On May 6, 2009, Branch Six of Hua and Company Mouyai Company signed a "Construction Contract." During the construction period, Branch Six of Hua stopped work due to the break in the capital chain of Mouyai Company, at which time Mouyai Company still owed Branch Six of Hua 19,306,500 yuan in construction costs. On August 8, 2013, Branch Six of Hua and Mouyai Company signed a "House for Debt Agreement," agreeing to use 5002 square meters of construction to offset the 19,306,500 yuan in construction costs owed by Mouyai Company to Branch Six of Hua. On December 11, 2013, the Yangquan City Intermediate People's Court of Shanxi Province issued Civil Mediation Document No. 42 of Yang Shang Chu Zi (2013) to confirm the above content of the "House for Debt Agreement" signed by Branch Six of Hua and Mouyai Company.

Another creditor of Mouyai Company, Wang Moushuang, applied for enforcement based on the effective judgment made by the Yangquan City Intermediate People's Court of Shanxi Province, and sealed up the 5002 square meters of debt-offsetting construction of Branch Six of Hua. Branch Six of Hua then raised an objection to the enforcement, and the two parties filed a lawsuit in the court.

First, regarding whether Branch Six of Hua enjoys and exercises the priority right to compensation for construction project prices. In this case, Branch Six of Hua and Mouyai Company signed the "House for Debt Agreement" under the coordination of the government to offset the 19,306,500 yuan of construction costs with the 5002 square meters of houses in question, which complies with the exercise method of the priority right to compensation for construction project prices stipulated by law. On the other hand, the term for both parties to sign the "House for Debt Agreement" did not exceed the exercise period of the priority right to compensation for construction project prices stipulated by law. Moreover, during the review period of this case, the court found that Branch Six of Hua and Wang Moushuang recognized that the project in question had actually been occupied and there was no dispute over the quality of the project. Therefore, it can be determined that Branch Six of Hua enjoys and exercises the priority right to compensation for construction project prices through the method of price reduction.

Second, regarding whether the claim of Branch Six of Hua to exclude compulsory enforcement has factual and legal basis. The claim of Branch Six of Hua to exclude the compulsory enforcement of Wang Moushuang is based on the enjoyment and exercise of the priority right to compensation for construction project prices. Even if Branch Six of Hua has not obtained property rights, it cannot be naturally denied that it can still claim to exclude enforcement based on other rights when it meets the statutory conditions. In addition, the priority right to compensation for construction project prices should take precedence over ordinary claims, and Wang Moushuang and Mouyai Company are in a private lending relationship. Moreover, Branch Six of Hua and Mouyai Company signed the "House for Debt Agreement" and exercised the priority right to compensation for construction project prices through the method of offsetting the price of the house, which was earlier than the time when Wang Moushuang applied for compulsory enforcement of the house in question in 2018, and the rights it enjoys over the debt-offsetting house in question are sufficient to exclude compulsory enforcement.

In bankruptcy proceedings, although enforcement measures involving the debtor's property will be suspended according to law, from a long-term perspective, when the bankruptcy proceedings are terminated, if the conditions for resuming enforcement are met, the original enforcement measures against the debtor's property may still be resumed. At that time, if the creditor's house-for-debt agreement is to be fully implemented, in addition to solving the problems of whether the agreement itself is valid and whether the administrator can legally terminate or exercise the right of revocation, it may still face the risk of being able to resist enforcement measures.

From a practical experience perspective, whether a house-for-debt agreement can exclude enforcement is related to whether the repayment of the debtor's property in bankruptcy cases complies with legal provisions. Compulsory enforcement measures, as a compulsory public power act, should protect the claims of creditors who have applied for enforcement more than those who have not applied for enforcement, but such protection is not a basis for breaking through the order of debt repayment in bankruptcy proceedings. In other words, if ordinary claims can resist the realization of priority claims in bankruptcy proceedings due to the application for enforcement, it deviates from the institutional requirements of fair repayment in bankruptcy proceedings and damages the institutional value of bankruptcy proceedings.

Returning to the case, the underlying logic of the Supreme People's Court's recognition that the claim of Branch Six of Hua can exclude enforcement lies in the fact that the original claim of Branch Six of Hua is the priority right to compensation for construction project prices, which should be given priority over the ordinary claim of Wang Moushuang to be compensated from the debtor's property according to law; at the same time, the time for Branch Six of Hua to exercise the priority right is within the statutory time limit and earlier than the time when Wang Moushuang applied for enforcement, and Branch Six of Hua does not have a situation of neglecting to exercise the right, so its house-for-debt agreement can exclude Wang Moushuang's enforcement measures. In summary, in the case where the right does not exceed the statute of limitations or the exclusion period, if the right of the house-for-debt creditor is to exclude other enforcement measures, the key condition should be whether the original right of the house-for-debt creditor is legally higher than the claim for enforcement. Specifically, if the original claim has a priority right and the claim for enforcement is an ordinary claim, referring to the cited case, enforcement can be excluded without worry; if the original claim and the claim for enforcement are both priority rights, according to the judicial spirit of the cited case, it should be recognized that a higher level of priority right can be excluded; if they are the same type of priority right, then the time of exercising the right and other issues should be comprehensively considered, and the spirit of the bankruptcy law should be used as a guide to determine whether the house-for-debt agreement can exclude enforcement.

(2020) Zui Gao Fa Min Zai No. 287 Hong Mou v. Hainan Zhongdu Tourism Industry Development Co., Ltd. Resale Civil Judgment on Resale Contract Dispute