On May 9, Guiyang Lelong Construction Labor Service Co., Ltd. (hereinafter referred to as “Lelong Company”) sent a letter to China University of Political Science and Law, requesting the withdrawal of the “Reform and Innovation Award” granted to the Guiyang Arbitration Commission in the third arbitration credibility evaluation. The letter stated that the Guiyang Arbitration Commission has strategic cooperation with China Railway Fifth Bureau Group and its three subsidiaries, China Railway 17th Bureau Group, China Railway Real Estate Southwest Company, China Construction Fourth Bureau First Company Southwest Branch, Guizhou Construction Engineering Group and its subsidiaries, as well as first-level financial institutions in Guizhou and major professional associations in Guizhou, which are parties involved in the case, which has a devastating impact on the credibility of the Guiyang Arbitration Commission. The company is also a victim of this “strategic cooperation” of the Guiyang Arbitration Commission and suffered a crushing defeat in the arbitration. 
Guiyang Arbitration Commission. Photo by Liu Hu
01 Labor Service Company Claims that Central Enterprises Owe Construction Funds and Applies for Arbitration
Lelong Company is a private enterprise. It subcontracts labor services from China Railway Fifth Bureau Group Construction Engineering Co., Ltd. (hereinafter referred to as “China Railway Fifth Bureau”). After completing the project, Lelong Company applied to the Guiyang Arbitration Commission for arbitration to recover more than 12.8 million yuan in overdue construction funds from China Railway Fifth Bureau, but the ruling was rejected. On April 19, Lelong Company has applied to the Guiyang Intermediate People’s Court to revoke the arbitration ruling, believing that the Guiyang Arbitration Commission has signed a “strategic cooperation agreement” with China Railway Fifth Bureau, and its behavior has seriously affected the basic requirements that the arbitration institution should be neutral and fair. “The arbitration between Lelong Company and China Railway Fifth Bureau in the Guiyang Arbitration Commission, the result can be imagined.” Relevant information shows that the project involved is the Chen Liang Village urban village renovation project in Guiyang Economic Development Zone (hereinafter referred to as the Chen Liang Village project). After China Railway Fifth Bureau signed a general contracting contract for construction with the owner, it subcontracted the labor services of buildings 1-5 in the project to Lelong Company. Among them, on September 1, 2014, China Railway Fifth Bureau signed the “Main Project Labor Subcontracting Contract” with Lelong Company, subcontracting the main project labor services of buildings 4 and 5 of the Chen Liang Village project to Lelong Company. The two parties agreed that the amount of work would be calculated based on the construction area, and the comprehensive labor unit price would be calculated at 418 yuan/㎡. On April 12, 2016, China Railway Fifth Bureau signed the “Main Project Labor Subcontracting Contract” with Lelong Company again, subcontracting the main project labor services of buildings 1-3 of the Chen Liang Village project to Lelong Company. The two parties agreed that “labor remuneration shall be priced based on the comprehensive labor unit price of the work results, and calculated according to the confirmed amount of work”, without specifying a specific price. After the contract was signed, Lelong Company completed the labor services as agreed. By the end of 2017, all five buildings subcontracted by Lelong Company were completed and delivered for use around the second half of 2018. The Chen Liang Village shantytown renovation project in Guiyang, which has been completed and put into use. Photo by Liu Hu On January 14, 2020, the Chen Liang shantytown renovation project department of China Railway Fifth Bureau (hereinafter referred to as the China Railway Fifth Bureau project department) issued two “Main Project Project Settlement Statements” to Lelong Company, of which the settlement amount for buildings 4 and 5 was more than 17.88 million yuan, and the settlement amount for buildings 1-3 was more than 43.65 million yuan, totaling more than 61.54 million yuan. On the same day, the China Railway Fifth Bureau project department signed a “Closing Account Agreement” with Lelong Company, confirming that Lelong Company had completed a total labor engineering output value of more than 61.54 million yuan, and as of the date of the agreement, China Railway Fifth Bureau had paid more than 39.88 million yuan. China Railway Fifth Bureau shall pay all the engineering funds to Lelong Company within 180 days after the signing of this agreement, and overdue payments shall be calculated at the national loan interest rate. However, Lelong Company has not received the engineering funds for a long time. On February 21, 2022, the company, out of helplessness, filed an arbitration with the Guiyang Arbitration Commission, claiming that China Railway Fifth Bureau had not fulfilled its contractual obligations to pay the engineering funds on time, and still owed it more than 12.8 million yuan, and requested that China Railway Fifth Bureau be ruled to pay the engineering funds and interest. During the arbitration case trial, China Railway Fifth Bureau did not object to the engineering funds of more than 17.88 million yuan for buildings 4 and 5 of the Chen Liang Village project, but did not recognize the engineering funds of more than 43.65 million yuan for buildings 1-3. After the application of China Railway Fifth Bureau and the appraisal by the appraisal agency entrusted by the Guiyang Arbitration Commission, the engineering cost of buildings 1-3 was more than 24.22 million yuan. Lelong Company did not recognize the appraisal amount, and believed that it should be based on the more than 43.65 million yuan determined by the “Settlement Statement” and the “Closing Account Agreement”. On November 14, 2023, the “(2021) Gui Arbitration No. 2245” “Ruling” (hereinafter referred to as “Ruling No. 2245”) made by the Guiyang Arbitration Commission adopted the appraisal amount of the appraisal agency, and determined that the engineering price in this case was more than 17.88 million yuan (buildings 4 and 5) + more than 24.22 million yuan (buildings 1-3), totaling more than 42.11 million yuan. The funds already paid by China Railway Fifth Bureau to Lelong Company plus the amount of the house抵款 has exceeded the engineering price in this case, and the ruling rejected all arbitration claims of Lelong Company.
02 Are the settlement statements and agreements stamped by the project department not valid?
During the arbitration process, although the “Closing Account Agreement” signed by the China Railway Fifth Bureau project department and Lelong Company, and the “Settlement Statement” for buildings 1-3 issued to Lelong Company were all stamped with the seal of the China Railway Fifth Bureau project department, China Railway Fifth Bureau also did not deny the authenticity of the seal, but did not recognize the settlement amount. China Railway Fifth Bureau argued that it did not recognize the settlement amount of the “Closing Account Agreement” claimed by Lelong Company, and the two parties had never conducted a settlement, and the “Closing Account Agreement” submitted by Lelong Company was not a true settlement. The agreement does not conform to the objective facts, nor does it conform to the basic transaction habits of the project. The interest claimed by Lelong Company should not be supported either. The two parties in this case have not completed the settlement, the premise for paying the engineering funds is not met, and according to the payment situation, China Railway Fifth Bureau has overpaid, including the assets抵债, so there is no fact of arrears, and there is no overdue interest. 
China Railway Fifth Bureau does not recognize the “Closing Account Agreement”, believing that it cannot be used as the basis for the settlement between the two parties. Provided by the interviewee China Railway Fifth Bureau has no objection to the seal of the China Railway Fifth Bureau project department stamped on the agreement, but believes that the agreement does not have the signature of any project personnel or company personnel of China Railway Fifth Bureau, and is not a document signed by China Railway Fifth Bureau, and China Railway Fifth Bureau has not found any record of the use of the seal. All “Closing Account Agreements” of China Railway Fifth Bureau are stamped with the special seal for contracts, and the seal of the project manager department does not have the effect of settlement. China Railway Fifth Bureau also does not recognize the “Settlement Statement” for buildings 1-3, believing that it does not conform to the facts. The “Settlement Statement” does not have the signature of the project manager of China Railway Fifth Bureau, and China Railway Fifth Bureau has not found any record of the use of the seal. The settlement method of the Chen Liang Village project is to sign a “Closing Account Agreement” after accumulating the amount of each period’s work inspection and valuation sheet, rather than a “Settlement Statement”. In this regard, He Li, the legal representative of Lelong Company, stated the formation process of the “Closing Account Agreement” and the “Settlement Statement” to the arbitration tribunal. In January 2020, He Li went to the office of the China Railway Fifth Bureau project department to find Minister Li for settlement, and Minister Li gave him two “Settlement Statements” and a “Closing Account Agreement”. Minister Li stamped the seal of the China Railway Fifth Bureau project department on the agreement, and He Li asked Minister Li to sign it, but Minister Li said that he could not represent the project department to sign it, and asked He Li to let project manager Sun sign it.
03 The appraisal opinion was pointed out that the area has a huge difference from the area agreed in the contract
In the arbitration case, China Railway Fifth Bureau believed that the total output value of buildings 1-3 was more than 28.19 million yuan, and did not recognize the settlement amount of more than 43.65 million yuan. Due to the large dispute between the two parties, China Railway Fifth Bureau applied to the arbitration tribunal to entrust an appraisal agency to appraise the engineering cost. The arbitration tribunal believes that even if the company’s seal is true, but if the person who stamped the seal is unauthorized to handle and lacks the corresponding appearance of rights, it cannot simply determine the legal effect of the evidence based on the fact of stamping the company’s seal, and at the same time, in view of the fact that the “Settlement Statement” also has a large difference in form from the conventional settlement data, therefore, the “Settlement Statement” cannot replace the settlement. The arbitration tribunal has doubts about the source of the “Closing Account Agreement” and the “Settlement Statement” for buildings 1-3, so it approved the appraisal application of China Railway Fifth Bureau. On February 22, 2023, the appraisal agency issued the “Engineering Cost Appraisal Opinion”, and the engineering cost appraisal amount for buildings 1-3 of the Chen Liang Village project was more than 24.22 million yuan. “The appraisal conclusion is not only nearly 20 million yuan less than the settlement amount of more than 43.65 million yuan between the two parties, but also nearly 4 million yuan less than the 28.19 million yuan recognized by China Railway Fifth Bureau itself.” Lelong Company does not recognize the appraisal conclusion, believing that the appraisal opinion cannot reflect the true situation of the settlement between the two parties, and cannot even represent the settlement intention of China Railway Fifth Bureau, and should not be used as the basis for the final decision. “In the appraisal opinion, the signatory Liu Mouping does not have the qualification certificate of a cost engineer, but he signed in the statement and the appraiser; the person in charge of the appraisal is Li Mouwen according to public information, but the person in charge who signed is not Li Mouwen. In addition to procedural defects, the appraisal opinion is full of loopholes, and there are huge differences in the most basic area and the area agreed in the contract.” said Guan Qiang, the agent of Lelong Company and the director of Guizhou Qianchuang Law Firm.
04 “If an agreement on the settlement of engineering price has been reached, the engineering cost appraisal shall not be approved“
The Guiyang Arbitration Commission’s “Ruling No. 2245” believes that the “Closing Account Agreement” and the “Settlement Statement” for buildings 1-3 should not be adopted, but the engineering cost appraisal conclusion should be adopted, and it is determined that China Railway Fifth Bureau’s actual payment has exceeded the output value of Lelong Company, and the ruling rejected Lelong Company’s request. However, “Ruling No. 2245” also believes that China Railway Fifth Bureau did not raise any objection to the authenticity of the seal of the China Railway Fifth Bureau project department in the main evidence held by Lelong Company, the “Closing Account Agreement” and the “Settlement Statement” for buildings 1-3, and China Railway Fifth Bureau lacked prudent work management behavior in project management, and was at fault for causing the dispute in this case, and the appraisal fee shall be borne by China Railway Fifth Bureau. Based on the fact that Lelong Company’s arbitration request was rejected, and the formation process of the above-mentioned documents is doubtful, the arbitration fee shall be borne by Lelong Company. “Can the two “Settlement Statements” and the “Closing Account Agreement” held by Lelong Company be used as the basis for the final decision?” The agent of Lelong Company believes that the view of the arbitration tribunal is obviously not tenable. In this case, China Railway Fifth Bureau did not deny the authenticity of the project department’s seal, and recognized the settlement amount of the “Settlement Statement” for buildings 4 and 5, then the “Settlement Statement” for buildings 1-3 and the “Closing Account Agreement” are obviously also true, and the “Settlement Statement” and the “Closing Account Agreement” themselves are the final settlement of the project. Since the arbitration tribunal confirmed the authenticity of the seal and believed that China Railway Fifth Bureau’s seal management was at fault, it also means that the “Settlement Statement” and the “Closing Account Agreement” held by Lelong Company are legal and valid. The arbitration tribunal recognized the authenticity of the project department’s seal, but did not recognize the effect of the seal, and recognized the authenticity of the “Settlement Statement” and the “Closing Account Agreement”, but did not recognize the settlement amount stated in it, and the reasons for the ruling contradict the results of the ruling. “The arbitration tribunal determined that the “Closing Account Agreement” held by Lelong Company does not conform to the transaction practice, and the “Settlement Statement” has a large difference from the conventional settlement data, which is completely groundless and fabricated out of thin air. The settlement practice of China Railway Group’s construction projects is the “Closing Account Agreement”, and the arbitration tribunal overturning the “Closing Account Agreement” is truly not in line with the transaction practice.” The agent of Lelong Company believes that the appraisal procedure obviously cannot be initiated in this case, and the appraisal conclusion obviously cannot be used as the basis for the final decision. First, Article 29 of the Supreme People’s Court’s Interpretation of the Application of Laws on Issues Concerning the Hearing of Construction Project Contract Disputes (I) clearly stipulates: “If the parties have reached an agreement on the settlement of the construction project price before the lawsuit, the people’s court shall not approve the application of one party to the lawsuit to appraise the engineering cost.” There is a “Closing Account Agreement” in this case, so the appraisal procedure obviously cannot be initiated. Second, the agent searched the “Judgment Documents Network” and found that in the projects involving China Railway Group and its subordinate enterprises with a “Closing Account Agreement”, the China Railway side applied to the court for appraisal, and the court did not allow the appraisal. “This is a judicial case of the court, and appraisal should not be conducted in this case either.” Third, the “Full Book of Legal Terms and Practical Guidelines for Construction Project Construction Contracts in China” jointly compiled by authoritative arbitration institutions such as the China International Economic and Trade Arbitration Commission, the Beijing Arbitration Commission, the Shenzhen International Arbitration Court, the Guangzhou Arbitration Commission, the Shanghai Arbitration Commission, and the Shanghai International Arbitration Center also points out that “the obligee who does not recognize the settlement agreement directly applies to the court for engineering cost appraisal in an attempt to use the appraisal opinion to directly replace the settlement agreement… In the case of a valid settlement agreement, the engineering price has been clarified, and it is meaningless to apply for appraisal.” According to this authoritative interpretation, the engineering cost appraisal can be conducted after the “Closing Account Agreement” is revoked, but the “Closing Account Agreement” in this case has not been revoked.
05 One of the parties has a “strategic cooperation” relationship with the Arbitration Commission
Lelong Company then applied to the Guiyang Intermediate People’s Court to revoke the arbitration ruling of the Guiyang Arbitration Commission, and it has been accepted. The agent of Lelong Company believes that the Guiyang Arbitration Commission has repeatedly used the banner of “source governance” to sign so-called “strategic cooperation agreements” with China Railway Group, including China Railway Fifth Bureau, and its subordinate companies, and its behavior has seriously affected the basic requirements that the arbitration institution should be neutral and fair, and the income of the arbitration commission and arbitrators all comes from the case acceptance fee. The arbitration between Lelong Company and China Railway Fifth Bureau in the Guiyang Arbitration Commission, the result can be imagined. According to the “Arbitration Law” and relevant regulations, after the Guiyang Arbitration Commission signed the “strategic cooperation agreement” with China Railway Fifth Bureau, it should not accept arbitration cases involving disputes with China Railway Fifth Bureau, but should collectively avoid. The Guiyang Arbitration Commission signed “strategic cooperation agreements” with many large enterprises, and the bad reviews are overwhelming. Webpage screenshot Secondly, in the arbitration case, the person in charge of the law firm where the agent of China Railway Fifth Bureau is located is an arbitrator of the Guiyang Arbitration Commission and a member of the Construction Engineering Arbitration Institute, and has long-term exchanges, communication and business dealings with the Guiyang Arbitration Commission, which has the objective situation of affecting the fairness of arbitration, and should have avoided it according to law but did not. The “Ruling No. 2245” of the Guiyang Arbitration Commission shows that on February 21, 2022, Lelong Company submitted an “Application for Arbitrator Avoidance”, applying for the chief arbitrator and two arbitrators of this case to collectively avoid, on the grounds that the arbitration tribunal in this case had other relationships with the agent, which may affect fair arbitration, and that the engineering cost appraisal of the engineering funds clarified in the “Closing Account Agreement” does not conform to judicial practice, and was rejected by the Guiyang Arbitration Commission. Thirdly, China Railway Fifth Bureau concealed evidence that was sufficient to affect a fair ruling. Lelong Company once applied to the arbitration tribunal to order China Railway Fifth Bureau to submit the settlement data it submitted to the owner of the Chen Liang Village project, but China Railway Fifth Bureau did not submit it, and should bear the corresponding legal consequences. According to the provisions of Article 58 of the “Arbitration Law”, if the other party conceals evidence that is sufficient to affect a fair ruling, the court may revoke the arbitration ruling according to law.
06 Letter to China University of Political Science and Law requesting the withdrawal of the award to the Guiyang Arbitration Commission
The author saw that the letter from Lelong Company to China University of Political Science and Law stated that in accordance with the requirements of the “improving arbitration credibility” put forward in the Fourth Plenary Session of the 18th CPC Central Committee, the “Arbitration Credibility Evaluation Report” jointly launched by China University of Political Science and Law and the Legal Daily is a major scientific research achievement, and the selection of award winners should have strict standards. And the winning arbitration commission selected from hundreds of commercial arbitration institutions across the country should be representative and typical, and its credibility should be impeccable. However, the behavior of the Guiyang Arbitration Commission may damage its credibility. The letter stated that Guizhou is located in an economically underdeveloped area. In recent years, the Guizhou local government and local state-owned enterprises have relatively serious debt problems. In the process of commercial cooperation between Guizhou’s downstream enterprises or private enterprises and the local government and local state-owned enterprises, the government and state-owned enterprises have relatively common overdue payment problems. And the Guiyang Arbitration Commission picks and chooses to sign strategic cooperation agreements with state-owned enterprises, “which can be said to add another layer of frost to the unfavorable business environment in Guizhou”. The author noticed that on July 7, 2023, the Guiyang Arbitration Commission signed a strategic cooperation agreement with Guizhou Construction Engineering Group and publicized it on its WeChat public account, which attracted widespread attention. The article “Guiyang Arbitration Commission Escorts Guiyang Construction Engineering Group, and the Other Party is Stunned” on the WeChat public account “Speaking in Law” pointed out: I don’t know whether the commission has visited the other parties in the case, especially the losing party, and whether they have felt fairness and justice? On May 13, the author wrote to Bu Guirong, the director of the Guiyang Arbitration Commission, to ask how he evaluates the letter requesting the withdrawal of the “Reform and Innovation Award” in the third arbitration credibility evaluation, and the arbitration failure of Lelong Company in the commission. As of the publication of this article, Bu Guirong has not responded.
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