Asset Preservation In Aid Of Litigation And Arbitration In China

In commercial litigations and arbitration proceedings involving assets in mainland China, asset preservation is a popular tool for the plaintiff/applicant to ensure a future enforcement of judgment or arbitral award. Given the speediness and the effectiveness of asset preservation in practice, some applicants also use it to pressure the defendant/respondent into settlement at the early stage of a lawsuit. As such, it would be helpful for multinational companies faced with dispute in mainland China to know how asset preservation works.

I. Circumstances where Chinese courts are willing to grant an application for asset preservation

Article 100 of the Civil Procedure Law of the PRC (Civil Procedure Law) provides that "in a case where, for the conduct of a party or other reasons, it may be difficult to enforce a judgment or any other damage may be caused to the [opposing] party, a people's court may, upon application of the opposing party, issue a ruling on