Provisions of the Supreme People's Court on Several Issues concerning Cases of Property Preservation Handled by People's Courts

Fa Shi [2016] No.22

November 7, 2016

The Provisions of the Supreme People's Court on Several Issues concerning Cases of Property Preservation Handled by People's Courts, which were adopted at the 1696th meeting of the Judicial Committee of the Supreme People's Court on October 17, 2016, are hereby promulgated for implementation as of December 1, 2016.

Provisions of the Supreme People's Court on Several Issues concerning Cases of Property Preservation Handled by People's Courts

(Adopted at the 1696th meeting of the Judicial Committee of the Supreme People's Court on October 17, 2016, and effective as of December 1, 2016)

These Provisions of the Supreme People's Court on Several Issues concerning Cases of Property Preservation Handled by People's Courts (hereinafter referred to as the "Provisions") are formulated in accordance with the Civil Procedure Law of the People's Republic of China and other laws and in combination with trial and execution practice, in order to protect the legitimate rights and interests of parties and interested parties in accordance with the law, and standardize the handling of cases of property preservation by people's courts.

Article 1 A party or interested party when applying for property preservation shall submit to a people's court an application, along with the relevant evidential materials.
An application shall set out the following items:
1. the identity, delivery addresses, and contact information of the preservation applicant and the person against whom preservation is adopted;
2. claims and the facts and reasons that they are based on;
3. the amount of the property concerned or the subject matter of the dispute concerned;
4. clear information on, or specific clues to, property under preservation;
5. information on property for guaranteeing property preservation or credit standing, or reasons for unnecessary provision of guarantees; and
6. other matters that need to be set out.
Where a creditor applies for property preservation after entry into effect of a legal document and before entry into execution procedures, the application shall set out the issuer of the legal document, document number and main content, with a copy of the effective legal document attached.

Article 2 Property preservation conducted by a people's court shall be ruled by the institution putting the case on file or the trial institution, and generally be transferred to the execution institution for implementation.

Article 3 Where a party applies for property preservation in the course of arbitration, it shall submit to a people's court via the arbitration institution an application, notice of accepting an arbitration case, and other relevant materials. Where the people's court rules to take property preservation measures or reject an application, it shall serve a ruling on the party and notify the arbitration institution.

Article 4 Where a people's court accepts an application for property preservation, it shall make a ruling within five days; if a guarantee needs to be provided, it shall make a ruling within five days upon provision of the guarantee; if it rules to adopt preservation measures, such measures shall be implemented within five days. In the case of emergency, a ruling shall be made within 48 hours; if preservation measures are ruled to be adopted, such measures shall be implemented forthwith.

Article 5 Where a people's court orders a preservation applicant to provide a guarantee in accordance with Article 100 of the Civil Procedure Law, the amount of the guarantee shall not exceed 30% of the claimed preservation amount; if the property involved in an application for preservation is the subject matter of a dispute, the amount of the guarantee shall not exceed 30% of the value of the subject matter of the dispute.
Where an interested party applies for property preservation before litigation, it shall provide a guarantee equivalent to the claimed preservation amount; under special circumstances, a people's court may handle it at its discretion.
During the property preservation period, where the guarantee provided by a preservation applicant is insufficient to compensate the possible losses caused to the person against whom preservation is adopted, a people's court may order the applicant to provide additional guarantees accordingly; if the applicant refuses to do so, the court may order release of the preservation wholly or partially.

Article 6 Where a preservation applicant or a third party provides a property guarantee for property preservation, it shall issue a letter of guarantee to a people's court. A letter of guarantee shall set out the guarantor, guarantee ways, guarantee scope, guaranteed property and its value, assumption of guarantee liability, and other content, with the relevant evidential materials attached.
Where a third party provides an assurance guarantee for property preservation, it shall submit a letter of assurance to a people's court. A letter of assurance shall set out the assurer, assurance ways, assurance scope, assumption of assurance liability, and other content, with the relevant evidential materials attached.
Where a people's court deems upon examination a guarantee for property preservation as having violated the prohibitive provisions of the Real Rights Law, the Security Law, Company Law and other relevant laws, it shall order the preservation applicant to provide other guarantees within a specified time limit; if the preservation applicant fails to do so within the specified time limit, the court shall reject the application.

Article 7 Where an insurer provides a guarantee for property preservation by signing a property preservation liability insurance contract with the preservation applicant, it shall issue a letter of guarantee to a people's court.
A letter of guarantee shall specify that the insurer shall compensate the person against whom preservation is adopted for the losses suffered thereby due to property preservation errors, with the relevant evidential materials attached.

Article 8 Where a financial institution approved to be established by the financial regulator provides a guarantee for property preservation in the form of an independent bond, the people's court shall grant approval in accordance with the law.

Article 9 Where a party falls under any of the following circumstances when applying for property preservation in the course of litigation, a people's court need not require the provision of a guarantee:
1. where the party claims for costs of support, maintenance or upbringing, pension, medical costs, labor remuneration, compensation for a work-related injury, or damages for a personal injury due to a traffic accident;
2. where the party suffers domestic violence and financial hardship in a marriage and family dispute;
3. where a people's procuratorate files a public interest lawsuit which involves damages;
4. where the party is injured for his/her brave deeds;
5. where the case has clear facts, definite rights and obligations, and less possibility of preservation errors; or
6. where the preservation applicant is a financial institution with dependent solvency as approved to be established by a commercial bank, insurance company, and other financial regulators, or a branch thereof.
Where a creditor applies for property preservation after entry into effect of a legal document and before entry into execution procedures, a people's court need not require the provision of a guarantee.

Article 10 A party or interested party when applying for property preservation shall submit express information on property under preservation to a people's court.
Where a party applying for property preservation in litigation cannot provide express information on property under preservation due to objective reasons but provides specific clues to such property, a people's court may, in accordance with the law, take property preservation measures.

Article 11 Where a people's court rules that preservation measures shall be taken in accordance with Paragraph 2 of Article 10 hereof, during the execution of such ruling, the preservation applicant may apply in writing to the execution court having established an online execution, enquiry, and control system to enquire as to the property of the person against whom preservation is adopted via such system.
Where a preservation applicant files an enquiry application, an execution court may enquire as to the property subject to preservation in the ruling or within the preservation amount via the online execution, enquiry, and control system, and take corresponding measures to seal up, distrain, or freeze such property.
Where a people's court cannot enquire as to the property available for preservation by use of the online execution, enquiry, and control system, it shall notify the preservation applicant in writing.

Article 12 A people's court shall keep information on the property of the person against whom preservation is adopted confidential in accordance with the law. Apart from the property preserved in accordance with the law, a people's court shall not reveal information on other property of the person against whom preservation is adopted, nor shall it use the relevant information for purposes other than property preservation and mandatory execution.

Article 13 Where the person against whom preservation is adopted has several items of property available for preservation, as long as the preservation purpose can be achieved, a people's court shall choose to preserve the property with minor impact on the production and operating activities thereof.
When a people's court designates the person against whom preservation is adopted to preserve the plants, machinery, equipment, and other production and operational property, the court shall allow such person to continue to use such property.

Article 14 Where the property under preservation is special movable property such as motor vehicles and aircraft, except where the whereabouts of the person against whom preservation is adopted is unknown, a people's court shall order such person to report in writing the ownership and possession and the use of such property and verify the same.

Article 15 A people's court shall, in accordance with a ruling on property preservation, take the corresponding measures, such as sealing up, distraining, and freezing such property.
Where the overall value of land, houses, and other immovable property is obviously higher than the amount specified in a preservation ruling, a people's court shall take measures to seal up, distrain, or freeze the corresponding part of the value of such immovable property, except where such immovable property cannot be divided for use or the division of such immovable property may severely impair its value.
Where a people's court takes measures to freeze the funds in a bank account, it shall specify the specific amount to be frozen.

Article 16 Where a people's court needs the assistance of the relevant entities in handling registration formalities when the court takes measures to seal up, distrain, or freeze property in property preservation, the relevant entities shall go through the formalities immediately upon service of the ruling and notice of assistance in execution. In the case of several rulings and notices of assistance in execution for the same property, registration formalities shall be gone through in chronological order of the service time.

Article 17 Where an interested party applying for property preservation before litigation lodges a lawsuit in accordance with the law or applies for arbitration within 30 days after a people's court adopts preservation measures, the property preservation measures before litigation shall be automatically converted to preservation measures in the course of litigation or arbitration; after entry into execution procedures, preservation measures shall be automatically converted to measures of sealing up, distraining, or freezing property in the course of execution.
Where preservation measures are automatically converted to preservation measures in the course of litigation or arbitration, or to measures of sealing up, distraining, or freezing property in the course of execution, in accordance with the provisions of the preceding paragraph, the period of such measures shall be counted on a consecutive basis, and a people's court need not prepare a new ruling.

Article 18 Where a preservation applicant applies for renewing property preservation, it shall apply to a people's court seven days prior to the expiration of the preservation period; if it fails to do so within the time limit or does not apply, it shall bear the sole legal liability for discontinuing preservation.
When conducting property preservation, a people's court shall notify the preservation applicant in writing of a definite deadline for property preservation and matters relating to a renewal application as specified in the preceding paragraph.

Article 19 Where a debtor applies for the preservation of the property determined to be paid as prescribed in an effective legal document during the re-trial period, a people's court shall not accept the application.
Where the execution of a former effective legal document is suspended during the re-trial period, and the party concerned applies for property preservation, a people's court shall accept the application.

Article 20 During the period of property preservation, where the person against whom preservation is adopted applies for disposal of the property under preservation by itself, a people's court may grant approval if it considers upon examination that the disposal will not damage the legitimate rights and interests of the preservation applicant and other executing creditors, provided that it shall supervise the person against whom preservation is adopted in disposing of the property at a reasonable price and within the specified period, and control the relevant price.
Where the person against whom preservation is adopted applies for disposal of the property under preservation which is the subject matter of a dispute, the application shall be subject to approval by the preservation applicant.
Where a people's court allows the person against whom preservation is adopted to dispose of the property under preservation by itself, the court shall notify the preservation applicant; if the preservation applicant disagrees, it may raise an objection in accordance with Article 225 of the Civil Procedure Law.

Article 21 Where the court taking preservation measures has not disposed of the property under preservation for more than one year after taking measures of sealing up, distraining, or freezing the property first, except where the property under preservation is the subject matter of a dispute, the executing court that seals up, distrains, or freezes the property in advance may ask upon negotiation the court taking preservation measures to transfer the property under preservation for execution. However, where judicial interpretations have different provisions, those provisions shall apply.
Where the court taking preservation measures has any dispute over the transfer of the property under preservation with the executing court that seals up, distrains, or freezes the property in advance, it may report to their common superior court for designating the executing court for such property on a level-by-level basis.
The common superior court shall, according to the type and location of property under preservation, the relationship between the amounts of claims and the value of property under preservation, and other specific situations of the case, designate an executing court, and urge the executing court to dispose of the property under preservation within the specified time limit.

Article 22 In disputes over property, where the person against whom preservation is adopted or a third party provides a sufficient and effective guarantee to request the release of preservation, a people's court shall grant approval. Where the person against whom preservation is adopted applies for release of preservation of the property which is the subject matter of a dispute, the application shall be subject to approval by the preservation applicant.

Article 23 Under any of the following circumstances after a people's court takes property preservation measures, the preservation applicant shall apply for release of preservation in a timely manner:
1. where no lawsuit is lodged in accordance with the law or no application is filed for arbitration within 30 days after property preservation measures are taken before litigation;
2. where an arbitration institution does not accept the arbitration application, approve the withdrawal of the arbitration application, or handle it as per the withdrawal of the arbitration application;
3. where the arbitration application or request is overruled by an arbitration award;
4. where other people's courts do not accept the lawsuit, approve the withdrawal of the lawsuit, or handle it as per the withdrawal of the lawsuit;
5. where the lawsuit or request for litigation is rejected by effective rulings or judgments of other people's courts; or
6. other circumstances under which the preservation applicant shall apply for releasing preservation.
A people's court shall order release of preservation within five days or, in the case of emergency, within 48 hours upon receipt of an application for release of preservation.
Where the preservation applicant fails to apply to a people's court for release of preservation in a timely manner, it shall compensate the person against whom preservation is adopted for any loss suffered due to property preservation.
Where the person against whom preservation is adopted applies for release of preservation, a people's court, if it deems upon examination that the application complies with legal provisions, shall order release of preservation within the period specified in Paragraph 2 of the present article.

Article 24 Where a people's court finds during the execution of a property preservation ruling that the content of the ruling on property preservation does not accord with the actual situation of the property under preservation, it shall revoke, alter, or correct the ruling.

Article 25 Where the preservation applicant or the person against whom preservation is adopted is dissatisfied with the preservation ruling or application rejection ruling, it may, within five days upon service of the ruling, apply to the people's court making the ruling for a review. The people's court shall examine the review application within ten days upon receipt thereof.
Where a person who is dissatisfied with a preservation ruling applies for a review, a people's court may revoke or alter the ruling if it finds upon examination that the reasons are tenable, or reject the application if the reasons are untenable.
Where a person is dissatisfied with an application rejection ruling and applies for a review, a people's court may revoke the ruling if it finds upon examination that the reasons are tenable and take preservation measures, or reject the application if the reasons are untenable.

Article 26 Where the preservation applicant, the person against whom preservation is adopted, or an interested party deems that any act committed during the implementation of a preservation ruling violates legal provisions and raises a written objection, a people's court shall examine and handle it in accordance with Article 225 of the Civil Procedure Law.

Article 27 Where a person not related to a case is dissatisfied with a preservation ruling or any act committed during the implementation of a preservation ruling and raises a written objection to the property under preservation based on substantive rights, when a people's court takes preservation measures for property other than the subject matter of a dispute in a lawsuit, the people's court shall examine and handle it in accordance with Article 227 of the Civil Procedure Law and make a ruling. Where a person not related to a case or the preservation applicant is dissatisfied with such ruling, it may, within 15 days upon service of such ruling, lodge a lawsuit to object to execution with the people's court.
After a people's court rules that the objection raised by a person not related to a case is tenable, where the preservation applicant fails to lodge a lawsuit to object to execution within the period as prescribed in legal provisions, the people's court shall, within seven days upon expiration of the time limit for lodging a lawsuit, release preservation of the property under preservation.

Article 28 In maritime litigation, where a maritime claimant applies for maritime claims preservation, the Special Procedure Law of the People's Republic of China on Admiralty and the relevant judicial interpretations shall apply.

Article 29 These Provisions shall come into force as of December 1, 2016.
Where there is any inconsistency between the judicial interpretations issued prior to the implementation of these Provisions and these Provisions, the latter shall prevail.