Meaning
A legal remedy allows a plaintiff to secure a defendant’s assets before initiating a formal lawsuit to ensure that a future judgment can be executed. Requesting pre-litigation property preservation is a common strategy in Chinese civil litigation to freeze the bank accounts or real estate of a counterparty. This procedure is handled by the local people’s court having jurisdiction over the assets or the defendant.
Application Rule
Applicants must submit a detailed list of the assets to be frozen along with a financial guarantee that matches the value of the requested preservation. This bond protects the defendant from financial losses if the underlying legal claim is eventually rejected by the court.
Judicial Timeline
The court must issue a ruling within forty-eight hours after accepting the completed application and the required security deposit. The asset freeze begins immediately upon the issuance of this ruling and is executed by court officers before the defendant receives notice of the action. This element of surprise is necessary to prevent the defendant from transferring assets to other jurisdictions.
Once the assets are frozen, the applicant must file a formal lawsuit or arbitration claim within thirty days to keep the preservation active.
Operational Limit
This procedure is difficult for foreign companies to execute quickly due to the requirement for notarized corporate documents and power of attorney filings. These administrative hurdles must be planned for in advance of any dispute.