The Supreme People’s Court recently issued a judicial interpretation – the Provisions of the Supreme People’s Court on Issues Concerning the Enforcement of Notarized Debt Instruments (Legal Interpretation  No. 18; the “Provisions”) – to further regulate cases involving the enforcement of notarized debt instruments in people’s courts, ensure that the enforcement is done in accordance with the law, and safeguard the rights of the litigating parties and other interested parties. The Provisions, which came into effect on October 1, primarily cover jurisdiction for the enforcement of notarized debt instruments, their determination, the circumstances under which no enforcement is proper and the reliefs. Please see below for details:
1. Jurisdiction over the enforcement of notarized debt instruments
Pursuant to the Provisions, cases involving the enforcement of notarized debt instruments shall fall within the jurisdiction of the people’s court where the domicile of the person or the property subject to the enforcement is located. The subject matter jurisdiction over cases shall be determined in reference to provisions concerning the subject matter jurisdiction of a people’s court in first instance civil and commercial cases.
2. Recognition of notarized debt instruments
Pursuant to the Provisions, the so-called “notarized debt instruments” are debt instruments that may be given the force of compulsory enforcement by way of notarization as prescribed in Paragraph 1 of Article 37 of the Notary Law.
To enforce notarized debt instruments, the following criteria must be met or a court will refuse enforcement:
(1) When applying for the enforcement of a notarized debt instrument, a creditor shall file an enforcement certificate showing the status of performance and other details in addition to the notarized debt instrument itself and other materials required for enforcement application.
(2) A notarized debt instrument whose enforcement is sought by a creditor shall include a notarized statement, a proven debt instrument, etc. The notarized statement shall contain the subject entities whose rights and obligations are at issue, the contents of performance and other matters.
In addition, the party subject to the enforcement may also apply to the court to deny enforcement in any of the following circumstances:
(1) The party subject to the enforcement is not present and fails to retain an attorney to appear to handle the notarization.
(2) The party has no capacity to act for civil matters or has limited capacity without a guardian to handle the notarization on the party’s behalf.
(3) The notary is either notarizing on his or her own behalf or for his/her close relative, or the notarization is done for in a matter in which the notary or his/her close relative has a stake in.
(4) It has been confirmed by an effective criminal law document that the notary engaged in bribery or acted with favoritism in handling such notarization.
(5) There is any other material violation of the statutory notarization procedure.
(6) The claims do not fall within the scope of compulsory enforcement of the notarized debt instrument.
(7) For a notarized debt instrument formed as a result of private lending but at a specified interest rate in excess of the upper limit prescribed by a people’s court pursuant to law or judicial interpretations, the excess interest shall not be included in the scope of enforcement.
3. Relief in the event of denial of enforcement
From the perspective of a creditor, if a court does not enforce a notarized debt instrument, the creditor may apply to the next higher people’s court for reconsideration within 10 days of service of the ruling. In case the creditor fails to timely apply for reconsideration or if the reconsideration application is rejected, the creditor may bring suit in a people’s court with respect to the dispute over the civil rights and obligations involved in the notarized debt instrument. If the notary office decides to not issue an enforcement certificate, the party may directly bring suit in a people’s court as well. For the party subject to enforcement, if such party applies for non-enforcement of a notarized debt instrument, a written application along with relevant evidentiary materials shall be filed with the enforcing court within 15 days of service of the enforcement notice.
Meanwhile, pursuant to the Provisions, if a party is dissatisfied with a ruling rejecting a non-enforcement application, an application may be filed with the next higher people’s court within 10 days of service of the ruling. The next higher people’s court shall review the application within 30 days upon receipt of the reconsideration application. If the application is found to be persuasive as a result of the review, the original ruling will be reversed and the notarized debt instrument will not be enforced; if it is not found to be persuasive, the reconsideration application will be rejected. Enforcement is not suspended during the reconsideration period.
In addition, a creditor or stakeholder may directly bring suit in a competent people’s court with respect to dispute over the civil rights and obligations involved in a notarized debt instrument in either of the following circumstances: (1) the civil rights and obligations set forth in the notarized debt instrument are inconsistent with the facts; or (2) the notarized debt instrument is void or revocable pursuant to law.
In general, the Provisions contain more detailed regulations on the issues in enforcement of notarized debt instruments. This is not only conducive to resolving issues in enforcement of notarized debt instruments but also provides a reference for enterprises to follow in the notarization of debt instruments so that they are validly notarized and thereby avoiding denial of enforcement due to nonconformity in the notarization document.