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Property Reservation and Advance Enforcement

Time:2014-03-13 Hit:1003

Property Reservation and Advance Enforcement

  According to China’s Civil Procedure Law, preliminary measures are stipulated to prevent a defaulter from avoiding carry out the enforcement of the judgment, upon the request of the plaintiff, the People’s Court may make an order to preserve the defendant’s property.

   In some circumstances, which may consider necessary, the People’s Court may adopt such measure itself without the application of the plaintiff. Such preliminary measures are often used as a litigation strategy, if the People’s Court seizes the company’s bank account or significant assets, the defendant may have no access to its funds, and its operation may be severely compromised. It usually puts considerable pressure on the defendant to negotiate or settle a quick resolution to the dispute. When an application of property reservation is filed to the court, the applicant will be asked to provide a financial guarantee to cover any potential damage in case the action is later regarded as unjust. In Shanghai, the People’s Court may ask 30% to 100% of the value of the preserved property. Depending on the court and the nature of the dispute, if the applicant fails to do so, the Court may reject the application. Nowadays, there are a lot of companies who are willing to do such business of providing the financial guarantee to the Court for the applicant of financial assistance. After the receiving of the application of the property reservation, the Court must make the order within 48 hours if the case is urgent. 

  In order to seize the defendant’s property in a timely manner, such application shall be filed at the time of or right before the filing of the lawsuit,  if the application is filed before the filing of the lawsuit, the lawsuit shall be filed within 15 days after the Court has adopted the preservation measures, or the Court shall cancel such measure.

  The property seized shall be limited to the scope of the claim, and when the property is seized the Court shall notify the defendant of such property preservation. The defendant has the right of providing a counter-guarantee to require the Court to cancel the aforesaid property preservation.

  If the petition of the property preservation turned out to be wrongfully made, the applicant shall take the full responsibility to compensate the defending party for any losses incurred therefrom.



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