Asset Preservation and Interim Measures in China: A Guide for Foreign Creditors

The legal basis: the 2023 Civil Procedure Law

China's interim-measures regime sits in the Civil Procedure Law, comprehensively amended on 1 September 2023 and effective from 1 January 2024, read together with the Supreme People's Court's Judicial Interpretation on the Application of the Civil Procedure Law. Interim measures are available in ordinary litigation and in maritime cases under the Special Maritime Procedure Law; for most commercial claims the Civil Procedure Law is the framework that matters. There is no separate article dealing with foreign parties — the same preservation rules apply, subject to the general rules on foreign-related civil procedure.

The four types of preservation

• Pre-action property preservation (诉前保全) — Article 104: applied for before filing suit, where the applicant's lawful rights are or may suffer irreparable harm.
• In-suit property preservation (诉讼保全) — Article 103: applied for during the proceedings, where the judgment may become impossible or difficult to enforce because of the respondent's conduct or other causes.
• Evidence preservation (证据保全) — Article 84: where evidence may be lost or become difficult to obtain later.
• Pre-enforcement preservation (执行前保全) — provided for in Article 163 of the SPC's Civil Procedure Law Judicial Interpretation, available before enforcement where a party fails to perform a legal document and the respondent may dispose of assets.

Most foreign-creditor recoveries use the pre-action or in-suit property preservation route. The choice between them is driven by urgency and by how the guarantee requirement is calibrated — the two are not the same.

The guarantee requirement: the detail that decides feasibility

Preservation is not free, and the court's standard requirement is that the applicant provide security. The calibration under the Civil Procedure Law is asymmetric by design:

• For pre-action preservation, the applicant must provide security in full — the court will not rule without it (Article 104).
• For in-suit preservation, the court determines the security amount within a range capped at 30% of the amount sought to be preserved, measured flexibly against the preservation risk and the value of the property (Article 103(2)). In practice courts frequently accept far less than 30%, and for a strong, clearly documented claim a modest guarantee often suffices.

Security can usually take the form of cash, a bank guarantee or an insurance-company guarantee letter (诉讼保全责任险), which has become the standard, low-cost instrument — the applicant buys a litigation-preservation liability policy for a small premium rather than tying up cash.

The 48-hour rule and the 30-day deadline

Two timing rules are constantly mixed up, and the distinction is critical. For pre-action preservation the court must issue a ruling within 48 hours of accepting the application, and execute it immediately. That is the ruling deadline, not the suit deadline. The separate obligation — and the trap — is that the applicant must institute litigation or apply for arbitration within 30 days of the pre-action preservation ruling; otherwise the court will lift the preservation. Fail to sue within 30 days and the freeze simply evaporates. In urgent in-suit cases the 48-hour ruling rule can also apply, but the 30-day suit window is specific to pre-action preservation.

What can be preserved — and what cannot

Preservation can reach bank deposits, real estate, vehicles, equipment, equity in companies, accounts receivable and intangible property such as IP. What matters for enforcement is liquidity: freezing a debtor's main operating bank account is usually the single most effective move because it interrupts payroll and collections and drives a settlement. Certain property is exempt from enforcement — the debtor's and their family's living necessities — and the court preserves only to the extent of the claim amount or the identified property. Locating the assets is the applicant's job in practice: the court will not trace for you, so a creditor should identify bank accounts (often from payment history), the debtor's registered real estate and shareholdings before applying.

Release, objection and the cost of getting it wrong

• Release by respondent's guarantee. Under Article 107, the respondent may have the preservation lifted by providing security, usually a cash deposit or a bank guarantee. A preservation can therefore be neutralized by a well-funded debtor — another reason to target liquid assets fast.
• Reconsideration. A party may apply to the same court for reconsideration of a preservation ruling, but the ruling is generally not stayed pending reconsideration.
• Wrongful preservation. If preservation is applied for wrongly, the applicant is liable for the loss caused to the respondent — compensation for the harm from a mistaken freeze. This is the downside risk that disciplines the process, and why a court often insists on the guarantee in the first place.

How foreign creditors use preservation in practice

For a foreign creditor owed money by a Chinese company, the effective sequence is usually: identify the assets; apply for pre-action preservation (with an insurance guarantee) to freeze the main account; then file the claim within 30 days; and negotiate from the position the freeze creates. Preservation is also available in support of arbitration — Chinese courts can order interim measures to support an arbitration, which matters where the dispute is headed to an arbitral tribunal. The provisions summarized here are current as of the date of writing; the Civil Procedure Law and the SPC interpretation are amended from time to time, so confirm the operative text before relying on any specific article number. Our dispute resolution team regularly runs preservation applications for overseas creditors; see also our guide to what to do first when facing a legal matter in China.