Tooling Ownership Registration under Chinese Law Rules
Foreign tooling held in Chinese factories demands explicit bailment deeds, metal serial tags, local VAT fapiao receipts, and PBOC credit registrations.
Baoquan Injunction
Meaning
Judicial orders issued by Chinese courts to secure assets or critical evidence before or during litigation prevent a counterparty from dissipating property or destroying critical proof. To obtain a baoquan injunction, the applying party must demonstrate that the absence of such measures would render the eventual judgment unenforceable. This mechanism covers bank accounts or real estate owned by the respondent.
It remains in force until the final judgment is executed unless the respondent provides an equivalent counter-security.
Procedural Requirement
Applicants must submit a formal application accompanied by a valid security deposit, which is often in the form of cash or a litigation guarantee insurance policy. The Supreme People Court rules govern the valuation of this security, which usually ranges from ten to thirty percent of the value of the targeted asset. A baoquan injunction requires the applicant to file a substantive lawsuit or initiate arbitration within thirty days of the court issuing the order.
Failure to meet this statutory deadline results in the automatic lift of the preservation measures.
Operational Impact
Foreign parties face distinct operational constraints when their assets are frozen under these orders. Banks execute the freeze immediately upon receiving the civil ruling from the court. This action halts raw material procurement and delays salary payments.
The affected factory must negotiate a swift settlement or provide alternative collateral to release the freeze.
Recourse Measure
A respondent can challenge the ruling by filing an objection with the same court within five days of receiving the notice. This objection does not suspend the execution of the preservation measures while the court reviews the claim. A successful challenge requires proof that the preserved assets exceed the claim value.