Underwriting Property Preservation Security Insurance for Cross Border Claims
Property preservation security insurance requires onshore Chinese guarantees backed by enforceable offshore bank collateral to mitigate cross-border subrogation risks.
Judicial Interpretation Fa Shi 2016 No 22
Meaning
Regulatory framework established by the Supreme People’s Court to govern the application and execution of property preservation was issued to standardize local practices. This judicial interpretation fa shi 2016 no 22 provides the technical rules for how courts handle asset seizures and security requirements in civil cases. It defines the responsibilities of the parties and the limits of judicial power.
The document was a major step in making the preservation process more predictable for commercial litigants.
Standardized Procedure
The regulation outlines the specific steps that a court must follow when receiving a request for an asset freeze. This judicial interpretation fa shi 2016 no 22 requires the court to rule on an application within five days for normal cases and forty-eight hours for emergencies. It also specifies the information that must be included in the preservation order.
Clear timelines help to prevent the dissipation of assets while the court is processing the request.
Insurance Adoption
One of the most significant changes introduced was the formal recognition of litigation insurance as a valid form of security. Under judicial interpretation fa shi 2016 no 22, claimants can use a policy from a licensed insurer instead of depositing large amounts of cash with the court. This has made property preservation much more accessible to smaller companies and individuals.
The insurer becomes liable for any damages caused by a wrongful freeze.
Execution Protocol
The document provides instructions on how to handle the freezing of different types of property including bank accounts and electronic funds. This judicial interpretation fa shi 2016 no 22 ensures that the court only freezes the amount of money necessary to cover the claim. It prohibits the excessive seizure of assets that would cause unnecessary hardship to the defendant.
The rules also clarify how to resolve disputes over the ownership of frozen property.