Enforcing Foreign Commercial Arbitration Awards inside Chinese Courts
Foreign arbitral awards face high recognition yields in Chinese courts under the prior reporting system, but procedural service defects halt execution.
Pre-Award Preservation
Meaning
Interim measures granted by a court before an arbitral tribunal issues its final decision prevent a party from dissipating assets or destroying evidence. Pre-award preservation is a standard component of the dispute resolution process in mainland China, where court intervention is required to enforce such orders. The process is governed by the Civil Procedure Law and specific judicial interpretations.
Security Bond
Applicants are typically required to provide a financial guarantee in the form of a cash deposit or a letter of credit from a Chinese bank. This security bond protects the respondent against potential losses if the pre-award preservation is later found to be wrongful. Courts determine the amount of the bond based on the value of the assets being frozen or seized.
Property Attachment
Judicial officers carry out the actual freezing of bank accounts or the sealing of warehouse inventory once the order is issued. A successful pre-award preservation ensures that funds remain available to satisfy a future arbitral award. This measure is effective even when the respondent has no fixed assets in the jurisdiction.
Urgent Necessity
A party must demonstrate that the failure to grant the order would result in irreparable harm or make the eventual award impossible to enforce. Judges evaluate the evidence provided by the claimant to determine the risk of asset dissipation. This assessment involves reviewing the financial stability and previous conduct of the respondent.
If the court is satisfied that a genuine threat exists, it will issue the order within a few days of the application. The speed of this intervention is a defining feature of the Chinese judicial approach to supporting arbitration.