Construction authorities must keep it simple on recordals

The construction contract recordal system has long been criticised. The criteria of the housing, and urban and rural construction commissions of different regions for recordal reviews are inconsistent, with a significant number of regions treating recordal as a substantive review with stringent criteria and an overly broad scope of review. With the central authorities calling for simplifying administration, the “long-arm jurisdiction” of construction commissions seems particularly out of place.

Recently, a client of ours encountered such a situation when carrying out construction contract recordal. The enterprise successfully participated in a public bid for “investment plus general construction contract” works for a certain infrastructure build-transfer (BT) project in Shandong. The bid invitation documents expressly specified that the general construction contract was to be entered into by the investor-established project company – the employer – and the bidder.

Subsequently, the parties entered into the general construction contract on this basis. However, the relevant officer at the construction commission denied the recordal on the grounds that the employer under the construction contract and the bid-inviting party were different. The inability to complete recordal affected the procedure for obtaining the construction permit, seriously impeding the normal progress of the project.

Wang Jihong is a partner and Yu Li is a paralegal at Zhong Lun Law Firm