Hainan Huaqi Industrial Development Company v. The People’s Government of Haikou City, and the Third Party: Hainan Xinming Real Estate Co., Ltd. (Dispute over Issuance of State-owned Land Use Certificate): The Determination and Adjudication on the Third-party Bona Fide Acquisitions in Administrative Litigation

The legality of the sued registration and certification shall be judged in administrative litigation, but the negative evaluation of such sued administrative act does not necessarily result in the revocation thereof. In the case where the sued administrative act is illegal, but its revocation would cause significant damage to national or public interests, the court shall rule to confirm the illegality thereof without revoking it. Circumstance judgment is one of the adjudication modes of administrative litigation, namely, it only negatively evaluates the legality of the sued administrative act, but does not change the legal relationship formed thereby.

The conditions for the application of circumstance judgment include not only circumstances involving national or public interest, but also those involving a bona fide third party. Where the sued house registration is illegal, but the revocation thereof will cause significant damage to public interest, or the underlying house has already been acquired bona fide by a third party, the court shall confirm the illegality of that sued administrative act without revoking it. The court, when hearing a house registration case, shall decide by substantive legal norms whether the party thereto acquires bona fide the underlying property right. Land and houses are both included in the class of real estate, with registration as the essential element required for effective changes to relevant property rights, which also brings about the same legal consequences between the two. Therefore, where any party asserts that he has acquired bona fide the land use rights, the court shall hear the case by reference to relevant laws or judicial interpretations.