CHINA Law and Practice Contributed by: Yaxing Zhang, Bing San, Yi Cao and Jiahui Zhu, Han Kun Law Offices
• rulings on evidence preservation (eg, a ruling order - ing the preservation of evidence at risk of loss or future unavailability, upon application); and • rulings in enforcement proceedings (eg, a ruling on adopting/lifting enforcement measures, a rul - ing to suspend enforcement, a ruling to terminate enforcement, etc). Enforceable Instruments Issued by Authorities Other Than Courts Besides arbitral awards, a notarised creditor’s rights document issued by a notary authority is also enforce - able. The issuance of such a document requires sat - isfaction of the following conditions: (i) specification of monetary/property performance obligations; and (ii) the debtor’s express advance consent to enforce - ment. A notarised creditor’s rights document allows credi - tors to bypass litigation and apply directly to the court for enforcement. The court may refuse enforcement if the document falls outside the scope of notarisable and enforceable instruments, or the document fails to state the debtor’s advance written consent to enforce - ment, among other circumstances. 2.2 Enforcement of Domestic Judgments If the debtor refuses to comply with the legally effec - tive judgment, the court in Mainland China may impose the following enforcement measures. Asset-Based Enforcement Measures Assets investigation Upon commencement of enforcement proceedings, courts will serve the debtor with an Enforcement Notice, and an Asset Disclosure Order requiring a full and truthful report to the court, with an explicit warning that failure to report or submission of false information may entail legal consequences includ - ing fines or detention. To investigate and verify the debtor’s asset information, courts will utilise the Sys - tem, on-site inspections and other lawful investigation methods. Freezing/seizing assets Courts can freeze or seize the debtor’s assets includ - ing but not limited to:
• cash/funds – bank deposits, digital payment bal - ances (Alipay/WeChat Pay), housing provident funds; • current assets – vehicles, vessels, machinery/ equipment, inventory/goods; • investments – listed shares, private equity, fund shares, non-life insurance; • property – land, buildings, construction projects; • income – salaries, bonuses; and • other – receivables, IP rights. Disposal of assets For monetary assets (cash/funds), courts may directly transfer the amounts to creditors. For non-monetary assets (eg, real estate, equity stakes), courts typically value the assets through professional appraisal and liquidate them via public auction or private sale. Behaviour and Credit Restriction Enforcement Measures Courts may impose the following non-asset conduct and credit restriction enforcement measures against debtors: • restriction of High Consumption Order – prohib - its debtors from high-value consumption (eg, air travel, luxury hotel stays, property purchases, international or private school); • inclusion on the List of Dishonest Judgment Debtors – public disclosure of identities and credit restrictions including loan rejections and bidding disqualifications of debtors; and • exit ban – legally prohibits debtors from leaving Mainland China through border control enforce - ment. Penalties for Refusing Court Enforcement When debtors wilfully refuse to comply with court judgments, courts may impose: • administrative penalties – fines (monetary sanc - tions) and detention (short-term custody ≤15 days); and • criminal liability – prosecution for the Crime of Refusing to Enforce Judgments or Orders where a party has the ability to execute a judgment or order rendered by courts but refuses to do so, and the circumstances are serious.
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