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by: Miguel Evaristo

In fact, many Court cases have arisen on this issue, i.e., cases of provisional concession contracts’ ending for the lease of a certain land. Many of the concessionaires have been claiming in Court against decisions that declared the end of the respective concession contracts. Those decisions, usually taken when the deadline of the lease was reached, were based on lack of land utilisation within the term provided in the contract. The concessionaires demand the annulment of the decision of the Administration on ending the lease.

It is also worth to mention that the consequence of the end of a concession not only implies the reversion of the land to the MSAR as the main consequence, but it also makes it impossible for the concessionaire to recover the incurred costs and improvements added to the land.

At a glance:

The concessionaires claim that they have lost months and years of the utilisation period, and that the responsibility for the delays in the works and the unavailability for using the land within the term granted is attributable to the Administration.

The Macao SAR Government (as Granting Entity), sustains that if after a period of 25 years of the provisional concession (provided that no other term is laid down in the contract) the utilisation clauses have not yet been fulfilled, the Chief Executive is legally bound to declare the term of the concession.

The Macao Courts have been ruling that:

• The new Land Law applies to previously granted concessions;
• The expiration of the provisional concession term automatically determines the end of the concession, if the concessionaires do not provide proof of the land utilisation by presenting the building use license;
• The Chief Executive is legally bound to declare the term of the concession, and it is not necessary for the Chief Executive to determine the reason for non-compliance with the utilisation clauses and whether such reason is attributable to the Concessionaire;
• Such decisions don’t breach the general principles of Administrative Law (e.g. justice, trust, impartiality, good faith and proportionality).

To date, no concessionaire has succeeded in reversing the Administration’s decision in Court, i.e. no concessionaire has achieved the Court’s annulment of the Chief Executive’s decision that declared the end of the respective concession contracts.

In principle, the end of the provisional concession period, if not definitively converted, should entail a (negative) administrative decision, by the Granting Entity, regarding the concessionaire’s conduct during the execution of the concession contract. Hence, to contradict such presumption, it is crucial to evaluate the concessionaire’s behaviour during the provisional concession period and provide sufficient evidence showing, beyond any doubt, that it cannot be accountable for not providing the building use license before the end of the provisional concession term.

Therefore, if it is proven that it was the Public Administration’s fault that the provisional concession ended without the issuance of the respective building use license (e.g. due to the delays in the approval of Zoning Plans, Urban Plans, construction and architectural projects, or imposing a change in the concession purpose) such may constitute grounds for sustaining the infringement of the general principles governing all contractual relations, namely the protection of contractually acquired rights and expectations of the concessionaire.

In short, in a perspective of “de lege ferenda”, the term of the concession should not be determined based only on the term of the provisional concession of the land and the failure to submit the building’s license by the concessionaire. However, the law in force leaves no margin for a different interpretation.

So, how can the concessionaires enforce their rights? They have no other choice but resort to Courts and file a claim for damages against the MSAR for the losses and damages incurred.