[Case Summary]This case involves a dispute over a mineral resources contract and is the first such "first case" handled by the Shaoguan Intermediate People's Court. The trial lasted for one year and was reviewed by the court's review committee. Our law firmWu JianiThe lawyer represented the three appellees (Jiangxi Province B Engineering Construction Co., Ltd. Chenguang Branch, Liu Gang, and Wu Qiang), successfully refuted all the claims of the appellant, A Mining Industry Co., Ltd., and helped the client recover more than 10 million yuan in funds. The core disputes were the validity of the mining rights contract, the determination of the fact of subcontracting, the sharing of losses, and the return of the deposit. Applicable laws: Article 35 of the Mineral Resources Law and the relevant provisions of the Civil Code of the People's Republic of China. The second instance upheld the first-instance judgment and dismissed the appeal.

I. Review of the Case

Mining contract disputes often involve searches for terms such as "Is the mining rights contracting contract valid?", "Is it legal for individuals to operate under a contracting company?", "Return of the security deposit in mining disputes", and "Consequences of an invalid contracting agreement". In April 2021, Shaoguan A Mining Co., Ltd. (A Mining Company) and Jiangxi Province B Engineering Construction Co., Ltd. (B Company) signed a "Mining Contract", transferring part of the mid-section mining rights of a tungsten mine to B Company for contracted operation. B Company was required to pay the tungsten concentrate task fee on a monthly basis. During the actual performance of the contract, Liu Gang and Wu Qiang, as natural persons, entered the construction site by contracting with B Company and Chenguang Branch. A Mining Company collected the 8 million yuan risk deposit as agreed, but Liu Gang and Wu Qiang failed to complete the mining task on schedule due to factors such as unsuitable mine conditions, safety rectification, and extreme weather. The two parties had serious disagreements over the payment of the contracting fee. In September 2022, A Mining Company sued B Company for defaulting on the contracting fee, demanding the termination of the contract, recovery of the arrears, and confiscation of the security deposit. Liu Gang and Wu Qiang, on the other hand, counter-sued, claiming that the contract was invalid and demanding the return of the security deposit and compensation for losses.

II. The focus of the case

  • Focus 1: The dispute over the validity of the mining rights contract.A mining company claimed that it had no knowledge of the subcontracting and that the contract was valid. The lawyer submitted the "Project Internal Management Agreement", payment receipts for the subcontracting fees, and a deposition from the legal representative, proving the fact of subcontracting and that A Mining Company was aware of it. According to Article 35 of the Mineral Resources Law, which stipulates that individuals are not allowed to mine specific mineral types and that subcontracting harms the public interest, the lawyer argued that the contract was invalid.
  • Focus II: Contract termination and liability for breach of contract.The lawyer submitted the Rectification Directive issued by the Emergency Management Bureau to A Mining Company, along with proof of extreme weather conditions that constituted obstacles to performance, pointing out that A Mining Company's unilateral prohibition of workers from entering the mine and its failure to assist with the necessary procedures constituted a fundamental breach of contract. The lawyer also argued that the deposit, which was paid by an individual, should be refunded after the contract was deemed invalid.
  • Focus Three: Determination of the amount of losses.The lawyer emphasized that the appraisal agency was selected by the court through a random draw, the process was legal, and the agency actively distinguished between the value of the tunnel project and the equipment to avoid duplicate claims.

III. Professional intervention by Hengluo Lawyers

The appellant (A Mining Company) claimed that:A mining company requested to revoke the first-instance judgment, remand the case for retrial, or modify the judgment in support of its first-instance claims (to terminate the "Mine Contract", recover the contractual payment and interest, the price of the mechanized sand, the payment on behalf of others, confiscate the deposit, and bear the attorney's fees and litigation costs).

The appellee (represented by Hengluo Law Firm):Wu JianiAs the attorney for Liu Gang, Wu Qiang, and B Company's Chenguang Branch, the lawyer launched attacks and defenses around four key points: locking in the evidence of the subcontracting fact, revealing that A Mining Company was aware of the situation, proving the contract's invalidity based on the Mineral Resources Law; providing evidence of the obstacles to performance and A Mining Company's fault; clarifying the nature of the deposit; and emphasizing the compliance of the appraisal process and actively eliminating duplicate calculations to demonstrate professional rigor.

IV. Outcome of the case

The court of first instance found that the "Mine Contracting Contract" was invalid due to the violation of the mandatory provisions of the "Mineral Resources Law" by the subcontracting arrangement, and ruled that A Mining Company should return the deposit of 8 million yuan and the task payment of 2 million yuan to Liu Gang and Wu Qiang, and compensate for the investment loss of 3.51 million yuan; B Branch should return the advance payment of 640,000 yuan to A Mining Company. After A Mining Company appealed, the court of second instance fully adopted Hengluo Lawyer's opinion, finding that the basic facts of the first instance were clear, and ruled to dismiss the appeal and maintain the original judgment. The rights and interests of the parties were fully protected, and more than 10 million yuan in funds were successfully recovered.

5. Henglu Law Firm's Advice

This case is represented by Attorney Wu Jiani from Beijing Henglu Law Firm (practice license number: 11101202011245064, subject to the certificate issued by the judicial administrative organ). Individuals who contract mining rights by using borrowed qualifications often have their contracts deemed invalid due to violations of the mandatory provisions of the Mineral Resources Law. After the contract is deemed invalid, the risk deposits and task fees already collected should be refunded, and the party at fault shall bear corresponding compensation responsibilities. Mining transaction parties should carefully review the qualifications and performance conditions, and keep good agreements, payment and appraisal evidence.

VI. Common Questions and Answers about Corporate Commercial Cases

  1. Q: Is the mining rights contract valid?
    A:If an individual contracts the mining rights by relying on others' qualifications, and violates the mandatory provisions of the Mineral Resources Law that individuals are not allowed to mine specific types of minerals, the contract will usually be deemed invalid.
  2. Q: Will the deposit be refunded after the subcontracted mining is deemed invalid?
    A:Retract. After the contract becomes invalid, the risk deposit and task payment collected by the employer shall be returned to the actual investors, and the party at fault shall bear the corresponding compensation liability.
  3. Q: How to determine the losses from mining disputes?
    A:The reports made by the evaluation and audit institutions, which are selected by the court through a random draw and based on on-site inspections and original invoices, are legally valid and are generally accepted by the court. It is important to avoid double counting.
  4. Q: Is it a breach of contract if the employer unilaterally prohibits workers from entering the mine?
    A:If the party fails to assist in handling the mining procedures as agreed, or unilaterally prohibits construction leading to the inability to fulfill the contract, it may constitute a fundamental breach of contract and affect the sharing of responsibilities.
  5. Q: Why did the trial of the "first case" of mining contracts take so long?
    A:It involves complex legal issues such as the effectiveness of mining rights contracting and loss sharing, which are often discussed by the trial committee. The trial period is relatively long, and professional representation is even more necessary.