Enforcement of Judgments 2025

Last Updated August 05, 2025

China

Law and Practice

Authors



Han Kun Law Offices was founded in 2004. A leading full-service law firm in China against the backdrop of globalisation, Han Kun has consistently focused on resolving complex domestic and international commercial transactions and disputes, establishing itself as one of the premier law firms in China’s legal industry. Renowned for its exceptional professional service of commercial dispute resolution, Han Kun has been repeatedly recognised by international authoritative legal media as a top-tier Chinese law firm in the Asia-Pacific region. With over 800 professionals, Han Kun has offices in Beijing, Shanghai, Shenzhen, Hong Kong, Haikou, Wuhan, Singapore, New York and Silicon Valley. Han Kun’s commercial dispute resolution team specialises in providing professional dispute resolution services for major, challenging and complex commercial disputes. It has long served top-tier domestic and international companies across various industries, delivering tailored and effective solutions for their commercial conflicts.

Methods for Investigating Asset Clues Through Public Channels

In China, a party may adopt the following approaches to investigate the counterparty’s assets through public channels.

  • Utilise corporate and credit information platforms (eg, National Enterprise Credit Information Publicity System, Qichacha, Tianyancha) to identify another party’s public information regarding equity investments and equity freeze status, real estate holdings, IP registrations and basic bank account information.
  • Appoint a licensed attorney to retrieve vehicle registration records from the traffic management bureau and business registration files from the market regulation administration to identify assets clues such as motor vehicles and equity holdings.
  • Acquire information on outstanding debts and accounts receivable by reviewing listed companies’ public announcements and annual reports.
  • Monitor judicially seized or auctioned assets through China Judgments Online website and judicial auction websites and promptly apply for participation in asset distribution.
  • Comprehensively review transaction documents and bank statements to obtain bank account details and real estate records.

Methods for Investigating Asset Clues with Court-Issued Attorney Investigation Orders

In addition, one party may appoint a licensed lawyer to investigate the following assets of another party with a court-issued attorney investigation order:

  • real estate ownership and transaction history at the real estate registration centre;
  • account details and transaction records from Alipay and WeChat Pay at the judicial assistance centres of Alipay and Tencent; and
  • other asset clues obtained from relevant organisations or government agencies. 

Methods for Investigating Asset Clues Through the Online Enforcement Enquiry and Control System

In 2014, the Supreme People’s Court of China (SPC) established the Online Enforcement Enquiry and Control System (the “System”), a pioneering judicial mechanism featuring a dual-level architecture. The System is primarily composed of the SPC’s centralised “hub-to-hub” platform, supplemented by decentralised “point-to-point” systems operated by provincial high courts. After years of development, this integrated system is now interconnected with 16 central government agencies, including the Ministry of Public Security and Ministry of Natural Resources, as well as over 3,900 banking institutions. The System enables courts to conduct comprehensive queries across 25 specific data fields within 16 major asset categories, including but not limited to bank deposits, real estate properties, motor vehicles, insurance, securities holdings, financial investment products, vessels and digital payment balances (eg, Alipay/WeChat Pay balances). The System has achieved effective coverage of debtors’ primary asset categories and relevant information, significantly enhancing enforcement efficiency.

At the litigation or pre-litigation asset preservation stage, upon issuance of a preservation order, the plaintiff may submit a written request to the court to utilise the System to investigate the defendant’s assets and take preservation measures. The courts retain discretionary authority to approve or deny the System-based investigation. In practice, most courts do not authorise the use of the System to investigate the defendant’s assets during the litigation preservation stage. Instead, the courts require the plaintiff to provide specific asset leads to take preservation measures.

Unlike the discretionary approach in litigation asset preservation, at the enforcement stage, the courts are required to proactively utilise the System to investigate the defendant’s assets and take preservation measures.

According to the Civil Procedure Law of the People’s Republic of China, the main types of adjudicatory documents issued by courts include the following.

Civil Judgment

A civil judgment is a court’s final ruling on substantive issues of a civil case, which can be categorised into:

  • monetary payment judgments, which require the defendant to pay a specified sum of money (eg, repayment of loans, payment for goods);
  • non-monetary property delivery judgments, which require the defendant to transfer or return specific property; and
  • specific performance judgments, which compel or prohibit the defendant from engaging in specific conduct (eg, cessation of infringement, issuance of formal apologies).

Civil Mediation Statement

A civil mediation statement is a legally binding document issued by a court confirming a settlement agreement between parties, which shall have the same legal effect as a civil judgment.

Payment Order

A payment order is a court-issued order requiring a debtor to repay a monetary debt within a specified period. A creditor may apply to the court for a payment order provided that the following requirements are met: (i) there are no other debt disputes between the creditor and debtor; and (ii) the payment order can be served upon the debtor. If the debtor fails to file a written objection within 15 days, the payment order shall become enforceable.

Procedural Order

Courts may issue various types of rulings during case adjudication (including first instance, second instance and retrial proceedings) and preservation/enforcement procedures to address procedural matters and certain substantive matters. Such orders can be systematically categorised as follows:

  • rulings concerning litigation commencement and progression (eg, a ruling on non-recognition of case, a ruling on jurisdictional objection, a ruling to dismiss the lawsuit, a ruling to stay proceedings, etc);
  • rulings concerning adjudication outcomes (eg, a ruling by a court of second instance dismissing the appeal and affirming the original judgment, a ruling by a retrial court dismissing a retrial petition, a ruling by a retrial court to retry the case, a ruling by a retrial court to revoke the original judgment and remand the case to the original court for retrial, etc);
  • rulings on property preservation (eg, a ruling ordering seizure, distraint, freezing, or other preservation measures against the opposing party’s property or the subject matter in dispute);
  • rulings on conduct preservation (eg, a ruling ordering a party to perform or refrain from performing specific acts including ceasing infringement, removing obstruction and prohibiting certain conduct);
  • rulings on evidence preservation (eg, a ruling ordering the preservation of evidence at risk of loss or future unavailability, upon application); and
  • rulings in enforcement proceedings (eg, a ruling on adopting/lifting enforcement measures, a ruling to suspend enforcement, a ruling to terminate enforcement, etc).

Enforceable Instruments Issued by Authorities Other Than Courts

Besides arbitral awards, a notarised creditor’s rights document issued by a notary authority is also enforceable. The issuance of such a document requires satisfaction of the following conditions: (i) specification of monetary/property performance obligations; and (ii) the debtor’s express advance consent to enforcement. 

A notarised creditor’s rights document allows creditors to bypass litigation and apply directly to the court for enforcement. The court may refuse enforcement if the document falls outside the scope of notarisable and enforceable instruments, or the document fails to state the debtor’s advance written consent to enforcement, among other circumstances.

If the debtor refuses to comply with the legally effective judgment, the court in Mainland China may impose the following enforcement measures.

Asset-Based Enforcement Measures

Assets investigation

Upon commencement of enforcement proceedings, courts will serve the debtor with an Enforcement Notice, and an Asset Disclosure Order requiring a full and truthful report to the court, with an explicit warning that failure to report or submission of false information may entail legal consequences including fines or detention. To investigate and verify the debtor’s asset information, courts will utilise the System, on-site inspections and other lawful investigation methods.

Freezing/seizing assets

Courts can freeze or seize the debtor’s assets including but not limited to:

  • cash/funds – bank deposits, digital payment balances (Alipay/WeChat Pay), housing provident funds;
  • current assets – vehicles, vessels, machinery/equipment, inventory/goods;
  • investments – listed shares, private equity, fund shares, non-life insurance;
  • property – land, buildings, construction projects;
  • income – salaries, bonuses; and
  • other – receivables, IP rights.

Disposal of assets

For monetary assets (cash/funds), courts may directly transfer the amounts to creditors. For non-monetary assets (eg, real estate, equity stakes), courts typically value the assets through professional appraisal and liquidate them via public auction or private sale.

Behaviour and Credit Restriction Enforcement Measures

Courts may impose the following non-asset conduct and credit restriction enforcement measures against debtors:

  • restriction of High Consumption Order – prohibits debtors from high-value consumption (eg, air travel, luxury hotel stays, property purchases, international or private school);
  • inclusion on the List of Dishonest Judgment Debtors – public disclosure of identities and credit restrictions including loan rejections and bidding disqualifications of debtors; and
  • exit ban – legally prohibits debtors from leaving Mainland China through border control enforcement.

Penalties for Refusing Court Enforcement

When debtors wilfully refuse to comply with court judgments, courts may impose:

  • administrative penalties – fines (monetary sanctions) and detention (short-term custody ≤15 days); and
  • criminal liability – prosecution for the Crime of Refusing to Enforce Judgments or Orders where a party has the ability to execute a judgment or order rendered by courts but refuses to do so, and the circumstances are serious.

Alternative Remedies

If no enforceable assets are found for the judgment debtor through various inquiries, the assets under the name of a third party may be legally enforced, or the third party may be added as a judgment debtor to increase the likelihood of debt recovery. Generally, under Chinese law, the common scenarios where the assets of a third party may be enforced or the third party may be added as a judgment debtor include the following.

  • Unpaid capital contributions – shareholders who default on their subscribed capital contributions, or withdraw contributions, may be added to the enforcement proceeding and held liable within the amount of the deficiency (even if they have since transferred their shares).
  • Illegal deregistration – if a company is deregistered without liquidation, its shareholders, directors or controlling shareholders may be held jointly liable for its outstanding debts.
  • Post-dissolution asset distribution – if a dissolved company’s assets were distributed to shareholders who failed to satisfy outstanding debts, such shareholders may be liable within the amount received.
  • Companies with sole shareholders – if a sole shareholder cannot demonstrate that corporate assets are independent of personal assets, courts may pierce the corporate veil and hold the shareholder directly liable.
  • Partnerships – general partners are jointly and severally liable for partnership debts. Limited partners may also be held liable within the scope of unpaid capital contributions.

Enforcement Fees

The applicant is not required to prepay execution fees when applying for compulsory enforcement in Mainland China. Such fees shall be borne by the judgment debtor and deducted from the recovered assets.

Enforcement Timeline

The statutory enforcement period is nominally six months for enforcement case filing; however, the actual duration may vary significantly on a case-by-case basis. This depends primarily on:

  • the number of executable asset leads;
  • complexity of asset disposal;
  • workload and proactivity of the enforcement judge; and
  • whether relevant enforcement procedures are triggered (eg, enforcement objections, reconsiderations, actions against enforcement objections, enforcement settlement, or enforcement resumption).

Methods for Courts to Investigate a Defendant’s Assets in Enforcement Proceedings

Court-ordered asset disclosure

The court issues an Asset Disclosure Order, requiring the debtor to truthfully disclose its current assets (eg, deposits, real estate, vehicles, equity, claims) and property transfers within one year prior to receiving the enforcement notice. Refusal to comply or false reporting by the debtor may result in fines, detention or criminal liability.

Court-initiated inquiries

The court can efficiently query nationwide information on the debtor’s asset through the System, including but not limited to bank deposits, real estate properties, motor vehicles, insurance, securities holdings, financial investment products, vessels and digital payment balances (eg, Alipay/WeChat Pay balances).

On-site investigation

The enforcement judge may conduct field surveys and searches at the debtor’s domicile or any locations where property might be located.

In addition, the enforcement judge may collect asset clues from relevant units (eg, municipal commission of housing, traffic management bureaus, market regulation administrations, housing fund management centres, social security bureaus, employers) or individuals.

Summons for enquiry

The enforcement judge may summon the debtor or their legal representative, principal responsible person, de facto controller, or directly responsible person to the court for investigation and enquiry, in order to clarify the debtor’s property status and the ability to perform obligations. If the summoned person or representative of the company fails to appear without justifiable reason after lawful summons, the court may subject them to detention for interrogation.

Search warrant

Where there is evidence or indication to believe that the debtor is concealing assets, accounting books or other materials and refuses to surrender them, the court may issue a search warrant and conduct a search of the debtor’s domicile or locations where the assets may be concealed.

Methods for Applicants to Investigate a Defendant’s Assets in Enforcement Proceedings

Applying for a Lawyer Investigation Order

The creditor’s lawyer may submit a written application to the court to issue a Lawyer Investigation Order to authorise the lawyer to investigate specific asset information of the debtor within a defined timeframe and scope. The common investigation scope includes:

  • detailed information on real estate, vehicles or industrial and commercial records under the debtor's name;
  • transaction history of the debtor’s bank accounts;
  • property information under the name of the debtor’s spouse (especially when involving community property or suspected asset transfers to the spouse); and
  • the debtor’s investments, income, etc.

Applying for a Reward Notice

The creditor may submit a written application to the court to make a public announcement to offer a reward for information leading to the discovery of the debtor’s assets’ clues or whereabouts. Informers whose provided clues are verified as true and lead to actual recovery will receive the reward according to the standard or proportion promised in the announcement, and such cost is typically borne by the creditor.

In any of the following circumstances, the court shall order a stay of enforcement of judgments:

  • where a third party files a written objection to the subject matter of enforcement (eg a third party claims co-ownership rights/mortgage rights/leasehold rights over the subject matter), and the court accepts and reviews it according to law;
  • where a party applies for retrial of the judgment, and the court orders a retrial after review; or
  • where one party applies for the enforcement of an arbitral award, and the other party applies to the court for setting aside of such award and provides the court with security for enforcement, and the court sets aside the application according to law.

In any of the following circumstances, the court may order a stay of enforcement of judgments:

  • where the debtor against whom enforcement is sought files an objection or applies for reconsideration regarding an enforcement act; or
  • where a third party initiates a third-party revocation action against the judgment, provided that security for enforcement is furnished to the court.

In any of the following circumstances, the judgments cannot be enforced:

  • if the creditor files an application for enforcement with the court after expiry of the two-year statutory time limit for enforcement, and the debtor subject to enforcement raises an objection to such time limit, the court shall dismiss the enforcement application; or
  • if the judgment result of the legally effective document is ambiguous and vague, rendering it impossible to enforce.

As a general principle, civil judgments and rulings (excluding civil mediation statements) shall be published on the China Judgments Online website.

Statutory exceptions prohibiting online publication of judicial documents include:

  • civil judgments involving state secrets;
  • cases concerning divorce proceedings, child custody, guardianship of minors; and
  • other circumstances where the court deems it inappropriate for online publication.

When publishing judicial documents, courts must redact the following information:

  • personal information of individuals – home addresses, contact details, ID numbers, etc;
  • information of legal entities – bank account numbers, licence plate numbers, etc;
  • trade secrets; and
  • personal privacy-related information.

If any party objects to the online publication of civil judgments/rulings, it may file a written application with the court requesting full non-publication, partial redaction or anonymisation (eg, replacing names with “Zhang XX”) with justification (eg, involvement of trade secrets or personal privacy).

Legal Basis for Recognition and Enforcement of Foreign Court Judgments

In China, the primary legal basis for recognising and enforcing foreign court judgments includes the following.

International treaties

China has not yet acceded to any universal international convention on recognition and enforcement of foreign judgments.

Bilateral judicial assistance agreements

China has concluded bilateral judicial assistance treaties or agreements containing provisions on the mutual recognition and enforcement of civil and commercial judgments with the following 35 countries: France, Italy, Russia, Ukraine, Spain, Hungary, Morocco, the United Arab Emirates, Brazil, Poland, Mongolia, Belarus, Argentina, Vietnam, Turkey, Egypt, Greece, Cyprus, Kazakhstan, Romania, Bulgaria, Cuba, Kyrgyzstan, Tajikistan, Uzbekistan, Tunisia, Peru, Algeria, Kuwait, Bosnia and Herzegovina, Ethiopia, Iran, Laos, Lithuania and North Korea.

Principle of reciprocity

In the absence of treaty relations, Chinese courts may examine applications for recognition and enforcement of foreign judgments based on the principle of reciprocity. In judicial practice, the establishment of reciprocity includes:

  • de jure reciprocity – the foreign country’s laws permit the recognition and enforcement of Chinese civil or commercial judgments, even if there is no prior record of such enforcement;
  • consensus-based reciprocity – a mutual understanding or consensus has been established between China and the foreign jurisdiction explicitly acknowledging reciprocity; and
  • presumed or diplomatically promised reciprocity – through diplomatic exchanges, either China or the foreign jurisdiction has issued a formal promise of reciprocity (this presumption stands unless the foreign jurisdiction has previously refused the recognition of a Chinese judgment on the grounds that no reciprocal relationship exists).

Legal Basis for Recognition and Enforcement of Hong Kong, Macau and Taiwan Court Judgments

Concerning the recognition and enforcement in Mainland China of civil and commercial judgments issued by the courts of the Hong Kong Special Administrative Region (SAR), Macau SAR and the Taiwan region, the SPC has promulgated the following specialised judicial instruments:

  • Arrangement on Mutual Recognition and Enforcement of Civil and Commercial Judgments between the courts of the Mainland and the Hong Kong SAR;
  • Arrangement on Mutual Recognition and Enforcement of Civil and Commercial Judgments between the Mainland and the Macau SAR; and
  • Regulations on the Recognition and Enforcement of Civil Judgments Rendered by courts in the Taiwan Region.

Parties may apply to courts in Mainland China for recognition and enforcement of relevant judgments from these jurisdictions under the above arrangements and regulations.

The procedures for applying to Chinese Mainland courts for recognition and enforcement of judgments rendered by courts in the Hong Kong SAR, Macau SAR and the Taiwan region are substantially similar to those for recognising and enforcing foreign judgments in Mainland China. This section focuses exclusively on the recognition and enforcement of foreign judgments.

Foreign Legal Instruments Eligible for Recognition and Enforcement

These include:

  • legally effective judgments, rulings, decisions or orders issued by foreign courts concerning substantive civil and commercial disputes; and
  • civil damage compensation awards independently rendered by foreign courts in criminal cases (excluding penal content).

Foreign Legal Instruments Ineligible for Recognition and Enforcement

These include procedural judicial documents such as preservative orders (eg, property seizures, injunctions), evidence-taking orders, etc.

Where a party applies to a court in Mainland China for recognition and enforcement of a foreign judgment or ruling, the court shall dismiss the application under any of the following circumstances.

Absence of Treaty or Reciprocal Relationship

The country where the foreign court is located has neither concluded nor jointly acceded to any international treaty with the PRC, nor has established a reciprocal relationship (except for applications recognising legally effective divorce judgments rendered by foreign courts).

Unverifiable Authenticity

The court, after examination, cannot verify the authenticity of the foreign judgment or ruling.

Non-Effectiveness or Lack of Finality

The foreign judgment or ruling has not yet become legally effective or lacks finality under the laws of that country (eg, where an appeal has been filed and remains pending).

Where the court has dismissed an application, the applicant may re-file the application. If the re-filed application meets the admissibility criteria, the court shall accept it according to law.

When applying to a court in Mainland China for recognition and enforcement of a foreign court judgment, the applicant shall follow these steps below:

Step One: Preparation of Case Filing Documents

For recognition and enforcement of a foreign judgment, the applicant shall prepare the following documents:

  • application letter – containing parties’ information, name of the foreign court, case number, claims and legal grounds, respondent’s asset status/location, and execution status of the judgment abroad;
  • validity documentation – original or notarised/certified copy of the foreign judgment;
  • proof of judgment’s effectiveness (for default judgments – evidence of proper service on the absent party);
  • formal documents – all foreign-language documents must include Chinese translations bearing official seals of professional translation agencies, and documents issued overseas require notarisation and authentication; and
  • property preservation (optional) – may be filed concurrently but requires sufficient security and specific asset clues.

Step Two: Application for Recognition and Enforcement

Jurisdiction

The applicant shall submit to the Intermediate People’s Court where the respondent has its domicile or assets. Where the respondent has no domicile/assets in Mainland China, the applicant can submit to the Intermediate People’s Court where the applicant is domiciled.

Time limit

The applicant shall apply for enforcement within two years from the judgment’s effective date. Late filing will result in loss of enforcement rights.

Adjudication process

The court shall constitute a collegial panel within 15 days. The respondent must file a defence within 15 days (if domestically domiciled) or 30 days (if overseas domiciled) after receiving the copy of the application. Before issuing the final ruling, the court shall report the final ruling to the SPC for archival filing.

Remedy

Parties dissatisfied with recognition/non-recognition rulings may apply for reconsideration to the higher court within ten days of service.

Step Three: Application for Compulsory Enforcement

Where recognition is granted, parties may apply for compulsory enforcement in Mainland China based on the effective ruling. Enforcement procedures are largely consistent with those for domestic judgments (see 2.2 Enforcement of Domestic Judgments).

Recognition and Enforcement Fees

The parties seeking recognition and enforcement of foreign judgments in Mainland China shall bear the following costs:

  • notarisation and authentication of foreign documents;
  • professional legal translation services;
  • court acceptance fees;
  • preservation application fee (capped at CNY5,000);
  • property preservation insurance premiums;
  • enforcement fee (to be deducted from recovered assets; see 2.2 Enforcement of Domestic Judgments); and
  • legal representation fees.

Recognition and Enforcement Timeline

Recognition phase

The standard timeframe for recognition of foreign court judgments is normally six to 12 months from filing to ruling, which may be extended when jurisdictional challenges are raised or complex factual determinations are required.

Enforcement phase

As detailed in 2.3 Costs and Time Taken to Enforce Domestic Judgments, the statutory enforcement period is nominally six months; however, actual duration varies significantly on a case-by-case basis in practice.

Pursuant to Article 300 of the Civil Procedure Law of the PRC, the Interpretation of the SPC on the Application of the Civil Procedure Law (the “SPC CPL Interpretation”), and the Minutes of the National Conference on Foreign-Related Commercial and Maritime Trials (the “Foreign-Related Minutes”), people’s courts shall refuse recognition and enforcement of foreign judgments or rulings under any of the following circumstances.

Jurisdictional and Procedural Defects

Jurisdictional defect

  • The foreign court lacked jurisdiction over the case.
  • Due process violations:
    1. the foreign court failed to duly summon the respondent;
    2. the foreign court deprived the respondent’s right to present arguments or defend; or
    3. parties lacking litigation capacity were not legally represented.

Fraudulent judgment

The judgment was obtained through fraudulent means.

Res Judicata and Public Order Conflicts

Violation of res judicata

A legally effective judgment on the same dispute has been rendered by a Chinese court or a third-country court.

Public policy

Violation of fundamental principles of Chinese law, or prejudice to state sovereignty, security or public interests. Chinese courts narrowly interpret public policy, applying only to fundamental violations, not legal errors.

Special Defences

Expiry of enforcement period

The respondent proves the application was filed beyond the two-year enforcement limitation period.

Excessive damages in violation of public interest

Where damages awarded in a foreign judgment substantially exceed actual losses, the court may refuse recognition and enforcement of the excess portion.

Arbitration agreement priority

For default judgments, the court identifies a valid arbitration agreement between the parties, and the absent party did not expressly waive its arbitration rights.

Parties dissatisfied with a recognition/non-recognition ruling may apply for reconsideration to the higher court within ten days of service. The higher court shall issue a final ruling within 30 days.

Legal Basis for Recognition and Enforcement of Foreign Arbitral Awards

International treaty

The recognition and enforcement of foreign arbitral awards in Mainland China is governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), which entered into force in China on 22 April 1987. As of 2024, the New York Convention has 174 contracting states, covering most major jurisdictions. Arbitral awards compliant with the New York Convention may be recognised and enforced by Chinese courts.

When acceding to the New York Convention, China made two reservations, specifically:

  • China applies the New York Convention only to the recognition and enforcement of awards made in the territory of another contracting state; and
  • China applies the New York Convention only to disputes arising out of legal relationships, whether contractual or not, which are classified as commercial under Chinese domestic law.

In essence, for a foreign arbitral award to be recognised and enforced in China under the New York Convention, it must meet two fundamental requirements:

  • the arbitral award must have been made in the territory of a contracting state to the New York Convention; and
  • the legal relationship giving rise to the dispute resolved by the arbitral award must be classified as commercial in nature under Chinese law.

Reciprocity Principle

For arbitral awards from non-New York Convention states, parties may seek recognition and enforcement under Article 304 of the Civil Procedure Law of the PRC based on the principle of reciprocity.

Legal Basis for Recognition and Enforcement of Hong Kong, Macau and Taiwan Arbitral Awards

Concerning the recognition and enforcement in Mainland China of arbitral awards issued by arbitral institutions in Hong Kong SAR, Macau SAR and the Taiwan region, the SPC has promulgated the following specialised judicial instruments:

  • Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and Hong Kong Special Administrative Region;
  • Arrangement Concerning Mutual Recognition and Enforcement of Arbitral Awards Between the Mainland and Macau Special Administrative Region; and
  • Provisions on Recognition and Enforcement of Arbitral Awards made in the Taiwan District.

Parties may apply to courts in Mainland China for recognition and enforcement of relevant arbitral awards from these jurisdictions under the above arrangements and regulations.

Procedure of Enforcement of Foreign Arbitral Awards

The procedure for applying for recognition and enforcement of foreign arbitral awards in China consists of two steps. First, the applicant applies to the court for recognition and enforcement of the foreign arbitral award. After review, the court issues a ruling on whether to recognise the award. After obtaining the recognition ruling, the applicant then applies to the court for compulsory enforcement of the foreign arbitral award.

Regarding the recognition and enforcement of foreign arbitral awards, an applicant shall file an application with the Intermediate People’s Court where the award debtor is domiciled or where the debtor’s assets are located. If the domicile or assets of the award debtor are not within the territory of the PRC, the application shall be filed to the Intermediate People’s Court at the applicant’s domicile or at a location with an appropriate connection to the dispute subject to the award.

Procedure of Enforcement of Hong Kong, Macau and Taiwan Arbitral Awards

The procedure for applying for recognition and enforcement of Hong Kong, Macau and Taiwan arbitral awards in China consists of two steps. First, the applicant applies to the court for recognition and enforcement of the Hong Kong, Macau and Taiwan arbitral award. After review, the court will issue a ruling on whether to recognise and enforce the award. After obtaining the recognition ruling, the applicant then applies to the court for compulsory enforcement of the foreign arbitral award.

For the recognition and enforcement of arbitral awards made in Hong Kong, the applicant shall apply to the Intermediate People’s Court at the respondent’s domicile or the location of assets.

For the recognition and enforcement of arbitral awards made in Macau, the applicant shall apply to the Intermediate People’s Court at the respondent’s domicile, habitual residence, or the location of assets.

For the recognition and enforcement of arbitral awards made in Taiwan, the applicant shall apply to either the Intermediate People’s Court at the applicant’s domicile/habitual residence, or at the respondent’s domicile/habitual residence/location of assets, or a specialised people’s court.

Procedure for Enforcement of Domestic Arbitral Awards

Domestic arbitral awards do not require a separate recognition procedure; the applicant may directly apply for enforcement.

Regarding the enforcement of domestic arbitral awards, jurisdiction principally lies with the Intermediate People’s Court at the award debtor’s domicile or the location of assets subject to enforcement. Exceptionally, where special local provisions apply (eg, pursuant to judicial authorisation by the SPC allowing Basic People’s Courts in Shenzhen to handle certain domestic award enforcement cases), jurisdiction may vest with the Basic People’s Court.

Categories of Foreign Arbitral Awards Not Enforceable

Pursuant to China’s commercial reservation declaration upon acceding to the New York Convention, the New York Convention shall apply exclusively to disputes arising from contractual or non-contractual commercial legal relationships as defined under Chinese law.

Consequently, China recognises and enforces foreign arbitral awards under the New York Convention only for commercial disputes, excluding disputes between foreign investors and host state governments.

The term “contractual or non-contractual commercial legal relationships” specifically refers to economic rights and obligations arising from contracts, torts or statutory provisions. This includes, but is not limited to:

  • sale of goods, property leasing, project contracting, processing work, technology transfer;
  • equity/joint ventures, co-operative operations, natural resources exploration;
  • insurance, credit, labour services, agency, consulting services;
  • passenger/cargo transportation by sea, civil aviation, rail, or road; and
  • product liability, environmental pollution, maritime accidents and ownership disputes.

Categories of Hong Kong, Macau and Taiwan Arbitral Awards Not Enforceable

China recognises and enforces arbitral awards rendered in Hong Kong, Macau and Taiwan concerning civil and commercial disputes, excluding disputes between foreign investors and host state government entities, and non-commercial disputes as defined by laws of Mainland China.

Procedures for Applying for Recognition and Enforcement of Foreign As Well As Arbitral Awards in Hong Kong, Macau and Taiwan Arbitral Awards

Phase 1: Application for recognition and enforcement of arbitral awards

The procedures are largely unified for foreign and Hong Kong, Macau and Taiwan awards.

  • The applicant prepares a complete set of recognition and enforcement documents, including but not limited to notarised/authenticated copies of the arbitral award, document translation, asset tracing reports and an application.
  • The applicant prepares property preservation documents (if applying concurrently for property preservation).
    1. The applicant submits the application documents to the court, which accepts the application and serves the respondent with a copy, allowing the respondent to file a defence.
    2. The respondent may raise jurisdictional objections (if any). If objections are raised, the court must first adjudicate such objections and resume the recognition/enforcement proceedings only after issuing a final ruling thereon.
    3. The court hears this case of recognition and enforcement.
    4. The court issues a ruling on whether to recognise and enforce the arbitral award.

Phase 2: Enforcement of arbitral awards

  • Upon obtaining a recognition ruling, the applicant files for enforcement. The court accepts the application and dockets enforcement of the case.
  • The court serves an Enforcement Notice and Property Reporting Order to the judgment debtor, demanding compliance with the award and disclosure of assets.
  • The court initiates online asset investigations and imposes control measures (eg, seizure, freezing) on the debtor’s assets.
  • The court arranges appraisal and auction of the debtor’s assets (if applicable). After failed auction(s), the court will solicit the applicant’s opinion on debt settlement to accept assets in kind.
  • The court may impose exit bans, high-consumption restrictions, and credit discrediting measures against the debtor upon the applicant’s requests.
  • Where assets are successfully disposed, the court distributes proceeds to the applicant. If no enforceable assets are found or disposed through an exhaustive assets investigation, the case shall be concluded via termination of enforcement or suspense of the current enforcement proceedings.

Procedures for Applying for Enforcement of Domestic Arbitral Awards

The procedures are the same as those for the enforcement of arbitral awards mentioned above.

Recognition and Enforcement Fees of Foreign Arbitral Awards As Well As Hong Kong, Macau, and Taiwan Arbitral Awards

The parties seeking recognition and enforcement of foreign arbitral awards as well as Hong Kong, Macau and Taiwan arbitral awards shall bear the following costs:

  • notarisation and authentication of foreign documents;
  • professional legal translation services;
  • court acceptance fees;
  • preservation application fees (capped at CNY5,000);
  • property preservation insurance premiums;
  • enforcement fee (deducted from recovered assets; see 2.2 Enforcement of Domestic Judgments); and
  • legal representation fees.

Timeline for Recognition and Enforcement of Foreign Arbitral Awards as well as Hong Kong, Macau and Taiwan Arbitral Awards

Recognition phase

The standard timeline for recognition of foreign arbitral awards as well as Hong Kong, Macau and Taiwan arbitral awards is normally six to 12 months from filing to ruling, which may be extended when jurisdictional challenges are raised or complex factual determinations are required.

Enforcement phase

As detailed in 2.3 Costs and Time Taken to Enforce Domestic Judgments, the statutory enforcement period is nominally six months; however, actual duration varies significantly on a case-by-case basis in practice.

Enforcement Fees and Timeline of Domestic Arbitral Awards

The fees and timeline for applying for enforcement of domestic awards in Mainland China is detailed in 2.3 Costs and Time Taken to Enforce Domestic Judgments.

Refusing Recognition and Enforcement of Foreign Arbitral Awards

According to Article 5 of the New York Convention, Chinese courts may refuse recognition and enforcement of foreign arbitral awards in the following circumstances.

  • Absence or invalidity of the arbitration agreement – for example, if the parties lacked legal capacity, the arbitration agreement is invalid under the law chosen by the parties, or, if the parties have not chosen the applicable law, the agreement is invalid under the law of the seat of arbitration.
  • Failure to properly notify the respondent of the appointment of the arbitrator or of the arbitral proceedings, or inability to present the case for other reasons.
  • The award adjudicates matters beyond the scope of the parties’ arbitration clause – if parts of the award exceed the scope of the arbitration, recognition and enforcement will be refused for those non-conforming matters.
  • The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the parties’ agreement or the arbitration law of the seat of arbitration.
  • The award has not yet been binding on the parties or has been set aside or suspended by a competent authority in the seat country.
  • The subject matter of the dispute is not capable of settlement by arbitration under Chinese law, such as cases involving personal status relationships (eg, marriage, adoption, guardianship, succession) or administrative disputes.
  • The recognition or enforcement of the award would be contrary to Chinese public policy.

Refusing Recognition and Enforcement of Hong Kong, Macau and Taiwan Arbitral Awards

The circumstances under which Chinese courts may refuse recognition and enforcement of Hong Kong, Macau or Taiwan arbitral awards are largely consistent with those for refusing recognition and enforcement of foreign arbitral awards as outlined above.

Refusing Enforcement or Setting Aside Domestic Arbitral Awards

Chinese courts may refuse enforcement or set aside domestic arbitral awards in the following circumstances.

  • Absence of a valid arbitration agreement – the parties did not include an arbitration clause in their contract nor subsequently conclude a written arbitration agreement.
  • Award beyond scope or authority – the matters decided in the award fall outside the arbitration agreement or are beyond the authority of the arbitral institution.
  • Procedural violations – the composition of the arbitral tribunal or the arbitration procedure violated statutory requirements.
  • Evidence based on forgery – the award was based on forged evidence.
  • Concealment of material evidence – the opposing party concealed evidence from the arbitral tribunal which was sufficient to affect the impartiality of the award.
  • Arbitrator misconduct – the arbitrator committed embezzlement, accepted bribes, engaged in malpractice for personal gain, or perverted the law during arbitration.
  • Violation of social public interests – the people’s court determines that enforcement of the award would violate social public interests and accordingly rules to refuse enforcement.

Furthermore, for foreign arbitral awards, Hong Kong, Macau or Taiwan arbitral awards, and domestic arbitral awards, recognition and enforcement/enforcement shall be refused if the application is filed after the two-year limitation period for enforcement, and the opposing party objects to the application on the grounds that the limitation period has expired.

Han Kun Law Offices

9/F Office Tower C1
Oriental Plaza
1 East Chang An Avenue
Dongcheng District
Beijing 100738
People’s Republic of China

+86 10 8525 5500

+86 10 8525 5511/5522

beijing@hankunlaw.com www.hankunlaw.com
Author Business Card

Trends and Developments


Authors



Han Kun Law Offices was founded in 2004. A leading full-service law firm in China against the backdrop of globalisation, Han Kun has consistently focused on resolving complex domestic and international commercial transactions and disputes, establishing itself as one of the premier law firms in China’s legal industry. Renowned for its exceptional professional service of commercial dispute resolution, Han Kun has been repeatedly recognised by international authoritative legal media as a top-tier Chinese law firm in the Asia-Pacific region. With over 800 professionals, Han Kun has offices in Beijing, Shanghai, Shenzhen, Hong Kong, Haikou, Wuhan, Singapore, New York and Silicon Valley. Han Kun’s commercial dispute resolution team specialises in providing professional dispute resolution services for major, challenging and complex commercial disputes. It has long served top-tier domestic and international companies across various industries, delivering tailored and effective solutions for their commercial conflicts.

The Rise of Reciprocity-Based Recognition of Foreign Judgments: From Principle to Practice

Legal framework: treaty and reciprocity-based recognition

In accordance with the Civil Procedure Law of the People’s Republic of China (the “PRC Civil Procedure Law”) and its interpretation, foreign civil or commercial judgments may be recognised and enforced in China through two primary legal avenues: (i) pursuant to international treaties or bilateral agreements to which China is a party, or (ii) based on the principle of reciprocity. These mechanisms operate under the overarching limitation that recognition must not contravene the fundamental interests of China, including its sovereignty, national security and public policy.

Historically, the absence of a binding treaty has often posed practical difficulties for litigants seeking to enforce foreign judgments in China. In response, the Chinese judiciary has progressively refined and expanded the application of the reciprocity principle in cross-border enforcement cases. A significant milestone was the promulgation of the Minutes of the National Symposium on the Foreign-Related Commercial and Maritime Trial Work of Courts (the “Judicial Minutes”) by the Supreme People’s Court in 2022.

Defining reciprocity: judicial minutes

Article 44 of the Judicial Minutes provides critical guidance for courts in determining whether a reciprocal relationship exists between China and the foreign jurisdiction whose judgment is sought for recognition. The provision delineates three categories of reciprocity:

  • de jure reciprocity – the foreign country’s laws permit the recognition and enforcement of Chinese civil or commercial judgments, even if there is no prior record of such enforcement;
  • consensus-based reciprocity – a mutual understanding or consensus has been established between China and the foreign jurisdiction explicitly acknowledging reciprocity; and
  • presumed or diplomatically promised reciprocity – through diplomatic exchanges, either China or the foreign jurisdiction has issued a formal promise of reciprocity. This presumption stands unless the foreign jurisdiction has previously refused the recognition of a Chinese judgment on the grounds that no reciprocal relationship exists.

Under the Judicial Minutes, the flexible and pragmatic approach significantly departs from earlier rigid interpretations that required prior actual enforcement cases as a prerequisite for establishing reciprocity. 

Guiding Case No 235: a turning point in judicial practice

In 2024, the Supreme People’s Court formally released Guiding Case No 235, which has since become emblematic of China’s forward-looking stance on reciprocity. This case involved an attempt by S Shipping Co to enforce multiple English judgments against MH Logistics Group for breaches of charterparty guarantees. The Shanghai Maritime Court, in a 2022 order, ruled that the absence of an international treaty or past recognition history between the UK and China did not preclude enforcement.

Instead, the court articulated a broader and more principled interpretation of reciprocity, holding that: (i) Chinese courts may presume reciprocity exists if the laws of the foreign jurisdiction allow, in principle, the recognition of Chinese judgments; and (ii) there is no recorded precedent of the foreign jurisdiction denying enforcement of a Chinese judgment on grounds of non-reciprocity.

This decision enables creditors from jurisdictions with compatible recognition frameworks – even without enforcement precedents – to pursue enforcement in China, marking a decisive break from the restrictive “factual reciprocity” requirement that had previously governed judicial discretion. This has alleviated a longstanding deadlock in international civil judgment recognition. 

Following the issuance of Guiding Case No 235, Chinese courts have continued to apply such principles. On 16 January 2023, in Case (2022) Jing 01 Po Shen No 786, the Beijing First Intermediate People’s Court recognised and enforced a bankruptcy ruling issued by the Aachen Local Court in Germany. This case reinforced a broader judicial commitment to the principle of de jure reciprocity and its application in the absence of binding treaties.

Together, these cases signal a transformation in China’s approach to cross-border civil judicial assistance, marking its transition from a passive to a proactive contributor in the global recognition of judgments regime.

Grounds for Refusal in Recognition and Enforcement of Foreign Judgments in Recent Chinese Practice

As globalisation deepens, a growing number of applications have been filed to Chinese courts for recognition and enforcement of foreign judgments. While a significant majority have been granted, a notable proportion of applications were refused due to procedural flaws, jurisdictional issues or conflicts with domestic legal principles. The authors will analyse the major grounds and representative cases where Chinese courts have declined to recognise or enforce foreign judgments over the past five years.

Legal basis and framework for review

Under Articles 299 and 300 of the PRC Civil Procedure Law and its judicial interpretation, the Chinese courts adopt a “limited substantive review” model. After the establishment of reciprocity, the courts focus on five enumerated grounds for refusal: (i) the foreign court lacked jurisdiction under Chinese law; (ii) the defendant was not duly summoned or given a fair chance to be heard; (iii) the judgment was obtained through fraud; (iv) a Chinese or third-country court has already adjudicated the same dispute; and (v) the enforcement would violate China’s fundamental legal principles or public interest, a residual ground for denial.

Recent Chinese practice

The legal rules outlined above are the foundation for the courts’ analytical framework. In practice, courts assess each application by matching statutory grounds with factual circumstances. The following cases illustrate how these grounds are applied.

Improper service or denial of due process

In Case (2020) Liao 01 Xie Wai Ren No 7, the court dismissed the enforcement request due to a failure to timely file an application. This demonstrates the strict procedural requirements Chinese courts impose on foreign judgments.

In Case (2020) Jing 04 Xie Wai Ren No 2, the Beijing Fourth Intermediate People’s Court refused to recognise and enforce a civil judgment issued by the Udmurtia Commercial Court of the Russian Federation. Applying the Treaty Between the People’s Republic of China and the Russian Federation on Judicial Assistance in Civil and Criminal Matters, the court found that the Russian court had not lawfully summoned the Chinese respondent. The time between the delivery of the judicial assistance requests and the hearing was less than six months, failing to meet the due process standards under both the bilateral treaty and the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. As a result, the recognition of the foreign judgment was denied.

Such procedural issues frequently arise in default judgments or informal service scenarios. Chinese courts apply a heightened scrutiny when due process protections are lacking.

Conflict with Chinese or third-country judgments

In Case (2018) Yue 03 Min Chu No 420, the court declined to recognise a New Zealand judgment as a related case was pending in a Chinese court. This reflects China’s commitment to maintaining its own jurisdiction and avoiding contradictory outcomes.

This provision prevents inconsistent judgments and upholds legal certainty.

Violation of fundamental legal principles or public policy

In Cases (2019) Yue 01 Xie Wai Ren No 22, the Guangzhou court partially recognised US judgments but refused to enforce the punitive damages, which significantly exceeded the actual damages, citing inconsistency with the Chinese compensatory civil law framework.

This flexible standard illustrates how Chinese courts balance domestic legal values with the demands of international co-operation.

In conclusion, foreign parties and counsel should pay close attention to key elements such as jurisdictional basis, due service and public policy considerations. Advance compliance plan will significantly enhance the likelihood of successful recognition in China.

Filing and reporting mechanism for the recognition and enforcement of foreign judgments

Pursuant to the Judicial Minutes, when a people’s court concludes a case involving the application for the recognition and enforcement of a foreign judgment, it shall file the case level by level with the Supreme People’s Court for the record within 15 days after rendering the ruling.

Prior to rendering a ruling, the people’s court that examines a case in accordance with the principle of reciprocity shall report the proposed handling opinions to the competent High People’s Court under the jurisdiction for review; if the High People’s Court agrees with the proposed handling opinions, it shall report its review opinions to the Supreme People’s Court for review. A ruling may be made only after the Supreme People’s Court gives a reply.

Breakthrough Remedies for Creditors Facing Enforcement Impasses

The enforcement impasse

In Chinese enforcement practice, once a judgment, including a recognised foreign judgment, or arbitration award enters the compulsory enforcement phase, the enforcement court may investigate the debtor’s assets and take measures such as the freezing of assets, seizure or auction. However, if the enforcement court finds that the debtor lacks enforceable assets or the available assets cannot be disposed at that time, the court may, pursuant to statutory procedures, terminate the current enforcement proceedings. Such proceedings may be recommenced if new asset clues are discovered.

This common enforcement deadlock in termination of current enforcement proceeding is often caused by:

  • asset transfers or concealment by the debtor;
  • waivers of valuable claims;
  • shareholders’ failure to fulfil capital contribution obligations (especially in closely held companies);
  • capital withdrawal or undercapitalisation; and
  • corporate insolvency or de facto bankruptcy.

Recognising these realities, Chinese authorities have developed new remedial mechanisms in recent years to strengthen judgment enforcement and provide meaningful relief to creditors.

Criminal liability for refusal to comply with effective judgments

One powerful remedy is criminal prosecution for refusal to comply with effective court judgments or rulings (the “offence”), provided for under Article 313 of the PRC Criminal Law. This provision has been clarified by multiple legislative and judicial documents, including the Interpretation by the Standing Committee of the National People’s Congress Regarding Article 313 of the PRC Criminal Law and the Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Refusal to Comply with Judgments or Rulings (the “Judicial Interpretation”), which came into effect on 1 December 2024. The Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security recently issued the Opinions on Several Issues Concerning the Handling of Criminal Cases of Refusal to Execute Judgments or Rulings (the “Opinions”), effective on 1 July 2025, which clarify the procedures and key considerations for handling such cases.

Key elements of this offence are as follows.

  • Scope of offenders – the statute applies to judgment debtors, guarantors, an obligor of assistance in enforcement, or any other person with the execution obligation who has the ability to enforce a judgment or ruling. Both individuals and legal entities can be ruled criminally liable.
  • Prohibited conduct – the conduct must involve wilful refusal to perform, despite the ability to do so, in serious or especially serious circumstances. Judicial interpretations list 13 serious scenarios and four especially serious ones, including but not limited to (i) malicious disposal of assets without consideration, such as transferring assets at a patently unreasonable low price, waiving claims or claim-related security interests, maliciously extending the maturity of due claims, or disposing of assets through false settlements or sham transfers; (ii) malicious diminution of liable assets by acquiring others’ property at patently unreasonable high prices or providing guarantees for others’ debts; and (iii) damage to or transfer of assets provided as security to the people’s court.
  • Object of the offence – this includes not only final judgments and rulings but also court-approved settlements, arbitration awards and rulings on the recognition and enforcement of foreign judgments.
  • Temporal scope – the offence now applies to conduct from litigation commencement through final judgment. In practice, some courts have extended its application to post-default conduct.

Individuals convicted may face imprisonment or fines, while companies are subject to financial penalties and confiscation. The relevant assets of the convicted individual may be directly recovered or ordered to be returned and disposed of by the enforcement court, and the applicant for enforcement will not be required to seek relief through separate proceedings. For example, in Case (2024) Gan 08 Xing Zhong No 140, an individual subject to enforcement was sentenced to eight months of imprisonment for waiving a claim of CNY400,000 against a third party after the judgment rendered by the court had become effective. In Case (2023) Ji 04 Xing Zhong No 537, a company was fined CNY100,000, and its legal representative was sentenced to one year and four months of imprisonment for transferring approximately CNY240,000 to a third party instead of compliance with a final and binding judgment.

Since the end of 2024, the successive issuance and implementation of judicial interpretations and policy guidance has reflected a clear stance by Chinese judicial authorities to strengthen criminal enforcement of judgments and rulings. We believe that the criminal route for refusal to comply with judgments or rulings will become an effective remedy for creditors in situations where the judgment debtor is unable or unwilling to perform. Applicants for enforcement are encouraged to examine whether the judgment debtor has engaged in acts of refusal and to promptly report any leads to the enforcement court or, where applicable, initiate private prosecution proceedings.

Joinder of additional parties in enforcement proceedings

Under PRC Civil Procedure Law and Provisions of the Supreme People’s Court on Several Issues Concerning the Modification and Addition of Parties in Civil Enforcement, creditors may request that parties other than the named debtor be added as judgment obligors if certain statutory conditions are met. This remedy aims to pierce the formal limitations of judgments to hold substantively liable parties accountable. Common scenarios for the joining of parties are as follows.

  • Unpaid capital contributions – shareholders who default on their subscribed capital contributions, or withdraw contributions, may be joined as parties to the enforcement proceeding. Such shareholders shall remain liable for the unpaid contribution amount, even if they have since transferred their shares.
  • Illegal deregistration – if a company is deregistered without liquidation, its shareholders, directors or controlling shareholders may be held jointly liable for its outstanding debts.
  • Post-dissolution asset distribution – if a dissolved company’s assets were distributed to shareholders who failed to satisfy outstanding debts, such shareholders may be liable within the amount received.
  • Companies with sole shareholders – if a sole shareholder cannot demonstrate that corporate assets are independent of their personal assets, courts may pierce the corporate veil and hold the shareholder directly liable.
  • Partnerships – general partners are jointly and severally liable for partnership debts. Limited partners may also be held liable within the scope of unpaid capital contributions.

The PRC Company Law (the “new Company Law”), effective on 1 July 2024, has substantially simplified the procedure for adding undercapitalised shareholders as enforcement targets. Previously, creditors had to prove company insolvency or acceleration of capital contribution deadlines. Courts were cautious to address substantive disputes during enforcement, often requiring separate litigation with full court fees. Now, the new Company Law dispenses with the need for acceleration or separate proceedings. Judges have authority to join shareholders in enforcement proceeding, reducing delays and costs. Creditors may also seek asset preservation orders against proposed joined parties earlier in the process, enhancing recovery possibilities.

Separate litigation for accountability

In addition to the provisions on joinder of parties to enforcement, the PRC Civil Code (the “Civil Code”), the new Company Law, and other relevant laws and regulations provide that certain parties may bear joint and several liability for a company’s debts under specified circumstances. However, since applications for joinder during enforcement proceedings must be based strictly on the provisions governing such enforcement, creditors may only seek relief by filing a separate lawsuit in circumstances not explicitly covered by such provisions, such as where the debtor is insolvent. Common scenarios are as follows.

  • Creditor’s right of revocation – where the debtor transfers assets to third parties without consideration, waives claims or claim-related security interests, or transfers assets at patently unreasonable low prices, acquires property at patently unreasonable high prices, or guarantees another’s debt, the creditor may, pursuant to Articles 538 and 539 of the Civil Code, initiate a separate action seeking to revoke such acts of the debtor. The creditor’s right of revocation is subject to dual time limitations: one year from discovery of the act and five years from its occurrence.
  • Creditor’s right of subrogation – where the debtor neglects to exercise its claims or related ancillary rights (such as mortgage rights), the creditor may, in accordance with Article 535 of the Civil Code, file a separate lawsuit to exercise the debtor’s rights against third parties on its behalf.
  • Veil piercing – where a shareholder abuses the independent legal personality of multiple companies under its control and the limited liability to evade debts, creditors may invoke Article 23 of the new Company Law to request that such companies be held jointly and severally liable.
  • Director liability – where directors (i) fail to urge shareholders to fulfil their capital contribution obligations in a timely manner, or assist shareholders in withdrawing capital contributions, are responsible for the company’s illegal reduction of registered capital, unlawful distribution of profits, or illegal financial assistance (including loans, gifts, or guarantees); or (ii) fail to liquidate the company in a timely manner, or cause harm to others through wilful misconduct or gross negligence in the course of performing their duties, creditors may, pursuant to Articles 51, 53, 163, 211, and 226 of the new Company Law, bring separate actions requesting that relevant directors bear joint and several liability for the company’s debts. 

Notably, where a controlling shareholder or actual controller instructs directors to act against the interests of the company, creditors may also bring a separate action under Article 192 of the new Company Law, seeking joint and several liability from such controlling shareholders, actual controllers and directors.

Overall, the new Company Law strengthens the obligations and responsibilities of shareholders and directors. When a debtor determined by an effective legal instrument is a company, and the company is unable to satisfy its debts, creditors should actively consider investigating whether the company’s shareholders or directors have engaged in conduct detrimental to the company or the creditors’ interests and seek remedies through separate litigation, as legally appropriate.

Transfer from enforcement to bankruptcy proceedings

Where a company debtor is unable to satisfy all of its debts and faces claims from multiple creditors, or where it is evidently insolvent, a creditor who has not obtained a prior preservation of assets (hereinafter referred to as a “Subordinated Creditor”) may find itself unable to recover from the remaining assets, as other creditors with preservation orders will enjoy priority satisfaction through enforcement. In such cases, the Subordinated Creditor may, pursuant to the Notice of the Supreme People’s Court on Promulgation of the Guiding Opinions on Several Issues concerning the Transfer from Judgment Enforcement to Bankruptcy Examination and other relevant regulations, apply to the enforcement court to transfer the enforcement proceeding to bankruptcy review.

Upon bankruptcy acceptance, enforcement proceedings are suspended and preservation measures are lifted, with the debtor’s assets being managed collectively as the bankruptcy estate. Upon receipt of such an acceptance ruling, the enforcement court will transfer the debtor’s assets under its actual control (such as bank deposits already seized or credited, movable property actually detained, securities, etc) to the bankruptcy court or the appointed administrator. At that point, the Subordinated Creditor may, in accordance with the PRC Enterprise Bankruptcy Law, participate in distribution on a pari passu basis with other creditors of the same ranking (including those creditors who had previously obtained asset preservation orders) in proportion to the amount of their recognised claims.

In conclusion, China’s judicial system has undergone a substantial evolution in recent years, both in recognising and enforcing foreign judgments and in strengthening relief mechanisms for creditors facing enforcement obstacles. The refinement of the reciprocity principle – from a rigid factual prerequisite to a legal presumption grounded in compatibility – signals China’s increasing alignment with international standards in private international law. At the same time, the expansion of creditor remedies in domestic enforcement highlights the system’s growing emphasis on accountability, deterrence and fairness.

Han Kun Law Offices

9/F Office Tower C1
Oriental Plaza
1 East Chang An Avenue
Dongcheng District
Beijing 100738
People’s Republic of China

+86 10 8525 5500

+86 10 8525 5511/5522

beijing@hankunlaw.com www.hankunlaw.com
Author Business Card

Law and Practice

Authors



Han Kun Law Offices was founded in 2004. A leading full-service law firm in China against the backdrop of globalisation, Han Kun has consistently focused on resolving complex domestic and international commercial transactions and disputes, establishing itself as one of the premier law firms in China’s legal industry. Renowned for its exceptional professional service of commercial dispute resolution, Han Kun has been repeatedly recognised by international authoritative legal media as a top-tier Chinese law firm in the Asia-Pacific region. With over 800 professionals, Han Kun has offices in Beijing, Shanghai, Shenzhen, Hong Kong, Haikou, Wuhan, Singapore, New York and Silicon Valley. Han Kun’s commercial dispute resolution team specialises in providing professional dispute resolution services for major, challenging and complex commercial disputes. It has long served top-tier domestic and international companies across various industries, delivering tailored and effective solutions for their commercial conflicts.

Trends and Developments

Authors



Han Kun Law Offices was founded in 2004. A leading full-service law firm in China against the backdrop of globalisation, Han Kun has consistently focused on resolving complex domestic and international commercial transactions and disputes, establishing itself as one of the premier law firms in China’s legal industry. Renowned for its exceptional professional service of commercial dispute resolution, Han Kun has been repeatedly recognised by international authoritative legal media as a top-tier Chinese law firm in the Asia-Pacific region. With over 800 professionals, Han Kun has offices in Beijing, Shanghai, Shenzhen, Hong Kong, Haikou, Wuhan, Singapore, New York and Silicon Valley. Han Kun’s commercial dispute resolution team specialises in providing professional dispute resolution services for major, challenging and complex commercial disputes. It has long served top-tier domestic and international companies across various industries, delivering tailored and effective solutions for their commercial conflicts.

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