Arbitration-related interim measures under Chinese law

By Arthur Dong and Vicky Zhao, AnJie Law Firm

Arbitration is a means to resolving disputes between commercial entities that parties commonly use, particularly in cross-border transactions. However, unless people frequently handle preservation measures (also termed “interim measures”) in arbitration, they may not be familiar with them.

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Q: What types of interim measures are available under Chinese law?

A: Although there is no definition of “interim measures” under Chinese law, the term generally means that, before a court judgment or an arbitration award is rendered, an interested party may, where there is a chance that the property could be dissipated or the evidence destroyed, apply for temporary coercive measures against property, evidence, behaviour, among other issues. to ensure subsequent smooth hearing and enforcement procedures. China’s Civil Procedure Law and Arbitration Law set forth respective provisions on evidence preservation, property preservation and behavioural injunction. Furthermore, arbitration rules of all major arbitration institutions in China carry provisions on interim measures.

Q: When and to whom may applications for interim measures be made?

A: Pursuant to the Civil Procedure Law, an application can be filed for interim measures before the start or during the arbitration. The provisions of the Supreme People’s Court on Several Issues Concerning the Handling by People’s Courts of Cases for the Enforcement of Arbitration Awards further provide that, after an arbitration award has been rendered and during the judicial review for an application by the judgment debtor for the vacation or non-enforcement of the arbitration award, an application for interim measures may also be made.

Pursuant to the Civil Procedure Law and Arbitration Law, a party may directly apply to the competent court for interim measures before the start of arbitration. Once the proceeding begins, a party is required to submit the application for interim measures to the arbitration commission, which will then forward it to the court.

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Q: Does China have an “emergency arbitrator system”?

A: The term “emergency arbitrator system” means that, before the constitution of an arbitration tribunal, the arbitration institution is requested, due to an urgent situation, to designate an emergency arbitrator to provide emergency interim relief to the applicant. Major arbitration institutions on the mainland, such as China International Economic and Trade Arbitration Commission, and Beijing Arbitration Commission, have adopted this system. Although under the New York Convention the enforceability of an emergency arbitrator’s “award” is uncertain, Hong Kong and Singapore have confirmed its enforceability through legislation. The arbitration practitioners in China have been calling for the introduction of an “emergency arbitrator” system into the legislative regime.

Q: How long does it take for the court to render a decision on interim measure applications? Also, how long will the interim measures be effective?

A: Pursuant to the Civil Procedure Law, under urgent circumstances, the court is required to render a decision within 48 hours after receiving an application for interim measures. If the court approves the application, the interim measures should be enforced immediately after such a decision. In practice, due to the differences in the number of cases that the courts accept and the specific circumstances of each case, the time the courts take to render decisions on interim measures will be different. Pursuant to the relevant judicial interpretations for the Civil Procedure Law, the freezing of bank deposits may not exceed one year, the seal-up or seizure of movable assets may not exceed two years, and the seal-up of immovable property or the freezing of other property rights may not exceed three years. However, before the expiration of the periods of interim measures, parties may apply to the courts for extensions of the same.

Q: To obtain the approval for interim measures, what conditions normally need to be satisfied?

A: The applicant for interim measures should be a party with a material interest in the matter. The applicant needs to show that its legitimate rights and interests may suffer irreparable harm without interim measures. For example, the property may be dissipated, or the evidence may be destroyed and so on. Furthermore, depending on the circumstances, the court may require the applicant to provide appropriate securities. Pursuant to the Civil Procedure Law, if the court requires the applicant to provide a security, and the latter fails to do so, the former may reject its application for interim measures.

Q: Before the start or during an arbitration outside China, may a party apply for interim measures to courts on the mainland?

A: China is currently silent on this issue. Since there is no legal basis, Chinese courts will not generally accept such requests (except maritime matters). However, given that courts on the mainland overall have a friendly attitude towards arbitration and China is expanding the scope of judicial assistance with other countries, the Beijing authorities may establish a legal system in the future to provide judicial assistance for foreign arbitration.

Q: Any practical advice on interim measures?

A: First, if an application for interim measures is approved, there should be prompt initiation of the arbitration. Pursuant to the Civil Procedure Law, if a party fails to commence the arbitration within 30 days after the court’s approval for interim measures, the court will lift the measures. Second, pay attention to the period of interim measures. If there is a need to extend the period, an application needs to be filed to the court for it before the expiration. Third, provide the arbitration institution with information on the competent court and the location of the property with pinpoint accuracy. Furthermore, any evidence about the urgency of the circumstances is helpful to accelerate the court’s decision-making process on an application for interim measures.

Arthur Dong and Vicky Zhao are partners at AnJie Law Firm

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