[Direct answer]In the Beijing area, after an enterprise is shut down by environmental protection authorities, it should quantify the amount of asset losses into claimable amounts through legal appraisals, which mainly include the residual value of fixed assets, losses from production and business suspension, investment in relocation and transformation, employee resettlement costs, and the value of surface attachments. The appraisal should be conducted by qualified institutions and should be based on the state of the enterprise at the time of the shutdown decision. Regarding legal remedies, according to the "Administrative Procedure Law of the People's Republic of China" (amended in 2017 and implemented since July 1, 2017), the enterprise can apply for administrative reconsideration (within 60 days) or file an administrative lawsuit (within six months) against the shutdown decision. If the shutdown action is confirmed to be illegal and causes losses, the enterprise can claim compensation in accordance with the "State Compensation Law of the People's Republic of China" (amended in 2012 and implemented since January 1, 2013). For reference only.Land expropriation and demolition, and administrative litigationColumn.

I. Problem Background and Typical Scenarios

These types of problems are common in several situations: First, during environmental inspections and air pollution prevention and control, enterprises are ordered to suspend production for rectification or even be directly shut down; Second, farms and processing plants located in prohibited breeding areas and ecological protection red lines are required to exit; Third, those who build without approval or whose supporting environmental protection facilities do not meet standards are ordered to demolish the relevant facilities within a specified time limit; Fourth, enterprises are shut down indiscriminately in the name of environmental protection, and the compensation plan is delayed for a long time; Fifth, after the shutdown, enterprises face water and electricity cuts and equipment seizures, plunging them into a production standstill. Many small and medium-sized manufacturing enterprises in Beijing and surrounding areas have encountered similar situations during the adjustment of the industrial structure. For those whose contract performance is affected, they can refer to the following measures:Business and contract disputes in enterprisesColumn.

II. Key points of dispute

First, the legality of the shutdown action. Whether the administrative organ has statutory authority, whether the procedures are legal, and whether a written decision has been made are prerequisites for claiming compensation or damages. Second, the debate over classification. Whether it is a legitimate policy withdrawal that should be compensated or an illegal shutdown that should be indemnified—the scope and approach of the two are different. Third, the assessment of losses. The assessment typically takes the date of shutdown as the reference point, but how to handle subsequent price changes often leads to disputes. Fourth, the evaluation method. For fixed assets, the cost method is commonly used, while for those with ongoing operating capacity, the income method can be applied. Different methods result in significant differences in compensation amounts. Fifth, the calculation standard for production and business losses. There are inconsistent standards across different regions. Sixth, the burden of proof. In administrative litigation, the defendant bears the burden of proof for the legality of the administrative act, while the plaintiff primarily provides evidence of the amount of losses. Specifically, the assessment should follow the currently effective laws, regulations, and judicial rulings.

III. Professional analysis by Henglue Lawyers

Based on the practical experience of lawyers from our firm handling environmental protection-related shutdown and expropriation compensation cases, the evaluation stage is the most prone to pitfalls. When handling similar cases in Beijing, the following points are usually taken into account: First, preserve the current situation before the evaluation and never dismantle or sell equipment without evaluation, taking photos and videos, or notarization. Otherwise, it will be difficult to prove the losses; Second, choose a qualified and impartial evaluation agency. If necessary, both parties can jointly appoint one or apply to the court for random selection; Third, the evaluation scope should be comprehensive, including not only factory buildings and equipment, but also ongoing projects, raw material inventories, employee severance payments, and losses of qualifications and orders; Fourth, if there are objections to the evaluation report, timely request a review and apply for a re-evaluation; Fifth, the evaluation results should be corroborated with the shutdown documents, payment receipts, and financial ledgers. In practice, many enterprises fail because they "disassemble first and negotiate later". By the time they realize the problem, key assets have already been lost, and the evaluation loses its basis. Early involvement of lawyers and evaluators in collaborative work is the key to effectively claiming losses.

IV. Practical suggestions and legal basis

Action recommendations: First, after receiving the decision to order closure or suspension of production, first review the subject and procedure of the decision, and apply for administrative reconsideration within 60 days or initiate administrative litigation within six months; Second, simultaneously apply for government information disclosure to understand the basis for the closure and compensation policies; Third, immediately fix evidence by taking comprehensive photos and videos of the factory area, equipment, and inventory, and notarize them if necessary; Fourth, commission an appraisal agency to issue an asset appraisal report, which will serve as the basis for negotiation and litigation; Fifth, compensation requests can first be submitted to the compensation obligation organ, which shall make a decision within two months from the date of receipt of the application. In terms of legal basis, Article 34 of the Administrative Litigation Law of the People's Republic of China stipulates that the defendant shall bear the burden of proof for the legality of the administrative act; Article 36 of the State Compensation Law of the People's Republic of China stipulates that compensation shall be given for direct losses caused by infringement of property rights; and the Administrative Enforcement Law of the People's Republic of China (implemented on January 1, 2012) strictly limits the procedures for seizure, detention, and forced demolition. For related procedural details, please refer to the relevant provisions.Land expropriation and demolition, and administrative litigationColumn.

5. Henglu Law Firm's Reminder

Risk Warning: Firstly, the time limit for review and litigation is relatively short, and the opportunity to seek relief will be lost if it is exceeded; Secondly, it is very easy to lead to losses that cannot be evaluated if the equipment is dismantled first and then compensation is discussed; Thirdly, the compensation plan promised orally should not be easily believed, and it should be fixed in a written agreement; Fourthly, the compensation is limited to direct losses, and the proof requirements for indirect losses are high. It is recommended to entrust a lawyer to coordinate the assessment and procedures as soon as possible, and you can consult with them for advice.Beijing Henglue Law FirmThe same type of column on the official website.

VI. Frequently Asked Questions

Q1: Can enterprises that are shut down for environmental protection receive compensation or damages?

It's possible to claim compensation, but the approach depends on the nature of the shutdown. For a legally authorized policy-based shutdown, compensation should be provided in accordance with the acquisition and exit policies, covering fixed assets, losses from production and business suspension, and employee resettlement. If the shutdown is illegal, compensation can be claimed for direct losses according to the "State Compensation Law of the People's Republic of China". In practice, it's a prerequisite to first confirm the nature and legality of the action through administrative reconsideration or litigation before discussing the amount of compensation, so as to ensure that the claim for losses is properly implemented.

Q2: What materials are needed to assess asset losses?

The following items should be prepared: business licenses and ownership certificates, factory and land lease or property rights documents, equipment purchase invoices and net book value records, construction contracts, raw material inventory lists, employee rosters and relocation expense vouchers, financial statements and tax payment records for the past three years, and administrative documents such as closure decisions. Only when all these materials are complete can they support a comprehensive evaluation scope, and any omission will result in a missing amount of money.

Q3: How much does it cost to file a lawsuit against environmental protection shutdowns?

The main expenses include attorney fees, appraisal fees, and case acceptance fees. The acceptance fees for administrative litigation are relatively low, the appraisal fees are calculated based on the scale and complexity of the assets, and the attorney fees are determined through negotiation based on the amount of the dispute and the length of the proceedings. If the shutdown is confirmed to be illegal and compensation is granted, some of the expenses incurred in safeguarding rights can be negotiated to be borne by the other party. It is recommended to consult on the nature of the case and the scale of the losses before making a budget.

Q4: How long will it take to resolve the dispute over compensation for the shutdown?

Generally, an administrative review decision is made within 60 days; an administrative lawsuit is usually concluded within six months in the first instance, and within about three months in the second instance; the time limit for the compensation obligation organ to handle the case first is two months. If the case enters the stages of evaluation, appraisal, or multiple rounds of consultation, the time period will be extended accordingly. Overall, the process typically takes around a year, and the earlier it is initiated, the more proactive it will be.

Q5: What should I do first after my business is shut down by environmental protection authorities?

The first step is to review the legal basis and procedures of the closure decision, and decide within 60 days whether to apply for a reconsideration; the second step is to take comprehensive photos and videos to fix the current situation of the factory and suspend the demolition and sale of equipment; the third step is to apply for information disclosure to understand the policy guidelines; the fourth step is to entrust an evaluation agency to quantify the losses; the fifth step is to negotiate first and then apply for a reconsideration and litigation with the help of a lawyer. The relevant procedures can be referred toLand expropriation and demolition, and administrative litigationColumn.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, so as to avoid missing the statutory time limit.Specialised services - Legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.