Introduction:

In the process of administrative management, administrative agencies may discover errors in their own decisions and correct them through revocation or modification. However, such self-correction actions often affect the legitimate rights and interests of administrative counterparties and give rise to disputes. Although current laws lack clear and systematic provisions on administrative self-correction actions, courts still need to establish standards for legality review in practice to supervise the proper conduct of administrative self-correction actions and protect the rights of counterparties. The case of “Huang v. A Township People’s Government (Dispute over Revocation of Decision Not to Impose Penalty)” [1] that the author once represented was selected as one of the Shanghai Courts’ Top Ten Typical Administrative Trial Cases of 2021. This article uses this case to explore how courts conduct judicial review of administrative self-correction actions.

[Key Ruling]

When an administrative agency revokes its decision not to impose a penalty, causing adverse effects on the administrative counterparty, the counterparty may file a lawsuit against the revocation decision, and the court shall accept the case. When conducting legality review of the revocation decision, the court should focus on examining whether the revocation decision has sufficient factual basis, whether it complies with the requirements of due process, and whether the revocation decision is appropriate after considering various factors. Where the sued administrative agency has no sufficient factual basis to prove that the original decision not to impose a penalty was erroneous as claimed, and the administrative counterparty was not at fault regarding the making of the original decision, and the revocation decision was made without due process, the counterparty’s request to revoke the revocation decision shall be supported by the people’s court.

[Case Summary]

Appellant (First Instance Plaintiff): Huang Respondent (First Instance Defendant): A Township People’s Government (hereinafter referred to as the Township Government)

In July 2020, the Township Government’s urban management law enforcement squadron discovered that Huang had used construction waste to fill a river channel on the west side of his residence. Upon commissioning a surveying company, the area of filled river channel was found to be 231.25 square meters. The Township Government issued a notice, determining that Huang’s unauthorized filling of the river channel violated Article 26 of the Shanghai River Management Regulations (上海市河道管理条例), and ordered him to restore the original condition by 17:00 on July 23, 2020, pursuant to Article 42 of the same Regulations.

Thereafter, Huang voluntarily carried out rectification as required by the Township Government. After on-site verification, the Township Government determined that Huang’s illegal act was minor and had been voluntarily rectified, and thus issued a decision not to impose an administrative penalty. In September of the same year, the urban management law enforcement squadron conducted another re-inspection survey, concluding that the original river channel area was 270.71 square meters, the area already rectified was 195.77 square meters, and the unrectified area was 74.4 square meters. Consequently, on November 23, the Township Government made the Decision on Revoking the ‘Decision Not to Impose Administrative Penalty’ and ordered Huang to make corrections before November 27, 2020. Huang disagreed with this and filed a lawsuit, requesting the revocation of the above decision revoking the non-penalty decision.

[Court Decision]

First Instance Held: The content of the sued revocation decision was that the Township Government, having found that the rectification situation as previously determined in the Decision Not to Impose Administrative Penalty was incorrect, decided to revoke that decision and ordered Huang to rectify within a specified period. The first instance court held that, based on the investigation records, relevant survey reports, river blue-line maps, etc., submitted by the Township Government, it could be determined that the disputed area was indeed a river channel. Secondly, regarding whether the order to rectify within a specified period was lawful, the Township Government conducted on-site re-examination and a second survey after making the Decision Not to Impose Administrative Penalty, confirming that part of the river channel had not been fully rectified, and accordingly requiring Huang to rectify again. The facts were clear. Since ordering rectification is not an administrative penalty and does not impose new obligations on the actor, the Township Government’s action was not improper. First instance judgment: Dismissed Huang’s claims. Huang refused to accept the judgment and appealed.

Second Instance Held: After investigating Huang’s act of filling the river channel, the Township Government determined the area to be 231.25 square meters and ordered him to rectify. Huang rectified as required, and the Township Government confirmed on-site that the rectification was complete, based on which it issued the Decision Not to Impose Administrative Penalty. Subsequently, the Township Government conducted another inspection and, based on a new survey, determined the unrectified area to be 74.4 square meters, concluding solely on this basis that Huang’s rectification was insufficient. However, the discrepancy between the two survey results was not caused by Huang’s fault, and the Township Government failed to inform Huang of the finding of insufficient rectification, violating due process. Therefore, the sued revocation decision was based on unclear facts, insufficient evidence, and unlawful procedure. Second instance judgment: Revoked the first instance judgment and revoked the sued decision revoking the non-penalty decision.

[Lawyer’s Commentary]

Administrative agencies have the duty of self-correction. When an administrative agency discovers an error in a prior administrative act during the administrative process, it often corrects itself through revocation, modification, or rectification. Such acts affect the rights and obligations of the parties and should be subject to judicial challenge. Based on the above case, the author believes that when conducting legality review of administrative self-correction actions, the following points should be noted:

I. Whether the Administrative Self-Correction Action Complies with the Principle of Due Process

“Procedural due process” is a basic requirement of law-based administration. Before making an administrative decision adverse to an administrative counterparty or interested party, the administrative agency should inform them of the relevant facts and provide them with an opportunity to present statements and defenses.

Under the current legal system, there are no clear provisions on how administrative agencies should correct their own actions. In such cases, the principle of due process should be applied to fill the legislative gap. Under the requirement of due process, when an administrative agency makes a correction decision, it should inform the counterparty in writing in advance of the proposed facts to be found, the applicable law, and the specific content, and grant the counterparty the right to present statements and defenses. If an administrative agency revokes an existing administrative act without due process, causing damage to the counterparty’s rights, it should be found to be procedurally unlawful. In Huang’s case, the court of second instance applied the principle of due process, achieving unity of legal and social effects.

II. Whether the Administrative Self-Correction Action Has Sufficient Factual Basis

An administrative self-correction action is essentially a new administrative act made by the administrative agency, aimed at modifying the effect of the original act. Therefore, the court needs to examine whether the administrative agency has sufficient factual basis when finding that the original act was “erroneous.”

If there is no clear factual and legal basis indicating that the original administrative act was indeed erroneous, the corresponding administrative self-correction action should be revoked by judicial judgment. In Huang’s case, Huang carried out rectification under the on-site supervision and guidance of the Township Government and passed the acceptance inspection. The Township Government made a final determination based on “minor illegal act with voluntary rectification.” Although the subsequent survey results differed, the Township Government could not prove that the previous survey was wrong and the current one was correct. Its determination contradicted the results of the on-site inspection and confirmation, and the evidence did not reach the standard of “clear and convincing,” thus the revocation was deemed invalid.

III. Whether the Administrative Self-Correction Action Is Clearly Improper

When an administrative agency discovers that the original administrative act was erroneous, it should carefully consider legal certainty. If administrative agencies are allowed to arbitrarily modify acts that have already taken effect, it would undermine reliance interests. The administrative agency should comprehensively consider: whether the counterparty was at fault for the error, whether the self-correction action infringes on reliance interests, whether it affects social public interests, and whether remedial measures have been taken.

When the counterparty is not at fault for the error and the correction will cause significant adverse effects on the counterparty without harming public interests, the administrative agency should consider not correcting the error or taking remedial measures. In Huang’s case, the court of second instance considered that Huang was not at fault for the survey error and had actively carried out rectification, and thus found that the Township Government’s discretion in revoking the decision not to impose a penalty was clearly improper and revoked it according to law.

IV. Conclusion

An administrative agency’s proactive correction of its own errors reflects its rule-of-law capability. However, administrative self-correction should also adhere to “correction according to law” and “correction with reason.” When an administrative self-correction action fails to comply with due process, lacks factual basis, or is clearly improper, the judiciary should still render a negative evaluation to protect the legitimate rights and interests of counterparties and maintain the stability of administrative legal relations.

Notes:

[1] This case was selected as one of the Shanghai Courts’ Top Ten Typical Administrative Trial Cases of 2021. [2] Gazette of the Supreme People’s Court of the People’s Republic of China, Issue 8, 2007. [3] Gazette of the Supreme People’s Court of the People’s Republic of China, Issue 11, 2021.