Source of Cases

• Data Source: Wolters Kluwer Legal Information Database

• Search Date: 15 April 2024

• Judgment Period: Last three years

• Keywords: Rooftop distributed photovoltaic

• Number of Cases: 224

I. Case Data Analysis on Distributed Rooftop Photovoltaic Projects

Legal disputes in rooftop distributed photovoltaic (PV) projects are predominantly civil and commercial in nature. The main types of disputes include construction contracts, other contract-related disputes, service agreements, sales contracts, lease agreements, commission contracts, private lending disputes, and obstruction removal cases.

II. Typical Cases in Distributed Rooftop Photovoltaic Projects

(A) Leakage Disputes

Leakage-related disputes between investors (entities undertaking rooftop PV construction) and rooftop owners are common during project operation. Disputes typically concern the investor’s responsibility to repair leaks or compensate for associated damages.

1. Responsibility Based on Causation

Responsibility is determined according to the principle of “he who asserts must prove.” Rooftop owners must demonstrate a causal link between the PV project and the leakage to claim compensation. Cases often fail due to insufficient evidence:

• In (2021) Zhejiang 0523 Minchu 3728, the court acknowledged the damages caused by leakage but ruled that causation was unproven.

• In (2022) Henan 0923 Minchu 244, the court rejected claims as the owner failed to provide adequate evidence.

Evidence typically includes third-party expert reports. For instance:

• In (2021) Liaoning 0903 Minchu 583, a court ruled in favour of the rooftop owner based on third-party verification of causation, requiring the investor to cover repair costs.

2. Responsibility Based on Contractual Obligations

When contracts stipulate the investor’s responsibility for rooftop functionality, courts enforce such provisions without requiring causation proof:

• In (2020) Zhejiang 01 Minzhong 5998, the court held the investor accountable for roof repairs as stipulated in the contract.

3. Compliance Recommendations

Investors should ensure contracts clarify:

• The rooftop owner’s responsibility to provide a structurally sound property.

• Liability for non-investor-related leakage issues.

During construction, investors must evaluate potential damage risks, document procedures, and retain evidence.

(B) Disputes Related to Changes in Rooftop Property

Rooftop distributed PV projects rely on rooftops as a base, and operational cycles are long. Disputes may arise when the property is mortgaged, auctioned, or if the owner undergoes bankruptcy.

1. Prior Mortgage vs. Subsequent Contracts

According to the Civil Code and related judicial interpretations, lease agreements cannot override pre-existing mortgage rights. Courts routinely uphold the primacy of mortgages:

• In (2021) Shandong 09 Zhiyi 65 and (2022) Zhejiang 02 Minzhong 980, courts ruled that investors cannot enforce lease agreements against pre-existing mortgages.

2. Bankruptcy of the Rooftop Owner

Under the Enterprise Bankruptcy Law, unfulfilled contracts depend on the bankruptcy administrator’s decision. Administrators may choose to maintain contracts for economic benefit or terminate them:

• In (2020) Jiangxi 1123 Minchu 1493, the administrator terminated the lease and required PV equipment removal, which the court upheld.

3. Pre-Lease vs. Subsequent Mortgage

Lease agreements established before mortgages are unaffected by the mortgage. Courts apply the principle of “lease prevails over mortgage”:

• In (2024) Zhejiang 0109 Zhiyi 53, the court upheld the investor’s lease rights, established before mortgage registration.

4. Ownership of PV Equipment

If PV equipment becomes affixed to the property and ownership is not explicitly agreed upon, it may transfer with the property. For example:

• In (2021) Jiangsu 0282 Minchu 6221, the court deemed PV equipment inseparable and included it in the property auction.

5. Compliance Recommendations

Investors should:

• Investigate property ownership and defects.

• Define contractual remedies for mortgage or bankruptcy-related disruptions.

• Clearly outline PV equipment ownership.

(C) Disputes Over Electricity Payments

Electricity payments are a primary revenue source for PV projects, yet disputes frequently arise over payment calculations, delays, and default consequences.

1. Basis for Calculating Payments

Courts rely on contractual agreements to determine electricity usage and charges:

• In (2021) Liaoning 09 Minzhong 238, the court upheld the contractual provision using metered data to calculate charges.

2. Defences Against Payment

Defences, such as unresolved roof leakage or missing invoices, typically affect payment timelines but not the underlying obligation:

• In (2021) Liaoning 09 Minzhong 238, the court ordered payment despite a leakage dispute.

3. Termination for Non-Payment

Courts are cautious about contract termination due to the economic implications of equipment removal. However, persistent non-payment undermining the contract’s purpose may justify termination:

• In (2022) Liaoning 09 Minzhong 1371, the court allowed termination due to prolonged non-payment.

4. Compliance Recommendations

Contracts should specify:

• Payment calculation methods.

• Invoicing and payment timelines.

• Penalties for late payments and termination clauses for non-compliance.

III. Conclusion

Distributed rooftop PV projects have become a popular investment avenue in the renewable energy sector, promising significant returns but presenting substantial legal risks. Investors must prioritise legal compliance and risk management to maximise economic benefits while maintaining sustainable development.