Mineral property rights fall under property law. “ Usufructuary right ” One type of right. According to property law, the rights to prospect for minerals, mine minerals, withdraw water, and use waters and tidal flats for aquaculture and fishing—rights acquired in accordance with the law—are protected by law.

In judicial practice, disputes over mining rights are primarily concentrated on... “ Secondary market ” That is, the property rights in mining. “ Circulation ” In legal acts, relatively speaking, mining administrative entities—represented by government agencies or mining authorities—are responsible for mining rights. “ Transfer ” It is relatively rare for disputes arising between civil and commercial entities in the primary market to escalate into judicial proceedings.

This case primarily analyzes the legal issues involved in two types of disposal methods for mining rights: direct transfer and indirect transfer through means such as equity transfers. Typical Case No. 1—Supreme People's Court ( 2011 ) Min Ti No. 81 Civil Judgment No. “ Chen Yundou v. The Dispute over the Mining Rights Transfer Contract between the Old Border Wall Village Committee of Hushan Town, Kuandian Manchu Autonomous County and Chen Yundou ” In this case, the natural person Chen Yundou holds mining rights. “ Lease ” The entity directly inherited the mining rights for the No. 1 and No. 2 gold mines from the Lao Bianqiang Village Committee, but later became involved in a lawsuit over disputes regarding performance. In the first-instance judgment, the Dandong Intermediate People’s Court upheld the validity of the mining rights lease agreement, yet dismissed Chen Yundou’s claim on the ground that the village committee had not been at fault in its performance. After Chen Yundou appealed, his appeal was rejected by the Liaoning Provincial Higher People’s Court in the second instance, and the original judgment was affirmed. Chen Yundou then applied for a retrial, and the Liaoning High Court... 2009 Year 8 Moon 14 Made on the day ( 2008 ) Liaomin No. [number] 26 The civil judgment declared the mining rights lease agreement invalid, citing the fact that the transfer of mining rights had not been approved by the Liaoning Provincial Department of Natural Resources and had failed to comply with the legally mandated approval procedures. The original judgment was upheld once again.

After reviewing the case, the Supreme People’s Court held that the mining industry is a licensed sector. According to relevant laws and administrative regulations, obtaining both the mining rights and lease rights for the gold mine in question requires approval from the Department of Natural Resources. Any mining activity conducted without obtaining such approval is not protected by law. 1998 Year 2 Moon 12 Article 10, Paragraph 3 of the State Council’s “Administrative Measures for the Transfer of Prospecting Rights and Mining Rights” stipulates: “ If the transfer is approved, the transfer contract shall take effect from the date of approval. 2000 Year 11 Moon 1 Article 36, Paragraph 2 of the "Interim Provisions on the Grant and Transfer of Mining Rights" issued by the Ministry of Natural Resources and Environment of China stipulates: “ The leasing and mortgaging of mining rights shall be managed in accordance with the conditions and procedures for the transfer of mining rights, and shall be reviewed and approved by the original issuing authority. ” Based on this, the lease agreement in question has been legally established but has not yet become effective. Therefore, the provisions of the mining rights lease agreement are not binding on either party and do not give rise to any liability for breach of contract.

In light of this, the Supreme Court made ( 2011 ) Min Ti No. 81 The civil judgment once again upheld the Liaoning High People's Court’s decision. 2008 ) Liaomin No. [number] 26 Civil Judgment No. [Number]. Typical Case No. 2

High People's Court of the Ningxia Hui Autonomous Region ( 2013 ) Ningmin Shangchu No. 17 Civil Judgment No. “ Gao Haizhou v. Ningxia Hedong Integrated Industrial Park Huanneng Investment & Real Estate Co., Ltd., Wang Chunling, and Others—Dispute over the Share Transfer Contract ”。

In this case, the natural person Gao Haizhou originally held shares in Ningxia Yuanzhou Mining Co., Ltd. 100 a certain percentage of equity, and subsequently transferred the equity agreement to Ningxia Huaneng Real Estate Investment Company, and also transferred the mining company... 30 The equity stake has been registered under the name of Wang Chunling, the shareholder, pursuant to instructions from China Huaneng Company. Subsequently, the two parties became involved in a lawsuit filed by Gao Haizhou over a dispute regarding contract performance, in which Gao Haizhou requested the rescission of the equity transfer contract and an order requiring Wang Chunling to return the shares she holds in Yuanzhou Mining Company. 30 % equity.

In the first instance, the Ningxia High People's Court upheld Gao Haizhou’s main claim, holding that the equity transfer contract between the two parties was valid, and issued a ruling ( 2011 ) Ningmin Shangchu No. 14 Civil Judgment No., ordering “ Terminate the contract and return the equity. ” After the appeal, the Supreme Court remanded the case to the Ningxia High People’s Court for retrial on the ground of procedural violations. Following the retrial, the Ningxia High People’s Court issued ( 2013 ) Ningmin Shangchu No. 17 Civil Judgment No. [Number]. This retrial judgment once again clearly affirmed the validity of the equity transfer contract between the two parties, and addressed Gao Haizhou’s request... “ Terminate the contract and return the equity. ” The court upheld the plaintiff’s main claim and dismissed in its entirety the counterclaim filed by China Huaneng Investment & Real Estate Co., Ltd.

In the two typical cases mentioned above, the mining rights lease agreement in Case 1 was ruled by the Liaoning High People’s Court as... “ Unapproved ” Confirmed for the reason that “ Invalid ” , which was later reclassified by the Supreme Court and the mining rights lease contract was confirmed as... “ Not effective ” In the case handled by the Ningxia Higher People's Court, the transfer of mineral rights carried out through the assignment of company equity was explicitly recognized by the court as... “ Effective ”。

The aforementioned case has given rise to numerous practical judicial issues worthy of study, such as: the principles for reviewing the validity of contracts in the transfer of mining rights; the relationship between contract validity and the corporate legal person’s property rights; the relationship between contract validity and administrative approval procedures; the issue of hierarchical effectiveness within the legal sources governing mining rights; and the judge’s power of clarification and the principle of rectifying contract validity.

In the two typical cases mentioned above, the mining rights lease agreement in Case 1 was ruled by the Liaoning High People’s Court as... “ Unapproved ” Confirmed for the reason that “ Invalid ” , which was later reclassified by the Supreme Court and the mining rights lease contract was confirmed as... “ Not effective ” In the case handled by the Ningxia Higher People's Court, the transfer of mineral rights carried out through the assignment of company equity was explicitly recognized by the court as... “ Effective ”。

This article primarily discusses the review principles governing the validity status of mineral rights transfer contracts and the implications for mineral rights. “ Contract management ” judicial recognition and issues such as the indirect transfer of corporate legal person property rights and mineral resource rights.

1 Principles for Reviewing the Validity of Mining Rights Transfer Contracts

The author believes that whenever there is a dispute over the validity of a contract, it is invariably necessary to examine the statutory elements related to whether the contract has been formed or not, whether it is valid or invalid, and whether it has taken effect or not. To assess the validity of a contract, one must first ascertain its status of formation; only when a contract has been formed can the issue of its validity be addressed. Second, in determining whether a contract has taken effect or not, one must first confirm whether the contract is valid in the first place—only a valid contract can even raise the question of whether it has taken effect. If a contract is itself invalid, it can never legally take effect, even if it has been fully performed. In such a case, there simply is no legal basis for discussing whether the contract has taken effect or not.

Supreme Court “ Key Ruling of the Judge ” It is pointed out that, in litigation, if a mining rights lease contract has not been approved, the people’s court should determine that the contract has not taken effect. Although the mining rights contract has not become effective, the approval clauses stipulated in the contract remain valid. If one party requests the other party to continue fulfilling its obligation to seek approval based on these clauses, and the people’s court, after review, finds that the objective conditions are favorable, it should support such request. However, if the continued pursuit of approval lacks the necessary objective conditions, the court shall dismiss the request in accordance with the law.

The author believes that in Case No. 1, the Supreme Court held that the contract... “ Not effective ” At the same time, it actually implicitly refers to the lease agreement. “ Effective ” Confirmed. Because, “ Invalid ” Contract and “ Not effective ” The biggest difference in the contract is that the parties to the contract... “ Not effective ” A contract enjoys the right to rectify its own validity; however, an invalid contract does not enjoy this right. This is because an invalid contract is void from the outset and its invalidity is certain and definitive. Therefore, regardless of whether the court has fulfilled its duty to clarify the situation or whether the parties have taken any relevant actions, the contract remains invalid. “ Correction ” No act can transform an invalid contract into a valid one.

The above-mentioned judicial principle is similar to the Supreme Court’s ruling in “Provisions (I) on the Trial of Disputes Involving Foreign-Invested Enterprises” regarding the validity of contracts. “ Correction ” Spirit. That is, “ A contract entered into by the parties during the establishment or amendment of a foreign-invested enterprise, which, according to laws and administrative regulations, must be approved by the approval authority of the foreign-invested enterprise before it becomes effective, shall become effective from the date of such approval. If the contract has not been approved, the people’s court shall determine that the contract has not taken effect. The people’s court shall not support a party’s request to declare the contract invalid. ” This judicial interpretation also stipulates that, “ If the contract referred to in the preceding paragraph is determined to be ineffective due to the lack of approval, this shall not affect the validity of the provisions in the contract requiring the parties to fulfill their approval obligations, nor the validity of any related provisions established pursuant to such approval obligations. ”。

The aforementioned system means that, after a party submits an application to the court or the court exercises its power of clarification ex officio with respect to the relevant party, the contract can be resolved through a separate approval procedure. “ Not effective ” the issue, thereby rectifying the validity of the contract.

Precisely in light of the above-mentioned spirit of the system, the Supreme People’s Court, in cases where the Liaoning Higher People’s Court had ruled a contract invalid, reversed its earlier determination regarding the legal validity of the relevant civil and commercial contracts, thereby holding that a mining rights lease contract that had not undergone approval was... “ Not effective ” Instead of “ Invalid ” The contract—meaning that, if in this case the ownership of the mining rights still rests with the Laobianqiang Village Committee and the conditions for approval have been met—then Chen Yundou would be entitled to [exercise his rights] even though the contract remains valid. “ Not effective ” Under such circumstances, it is still possible to hold the Laobianqiang Village Committee legally responsible for the administrative licensing approval procedures and for continuing to perform its obligations. However, according to the facts established by the Supreme People’s Court, the Laobianqiang Village Committee is no longer a lawful entity holding mining rights and has lost the conditions necessary to rectify the validity of the contract. Therefore, in accordance with the law, the mining rights lease agreement between the two parties shall be deemed to be... “ Not effective ” Contract.

In addition, it should be noted that any contract subject to the right of rescission must necessarily be... “ Effective ” A contract is valid—at least until it is revoked—and only after revocation does it produce legal consequences that are essentially similar to those of a void contract. However, if the contract itself is invalid in the first place, one can only seek a court’s confirmation of its invalidity and cannot directly request its revocation. Therefore, in judicial practice, the right to confirm a contract’s invalidity should not be confused with the right to revoke the contract.

If a mining right has already been subsumed within other rights, and the disposition and transfer of such rights do not involve administrative approval procedures, then the indirect transfer of mining rights can reasonably circumvent the administrative approval system. Such conduct is not an illegal act aimed at evading the law; rather, it stems from the different forms of rights granted to civil entities by law and thus deserves full judicial protection. In practice, the separation of ownership and operational control in mining enterprises primarily manifests itself in the form of contracted management of mining rights. Given that the core asset of a mining enterprise is its mining property rights, and considering the existing defects in China’s current system for the transfer of mining rights, numerous disputes have arisen in the field of mining rights investment involving the separation of ownership and operational control. Among these, the most typical example is the contracted management of mining enterprises.

2 Mineral rights “ Contract management ” The issue of judicial recognition

In judicial practice, regarding mining enterprises... “ Contracting ” There’s a significant misunderstanding that has long persisted in business disputes: it seems that as soon as something involves... “ Contracting ” A legal relationship must necessarily be illegal or... “ Invalid ” Yes. This cognitive state is primarily the result of a misinterpretation of the relevant provisions in the State Council’s “Administrative Measures for the Transfer of Prospecting Rights and Mining Rights,” which stipulate that unauthorized transfer of mining rights to others through methods such as contracting for the purpose of mining shall be subject to penalties. The occurrence of this situation is attributable not only to shortcomings in the legislation itself but also to significant misinterpretations of the legislative intent by both judicial authorities and administrative enforcement agencies responsible for mining affairs. The author believes that, as a legitimate form of enterprise operational right transfer, “ Contracting ” The operation is completely legal. What the State Council’s administrative legislation prohibits is merely— “ Contracting ” Indirect approach “ Transfer ” the conduct of mining rights, but it does not itself prohibit mining enterprises from engaging in legitimate activities. “ Contracting ” Business operations.

The practice of contracting and operating mining rights “ Effective ” The reason is that, “ Contracting ” It is a business model that can be independently adopted by enterprises of all types, and represents one of the typical forms of separation between ownership and management rights in enterprises. In essence, mining enterprises are no different from other enterprises; therefore, we should support the practice of contract-based management, which is widely prevalent in the mining industry.

Opponents, however, argue that according to current legislative provisions, any... “ Contracting ” If mining rights are transferred to others for mining purposes without authorization through such means, the department responsible for geological and mineral resource management under the people's government at or above the county level shall order rectification. In cases of serious violations, the original issuing authority shall also revoke the mining permit. As can be seen, “ Contracting ” It is a type in the field of mining rights. “ Innate deficiency ” The business model in question amounts to a disguised transfer of mineral rights and clearly circumvents the prerequisite approval system; therefore, judicial rulings should not endorse it. The advantage of the aforementioned institutional arrangement lies in the fact that, on the one hand, it does not mechanically reject all... “ Contracting ” The legal validity and enforceability of the actions, on the one hand, respect administrative licensing authority, thereby effectively resolving issues faced by mining enterprises. “ Contracting ” The deadlock in the rules for confirming operational effectiveness.

No provision has been established in China's legal system governing mineral rights. “ Revocation period ” It is a serious legal loophole. “ Revocation ” Originally, it was merely an administrative penalty and should not have affected the mining enterprise’s legal personality or its usufruct rights over mineral resources. However, due to the absence of... “ Revocation period ” The system leads managers to believe that once a license is revoked, it is permanent, and whether or not to grant a new administrative permit is entirely at the manager’s discretion. As a result, this completely negates mining investors’ right to hold onto remaining resource reserves, effectively extinguishing investors’ mineral property rights through the exercise of administrative penalty powers.

A reasonable institutional design should set different time limits according to the varying circumstances of violations. “ Revocation period ” Where the illegal act has been rectified, a new administrative permit for exploration and mining should be granted.

The corporate legal person’s property rights enjoy statutory independence relative to those of shareholders, ensuring that any internal or external transfer of equity by shareholders will not undermine the integrity of the corporation’s legal person property rights. Therefore, indirectly transferring mineral rights through the assignment of corporate equity is entirely a lawful form of property rights transfer.

The two opposing views mentioned above each have their own shortcomings. It should be said that, “ Contracting ” It is widely prevalent in the real economic life of mining enterprises and represents a highly adaptable business model—yet it is uniformly denied. “ Contracting ” The effectiveness of the behavior clearly undermines the stability of transactions and the protection of genuine investors. However, to support it across the board... “ Contracting ” The operation also conflicts with the existing legal system. Therefore, in judicial practice, we should draw on the rules governing the validity of civil and commercial acts that involve prior approval systems in other jurisdictions to resolve such disputes.

Since the mining rights transfer system requires that the transfer contract take effect from the date of approval, in litigation disputes arising after the conclusion of a mining enterprise contracting agreement or an equity transfer agreement, if the original owner (or the contracting party) and the contractor (or the transferee) have yet to fulfill their approval obligations, the contractor may request the contracting party to continue performing the contract and jointly fulfill the approval obligations within a specified period. If the contracting party refuses to fulfill its approval obligations, the contractor may request to submit the approval application unilaterally.

After the court issues a ruling supporting either or both parties’ application for approval, it shall temporarily suspend the proceedings in the dispute over the validity of the contract for contracting (or equity transfer contract) within the specified time limit. Upon resuming the proceedings, the court shall render a corresponding judgment based on the approval conclusion issued by the relevant land and resources authority. If the application is approved, the contracting contract shall become effective and may continue to be performed; otherwise, the contracting contract shall not become effective, and the contracting party may request termination of the contract, while the contractor may demand that the contracting party compensate for reasonable investment losses and lost expected profits. 3 Indirect Transfer of Corporate Legal Person Property Rights and Mineral Rights

Although the Company Law does not explicitly state whether mineral rights can be used for investment in a company and as an element of its registered capital, the law does provide a general provision. “ Non-monetary property that can be valued in monetary terms and legally transferred may be contributed as capital. ” Therefore, mining rights as “ Usufructuary right ” It is entirely feasible to invest in the company.

A significant issue in corporate law practice and judicial practice is whether mineral property rights can be held by a company. “ Equity transfer ” in the form of indirect circulation?

In the case handled by the Ningxia High People’s Court, it was determined that the equity transfer contract between the parties and Ningxia Yuanzhou Mining Company did not violate any prohibitive provisions of laws or regulations, and thus was deemed a valid contract. The author believes that this precedent set by the Ningxia High People’s Court effectively resolves such judicial ambiguities.

Indirect transfer of mining rights through the assignment of corporate equity is a common and effective practice in real-world applications. The primary reason for this lies in the fact that the transferability of corporate equity does not involve any administrative approval procedures. Moreover, the transfer of corporate equity itself does not entail the transfer of the company’s mining rights. Legally speaking, the withdrawal or addition of certain shareholders (including original shareholders) does not imply a change in the legal entity—the mining rights holder—of the company.

The conditions required for the simple transfer of mining rights include: the mining enterprise must have been engaged in mining production for at least 1 Year; no disputes regarding mining rights; mining right usage fees, mining right purchase prices, mineral resource compensation fees, and resource taxes have been paid in accordance with relevant national regulations; and other conditions stipulated by the competent department of geology and mineral resources under the State Council, etc. However, the fundamental prerequisite is that... “ Mining enterprises that have already obtained mining rights, in the event of corporate mergers or divisions, joint ventures or cooperative operations with other entities, or in cases where enterprise assets are sold or there are other changes in the ownership of enterprise assets requiring a change in the holder of the mining rights, may, upon lawful approval, transfer their mining rights to others for mining purposes. ”。

The purpose of setting the above-mentioned restrictive conditions is to prevent speculation in mining rights and to protect genuine investors and their legitimate rights and interests. Therefore, when reviewing disputes over the validity of equity and asset transfers involving mining enterprises—including mining rights—attention must not be focused solely on the original holders of mining rights or the initial investors of the mining enterprise. “ Exit ” As a criterion for determining whether mining rights... “ Transferred ” The symbol.

The competent mining authority believes that this situation is suspected of using the legal form of equity transfer to conceal the illegal purpose of transferring mining rights, and thus constitutes an invalid act aimed at circumventing the law. It violates the State Council’s regulations stipulating that the transfer of mining rights must be subject to... “ Investment form ”、 “ Change of entity ” And “ Approved in accordance with the law ” The constraints of the three mandatory systems.

The author believes that equity transfer transactions conducted in accordance with corporate law should be recognized as valid. Although such equity transfers implicitly involve the company’s interests in mineral resources, this is the result of a civil entity’s lawful choice and application of two distinct legal systems—mining law and corporate law—and its legal validity should not be denied.

The transfer of mineral rights in the form of equity differs from the transfer of mining rights themselves. “ Lease ” As in the case handled by the Liaoning Higher People’s Court, the leasehold interest obtained by Chen Yundou is a time-limited right to conduct production and business operations, which differs significantly from the acquisition of corporate equity that carries property rights attributes. In the practical handling of mineral rights transfers, mineral rights... “ Lease ” With mining rights “ Contracting ” The civil behavioral characteristics exhibited by these operations are highly intertwined, and the parties involved often fail to align the names of their agreements with the substantive legal attributes they actually embody, further complicating the task of judicial confirmation. However, according to the current framework of mineral rights management systems, it appears that mineral rights... “ Contracting ” is prohibited, while mining rights “ For rent ” However, it is permitted. Although the lessee is not allowed to sublet the mining rights again, the contractor is subject to certain restrictions. “ Subcontracting ” It thus appears that there is no effective way to constrain it under the management system. Of course, the leasing of mining rights should comply with the conditions for the transfer of mining rights stipulated by the State Council.

The reason why equity in companies holding implied mining rights can be transferred lies in the existence of the corporate legal person’s property rights system. The legal significance of this system is that corporate legal persons possess independent corporate property and enjoy corporate property rights; no non-market-based power factors may interfere with shareholders’ disposition of their property rights.

Therefore, in the transfer of mining rights through the equity transfer of a company, the mining rights themselves are not involved. “ Change of entity ” The issue, therefore, only requires the application of corporate law regulations and does not necessitate the application of... “ Approved in accordance with the law ” system. Otherwise, if only lower-level administrative regulations are applied within the same legal relationship, it would effectively undermine or nullify the corporate law’s system governing equity transfers.