CHINA Law and Practice Contributed by: Hongyu Liu, Shuaifeng Wang, Dongda Wei and Chen Rong, King & Capital Law Firm
• property owned by one party before marriage; • compensation or indemnity received by one party for personal injury; • property clearly designated to only one party in a will or gift contract; • daily necessities used exclusively by one party; and • other properties that should belong to one party. However, courts may adjust the distribution proportion based on a comprehensive consideration of factors such as safeguarding the interests of the children, the wife and the innocent party, pursuant to Article 1087 of the Civil Code. For instance, if the wife has borne more responsibilities in raising the children, or if one party is at fault for acts such as domestic violence, the court may rule that the innocent party receives a larger share of the property. Court Orders and Identification of Assets Courts can issue various orders in the division of divorce property, including: • determining property ownership – for example, rul ‑ ing that real estate or vehicles belong to one party, while the other party receives a compensatory payment; • ordering compensation payments – for instance, ordering the titled party to compensate the other party for the repaid loan portion and its apprecia ‑ tion regarding a property purchased before mar ‑ riage but with the loan repaid during marriage; • addressing joint debts – such as characterising debts and dividing repayment responsibilities; and • sanctioning acts of concealing or transferring prop ‑ erty – a party who hides, transfers, sells, destroys or damages joint property, or forges debts in an attempt to seize the property of the other party, may be awarded a smaller share or no share of the property in the divorce (according to Article 1092 of the Civil Code). When issuing the aforementioned orders, courts will focus on the following factors. • the source of the property and the degree of con ‑ tribution – for example, if one party purchased a property before marriage and the loan was repaid
during the marriage, the other party should be compensated for the repaid portion and its appre ‑ ciation; • the duration of the marriage and contributions to the family – a shorter marriage duration with lesser contribution by one party might result in a reduced share for that party; • protecting the interests of children and the wife – the party with whom the child primarily resides or the wife might receive a larger share of property to ensure their livelihood; • the degree of fault – a party at fault for bigamy, domestic violence, etc, might receive a smaller share; and • the utility and economic value of the property – striving to maintain the integrity of productive property, such as company equity. Courts identify property through a combination of declarations by the parties and investigations initi ‑ ated by the court. The specific procedures include the following. • Declaration of marital joint property: In divorce proceedings, both parties are required to complete a Marital Joint Property Declaration Form, fully dis ‑ closing wages, real estate, financial assets, etc. A party who fails to declare honestly may be awarded a smaller share or no share by the court based on Article 1092 of the Civil Code. • Court investigation and evidence collection: One party can apply to the court to obtain evidence of property from third parties such as banks or real estate registration centres. The court can also issue investigation orders to compel third parties to provide relevant information. • Sanction measures: Against acts of concealing property, courts may impose compulsory measures such as fines or detention; if a crime is constituted, criminal liability shall be pursued according to law. Property Regimes China’s system is based on the statutory system of joint property between spouses, while also allowing for an agreed property system. This means spouses can clarify property ownership through prenuptial or marital agreements (according to Article 1065 of the
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