Meaning
A provisional judicial remedy in China enables a claimant to freeze, seize, or seal the domestic assets of a defendant to prevent them from being hidden or transferred prior to a final judgment. This legal measure is employed by foreign and domestic creditors to ensure that a future court decision or arbitration award can be successfully executed against the debtor. Through onshore asset attachment, the court exercises jurisdiction over the defendant’s bank accounts, real estate, machinery, or corporate shares.
The freezing order remains in place for a specified period, typically one year for bank accounts and three years for real property.
Procedural Request
The application for this measure can be submitted to the court before or during the filing of a formal lawsuit or arbitration proceeding. To successfully obtain an onshore asset attachment, the plaintiff must provide detailed information regarding the location, value, and ownership of the target assets. The court evaluates the urgency of the request and the likelihood that the defendant will dissipate their assets if the order is not granted.
This process is highly confidential to prevent the defendant from learning of the application and transferring the funds before the court acts.
Judicial Execution
The implementation of the preservation order is carried out by the court’s enforcement division rather than the applicant. Officers serve electronic notices to commercial banks, company registries, and real estate offices to execute the asset freeze immediately. In the context of onshore asset attachment, bank accounts are frozen up to the value of the claimant’s legal demand.
This execution process restricts the defendant from withdrawing, mortgaging, or selling the attached assets until the court issues a release order. If the dispute is resolved or if the plaintiff loses the lawsuit, the court releases the attachment and restores the defendant’s full control.
Security Deposit
Compliance requires the applicant to provide a counter-security, such as a cash deposit or a bank guarantee, to cover potential damages to the defendant in case of a wrongful attachment. The value of this security usually ranges from twenty to one hundred percent of the total asset value being frozen.
