Civil Procedure Asset Preservation Mechanisms in Chinese Commercial Disputes
Asset preservation under Chinese Civil Procedure Law instantly freezes bank accounts and equity upon post of insurance bonds, compelling rapid commercial settlement.
Intra Litigation Preservation
Meaning
Property preservation measures requested after a lawsuit has been formally filed but before a final judgment is rendered fall under a specific category of judicial action. This intra litigation preservation allows a plaintiff to secure the assets of the defendant while the merits of the case are being argued in court. It differs from pre litigation preservation in that the case is already active and the court has established its jurisdiction over the parties.
Procedural Flow
Applicants must demonstrate that the conduct of the defendant or other factors might make a future judgment difficult to execute. The request for intra litigation preservation is usually filed at the same time as the complaint or at any point before the trial concludes. Courts typically rule on these applications within forty eight hours if the situation is deemed urgent.
Bond Requirements
Provision of security is almost always a prerequisite for the court to grant the freezing order. For intra litigation preservation, the court assesses the risk of the freeze and demands a guarantee from the plaintiff, often in the form of cash or an insurance policy. This bond protects the defendant from financial harm if the plaintiff eventually loses the lawsuit.
Lifting the Order
Frozen assets are released only upon the final payment of the judgment or if the court dismisses the plaintiff’s claims. If the defendant wins the case, the intra litigation preservation is vacated and the plaintiff may be liable for damages. The defendant can also request to lift the freeze by providing a counter guarantee of equal value.