Dispute between Yang Shan and the Management Committee of Yangpu Economic Development Zone over compensation for dislocation of aquaculture facilities

[Basic facts]

The Claimant Yang Shan had been engaged in farming 100 mu (about 6.67 hectares) of eucheuma in the sea areas of Yangpu since July 2004. Yang had obtained an aquaculture permit valid until 24 September 2008 issued by the fishery and fishing harbor supervision and administration center of Yangpu, but he did not hold a certificate of right to use sea areas. In February and June of 2009, for the purpose of dredging the deep-water channel of Yangpu Port and improving the beach environment, the Management Committee of Yangpu Economic Development Zone (the Defendant) and the People’s Government of Danzhou jointly formulated the “Plan for Dislocation of the Floating Rafts near Yangpu Port” and the “Supplementary Plan for Dislocation of the Floating Rafts near Yangpu Port”, under which the aquiculture farmers operating within the project areas would be disclosed against indemnities. However, the two plans only targeted at the floating rafts cultivating fish, prawns or other organism and did not expressly include the dislocation of and compensation for eucheuma farming. In 2010, the Defendant dislocated all the floating rafts from the sea areas where the Claimant cultivated eucheuma. The functional departments of the Defendant visited the site and proposed a preliminary compensation plan to make indemnity to the Claimant for eucheuma farming. On 4 March 2011, on the basis of the provincial standards on compensation for eucheuma farms and in light of the actual conditions, the Defendant decided to make compensation to the Claimant at an amount of RMB484,000, with RMB481,500 actually paid.

The Claimant lodged a lawsuit claiming that the Defendant did not make compensation according to due process, and that the dislocation was illegal and the compensation was insufficient to cover his loss. The Claimant requested the Court to adjudge that the Defendant’s dislocation of the aquiculture farm of the Claimant was illegal and to order the Defendant to revise the compensation amount to RMB4,344,800 according to the compensation standards set forth in the two plans.

The Defendant responded that the Claimant had stopped the farming operation before the dislocation, and that the Claimant did not obtained a certificate of right to use sea areas and the aquiculture permit had expired; moreover, the compensation amount of RMB481,500 was quite sufficient. The Defendant requested this Court to dismiss the litigation requests of the Claimant.

[Judgment]

The Court held that it was lawful for the Defendant, a state organ, for the purpose of dredging deep-water channel of Yangpu Port and improving the beach environment, to dislocate fishing rafts from the sea areas where the Claimant used to farm but no longer have the lawful right to use. During the dislocation, the Defendant had conducted several site researches and made necessary and sufficient compensation based on the provincial compensation standards in light with the conditions of the Claimant. The Claimant also accepted the compensation. The dislocation of the Claimant’s aquiculture farm and the compensation made thereto did not violate any statutory procedures or standards. And since the Claimant could not produce evidence to prove that the property value or economic loss was higher than the compensation amount paid by the Defendant, the compensation did not violate any laws or was unreasonable. Therefore, the allegation of the Claimant that the dislocation of his aquaculture farm by the Defendant was illegal and the demand for amendment of the compensation amount were not supported by facts or laws. The Court dismissed the litigation requests of the Claimant in the first instance. Yang was not satisfied with the judgment and made an appeal, but the Higher People’s Court of Hainan Province upheld the original judgment in the second instance.

[Significance]

This is a case of dispute over compensation for dislocation of aquaculture farm when government organs desire to use the sea areas for public construction purpose. The disputed issues of this kind of cases often concern whether the dislocation act of the government is lawful and whether the compensation amount is reasonable.

According to Article 3 of the Law of the People's Republic of China on the Administration of Sea Areas, “the sea areas belong to the State, and the State Council exercises ownership over the sea areas on behalf of the State…Any entity or individual desires to use sea areas shall obtain the right to use sea areas according to law.” Article 29 further stipulates that “where the right to use sea areas expires and no application for renewal is made or the application for renewal is not approved, the right to use sea areas shall be terminated.” These provisions are the legal basis for administrative organs to make lawful requisition and punish unauthorized occupation of sea areas. Currently, there is no clear and unitary standard on the compensation for dislocation at sea. In the practice of dislocation and compensation, the administrative organs usually set compensation rules for a specific dislocation project under the dislocation implementation plan and make compensation upon agreements with the owners during the implementation process. Compensation is usually made to cover losses in the reclaim of the right to use sea areas, the stock being cultivated, offshore facilities, and labor investment. If the compensation plan is not applicable, the administrative organ may refer to other practices of the province and make compensation in light with the conditions of the concerned person.

The sea areas involved were under the lawful use of the Claimant Yang Shan who had obtained an aquaculture permit. However, the permit had expired and so Yang was no longer entitled to use the sea areas lawfully. Therefore, there was actually no dispute over requisition of sea areas in this case. The Defendant might take back the sea areas at any time for free for public construction purpose. As regards the farming facilities left over at the sea areas by Yang, the Defendant might simply gave a written notice to require Yang to remove his property within a reasonable time; otherwise the property would be abandoned. To advance the progress of the projects, the Defendant did not take the facilities as vacant goods or abandoned properties and remove them by strictly following the regulations of law; instead, the Defendant made compensation to Yang at an amount apparently higher than the value of the aquaculture facilities. However, the peace offering of the administrative organ was not satisfactory to Yang at all who instead demanded for higher compensation. It was certainly a question worth pondering.