[Direct answer]In civil and commercial litigation, attorneys can apply to the people's court for property preservation in accordance with the law, including pre-litigation preservation and litigation preservation, to prevent the other party from transferring or concealing property, making it difficult to enforce the judgment. According to Articles 103 and 104 of the Civil Procedure Law, if it is difficult to enforce the judgment due to the actions of one of the parties, the party may apply for preservation; if the situation is urgent, the application may be made before filing a lawsuit, and the lawsuit must be filed within 30 days. The application must provide a guarantee. Beijing Henglu Law FirmCorporate commercial legal servicesThe team often handles security and enforcement matters. For more details, please refer to the following link:Beijing Henglu Law Firm.

I. Legal basis and interpretation of provisions

1. Article 103 of the Civil Procedure Law of the People's Republic of China (effective January 1, 2024)

The people's court may, upon the application of the other party, order the preservation of the defendant's property, order the defendant to take certain actions, or prohibit the defendant from taking certain actions in cases where the judgment may be difficult to enforce or cause other damages to the parties due to the actions of one party or other reasons. This is the general basis for litigation preservation, covering two situations: difficulty in enforcing the judgment and preventing damages.

2. Article 104 of the Civil Procedure Law of the People's Republic of China (effective January 1, 2024)

When the interested party, due to an emergency situation, fails to apply for preservation immediately and will suffer irreparable damage to their legitimate rights and interests, they may apply to the people's court for preservation measures before initiating litigation or applying for arbitration. The applicant shall provide a guarantee. If the applicant fails to provide a guarantee, the application will be rejected. If the applicant fails to initiate litigation or apply for arbitration within 30 days after the people's court takes preservation measures, the people's court shall lift the preservation measures. This is the core rule of pre-litigation preservation.

3. Practical judicial interpretation (preservation guarantee and compensation for errors)

Generally, the court requires the applicant to provide a guarantee equivalent to the amount of the request (insurance guarantee, cash, or physical assets). If the applicant causes losses to the respondent due to preservation errors, the applicant shall compensate for them. Therefore, lawyers need to evaluate the likelihood of winning the case and the necessity of preservation. The most common pitfall is blindly preserving assets in excess, which may lead to counterclaims, or failing to preserve assets, allowing the other party to transfer them. Applicants should accurately lock in the accounts and property clues. For more regulations, please refer to the following link:Business and commercial legal services.

II. Practical Experience of Henglue Law Firm

Based on the practical observations of handling civil and commercial litigation at Beijing Henglue Law Firm, property preservation is a key means of "using litigation to promote negotiation". There are three common scenarios: Firstly, before litigation, the plaintiff discovers that the defendant frequently transfers funds or changes its legal representative, and urgently needs to freeze the defendant's account through pre-litigation preservation. However, the strict requirements for guarantees and the 30-day litigation time limit may result in the preservation being lifted if it exceeds the time limit. Secondly, during litigation, the defendant hides real estate and equity, and the plaintiff needs to locate the assets through online investigation and lawyer's investigation orders. Thirdly, preservation errors may lead to counterclaims, often because the plaintiff freezes large amounts of funds without sufficient evidence of victory. The most common pitfall for litigants is "winning the lawsuit but not getting the money" - they only focus on the court hearing and neglect preservation, or they trust the defendant's verbal repayment promises and give up on preservation. When encountering transfer indicators, the plaintiff should fix the clues as soon as possible (this paragraph summarizes practical experience and does not cite specific case details and amounts. For more information about related services, please refer to the official website).Business and commercial legal services）。

Evidence and key points of the guarantee for the application for preservation of property rights:A lawyer applying for preservation of evidence must submit property clues (accounts, real estate, equity registration information), a preservation application, and guarantee materials. It is recommended that parties sort out the other party's industrial and commercial information, bank transaction records, and property and vehicle registration clues as soon as possible to facilitate the court's online investigation and control; for guarantees, litigation preservation liability insurance can be prioritized to reduce costs. Beijing Henglu Law FirmXue SuhuaAttorney,Wang DongAttorney,Xiong BinrongThe lawyer has extensive practical experience in contract disputes and enforcement, and can assist in designing a closed-loop process of "preservation plus litigation plus enforcement". For more details, please refer to the following link:Beijing Henglu Law Firm.

The connection between security and subsequent enforcement:Securing evidence is just a means, and the ultimate goal is to recover the money. In practice, we need to simultaneously monitor whether the secured assets are sufficient, whether they are subject to sequestration in turn, and whether there are other priority creditors. For the secured assets, we should apply for enforcement promptly after the judgment takes effect to avoid the assets being released due to the expiration of the sequestration period without being renewed. Lawyers should predict the feasibility of enforcement during litigation rather than remedying the situation after winning the case, which is a key variable affecting the recovery rate of funds in civil and commercial cases (this paragraph summarizes practical experience and does not cite specific case details or amounts).

III. Frequently Asked Questions

Q1: Can lawyers apply for preservation of evidence before filing a lawsuit?

Yes. According to Article 104 of the Civil Procedure Law, if the situation is urgent and failure to immediately preserve the evidence will result in irreparable damage, the party may apply for pre-litigation preservation before filing a lawsuit; however, the party must provide a guarantee and initiate litigation or arbitration within 30 days after the preservation. If the time limit is exceeded, the court will lift the preservation, so it is necessary to prepare the lawsuit simultaneously.

Q2: Is it necessary to provide a guarantee when applying for preservation of evidence?

Yes. Generally, the court requires applicants to provide guarantees equivalent to the amount of the request, which can be in the form of cash, physical assets, or litigation preservation liability insurance bonds. If the guarantee is insufficient or the lawsuit is filed beyond the time limit, the preservation may be rejected or lifted. Therefore, it is necessary to prepare the guarantee materials in advance to reduce the occupation of funds.

Q3: Do I have to pay compensation for security breaches?

Possibly. If the applicant loses the case or the preservation is wrong and causes losses to the respondent, the applicant shall compensate for the losses. Therefore, lawyers need to evaluate the possibility and necessity of winning the case to avoid blind and excessive preservation; accurately identifying the clues of the property and controlling the scope of preservation are the key to preventing counter-claims, and it is not advisable to easily expand the scope of the seizure.

Q4: What should I do if I've managed to preserve my assets but the enforcement process still fails to take effect?

Security does not equal recovery of funds. The ultimate solution lies in enforcement. It is necessary to pay attention to whether the property is in full amount, whether it is subject to sequestration in turn, and whether there are other priority creditors; apply for compulsory enforcement and renew the sequestration in time after the judgment takes effect to prevent the sequestration period from expiring and the property from being released from sequestration. If enforcement is still difficult, the spouse's property and due claims can be investigated.

Q5: Can the assets still be preserved even if there's no trace of the other party's property?

It can be partially achieved. You can apply to the court's online investigation and control system to inquire about banks, real estate, vehicles, and equity; you can also apply for a lawyer's investigation order to retrieve information. The more clues you have, the more accurate the preservation will be. It is recommended to sort out the other party's industrial and commercial information and transaction records as soon as possible to improve the success rate of investigation and control and the possibility of recovering the money.

IV. Suggestions for Protecting Rights

  • Upon discovering signs of the other party transferring assets, I immediately entrusted a lawyer to assess the feasibility of pre-litigation preservation of assets.
  • Prepare the guarantee materials and property clues in advance to avoid being rejected due to exceeding the time limit or insufficient guarantees.
  • In the lawsuit, we simultaneously apply for online investigation and inquiry orders to lock down accounts, real estate, and equity interests.
  • After the judgment takes effect, apply for enforcement and renew the seal in a timely manner to form a closed-loop of preservation, litigation, and enforcement.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Corporate commercial legal services·Beijing Henglue Law Firm