Interpretations of the Supreme People's Court on Several Issues concerning the Application of Laws in Handling Judicial Compensation Cases in Civil and Administrative Proceedings

Fa Shi [2016] No.20

September 7, 2016

(Adopted at the 1678th meeting of the Judicial Committee of the Supreme People's Court on February 15, 2016 for implementationas of October 1, 2016)

The Interpretations of the Supreme People's Court on Several Issues concerning the Application of Laws in Handling Judicial Compensation Cases in Civil and Administrative Proceedings, adopted at the 1678th meeting of the Judicial Committee of the Supreme People's Court on February 15, 2016, are hereby issued and shall come into force as of October 1, 2016.

According to the State Compensation Law of the People's Republic of China and relevant provisions of laws, combined with the reality of the state compensation made by the people's court, the interpretations of the compensation committee of the people's court on several issues concerning the application of laws in handling judicial compensation cases in civil and administrative proceedings are hereby given as follows:

Article 1 During civil or administrative proceedings, if a people's court has taken compulsory measures against the activities of obstruction of proceedings, preservation measures or advance execution measures illegally, or wrongfully executed a judgment, decision or other valid legal documents, which has infringed the legitimate rights and interests of citizens, legal entities or other organizations and caused damage, then the claimant for compensation may make a claim for compensation with the people's court in accordance with the law.

Article 2 Taking compulsory measures against the activities of obstruction of proceedings illegally includes all of the following activities:
1. taking such measures as imposing a fine or holding in custody a person who has not conducted such activity as the obstruction of proceedings;
2. imposing a fine of an amount exceeding the limit as stipulated by the law;
3. holding a person in custody for a period exceeding the time limit as stipulated by the law;
4. taking the said two measures repeatedly against the same activity of obstruction of proceedings; and
5. other activities violating the law.

Article 3 Taking preservation measures illegally includes all of the following activities:
1. taking preservation measures when it should not do so in accordance with the law;
2. relieving preservation measures when it should not do so in accordance with the law, and vice versa;
3. taking preservation measures clearly beyond the scope of the claims, except for such case where the property under preservation is an integral object and the debtor does not have any other property for this purpose or other property is insufficient to guarantee the realization of creditor's rights;
4. taking preservation measures for the property which are irrelevant to the case in the case of payment for specific articles;
5. preserving the property of a person not involved in the case illegally;
6. failing to perform regulatory responsibilities for property which has been seized, detained or frozen, which leads to damage or loss of the property under preservation;
7. taking preservation measures for seasonal goods, fresh or perishable goods, or goods unsuitable for long-term preservation, and failing to handle them timely or handling them illegally, which leads to damage or serious depreciation of the said goods;
8. taking preservation measures for real estate or specific movable properties including ships, aircraft and motor vehicles, and failing to notify relevant registration organs not to handle the registration of change for such properties under preservation in accordance with the law, which leads to the ownership of such properties being transferred;
9. taking behavior preservation measures illegally; and
10. other activities that violate the law.

Article 4 Taking advance execution measures illegally includes all of the following activities:
1. taking advance execution measures by breaking the conditions and scope as stipulated by the law;
2. taking advance execution measures by exceeding the scope of the claims; and
3. other activities that violate the law.

Article 5 Wrongful execution of a judgment, decision or other valid legal documents includes all of the following activities:
1. executing legal documents which have not come into force;
2. exceeding the amount and scope as stipulated by the valid legal documents;
3. delaying the execution on purpose or failing to conduct execution on the property of an executee which has been found, which leads to a loss in the property under execution;
4. failing to resume an execution which should have been carried out, which leads to a loss in the property under execution;
5. executing the property of a person not involved in the case illegally;
6. executing the funds and materials of the case in favor of another concerned party or a person not involved in the case illegally;
7. taking execution measures on a mortgage, pledge or retained property illegally, which causes the priority of compensation of a mortgagee, pledgee or lienee not to be capable of being achieved;
8. failing to perform regulatory responsibilities for property which has been seized, detained or frozen in execution, which leads to damage or loss of the property;
9. taking execution measures for seasonal goods, fresh or perishable goods, or goods unsuitable for long-term preservation, and failing to handle them timely or handling them illegally, which lead to damage or serious depreciation of the said goods;
10. failing to auction property under execution which shall be auctioned in accordance with the law, or failing to have the property assessed by an asset appraisal institution in accordance with the law when it should do so, selling the property illegally or paying a debt in kind; and
11. other wrongful activities.

Article 6 Where a functionary of the people's court, in the process of civil or administrative proceedings, carries out any activity that causes bodily injury or death to a citizen by using the violence or instigating or indulging the use of violence such as beating one up or abuse by others, or by unlawful use of a weapon or police apparatus, Items 4 and 5 of Article 17 of the State Compensation Law of the People's Republic of China (hereinafter referred to as the "State Compensation Law") shall apply regarding the compensation for such activities.

Article 7 The State does not assume the liability for compensation if it falls under any of the following circumstances:
1. where it falls under any of the circumstances as stipulated by Article 105, Paragraph 2 of Article 107 and Article 233 of the Civil Procedure Law;
2. where the applicant for execution provides wrong subject matter for execution, except for a case where the people's court knows that the subject matter is wrong but still conducts the execution;
3. where a custodian appointed by the people's court in accordance with the law uses, hides, destroys, transfers or sells property that has been seized, detained or frozen illegally;
4. individual behaviors of the functionaries of the people's court which have nothing to do with exercising their functions and powers;
5. damage caused by force majeure, legitimate defense and urgent danger prevention; or
6. other circumstances in which the liability for compensation should not be assumed by the State in accordance with the law.

Article 8 Where there is damage to the legitimate rights and interests of citizens, legal entities or other organizations caused by a variety of reasons, the compensation amount shall be reasonably determined based on such factors as the impact of the activities of a people's court or its functionaries in exercising their functions and powers on the occurrence or expansion of the harmful consequences.

Article 9 Where the claimant is also responsible for the occurrence or expansion of the harmful consequences, the liability for compensation assumed by the State shall be reduced based on such factors as the impact of his/her fault on the occurrence or expansion of the harmful consequences in accordance with the law.

Article 10 Where the losses of citizens, legal entities or other organizations have been compensated for during civil or administrative proceedings, the State will not assume the liability for compensation for such losses.

Article 11 Where a people's court or its functionaries, in the process of civil or administrative proceedings, infringe the personal rights of a citizen by the activities as stipulated by Article 2 or Article 6 of the Interpretations of the Supreme People's Court on Several Issues concerning the Application of Laws in Handling Judicial Compensation Cases in Civil and Administrative Proceedings (hereinafter referred to as these "Interpretations"), the amount of money for compensation shall be calculated in accordance with Articles 33 and 34 of the State Compensation Law. If the people's court or its functionary causes mental damage to a citizen, they shall, in accordance with Article 35 of the State Compensation Law, within the scope of the impact of the infringement activities, eliminate the bad effect, reinstate the reputation of and make an apology to the claimant; claimants suffering serious damage shall be paid corresponding consolation money as mental damages.

Article 12 Where a people's court or its functionaries, in the process of civil or administrative proceedings, infringe the property rights of citizens, legal entities or other organizations and cause damage by the activities as stipulated by Articles 2 to 5 of these Interpretations, they shall assume the liability for compensation in accordance with Article 36 of the State Compensation Law.
Where the property cannot be restored to its original condition or its losses eliminated, its losses shall be measured at the market price at the time when the infringement activity occurs; where the market price cannot be determined or is not enough to make up for the losses of the claimant, the losses may be calculated by using other reasonable methods.

Article 13 Where a people's court or its functionaries have wrongfully executed a judgment, decision or other valid legal document, and auctioned or sold the property of citizens, legal entities or other organizations in accordance with legal procedures, proceeds from the auction or sale shall be paid.
If the people's court has auctioned property illegally, or the selling price is obviously lower than the value of the property, corresponding compensation shall be paid in accordance with Article 12 of these Interpretations.

Article 14 The necessary current expenses incurred during the suspension period in which an entity is ordered to suspend production or business operation as stipulated by Item 6 of Article 36 of the State Compensation Law refer to the basic expenses as required by legal entities, other organizations and individual businesses to maintain the operation during the suspension period, including wages for left-behind employees, as well as taxes and dues, water and electricity fees, housing and site rental, equipment rental, depreciation allowances of equipment and other necessary current expenses which must be paid.

Article 15 The bank interest on deposits in the same period as stipulated by Item 7 of Article 36 of the State Compensation Law shall be calculated at the benchmark interest rate of fixed-term deposit with lump-sum deposit and withdrawal for one-year RMB issued by the People's Bank of China when the people's court makes a valid decision of compensation, and the compound interest is not under calculation.
Where the property which shall be returned is a legitimate deposit of a financial institution, the interest in the deposit contract during the duration shall be calculated at the interest rate as specified in the contract.
Where the property which shall be returned is cash, the payment of the interest shall be subject to Paragraph 1 of this article.

Article 16 Where the property required to be returned in accordance with Article 36 of the State Compensation Law is a loan from a financial institution approved by the State, then the people's court shall also pay the interest on such loan under lending conditions in addition to the principal of the loan.

Article 17 Where the usufructuary right holder, security interest holder, lessee or other persons who take legal possession or use the property make a claim for compensation in accordance with Article 38 of the State Compensation Law, the people's court shall, in accordance with the Provisions of the Supreme People's Court on Work of Case Filing of State Compensation Cases, investigate the case and record it on file.

Article 18 During civil or administrative proceedings, if a people's court has taken compulsory measures against the activities of obstruction of proceedings, preservation measures and advance execution measures illegally, or wrongfully executed a judgment, decision or other valid legal document due to a change in the original judgment by the reconsideration of a people's court at a higher level, then the people's court at a higher level shall be the organ liable for compensation.

Article 19 Where citizens, legal entities or other organizations make a claim for compensation in accordance with Article 38 of the State Compensation Law, they shall make such claim upon termination of the civil or administrative proceedings or execution procedures, except in the following situations:
1. where the people's court has revoked the compulsory measures taken against activities of obstruction of proceedings in accordance with the law;
2. where the compulsory measures taken against activities of obstruction of proceedings by the people's court have caused bodily injury or death to a citizen;
3. where the property which has been confirmed in accordance with the law by the judicial proceedings as a property not belonging to the debtor or executee is unable to be remedied in the relevant judicial proceedings or execution procedures;
4. where the relevant activities which have been confirmed by the valid legal documents of the people's court to be illegal are unable to be remedied in the relevant judicial proceedings or execution procedures;
5. where the claimant has evidence to prove that his/her claim has nothing to do with such civil or administrative proceedings or execution procedures; or
6. other situations.
Where a claimant, according to the preceding paragraph, makes a claim for compensation upon the termination of civil or administrative proceedings or execution procedures, then the period for such legal proceedings or execution procedures will not be included in the period of prescription of claim for compensation.

Article 20 Where the compensation committee of a people's court handles a judicial compensation case in civil or administrative proceedings, if a period falls under any of the following circumstances, then the corresponding period will not be included in the period of handling:
1. a period in which the relevant files or other materials are transferred from the organ liable for compensation, the relevant people's court or other State organs; or
2. a period in which an appraisal or assessment is entrusted to be carried out by the compensation committee of the people's court.

Article 21 Where the compensation committee of a people's court handles a judicial compensation case in civil or administrative proceedings, it shall investigate the following matters altogether including whether the activities of the people's court or its functionaries which exercise their functions and powers are in conformity with the law, whether the fact of damage claimed by the claimant is true, as well as whether there is a causal relationship between the said activities and the said fact of damage.

Article 22 These Interpretations will come into force as of October 1, 2016. If the judicial interpretations issued by the Supreme People's Court before the coming into force of these Interpretations are inconsistent with these Interpretations, the latter shall prevail.