October 2022
Lihui Jiang and Teresa Huang
In September 2018, the Civil Compulsory Enforcement Law was included in the legislative plan of the Standing Committee of the 13th National People’s Congress as a Category II project, with the Supreme People’s Court being identified as the lead drafting unit[1]. In 2022, the Standing Committee of the Thirteenth National People’s Congress deliberated on the Civil Compulsory Enforcement Law of the People’s Republic of China (Draft) (hereinafter referred to as the Draft), which was published for public comments on June 24, 2022. The Draft is the first separate legislation on civil compulsory enforcement, and is divided into 4 parts and 17 chapters, including the General Provisions, the Final Enforcement for Satisfaction of Pecuniary Claims, the Final Enforcement for Satisfaction of Non-Pecuniary Claims, the Enforcement of Preserving Measures and Supplemental Provisions. The Civil Compulsory Enforcement Law will replace the Enforcement Procedure Part of the Civil Procedure Law and the related judicial interpretations after it is formally promulgated and effective. This article will focus on the main highlights of the Draft to explain the content.
1. Incorporating the prescriptive period for applying for enforcement into the concept of the limitation of action
Article 246 of the current Civil Procedure Law stipulates that the period for applying for enforcement is two years. However, Chapter III “Bases for Enforcement” of the Draft incorporates the prescriptive period for applying for enforcement into the concept of the limitation of action. Article 15 of the Draft provides that the provisions of the Civil Code of the People’s Republic of China and other laws on extinctive prescription shall apply to the extinctive prescription for applying for protection of civil rights as determined by a basis for enforcement. However, where the law provides for a prescriptive period of less than three years, the prescriptive period restarted after the basis for enforcement is made shall be three years. The provision not only maintains consistency with the Civil Code, but also makes the civil rights of the parties strengthened from the procedural regulation.
2. Further improving the property reporting system
The property reporting system for the party subject to enforcement has been comprehensively and detailedly stipulated in Article 248 of the Civil Procedure Law and the Provisions of the Supreme People’s Court on Issues concerning Property Investigation during Enforcement in Civil Procedures (hereinafter referred to as the “Property Investigation Provisions”). On this base, two important amendments have been made in the Draft.
The first is the on-site reporting system. Article 46 of the Draft states that after receiving the order of property reporting, the party subject to enforcement shall give a report in person on the designated date. If the party subject to enforcement indeed has difficulty reporting on such date, the party may apply for modification of the date to the people’s court. For the first time, the Draft explicitly requires that the party subject to enforcement shall be present in person, whereas there is no such requirement in the Property Investigation Provisions. Although the current status of the property of the party subject to enforcement will not objectively change depending on whether the party is present in person, in practice, the party’s personal presence in the court to visually experience the deterrent effect of public power can reduce the possibility of such party’s concealing property and motivate the party to actively repay the debt. In particular, there are cases where enforcement is difficult not because the parties subject to enforcement do not have property available for enforcement, but because they refuse to cooperate for various reasons. Thus, it can be observed whether the chances of successful enforcement can be improved because of this mechanism of personal reporting after the implementation thereof.
In addition, the Draft also proposes to establish a database of property reporting by the party subject to enforcement. Article 49 of the Draft stipulates that a people’s court shall establish a database of property reporting by the party subject to enforcement to register and store the content of reports. An applicant for enforcement may, with the permission of the people’s court, inquire about the property and relevant information of the party subject to enforcement through the database. It is common in practice that a debtor is sued and applied for compulsory enforcement by different creditors, and in these separate cases, each creditor needs to separately investigate the status of the debtor’s property, and the court needs to process the information separately several times. According to Article 49, any applicant for enforcement can apply for the use of the information on the property once reported by the party subject to enforcement against the same debtor, thus helping to improve the efficiency of enforcement and save judicial resources.
3. Clarifying the lawyer investigation order system
It is often difficult to locate the property of the party subject to enforcement in enforcement procedures. Despite the aforementioned property reporting system, the property reporting of the party subject to enforcement is not satisfactory in practice. On the one hand, the people’s courts have the authority to investigate but objectively have insufficient manpower; on the other hand, lawyers are faced with the dilemma of not having the relevant authority to investigate. The lawyer investigation order system can to a certain extent mollify the aforementioned contradictions, but unfortunately, the system is currently still very rare in practice. Substantially, it has not been clearly stipulated in the form of law, and is still mainly based on various guiding opinions and normative documents. Therefore, in practice, the system is often challenged by the parties subject to enforcement as it has no legal basis[2].
Article 52 of the Draft provides in the form of law for the lawyer investigation order system, which specifies that where a people’s court is unable to inquire about a certain piece of information on property through an online information platform, and the applicant for enforcement is objectively unable to obtain such information by an authorized lawyer, the applicant for enforcement may apply by an authorized lawyer to the people’s court for an investigation order. If the lawyer conducts an investigation with the investigation order, relevant organizations and individuals shall assist. The Draft clearly affirms the legal status of the lawyer investigation order, so that the lawyer can have the support of the court’s power when searching for property, thus further protecting the rights and interests of the applicant for enforcement.
4. Assisting in enforcement to make “joint efforts” to search for property clues
If the party subject to enforcement, as the owner of the property, deliberately conceals the relevant information, the applicant for enforcement will always be in a relatively passive position. In addition, as property types are complex and diverse, the search often requires the cooperation of relevant departments, but as a non-owner, the applicant for enforcement does not necessarily have the authority to do so. Accordingly, the Draft emphasizes “joint efforts” to search for property clues in the Section of “Assistance in Enforcement”, and Article 72 clearly stipulates that relevant organizations and individuals shall assist in the investigation of the property and identity information of the party subject to enforcement and related persons according to the notice of the people’s court. At the same time, in order to ensure the cooperation of all parties, Article 73 also provides that the relevant organizations and individuals shall not conduct a substantive examination on the content of the notice on assistance in enforcement in the process of assistance in enforcement, and if they consider that the content of the assistance in enforcement is incorrect, they may submit written objections to the people’s court, but shall not stop the assistance.
5. The daily fine and special detention systems for refusal to execute
Since 2019, the people’s courts have handled 10.16 million enforcement cases per year on average, with the amount of successfully enforced cases being RMB1.85 trillion per year on average[3]. However, the phenomenon of evasion of enforcement still prevails in practice, which affects the timely realization of the rights and interests of the winning party. Many winning parties have merely a judgment in favor thereof, but their civil rights and interests still cannot be protected accordingly. In response to the refusal of some parties subject to enforcement to execute, the Draft proposed a daily fine system. Article 188 of the Draft stipulates that if a party subject to enforcement possesses the subject matter to be delivered as determined according to the basis for enforcement and refuses to deliver it, the people’s court may impose a daily fine on the party, with the amount of the fine for an individual being less than RMB100,000 per day, and that for an organization being less than RMB one million per day, but the cumulative days of fine shall not exceed one hundred and eighty days. In addition, Article 193 of the Draft also provides for a special detention system for a party subject to enforcement who shall perform a specific act as determined according to the basis for enforcement and fails to perform it after the deadline. The people’s court may detain a party subject to enforcement several times, but the cumulative period of detention shall not exceed six months. The aforementioned two systems greatly strengthen the punishments, making it costlier for the “deadbeats” to violate the law, thus enhancing the effectiveness of enforcement.
In addition to the aforementioned five aspects related to property search and enforcement, the Draft also makes adjustments and regulations on the system of enforcement personnel of the people’s courts, the system of enforcement service, the enforcement of mutual obligations for simultaneous performance, the system of enforcement supervision, the system of sealing up, and the enforcement of joint property etc. As the deadline for public comments on the Draft has passed, it is believed that the Civil Compulsory Enforcement Law will be formally promulgated soon, and our Law Firm will continue to keep an eye thereon and share it with you.
[1] Website of the Supreme People’s Court of the People’s Republic of China: Explanation on the Civil Compulsory Enforcement Law of the People’s Republic of China (Draft) https://www.court.gov.cn/zixun-xiangqing-363381.html
[2] Website of WWW.CHINACOURT.ORG: Improving the Institutional Guarantee for Lawyer Investigation Orders https://www.chinacourt.org/article/detail/2019/06/id/4082552.shtml#
[3] Website of the Supreme People’s Court of the People’s Republic of China: Preliminary Consideration of the Draft Civil Compulsory Enforcement Law to Provide Legal Protection for “Practically Solving Difficulties in Enforcement” https://www.court.gov.cn/zixun-xiangqing-363091.html
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