Chinese courts can preserve property before or during civil litigation when statutory conditions are met. Measures can include freezing bank accounts and preserving other property. Pre-litigation preservation requires urgency and security, and if granted the applicant must commence the substantive proceeding within 30 days.
1. What property preservation is
Property preservation is a court measure designed to prevent a later judgment from becoming difficult to enforce. Depending on the asset, the court may freeze, seize, detain or otherwise restrict disposition within the scope of the claim.
For a commercial creditor, preservation is not a substitute for proving the case. It is a tool to protect enforceability while the merits are decided.
2. When to consider preservation
Preservation deserves early attention when there are concrete warning signs: repeated broken payment promises, account changes, disposal of equipment, closure of premises, abnormal deregistration activity, multiple lawsuits, transfer of receivables, or a supplier suddenly moving business to another entity.
The best time to ask about preservation is usually before the counterparty has been repeatedly warned that litigation is imminent.
3. Pre-litigation preservation
Article 104 of the Civil Procedure Law permits an interested party to apply before litigation or arbitration where urgency means failure to preserve immediately could cause irreparable harm to lawful rights and interests. The application may be made to the court where the property is located, where the respondent is domiciled or another court with jurisdiction over the dispute.
The applicant must provide security. The court must decide an urgent pre-litigation application within 48 hours. If preservation is ordered, the applicant must file the lawsuit or commence arbitration within 30 days after the court takes the preservation measure; otherwise the preservation should be lifted.
4. Preservation during litigation
During a pending case, the court may also order preservation where a party’s conduct or other reasons may make the judgment difficult to enforce or cause other damage. Depending on the circumstances, the court may require security.
In practice, the application should identify the amount to be preserved, the legal basis and, if available, asset clues. A focused application is generally stronger than a generic request to “freeze everything.”
5. Security and cost
Security is a central part of preservation practice. For pre-litigation property preservation, the SPC interpretation provides that the applicant should generally provide security equivalent to the amount requested to be preserved, subject to special circumstances. During litigation, the court decides whether security is required and in what amount.
Security can materially affect litigation economics. Before applying, the creditor should understand what form of security the court will accept and the cost of obtaining it.
6. What can be preserved
The Civil Procedure Law allows preservation by seizure, detention, freezing and other legally authorized methods. In commercial cases, bank deposits are often the most efficient target, but real estate, equity interests, vehicles, equipment and other property can also be relevant depending on ownership and registrability.
Preservation is limited to the scope of the claim or property connected with the case. Property already frozen or seized cannot simply be duplicated without regard to existing measures.
7. Wrongful preservation risk
Preservation is powerful because it can restrict a company’s assets before final liability is determined. That power carries risk. Article 108 of the Civil Procedure Law states that if an application is erroneous, the applicant should compensate the respondent for losses caused by the preservation.
That is why claim quality, amount, defendant identity and asset ownership must be checked before filing.
8. Foreign-company preparation
A foreign applicant may need its corporate-status and authorization documents ready quickly, together with Chinese translations and any required Apostille or other authentication. If preservation is strategically important, those formalities should be started before the substantive claim is fully drafted.
Frequently asked questions
Can a foreign company apply for asset preservation in China?
Yes. Foreign litigants can seek preservation in appropriate PRC civil cases, subject to jurisdiction, evidence, security and procedural requirements.
How fast can pre-litigation preservation be decided?
For a qualifying urgent pre-litigation application, the Civil Procedure Law requires the court to make a ruling within 48 hours after accepting the application.
Do I have to provide security?
Pre-litigation preservation requires security. During litigation, the court determines whether security is required and the amount based on the circumstances.
What happens if the preservation application is wrong?
The Civil Procedure Law provides that an applicant should compensate the respondent for losses caused by an erroneous preservation application.
Selected official sources
For primary-law checking and further reading:
- PRC Civil Procedure Law (2023 revision, effective 1 January 2024)
- Supreme People’s Court Interpretation of the Civil Procedure Law
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This article provides general information about PRC law and procedure. It is not legal advice for any particular matter. Court practice, contract terms, evidence and procedural requirements can materially change the analysis.