The Complete Guide to Applying for Pre-Judgment Asset Preservation in China

I. What Is Litigation Preservation?

Litigation preservation refers to the compulsory measures—such as seizure, impoundment, or freezing—taken by Chinese courts against a defendant’s assets, either before or during litigation, upon a party’s application, to prevent the transfer of assets that would render the judgment unenforceable. Simply put, it involves freezing the opposing party’s assets first, then proceeding with the lawsuit.

II. Why Apply for Preservation?

1. Preventing Asset Transfer

Once the opposing party learns they are being sued, they are likely to transfer bank deposits, real estate, or vehicles. Preservation measures can “lock up” assets before the opposing party has a chance to react.

2. Facilitating Settlement and Enforcement

Once assets are frozen, the opposing party often takes the initiative to propose a settlement or mediation in order to have the freeze lifted. Data shows that cases involving preservation measures have significantly higher rates of settlement and voluntary compliance.

3. Gathering Information on Assets

Through the court’s online asset control system, one can query information on the respondent’s bank deposits, real estate, vehicles, and other assets, laying the groundwork for subsequent enforcement.

III. What Materials Are Required to Apply for Preservation?

According to the practical requirements of Chinese courts, applying for property preservation typically requires submitting the following materials:

(1) Application for Property Preservation

Core content requirements: Basic information of the applicant and the respondent, the amount requested for preservation,and information regarding the property to be preserved or specific leads.

Note: If specific property information of the respondent cannot be provided, the application may state: “Request the court to query, seize, and freeze the respondent’s property through the online enforcement and control system.”

(2) Security for the Preservation Order

In China, applying to the court for a preservation order requires the provision of security. Forms of security include: cash deposit (depositing a security deposit into a court-designated account), real estate collateral (providing real estate owned by the applicant as collateral), and property preservation liability insurance (purchasing a letter of guarantee from an insurance company).

In China, plaintiffs typically purchase a letter of guarantee from an insurance company. This is highly recognized by Chinese courts and is also very affordable, typically costing only 100–200 USD.

(3) Preservation Fees

When a plaintiff applies for property preservation with a Chinese court, they must pay an application fee to the court, according to the following standards:

· For amounts between 1,000 and 100,000 yuan: 1% of the amount

· For amounts over 100,000 yuan: 0.5% of the amount (not to exceed 5,000 yuan)

Note: The property preservation application fee is considered a litigation cost. It is prepaid by the applicant and ultimately borne by the losing party.

IV. Application Process

Most Chinese courts now support online applications for litigation preservation. However, for convenience, it is common to submit the preservation materials to the Chinese court simultaneously with the case filing. Upon receiving the materials, the court will notify the plaintiff to pay the preservation fee. After the plaintiff pays the fee (most Chinese courts support electronic payment), the court will implement preservation measures. Generally, within 15 days of paying the preservation fee to the Chinese court, the court will freeze the defendant’s assets.

V. Duration of Preservation and Renewal Reminder

The duration of preservation varies by asset type in Chinese courts: bank deposits (1 year),vehicles, equipment, etc. (2 years), and real estate (3 years).

Important Reminder: One month before the preservation expires, you must apply to the court for renewal. Renewal is free，you only need to submit an application. If you forget to renew, the defendant’s assets will be unfrozen.

VI. Frequently Asked Questions

Q1: Can I still apply for property preservation with a Chinese court if I don’t know what assets the other party owns?

Yes. In many Chinese courts, if you cannot provide specific information about the assets to be preserved, you may request the court to use the online enforcement inquiry system to investigate the defendant’s assets. However, some courts do not support this process, so you should communicate with the court in advance.

Q2: Who is liable for losses resulting from errors in the preservation order?

The applicant is liable. However, since most applicants now purchase property preservation liability insurance, the insurance company will compensate within the policy limit.