1. The old law vs the new law
Much has been said and written about the expiration of concession leaseholds under Law no. 13/2013, of 2 September (the “New Land Law”), as opposed to the former Law no. 6/80/M, of 5 July (the “Old Land Law”).
In comparative terms, it should be noted that there are very little differences between the Old Land Law and the New Land Law, within the relevant controversial context, with particular emphasis to the preclusion of renewal of the provisional concessions as set forth by the New Land Law – within the terms set in paragraph 1 of its Article 48.
In this sense, a closer look at the Old Land Law and the New Land Law reveals that the previous article 55 and the current article 48 both converge on the understanding that there is no room for land lease renewal within provisional concessions, as this merely applies to definitive ones.
What did in fact change is the Government’s disposition towards the matter, now choosing to terminate the concessionaires licence due to expiration and to withhold any further concession leasehold awards, whereas in the past, it was customary practice from the Government to declare the expiration of the concession leaseholds due to term expiration, alongside the decision to regrant the licence with exemption of public tender, on the grounds of public interest – as shown, e.g. by Dispatch of the Secretary for Transport and Public Works No. 20/2006 –.
This decision has ultimately led to entirely unreasonable, disastrous and unfair economic and social practical results – which were certainly not the goals pursued by the legislator when the New Land Law was discussed and approved –, thereby sentencing to death the validity and effectiveness of legal instruments such as contracts of developers with promissory buyers by the thousands, as well as the concessionaire’s trust alongside with that of the investors and the general public, ultimately jeopardizing a massive volume of legal transactions.
2. How has the New Land Law been applied?
From this viewpoint, both the Administration and the Macau Courts have consistently made it clear that once the provisional concession period has expired without it becoming definitive – i.e., without developing the land within the (development) period set out in the contract – the concession shall be deemed expired ipso facto, simply due to a mere passing of time and regardless of whether or not the land was effectively used by the concessionaire, and whether or not the concessionaire was at fault for the non-development of the land.
This claim is sustained by the notion that in such cases there would be no other alternative for the Chief Executive except to declare the expiration of the concession leaseholds, and therefore honour the principle of administrative legality and legal security and certainty.
In truth, the aforementioned understanding is based on a possible interpretation / application of the New Land Law, but it is certainly not what this legislation had initially intended for, and neither does it comply with the Macau legal system as a whole. Also, the said interpretation is seemingly inconsistent with the land concession leasehold regime, and it does not benefit the enforcement of the principles on which such interpretation is supposedly based, namely the principle of legality and the principle of security and certainty of the legal trade.
3. There are other interpretations
Following a close scrutiny of the New Land Law’s legal framework it is not entirely difficult to find other viable and more suitable interpretations which, although they may follow a different dogmatic approach to the matter, are however more beneficial, revealing a more harmonious outcome and leading to a better aligned and overall fairer legal system. This might allow for the period of the concession leaseholds to be legally and legitimately extended (and not renewed), suspended, and more importantly, for the provisional concession to be converted into a definitive concession.
Let’s have a closer look at these alternative interpretations:
The concession leasehold as a surface right
The scope of the concession leasehold is first and foremost to grant powers to build, transform or maintain the works for the purposes set forth in the respective title (vide article 42 of the New Land Law).
Granting the concessionaire powers to maintain the works on the concessioned land, which were absent from previous laws, which only mentioned powers to build and transform, is symptomatic of the New Land Law’s acknowledgement of the confluence of the substance of the right arising from the concession leasehold and the surface right.
On the other hand, the concession itself is governed by contract and additionally by civil law, according to article 41 of the New Land Law.
With regard to the expiration period, it is clear from the surface right’s regime set out in the Civil Code (vide paragraph 3 of Article 1427 of the Civil Code) that the termination of the surface right by way of lack of use after 7 years is subject to the rules on the suspension and interruption of the limitation period.
Therefore, in cases where the Government has deliberately prevented the concessionaire to develop the land within the stipulated term, there are grounds to suspend the time period given to exercise the right, pursuant to paragraph 2 of art. 313 of the Civil Code.
Expiration as a punitive sanction
On the other hand, should it be chosen to dismiss any discussion around the nature of the provisional concession period (expiration / limitation period), the fact that should also be considered is that (and contrary to the current understanding of the Macau Courts) the New Land Law prescribes an expiration regime which itself is a true punitive expiration, as in fact already did the Old Land Law. In this sense, and to the extent that the expiration of the provisional concession is associated with the failure to carry out the development, it always bears a punitive intent, aiming to sanction the concessionaire who failed to develop the land due to his inertia or negligence.
Consequently, when expiration is invoked due to failure to comply with obligation to develop the land within the concession’s set term, the following circumstances must be verified simultaneously:
- expiration of the concession leasehold period;
- whether the land was in fact developed or not;
- failure to carry out the land development; and
- whether such failure was due to a breach of the contract’s development clauses attributable to the concessionaire;
Therefore, only in case all of the abovementioned conditions are met will the declaration of expiration be legitimate.
The condition thesis
From a different perspective, it should also be noted that the land development is itself a condition for converting the provisional land concession into a definitive concession.
As such, under paragraph 2, article 268 of the Civil Code, such condition is considered to have been met should the land development be barred, in breach of good faith, by the obligee.
Now, let’s assume that the lack of development is due to the Government’s decision to suspend works and carry out an assessment of development projects aimed at approving a new urban plan, and such approval is pending for over a decade. In this case, the Government is exclusively liable for the fact that the building was not constructed and the land not developed, which was a resolutory condition of the concession’s provisional nature and a suspensive condition of its definitiveness.
Therefore, in this case one can argue that the aforementioned condition was not fulfilled due to fault of the obligee and should be considered applicable by analogical application paragraph 2 of article 268 of the Civil Code.
Extension / Suspension
Lastly, articles 103 and 104 of the New Land Law provide that the term for development can be suspended or extended in the event it is not attributable to the concessionaire the failure to carry out the necessary steps in the development within the indicated term, and the Chief Executive deems the reasons invoked admissible.
In light of such circumstance, should it be assumed that the referred suspension or extension is included within the time-limit for the concession period?
The New Land Law provides no indication to the contrary. What would happen if under the abovementioned provisions the development period was suspended for such an extended period of time that it would inevitably cause the concession period itself to be exceeded? Would the provisions set out in article 48 of the New Land Law be applicable unconditionally? It does not seem a judicious understanding.
In fact, the extension of the leasehold period does not consist on a renewal (the extension is not automatic and is only granted for a strictly necessary period of time), and the fact that the New Land Law states that the concession period cannot exceed the duration of 25 years does not necessarily mean that the land concession overall duration might not exceed the said 25 years, suspensions included. Should there in fact be a suspension, the leasehold period reaches a standstill and therefore the same is not increased.
Although different legal solutions and interpretations consistent with the New Land Law’s ratio and sentiment of justice do exist, it is by far convenient that a matter of such importance as the one under scrutiny is carefully analysed and made uncontentious for the sake of security and stability of the legal trade in Macau. This may only be achieved by manner of legislative intervention, which is in fact badly needed.