CHINA Law and Practice Contributed by: Qingyou Wang, Yichen Lu, Chao Tang and Yuhe Gu, Anli Partners
9.4 Enforcement Mechanisms of a Domestic Judgment Core Enforcement Procedures The successful party must apply for enforcement to the court of first instance within two years from the date on which the judgment takes legal effect. The court will use various methods to locate assets avail- able for enforcement. Once such assets are identi- fied, it will promptly apply control measures such as seizure, attachment and freezing, for which the court will take appropriate realisation measures according to the nature of the property in order to satisfy the debt, as follows: • auction or sale – for physical assets such as real estate and vehicles, the court will usually entrust a professional auction institution to conduct a public auction; • transfer of funds – for bank deposits, the court may issue a ruling directing the bank to transfer the funds to the court’s designated account; and • payment in kind – with the consent of the applicant for enforcement, the judgment debtor’s property may be valued and used to set off the debt. If, after exhausting available asset-investigation measures, no property is found that can be enforced against, the court may rule to terminate the current round of enforcement. If new assets are later discov- ered, the applicant may apply to resume enforcement. In addition to directly realising assets, the court may also: • list the judgment debtor as a dishonest debtor, impose restrictions on high-value consumption and disqualify it from certain government procurement; • impose fines or judicial detention on persons who evade or obstruct enforcement; and • transfer cases for criminal prosecution where the conduct may constitute the offence of refusing to enforce a judgment or ruling. 9.5 Enforcement of a Judgment From a Foreign Country In China, foreign civil and commercial judgments may be recognised and enforced on two main bases: an applicable international convention or bilateral trea-
ty between China and the state of origin, or, in the absence of such instruments, the principle of reci- procity. The judgment creditor will normally apply to the intermediate people’s court at the debtor’s domi- cile or the place where key assets are located and must file an authenticated copy of the judgment, proof that it is final and effective, evidence of proper service, and any required notarised and legalised documents with certified Chinese translations. Once the formal requirements are satisfied, the court hears submissions from both sides and undertakes a limited review. It considers whether the foreign court had a proper jurisdictional basis, whether the proceedings met basic standards of procedural fair- ness and gave the defendant a real opportunity to be heard, whether there is any conflicting effective Chi- nese judgment, and whether recognition would clearly conflict with fundamental principles of Chinese law, public policy or China’s sovereignty and security. If recognition and enforcement are granted, the judg- ment is enforced in essentially the same manner as a domestic judgment; if refused, the applicant will usu- ally have a limited period to seek reconsideration. The Chinese legal system applies a two-tiered system. Under the Civil Procedure Law of China, if a party dis- agree with the judgment of the first instance, he may appeal to the court of a higher level. After reviewing the judgment of the first instance, the court of appeal will make the judgment of the second instance, which is the final and effective judgment. If the party disagree with the judgment of the second instance, they may apply to the court of a higher level for retrial review. The retrial review is a mechanism that prevents the major and severe mistakes of the first and second instances. According to statistics pub- lished by the Supreme Court of China, more than 90% of retrials do not change the outcome of the original instance. Also, before the retrial court changes the judgment of the previous instance, that judgment is regarded as final, binding, effective, and enforceable. 10. Appeal 10.1 Levels of Appeal or Review to a Litigation
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