Meaning
Detailed rules for the application of property preservation measures are set forth by the Supreme People’s Court to standardize litigation procedures. This judicial interpretation 22 2016 provides the specific criteria that courts must follow when seizing, freezing, or sequestering assets during a legal dispute. It clarifies the requirements for the types of security that an applicant must provide to the court.
Asset Protection
Parties involved in commercial disputes use these rules to ensure that a future judgment can be executed against a defendant. Under judicial interpretation 22 2016, a court must respond to an application for preservation within five days of receiving the request and the required security. This timeline prevents the defendant from transferring or hiding assets before the court can act.
Security Standards
The regulation specifies that the value of the security provided by the applicant should generally not exceed thirty percent of the value of the assets being preserved. Because judicial interpretation 22 2016 aims to balance the rights of both parties, it allows for various forms of security including cash, property, and insurance letters of guarantee. This flexibility reduces the financial burden on the party seeking the preservation order.
Operational Limits
Courts are prohibited from freezing assets that exceed the value of the claim plus reasonable costs. While judicial interpretation 22 2016 allows for the preservation of bank accounts, it instructs judges to avoid measures that would cause a business to cease its normal operations. The interpretation serves as a procedural guide for both local and higher courts.
