Meaning
Judicial seizure of assets prior to a final court decision ensures that a plaintiff can secure the enforcement of a future judgment when there is a risk that the defendant will conceal or transfer property. In Chinese civil litigation, pre judgment property attachment allows a business partner to freeze the bank accounts or inventory of a local factory before a trial begins. This preventative court order holds the disputed goods or capital under judicial control during the trial.
Judicial Remedy
Legal authority for this preservation measure is found in the Civil Procedure Law of China. The judicial remedy of pre judgment property attachment requires the applicant to submit a formal application to the intermediate people’s court alongside a guarantee of asset security. If the applicant fails to provide this counter-guarantee, the court will reject the application to protect the defendant from unfair financial disruption.
Application Procedure
Securing the freeze involves a precise sequence of filings and bond postings. The application procedure of pre judgment property attachment begins with the submission of proof showing that the target assets are in imminent danger of being dissipated. Once the application is accepted, the plaintiff must post a deposit or a letter of guarantee from an approved domestic insurer equal to the value of the requested assets.
This guarantee covers any damages caused to the defendant if the plaintiff loses the case. After the court issues the ruling, the enforcement officer executes the freeze directly at the bank or registry.
Litigation Risk
Moving forward with this strategy exposes the claimant to serious financial exposure. The litigation risk of pre judgment property attachment comes from the potential liability for wrongful execution. If the final judgment goes against the plaintiff, the court will use the posted bond to compensate the factory for the business losses incurred during the freeze.
This outcome can result in substantial damages if production lines were suspended.
