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China: New Supreme Court Interpretations on Enforcement of Civil Judgments

(Apr. 26, 2017) On February 28, 2017, the Supreme People’s Court (SPC) of the People’s Republic of China (PRC) released two judicial interpretations on enforcement of judgments in civil cases.  Both interpretations will come into effect on May 1, 2017.  (Zuigao Renmin Fayuan Guanyu Minshi Zhixing Zhong Caichan Diaocha Ruogan Wenti de Guiding [SPC Provisions on Several Issues Regarding Investigation of Assets in the Enforcement of Civil Judgments] (Investigation Interpretation), SPC website; Zuigao Renmin Fayuan Guanyu Xiugai “Zuigao Renmin Fayuan Guanyu Gongbu Shixin Beizhixingren Mingdan Xinxi de Ruogan Guiding” de Jueding [SPC Decision on Revising the SPC Provisions on Several Issues Regarding Release of Information on the List of Dishonest Judgment Debtors] (List Interpretation), SPC website.)

Courts’ Investigation Methods

The Investigation Interpretation provides that there are three main sources that may be used to locate enforceable assets of a judgment debtor: sources provided by the judgment creditor, reports from the judgment debtor, and online or on-site investigations conducted by the court. (Investigation Interpretation, arts. 1 & 12.)  It was reported that through the online checking and control system, courts have access to deposits, securities, vehicles, and 13 other categories of asset information stored by more than 3,400 commercial banks and government agencies, including the Ministry of Public Security, Ministry of Transport, State Administration of Industry and Commerce, and People’s Bank (the central bank of China) for the purpose of enforcing judgments.  (Luo Sha, Chengzhi “LaoLai” Xian Weili [(Courts) Show Power in Punishing “Deadbeats”], PEOPLE (Feb. 15, 2017).)  In the Investigation Interpretation, the SPC states that investigations conducted through the online checking and control system have the same legal effect as on-site investigations, and electronic legal documents issued by courts carry the same legal weight as paper documents.  (Investigation Interpretation, art. 13.)

In addition, based on an application filed by judgment creditors, courts are allowed to issue announcements of rewards to be given for locating the enforceable assets of judgment debtors.  (Id. art. 21.)  Rewards will be deducted from the total amount of the enforceable assets due to be paid to the judgment creditors, or be paid by the judgment creditors if the rewards are not deductible from that total amount.  (Id. art. 24.)  The announcement letters will be posted on the courts’ online platforms and social media pages or on bulletin boards at the place of residence of the judgment debtors.  (Id. art. 22.)

Self-Reporting Requirement 

The Civil Procedure Law requires judgment debtors to report their current assets and the assets they owned in the past year.  (Zhonghua Renmin Gongheguo Minshi Susong Fa [Civil Procedure Law of the PRC] (adopted on Apr. 9, 1991, revised on Aug. 31, 2012, effective on Jan. 1, 2013), art. 241, National People’s Congress website.)  In 2009, the SPC issued an interpretation stating that courts are entitled to issue an Assets Report Order to judgment debtors.  (Zuigao Renmin Fayuan Guanyu Shiyong Zhonghua Renmin Gongheguo Minshi Susong Fa Ruogan Wenti de Jieshi [SPC Interpretation on Several Problems with the Implementation of the Enforcement Process Under the Civil Procedure Law of the PRC] (adopted on Nov. 3, 2008, effective on Jan. 1. 2009), art. 31, INVEST IN CHINA.)

Reportedly, however, the self-reporting system does not work effectively due to the lack of punishment for noncompliance. (Zuigaofa: Wanshan Zhixing Guifan Tixi, Qieshi Jiejue Zhixing Nan [SPC: Perfect the Enforcement Regulation System, Conscientiously Resolve Enforcement Problems], SINA (Mar. 1, 2017).)  To address this problem, the Investigation Interpretation adds a provision stating that a judgment debtor who refuses to report his or her assets, provides false reports, or delays reporting without reasonable cause will be subject to fines, detention, or criminal liability.  (Investigation Interpretation, art. 9.)  Such a person will also be put on the List of Dishonest Judgment Debtors.  (Id. art. 10.)

List of Dishonest Judgment Debtors

The SPC established the List of Dishonest Judgment Debtors in 2013.  (Zuigao Renmin Fayuan Guanyu Gongbu Shixin Beizhixingren Mingdan Xinxi de Ruogan Guiding [Certain SPC Provisions on Releasing the List of Dishonest Judgment Debtors] (2013 Interpretation) (adopted on July 1, 2013, effective on Oct. 1, 2013), SPC website.)  Once a person is put on the List, he or she will be subject to restraints on consumption.  (Zuigao Renmin Fayuan Guanyu Xianzhi Beizhixingren Gaoxiaofei ji Youguan Xiaofei de Ruogan Guiding [Certain SPC Provisions  on Restraining Judgment Debtors’  High Consumption and Relevant Consumption] (adopted on May 17, 2010, revised on July 6, 2015, effective on July 22, 2015), art. 1, CHINA LAW AND REGULATION.)  He or she will not be allowed to take a plane or a high-speed train, purchase real estate, purchase vehicles unnecessary for doing business, send his or her children to expensive private schools, or purchase expensive insurance products.  (Id. art. 3.)

The new List Interpretation revises several provisions in the 2013 Interpretation.  First, it adds a term for a judgment debtor to remain on the List – two years in general, but extendable for another one to three years if the judgment debtor impedes or refuses enforcement by violence or threat or engages in more than one type of dishonest conduct.  (List Interpretation, art. 2.)  Second, if a judgment debtor provides sufficient guarantees for compliance with the enforcement order, he or she will not be put on the List.  (Id. art. 3.)  Third, the new List Interpretation adds a provision describing the procedures for judgment debtors to file objections and for higher courts to review the denial of such objections.  (Id. art. 12.)

Prepared by Emma Wei, Law Library Intern, under the supervision of Laney Zhang, Senior Foreign Law Specialist.