the practice. This kind of harmonious interaction between the legal profession and the real estate industry is of great significance for solving the cutting-edge legal problems, and for promoting the practice of the legal theory.

The progress of the lawyer profession and the progress of rule of law are based on every lecture or forum, every real case and the resolution of every dispute achieved by our legal professionals. With minor steps accumulated, we can promote the progress of rule of law and find the solution to legal problems with Chinese characteristics.

02

Characteristics and trends of real estate cooperative development disputes in the current situation

Mr. WU Bin, director of LANDING’s National Dispute Resolution Professional Committee, talked about the current characteristics and trends of real estate cooperative development disputes based on the big data of the current judicial reviews.

Mr. Wu firstly interpreted the overall data of the past years from the macro perspective. The total number of cases in recent years declined clearly and there appeared “two highs and one low” phenomenon in the trial procedure, which referred to the fact that the amount of the subject matter was generally larger, and the jurisdiction was in higher courts and the original decisions were controversial, and the rate of the appellate court’s overturn was higher. Subsequently, from a micro perspective, Mr. Wu specifically analyzed the five characteristics of real estate cooperative development disputes.

03

Is Land Grant Contract dispute an administrative lawsuit or a civil lawsuit?

Mr. CHEN Jingjie, senior partner of LANDING, conducted detailed comparative analysis on the issue whether the land grant contract dispute is an administrative lawsuit or a civil lawsuit from six aspects.

When it comes to a specific case, it is necessary to take into account the nature of the case, the facts, the specific administrative act, the client’s business purposes, the local judicial practice and other factors, to choose the appropriate judicial strategy for the clients, to protect their own interests and prevent the corresponding risks.

04

The judicial reviews on the “fake equity, real debt” problem in the real estate cooperative development disputes

Ms. XIONG Huan, partner of LANDING, indicated that in the “fake equity, real debt” situation, an investment agreement acts as an equity investment in appearance but lack a loan agreement that represents a genuine expression of intent of both parties. With the China’s strong regulatory supervision on real estate enterprise financing, the courts may have different views on the nature of “fake equity, real debt” agreements. Ms. Xiong analyzed the judging standard of “fake equity, real debt” agreement from the concepts, transaction mode and how to identify equity and debt in real estate cooperative development, and provided practical suggestions to the real estate corporates.

05

Corporate deadlock and its solution

Ms. HE Xiaoli, director of LANDING Zhengzhou, delivered a speech on how to solve corporate deadlock through non-litigation methods. Ms. He gave in-depth analysis on 4 common deadlock situations by means of vivid analogies and examples. She indicated that prevention is better than hindsight for the corporate deadlock issue, such as reasonable equity structure design, mutual equity pledge and cross-shareholding.

06

Round-table conference topic: common shareholder dispute resolutions in real estate cooperative development

Subsequently, LANDING lawyers Ms. HAN Tianlan, Mr. LI Min and Ms. LIN Jing discussed on the issue of common shareholder dispute resolutions in real estate cooperative development.

Ms. HAN Tianlan, director of LANDING Shanghai DR department, shared 3 common situations where the corporate shareholders had transferred the capital without authorization and proposed corresponding resolutions.

Mr. LI Min, director of LANDING Fuzhou, analyzed the issue how to protect the shareholder’s interests who had to overinvest the corporate beyond the agreement in order to ensure the completion of the project when the other shareholders failed to fulfill their capital contribution obligations.

Ms. LIN Jing, partner of LANDING Shanghai, answered questions on dividend distribution in real estate cooperative development projects.

07

Legal issues on primary and secondary land joint development

Mr. ZHANG Junjian, Head of Legal Affairs of East China of China Jinmao Holdings Group Limited, shared with the audience on the enterprise’s concerns in some major projects, past problems, as well as the solutions and reflections on these problems from the corporate perspective.

08

The prospect of toxic assets with the development of EPC and PPP

Mr. LIU Zhaofu, director of LANDING Real Estate and Construction Department, delivered a keynote speech from 4 aspects, including the development of EPC and PPP, current background, prospects and toxic assets. Mr. Liu indicated that the current world is experiencing a hundred years of unprecedented changes, in the context of COVID and economic downturns globally and the domestic financial risk and structural adjustment, the cases frequently occurred where the private enterprises defaulted in the project and the state-owned enterprises had to take it over. The agent construction industry witnessed majestic changes, such as intensified competition, the advantages of amortization of equality, etc. and the traditional Agent construction mode has been replaced gradually by commercial EPC and PPP mode.

09

Asset Management Corporation’s (AMC) role in Real Estate Project Risk Mitigation Practice

Mr. LIU Jiashu, Legal Manager of China HUARONG Shanghai Office, introduced 2 main modes for AMCs to participate in real estate project risk mitigation, which are reorganization and restructuring. Mr. Liu specifically analyzed the basic logic, application scenarios, and operation mode of the reorganization, as well as the social functions and interventions of the restructuring mode.

The forum invited more than ten guests, focusing on multi-faceted, all-round analysis and presentation on the real estate cooperative development. Based on both the observation from a macro aspect and specific analysis from micro aspect, the forum provided fresh thoughts for lawyers in the real estate cooperative development business and guidance for the developers and the relevant enterprises to deal with the relevant issues more appropriately.