Shanghai Municipality, Preventing and Halting Arrears in Project Construction Payments Several Provisions

Issued: August 15 2001

Main contents: The Provisions require owners of construction projects to provide evidence proving investment scales and funding sources of the projects when they apply for project approval and to provide evidence of advance payment to construction contractors when they apply for construction permits (Section Two). Construction contracts must include provisions for pricing, payment, adjustment of payment and resolution of defaults (Section Three). Payment should be settled upon the completion of each phase of construction, which normally includes a foundation phase, structure phase and completion phase (Section Four). Project owners who willfully default on payment and refuse to obey court judgments shall be disclosed to the public in a "list of defaulting project developers" (Section Seven). A security mechanism shall be put in place on a trial basis to require project owners to provide payment security and contractors to provide performance security (Section Ten).
Related legislation: PRC, Construction Law, Nov 1 1997, CLP 1998 No.1 p6; PRC, Invitation and Submission of Bids Law, Aug 30 1999, CLP 1999 No.8 p34; PRC, Contract Law, Mar 15 1999, CLP 1999 No.4 p19; State Council, Administration of the Quality of Construction Works Regulations, Jan 30 2000, CLP 2000 No.2 p5 and Shanghai Municipality, Administration of the Construction Market Regulations, Oct 21 1997, CLP 1998 No.2 p17