THE SUPREME PEOPLE'S COURT has issued a judicial interpretation on dealing with cases involving agreements signed between administrative authorities and citizens, legal persons or other organizations, which stipulates the legal liability that administrative organizations bear. China Daily writer Wang Yiqing comments:

This judicial interpretation aims to solve the problem of a government failing to fulfill an agreement. According to the judicial interpretation, administrative authorities will be held legally responsible for breaking the agreements using the excuse of a change of local government leading officials. Any losses suffered by enterprises and investors in the event of an administrative authority breaking an agreement are to be compensated according to law.

According to the Supreme People's Court, the judicial interpretation aims to ensure administrative organizations fulfill their policy promises and carry out any administrative agreements they sign.

The judicial interpretation is expected to solve the difficulty that market players face when there is a dispute with administrative authorities over breach of contract. Local authorities have sometimes failed to fulfill the commitments they made for investment, housing demolition or land acquisition purposes. But it is difficult for the citizens, legal persons or other organizations to safeguard their legal rights and interests when the agreement involves any administrative authorities. Such cases not only undermine market players' rights and interests, they also damage the local market environment. In addition, they have a negative impact on the image of local governments.

The legal environment is a significant part of the business environment. The new judicial interpretation requires administrative organizations to abide by the laws and regulations the same as any other market player has to. Local authorities are urged to make reasonable and long-term policy according to the laws and regulations, which will further promote administrative efficiency in local areas.

Government authorities being held responsible for failing to fulfill agreements is therefore conducive to improving the business environment, promoting responsible governance and enhancing the integrity of local governments.