Understanding Liquidated Damages under Chinese Law: Key Points for Foreign Enterprises
In international business contracts governed by Chinese law, liquidated damages clauses are a common fixture. They set out pre-agreed compensation for breaches, helping both sides clarify rights and obligations while adding certainty to transactions. However, Chinese law places strict rules and judicial oversight on these clauses—rules that often differ from those in overseas common law or civil law systems. To help foreign businesses steer clear of pitfalls in cross-border deals, this article breaks down the key rules, statutory limits, court adjustment practices, and special scenarios for liquidated damages under Chinese law.
1. The General Rule for Liquidated Damages: Compensation-Oriented with Supplementary Punishment
The governing rule for liquidated damages in China is established by Article 585 of the Civil Code, which defines their primary purpose as compensating the non-breaching party for actual losses incurred due to a breach of contract. Punishment is explicitly characterized as a secondary, supplementary function. This compensation-oriented foundation distinguishes China’s legal approach from common law systems, where parties may independently agree upon high punitive liquidated damages.
In practice, this principle requires that the contractually agreed amount of liquidated damages bears a reasonable relationship to the foreseeable or actual loss. Should the stipulated sum of liquidated damages be judged substantially excessive or overly low compared to the proven loss, the court is empowered by law to adjust it upon request. This judicial discretion serves to prevent outcomes where the non-breaching party obtains a windfall gain from liquidated damages, or where the breaching party bears a liability disproportionate to the harm caused.
Consequently, when drafting or enforcing contracts within China’s jurisdiction, parties should focus on establishing a credible pre-estimate of potential loss. Well-structured liquidated damages clauses that demonstrate this compensatory intent are more likely to be upheld and enforced by Chinese courts.
2. Liquidated Damages: Understanding the 30% Statutory Cap for “Excessively High” Claims
When navigating contract disputes involving liquidated damages in China, grasping the judicial benchmarks governing liquidated damages is critical for drafting enforceable contracts and resolving disputes effectively.
According to the Supreme People’s Court’s Minutes of the National Court Work Conference on the Implementation of the Civil Code, liquidated damages are generally deemed “excessively higher than the losses caused” if they exceed 30% of the actual losses defined under Article 584 of the Civil Code. This 30% threshold serves as a core reference for adjusting liquidated damages: courts or arbitration tribunals are empowered to reduce any portion of aliquidated damages claim that surpasses this cap. This rule delivers critical clarity for liquidated damages clauses in contract drafting and dispute resolution, safeguarding legal interests while upholding the enforceability of contract terms tied to liquidated damages.
It is important to note that the “actual losses” used to evaluate liquidated damages include expected benefits that would have been secured upon full contract performance, but shall not exceed the scope of losses foreseeable by the breaching party at the time of contract conclusion. This definition directly shapes how liquidated damagesare calculated and adjusted in practice.
For disputes involving late payments or contracts with financing elements (e.g., cross-border loans, equity repurchase agreements, investment valuation adjustment mechanisms), courts typically set aside the 30% rule and instead use private lending interest rate benchmarks to adjust liquidated damages.
Currently, the widely accepted standard for such liquidated damages adjustments is four times the one-year Loan Prime Rate (4xLPR) announced by the National Interbank Funding Center, translating to an annual rate of approximately 14.4%-15% in 2026. For contracts signed prior to August 20, 2020, some cases may still reference the old 24% annual benchmark. Critically, the total sum of liquidated damages, interest, service fees, and other related charges cannot exceed this upper limit—and any excess amount already paid can be claimed back by the affected party.
3. Judicial Adjustment of Liquidated Damages: Key Factors & Binding Rules
The judicial adjustment of liquidated damages follows the principle of party-initiated application, but courts are not entirely passive in practice. Even if the breaching party does not file a request to adjust liquidated damages, if the court determines that the agreed liquidated damages are excessively high, it may take the initiative to adjust liquidated damages ex officio. A representative case is (2022) Yue 01 Min Zhong No. 6068, where the Guangzhou Intermediate People’s Court adjusted the agreed daily liquidated damages rate of 3% (equivalent to an annualized rate of over 1000%) to the Loan Prime Rate (LPR) plus 50%—even in the absence of the defendant. This ruling fully reflects the judicial logic governing the adjustment of liquidated damages.
When adjusting liquidated damages, courts will comprehensively assess multiple core factors:
Progress of contract performance: For example, partial performance of the contract will lead to a corresponding reduction of liquidated damages;
Degree of fault of the breaching party: Malicious breach may not warrant a reduction of liquidated damages;
Industry practices and transaction background: These contextual factors help courts determine a reasonable level of liquidated damages aligned with market norms.
Additionally, a critical reminder: Even if parties include a clause in the contract stating they “waive the right to adjust liquidated damages,” such an agreement may be deemed invalid by courts. Judicial practice consistently supports adjusting liquidated damages based on actual circumstances to balance the legitimate interests of both parties.
4. Burden of Proof Allocation for Liquidated Damages
The party claiming that liquidated damages are excessively high and requesting a reduction bears the primary burden of proof. Specifically, this party must demonstrate that the agreed-upon liquidated damages exceed the scope of actual losses caused by the contract breach.
When the non-breaching party argues that the stipulated liquidated damages are reasonable, it is also required to provide corresponding evidence to verify the amount of its losses. Such evidence may include capital occupation costs, rights protection expenses, expected interest losses, and other quantifiable losses that support the reasonableness of the set liquidated damages.
If neither party can fully adduce sufficient evidence to substantiate their claims regarding liquidated damages, the court will exercise discretion to determine a reasonable amount of liquidated damages based on the specific facts of the case and prevailing industry standards.
5. Conclusion: Professional Guidance to Mitigate Liquidated Damages Risks in Foreign-Related Transactions
When conducting foreign-related transactions, liquidated damages risks stand as a major threat to your business’s financial security and legal rights—and navigating these risks requires targeted professional support.
China’s liquidated damages system diverges significantly from frameworks in other jurisdictions. Inadequate drafting of liquidated damages clauses, paired with limited familiarity with Chinese judicial practices around liquidated damages, can easily result in unintended rights erosion and substantial financial losses.
Our team specializes in foreign-related contract disputes, with deep mastery of the critical differences between Chinese and international liquidated damages rules. We offer full-cycle professional assistance: from crafting enforceable liquidated damages clauses to providing strategic guidance during dispute resolution, we help you avoid legal pitfalls tied to liquidated damages and robustly safeguard your core commercial interests.
If you have questions about liquidated damages in foreign-related transactions or need tailored legal support to mitigate associated risks, feel free to contact us at any time.
Contacts:
Saway Wang
Tel: +86 18017682422
Email: sawaywang@billionslawyer.com
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Resolved Divorce Deadlock Spanning Five Countries
When a cross-border marriage dissolves, can spouses from different nations and residences conclude their union amicably and expediently? Recently, we successfully represented a complex foreign-related divorce case spanning five jurisdictions. This outcome not only provides a resounding affirmative answer but also powerfully demonstrates the core value of professional legal services: forging pathways and dissolving deadlocks amidst formidable challenges.
1. Case Background: A Divorce Dispute Spanning Five Countries
(Identities desensitized to protect privacy)
In this case, the French husband and the British wife married in the U.S. Post-marriage, the wife settled in China while the husband relocated to Canada. Cultural differences and long-term separation quickly eroded their relationship, with both agreeing their marriage was irretrievably broken and beyond reconciliation. Notably, they had no substantive disputes over divorce terms, child custody, or property division. However, navigating the legal initiation process became a major hurdle. Seeking professional guidance, the wife reached out to our team for assistance.
2.Preliminary Analysis: Can a Chinese Court Accept Their DivorceDispute?
A French national and a British national—married in the U.S., with one settling in China and the other moving to Canada post-marriage—had a practical concern: Could a Chinese court handle their divorce dispute?
When the wife consulted us in late 2023, the applicable laws were the 2021 revised Civil Procedure Law and its 2022 judicial interpretation. These regulations had limited provisions on jurisdiction over foreign-related divorce disputes, covering only cases involving overseas Chinese, Chinese citizens residing abroad, and foreign-related contract/property disputes. There were no explicit rules for divorce disputes where both parties are foreign nationals but one resides in China.
Our legal research uncovered key guidance: The 2017Answers to Case Filing Questions (II)(Hugao Fali [2017] No. 5) issued by the Shanghai Higher People’s Court clarifies that jurisdiction over foreign-related divorce disputes hinges on two core factors—nationality and marriage location. For cases where both parties are foreign nationals and married abroad, Chinese courts may accept the divorce dispute if both parties jointly choose Chinese court jurisdiction and such handling is truly necessary. Additionally, Article 277 of the new Civil Procedure Law (effective January 1, 2024) stipulates that if parties to a foreign-related civil dispute (including divorce disputes) explicitly select Chinese court jurisdiction in writing, Chinese courts shall exercise jurisdiction.
Based on these legal foundations, we clearly advised the client that their divorce dispute falls under the jurisdiction of a Chinese court.
3. Deadlock Immediately Before Initiation: Husband Refuses to Complete Required Notarization
After communicating with the wife, we confirmed the wife had long resided and worked in Pudong district of Shanghai, establishing it as her legal habitual residence. We initially advised the husband to file as plaintiff (with the wife as defendant) and represented him to initiate divorce proceedings at the People’s Court of Pudong, Shanghai.
However, legal analysis showed the case required mutual spousal consent to the court’s jurisdiction—not just reliance on the defendant’s habitual residence. Our initial plan to file first, then have the court record both parties’ consent, was blocked: the Pudong Court mandated in-person attendance for this step, barring lawyers from confirming jurisdiction on clients’ behalf.
As the husband was based in Canada and uncooperative, he explicitly refused to travel to China. After repeated communications with the court’s filing window (which consulted leadership), we secured approval: the court would accept the case if the husband submitted a notarized, authenticated statement agreeing to Pudong Court’s jurisdiction and the application of Chinese law, no in-person appearance needed.
We immediately prepared all required documents (statement, power of attorney, complaint, etc.) and pressed the husband to complete the notarization process. Despite repeated promises, he took no action. We also tried to assert jurisdiction under Article 276 of China’s new Civil Procedure Law, citing other appropriate connections to China, but the court rejected this, deeming the provision inapplicable.
The divorce dispute fell into a deadlock that dragged on for 18 months.
4. Key Breakthrough and Breaking the Deadlock
During in-depth case review and communications with the client, we uncovered a critical detail: the husband had committed bigamy during his marriage to our client, exposing him to criminal legal risks. We promptly conducted legal analysis and strategically pressured him by clarifying potential consequences—including criminal liability and lasting impacts on his future. We also exerted pressure on his foreign “current” wife via Instagram.
Facing major legal risks and pressure from his “current” wife, the husband’s attitude shifted dramatically. He agreed to cooperate in preparing notarized documents, including a statement consenting to Pudong Court’s jurisdiction. With these key papers, we re-submitted the filing application to the People’s Court of Pudong New Area, Shanghai, and successfully got the case accepted.
5. Lawyers’ Role in a Cross-Border Divorce Dispute: Professional Solutions to Key Challenges
After resolving jurisdiction and case filing issues in this cross-border divorce dispute, we faced a critical hurdle: Chinese domestic divorce proceedings typically require both spouses to appear in court in person, but the husband was in Canada and unable to travel to China. Our lawyers addressed this efficiently through targeted actions:
（1）Securing Virtual Court Hearings
We communicated extensively with the presiding judge, detailing the divorce dispute specifics and the parties’ practical barriers. This successfully convinced the court to adopt virtual video hearings, cutting down time and financial costs significantly. Identity verification was completed via the husband’s passport, with the wife confirming his identity in person.
（2）Meticulous Pre-Hearing Prep & System Guidance
We assisted both parties in preparing, notarizing and authenticating essential documents (e.g., ID papers, marriage certificates). For the overseas husband, we created a detailed English guide to the virtual court system, ensuring he could access the hearing smoothly and fully exercise his litigation rights.
（3）End-to-End Support During Hearings
Serving as legal representatives and translators, our lawyers used proficient English to help both spouses clearly state their divorce intentions. We collaborated closely with the judge to ensure an efficient, seamless hearing process for the divorce dispute.
6. Satisfactory Result: Efficient Dispute Resolution, Peaceful Separation
Ultimately, the People’s Court of Pudong swiftly issued a civil mediation statement and a divorce certificate based on the hearing, affirming the dissolution of the marriage relationship between the parties and legally serving the documents. A cross-border divorce dispute, once stalled by jurisdictional hurdles, was efficiently, smoothly, and legally resolved through a single online court hearing after lawyers overcame the deadlock with professional expertise and strategic acumen.
7. Case Significance: Professional Value Lies in Resolving Complexities
This case’s impact extends far beyond its immediate outcome, delivering three key takeaways:
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Proving Professional Service Efficiency
Resolving this cross-border divorce dispute relied not only on deep expertise in foreign-related jurisdiction rules but also on lawyers’ ability to distill critical facts from complex scenarios and strategically convert substantive legal risks into procedural leverage. Professional legal services stand as a powerful tool to break deadlocks and create viable solutions.
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Reflecting the Core Value of Legal Services
A lawyer’s value goes far beyond basic paperwork or procedural follow-ups. For this divorce dispute, we provided end-to-end support—from legal analysis, strategy formulation, and risk notification to notarization guidance, court coordination, technical support, and courtroom control. We turned a seemingly impossible goal into a feasible path, addressing the client’s core challenges head-on.
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Highlighting the Openness and Convenience of Chinese Judiciary
Chinese courts, while strictly adhering to legal frameworks, accept parties’ jurisdiction choices via notarization and flexibly utilize remote court hearing technology. This streamlines the resolution of cross-border divorce disputes, fully embodying the openness and efficiency of China’s judicial practice.
Divorce may mark the end of a relationship, but professional legal services can chart a lawful, dignified, and efficient path even in the most challenging divorce disputes. We help clients clear obstacles, transition smoothly, and embrace a new chapter in life—this is the lasting value we, as lawyers, strive to deliver.
Contacts:
Saway Wang
Tel: +86 18017682422
Email: sawaywang@billionslawyer.com
Secured Nearly 200,000 RMB of Severance Pay for a Foreigner In Labor Dispute
Our team recently represented a foreigner holding a Chinese “Five-Star Card” (Permanent Residence Permit) in a labor dispute with his employer over labor contract renewal, achieving a favorable resolution. Through precise legal positioning, a robust arbitration strategy, and multiple rounds of professional negotiations, we successfully secured a nearly 200,000 RMB settlement for our client in this labor dispute, effectively safeguarding the legitimate rights and interests of high-level foreign talent in China’s labor market.
1. Case Background: The Foreigner’s Renewal Dilemma
Our client, Mike (pseudonym), was embroiled in a labor dispute when his employer abruptly decided not to renew his second fixed-term labor contract upon expiration, leaving him facing involuntary job loss after several years of consecutive employment with the company.
As a foreign national holding a Chinese Permanent Residence Permit and enjoying its associated benefits, Mike was initially pessimistic about resolving the labor dispute and protecting his rights in the face of his employer’s unilateral non-renewal decision. Before seeking our team’s legal assistance, he had nearly resigned himself to the reality of involuntary termination stemming from the labor dispute.
2. Legal Positioning and Strategic Choice
Upon accepting this labor dispute case, we promptly assembled a specialized labor dispute team and conducted a comprehensive analysis from three key dimensions to address the core issues:
(1) Legal Status Determination in Labor Disputes
According to the “Measures on the Treatment Entitled to Foreigners with Permanent Residence Status in China,” foreign nationals holding a Chinese Permanent Residence Permit enjoy the same labor rights and assume the same obligations as Chinese citizens in labor dispute scenarios (except for specific excluded rights). This meant Mike was directly protected by China’s Labor Contract Law in this labor dispute, granting him equal treatment to Chinese workers. The critical labor dispute point was that Mike had consecutively signed two fixed-term labor contracts—satisfying the Labor Contract Law requirement for an open-ended labor contract.
(2) Arbitration Strategy Formulation for Labor Disputes
Based on Mike’s legal status, we confirmed he was entitled to identical labor protections as Chinese citizens in this labor dispute. The employer’s refusal to sign an open-ended contract (despite Mike’s clear renewal willingness) constituted suspected illegal termination of the labor relationship—an actionable claim in the labor dispute. We calculated Mike could legally seek compensation including illegal termination damages, contract completion bonuses, and unpaid annual leave wages, totaling a substantial sum for this labor dispute.
(3) Evidence System Construction for Labor Dispute Resolution
The team guided Mike to systematically collect three key evidence types critical to resolving the labor dispute:
- Labor relationship proof: Two complete labor contracts, work permit records, and salary payment records (foundational to establishing the labor dispute);
- Renewal intention proof: Email correspondence and renewal survey forms (demonstrating Mike’s clear willingness to renew—an essential factor in the labor dispute);
- Employer breach proof: Records of the company’s explicit refusal to renew (directly supporting the illegal termination claim in the labor dispute).
3. Professional Arbitration and Multi-round Negotiations
(1) Precise Labor Arbitration Application
On the basis of thorough preparation, we filed a labor arbitration application with the local Labor and Personnel Dispute Arbitration Commission, emphasizing three critical points: (1) the employer’s illegal refusal to sign an open-ended labor contract, a core violation in labor disputes; (2) the principle of equal rights for permanent resident foreigners and Chinese workers in labor disputes; (3) clear and reasonable compensation claims aligned with labor dispute regulations.
(2) Multi-round Professional Negotiations in Labor Dispute Resolution
Given the potentially lengthy timeline of labor dispute arbitration and litigation—even if successful, compensation could be significantly delayed—Mike expressed concern. Therefore, after filing the case, we did not merely wait for the arbitration hearing but proactively initiated multiple rounds of professional negotiations to resolve the labor dispute:
- First Round
Clarifying Legal Stance on Labor Dispute. We clearly communicated the special legal status of permanent resident foreigners in labor disputes to the employer’s representative lawyer. Simultaneously, we presented relevant legal bases and similar labor dispute cases, highlighting the severe legal risks of illegal termination.
- Second Round
Presenting Key Evidence for Labor Dispute. We selectively disclosed core evidence to the opposing party, demonstrating our evidential strengths and focusing on the completeness and credibility of the evidence chain in labor dispute cases.
- Third Round
Balancing Interests in Labor Dispute Settlement. We analyzed the pros and cons from various perspectives—including the company’s reputation risks and the impact on foreigner management in labor disputes—and proposed a reasonable and constructive settlement plan tailored to labor dispute resolution.
(3) Breakthrough in Mediation
Facing a strong employer, we seized the optimal timing, maintaining legal pressure while demonstrating sincerity towards mediation. This ultimately led both parties to reach a settlement agreement of nearly 200,000 RMB, far exceeding the client’s initial expectations .
4. Case Outcomes and Value
The successful resolution of this labor dispute case brought the following benefits to our client:
- Secured nearly 200,000 RMB in compensation through the labor dispute resolution, effectively alleviating financial pressure during the employment transition period.
- Protected his dignity and rights via legal channels in the labor dispute, thereby enhancing his confidence in China’s legal environment.
- Achieved rapid labor dispute resolution through settlement, avoiding protracted arbitration and litigation procedures.
For foreign nationals facing labor disputes in China, a professional legal team specializing in labor disputes must not only be well-versed in general labor regulations but also proficient in specific provisions governing foreign-related labor relationships to deliver precise and effective legal services for labor dispute resolution.
Consequences of Failing to Execute A Court Judgment in China
As China integrates further into the global economy, an increasing number of foreign companies and individuals face legal proceedings within its jurisdiction. When a court judgment is issued, compliance is not optional—it is mandatory. Understanding the consequences of refusing to execute a court judgment in China is critical for protecting your interests.
This article explains the severe repercussions of non-compliance under Chinese law, based exclusively on authoritative legal sources. From enforced property seizures and credit blacklisting to criminal liability, we detail what happens if you refuse to execute a court judgment. Whether you are an enterprise seeking owed payments or an individual enforcing your rights, this guide helps you navigate China’s legal landscape with clarity.
1. Enforcement Measures Against Property Under a Chinese Court Judgment
When a party refuses to execute a court judgment in China, the court has the authority to take direct enforcement actions against the debtor’s property. Key measures include:
(1) Freezing and Deducting Bank Deposits
If a debtor refuses to pay as mandated by a court judgment, the court can order the freezing and direct deduction of funds from the debtor’s bank accounts. This includes savings deposits, wealth management products, and other financial assets.
(2) Auctioning Assets
The court may seize and publicly auction valuable assets—such as real estate, vehicles, inventory, and equity interests—to recover debts specified in thecourt judgment. Proceeds from the auction are used to fulfill the obligations under the court
2. Compulsory Performance of Obligations Under a Court Judgment
When a debtor fails to comply with a court judgment, Chinese courts can enforce specific actions or restrict certain behaviors to ensure implementation. Key measures include:
(1) Mandatory Actions Ordered by Court Judgment
Courts can require debtors to perform specific actions in accordance with the court judgment, such as transferring property, restoring reputation, or issuing formal apologies. If the debtor refuses, the court may arrange for a third party to perform the act at the debtor’s expense.
In certain situations, the court can also compel government authorities to assist in enforcement. For example, it may issue a Notice of Assistance in Execution to real estate or company registration bureaus, mandating that they update registrations based on the court judgment.
(2) Restraining OrdersUnder a Court Judgment
A court judgment may prohibit an individual or entity from engaging in specific activities—such as disposing of assets without court approval or continuing infringing behavior. Violations of these court-ordered restrictions can lead to further legal consequences.
3. Penalties for Refusing to Comply with a Court Judgment
Individuals or legal entities that refuse to comply with a court judgment may face daily fines imposed by the court. These penalties continue to accumulate until the obligations under the court judgment are fully satisfied, significantly increasing the financial burden on the non-compliant party.
4. Inclusion in the Dishonest Persons List (“失信被执行人名单”)
Failure to comply with a court judgment can result in being included in China’s Social Credit System blacklist—known as the “Dishonest Persons List.” This designation carries severe social and legal restrictions, including:
(1) Restrictions on High-Consumption Activities
Debtors and their legal representatives (for companies) are barred from engaging in high-consumption activities, such as:
– Purchasing first-class flight tickets or soft-sleeper train tickets;
– Staying at high-star hotels or luxury resorts;
– Enrolling children in expensive private schools.
These prohibitions are enforced under the authority of the court judgment.
(2) Travel Restrictions
Based on the court judgment, debtors and affected legal representatives may be prohibited from using high-speed trains, flights, or other premium means of transportation, severely limiting freedom of movement.
5. Judicial Detention for Refusing to Comply with a Court Judgment
Under Article 114 of China’s Civil Procedure Law, courts may impose short-term judicial detention—usually for up to 15 days—on individuals who obstruct the enforcement of a court judgment. This is an administrative measure, not a criminal penalty, designed to compel compliance.
Behaviors that can lead to detention include concealing assets, providing false information, refusing to perform mandatory actions, or violating restraining orders issued under the court judgment.
For foreigners in China, non-compliance with a court judgment could result in temporary loss of freedom, disrupted travel plans, and potential visa complications. detention serves as a strong deterrent, underscoring that the Chinese legal system treats enforcement with utmost seriousness.
6. Criminal Liability for Repeated Refusal to Execute a Court Judgment
In cases of repeated or malicious non-compliance, refusing to perform a court judgment may lead to criminal charges under Article 313 of China’s Criminal Law. The crime of “refusal to execute a court judgment or order” is punishable by:
– Imprisonment for up to seven years;
– Criminal detention;
– And/or criminal fines.
A conviction under this statute reflects the severe consequences of intentionally ignoring a legally effective court judgment in China.
Conclusion: Key Takeaways and Practical Advice on Complying with a Court Judgment in China
Refusing to execute a court judgment in China leads to severe and multi-level consequences—including asset seizure, financial penalties, judicial detention, and even criminal liability—all grounded in laws such as the Civil Procedure Law and the Criminal Law.
For foreign companies and individuals involved in legal disputes in China, complying with a court judgment is not only a legal obligation but also a strategic necessity. Adherence helps avoid operational disruption, protects your reputation, and supports fair and enforceable outcomes.
Always consult with qualified legal professionals in China to navigate execution procedures, and consider proactive dispute-resolution methods like mediation to sidestep enforcement risks. Remember, China’s judiciary prioritizes efficient execution, so respect court judgment to foster trust and stability in your cross-border engagements.
Email: sawaywang@billionslawyer.com
Tel/Whatsapp: +86 18017682422
What is Property Preservation under Civil Litigation Procedure in China?
In China’s civil and commercial dispute resolution process, Property Preservation is a crucial measure to prevent the malicious transfer of property to evade debts. It acts as a vital protective barrier during litigation or arbitration, exerting pressure on the defendant and compelling it to fulfill its debt obligations. This article offers a clear analysis of its value, scope, and common misconceptions.
1. Why is Property Preservation Necessary?
A primary concern when litigating or arbitrating in China is winning the case only to discover that the opposing party has surreptitiously dissipated or transferred key assets essential for enforcement. The core function of Property Preservation is precisely to mitigate this risk. It allows a party to apply for property preservation to the court when filing the case, seeking preliminary restrictive measures against the respondent’s assets.
The core value of Property Preservation：
- Preventing Asset Transfer: Measures such as freezing bank accounts, sealing real estate, or impounding vehicles effectively prevent the opposing party from transferring, concealing, or selling off assets.
- Securing Future Enforcement: It preemptively identifies and secures assets that can satisfy a future judgment, thereby avoiding the predicament of a “hollow judgment”–winning the case but being unable to collect.
- Applying Performance Pressure: Preservation measures can significantly disrupt the respondent’s business operations, incentivizing them to proactively seek settlement or fulfill their obligations.
- Facilitating Dispute Resolution: It creates a more advantageous foundation for settlement negotiations, mediation, or other Alternative Dispute Resolution (ADR) mechanisms.
2. What Assets Can Be Preserved?
According to the relevant provisions of the Civil Procedure Law of the People’s Republic of China (CPL, 《中华人民共和国民事诉讼法》) and its Judicial Interpretations, the primary categories of preservable assets include:
- Bank Accounts:Freezing deposits is the most common measure, can directly restrict the transfer of deposits in the bank account.
- Real Estate: Propertiesand land use rights can be sealed, prohibiting sales, mortgages.
- Stocks, Bonds, Fund Units:Can be frozen through relevant registration and clearing institutions, restricting transactions.
- Vehicles, Vessels, Aircraft:Can be sealed and restricted for sales and mortgages through the relevant traffic control, vessel, or aircraft registration authorities.
- Equity/Investment Interests:Shares in limited liability companies, partnership interests, etc., can be frozen, restricting transfer and, depending on the scope of the application and the court’s ruling, the exercise of shareholder rights.
- Machinery, Equipment, Raw Materials, Inventory/Goods:The court may move the above items to a designated place and seal them up, restricting the transfer of anyone.
- Intellectual Property Rights:Proprietary rights within patents, trademarks, and copyrights can be frozen, prohibiting assignment or licensing.
- Cash Value of Insurance Policies (if enforceable):The cash surrender value of policies that have such value and are legally subject to compulsory enforcement can be frozen.
- Accounts Receivable:The court can notify the account debtor (the third party owing money to the respondent) to perform its payment obligation directly to the court.
- Rental Income:The court can order tenants to pay rent directly into a court-designated account.
- Other Property-Value Rights:Any rights possessing transferability and monetary value, such as future revenue arising under specific contracts, may theoretically be subject to preservation (subject to case-specific analysis and court approval).
3. What Should We Provide for Property Preservation
（1）Application letter for property preservation
（2）Property Clues:
- Bank Account: we need to provide the court with the bank account number of the respondentwhen applying for preservation. If you are unaware of the bank account number, you may consult with us for assistance in checking.
- Real Estate:the detailed address of the real estate is required to be provided
- Machinery, Equipment, Raw Materials, Inventory/Goods:we need to provide the location, product name, quantity, model, brand or other related information.
4. Liability for Wrongful Preservation
Property Preservation is a sharp “double-edged sword.” If applied for improperly or excessively, the applicant bears corresponding liability for damages. This is why courts usually require applicants to provide sufficient security when applying for property preservation. The form of security can be cash security (usually 30% of the amount preserved) or a guarantee letter a qualified institution (such as an insurance company or guarantee company)
The primary scenarios triggering liability include:
- Compensation after losing the case:If the applicant ultimately does not prevail on the claim for which preservation was sought, they are generally liable to compensate the respondent for all losses caused by the wrongful preservation. For example: Company A wrongfully freezes Company B’s bank account, causing B to lose a crucial business opportunity. A must compensate B for lost profits and potential reputational damage.
- Excessive Preservation:Even if the applicant partially wins the case, if the value of assets preserved significantly exceeded the amount ultimately awarded by the court (e.g., freezing ¥10 million but only winning ¥2 million), the applicant is liable for damages caused by the excessive portion of the preservation.
- Failure to Timely Lift Preservation: Once the grounds for preservation cease to exist (e.g., the claim is dismissed, the parties settle and the settlement is performed), the applicant has an obligation to promptly apply to the court to lift the preservation measures. Failure to do so resulting in additional losses renders the applicant liable for those expanded damages.
- Scope of Compensable Losses: Liability may cover direct property damage (e.g., operational losses due to wrongful frozen accounts, increased financing costs, losses from forced asset sales at depressed prices), lost profits (expectation damages), and, in extreme cases, indirect losses like reputational harm.
Conclusion
Property Preservation is a potent procedural tool within the Chinese legal system, significantly reducing the risk of “enforcement difficulties”. Given its high degree of technicality and the potential for significant liability consequences, it is strongly advisable to seek legal advice from qualified Chinese lawyer before applying for Property Preservation.
A experienced lawyer can help you:
- Investigate the assets of the defendant.
- Analyze the chance of the case and the risk of property preservation
- Gather necessary evidence.
- Prepare and arrange sufficient and appropriate security.
- Strategically navigate the application process to maximize the protective benefit.
- Minimize the legal risks associated with wrongful or excessive preservation.
Through careful planning and expert guidance, this “double-edged sword” can be effectively wielded as a robust shield to safeguard your legitimate rights and interests in China.
Saway Wang
Email: sawaywang@billionslawyer.com
Tel/Whatsapp: +86 18017682422
How To Recognize and Enforce a Foreign Divorce Judgment?
In today’s globalized world, cross-border marriages and divorces are common, but a foreign divorce decree isn’t automatically recognized in China. For example, if a couple marries in China and divorces in the U.S., the U.S. decree isn’t valid in China until acknowledged and enforced by a Chinese court. Similarly, a divorce finalized in China must be recognized and enforced by the relevant foreign court to be effective in that country.
Not completing the process of recognizing a foreign divorce decree in China can result in various legal issues and risks. For instance.
Risk of property division: If a couple divorces in a foreign country and one party acquires new property in China, that property could be subject to division. Under Chinese law, property obtained during the marriage is considered communal, and without formal recognition of the foreign divorce, this rule still applies.
Risk of bigamy: If a person divorces in a foreign country and then remarries in China without formally recognizing the foreign divorce decree, they risk committing bigamy. Bigamy is a criminal offense under Chinese law and can lead to criminal charges.
This article will guide you through the process of applying for recognition and enforcement of a foreign divorce decree in China, as well as the steps to apply for recognition and enforcement of a Chinese divorce decree in another country.
1. How to Recognize and Enforce a Foreign Divorce Judgment in China?
(1) Which foreign divorce judgment can be recognized and enforced by Chinese courts?
To seek recognition and enforcement of a foreign divorce decree in China, at least one of the parties involved, whether the applicant or the respondent, must be a Chinese citizen.
(2) Who can apply for recognition and enforcement of foreign divorce judgment in Chinese courts?
Both the parties involved in the divorce and the foreign court that issued the decree are eligible to apply for recognition and enforcement of foreign divorce judgments in Chinese courts.
(3) Which court has jurisdiction?
The application must be filed with the intermediate people’s court located in the applicant’s usual place of residence.
(4) Inadmissibility in Chinese Courts
If a court has already accepted a divorce lawsuit, and one of the plaintiffs subsequently changes their request to seek recognition of the foreign court’s divorce judgment, or if the defendant files a new application for the recognition of the foreign court’s divorce judgment, the application will not be accepted.
(5) What documents are needed for the application for recognition and enforcement?
(i) Application Letter:
The application letter must include the following details:
the applicant’s name, gender, age, place of employment, and address; the name of the foreign court that issued the judgment, the judgment’s outcome, and the date of the judgment; the circumstances under which the applicant was summoned and responded to the appeal; the reasons for the application and the specific request; as well as any other relevant information.
(ii) Photocopies of passports or identity documents of both the applicant and the respondent;
(iii) Original Divorce Decree and Notarized Translation;
(iv) Documents Proving the Validity of the Foreign Divorce Decree with Notarization and Legalization
(6) What is the time frame for the Court’s review?
Generally, upon receiving an application, the court must initiate the case within seven days if the application meets the admissibility criteria. If the application does not meet the criteria, the court must notify the applicant of its inadmissibility within seven days, along with the reasons for this decision.
However, the law does not specify a time limit for the court to issue a ruling on the recognition of a foreign divorce decree or to reject the application once it has been accepted.
(7) How do Chinese courts decide on recognizing and enforcing foreign divorce decrees?
(i) Four reasons why Chinese courts are obligated not to recognize and enforce divorce decrees from foreign courts:
① The foreign court’s judgment has not yet become legally effective.
② The foreign court that issued the judgment lacked jurisdiction over the case.
③ The foreign judgment was made without the defendant being present and without a proper summons.
④ The divorce case between the parties is being heard or has already been decided by a Chinese court, or a divorce judgment from a third country has been recognized by a Chinese court.
(ii) Legal grounds for Chinese courts to recognize and enforce foreign court divorce judgments
Chinese courts will decide to recognize the validity of foreign divorce decrees as long as they do not contravene fundamental principles of Chinese law or harm national sovereignty, security, or public interest.
The review criteria are:
(a) the provisions of international treaties between the two countries; or
(b) reciprocal relations, meaning that if one country recognizes the validity of Chinese divorce decrees, China will also recognize the validity of divorce decrees from that country.
(8) Do Chinese courts recognize and enforce foreign divorce decrees in full?
No. Chinese courts only recognize the aspects of the foreign judgment related to the personal relationship between the parties, such as the marital status and whether a divorce has been granted. Matters related to property division and child custody still require separate lawsuits within China to be addressed and confirmed.
(9) Can a decision by a Chinese court regarding the recognition and enforcement of a foreign divorce decree be appealed?
There is no appeal, and upon service, it becomes legally effective.
(10) Court Fees
The court fee will be RMB 100.
(11) What are the remedies for inadmissibility and rejection?
If the court rejects the applicant’s application or dismisses it, the applicant cannot submit a new application. However, they can pursue a separate divorce lawsuit in a people’s court.
2. How to Recognize and Enforce a Chinese Divorce Judgment Abroad?
The recognition and enforcement of Chinese court judgments in foreign countries can be accomplished based on the following methods:
(1) Based on bilateral mutual legal assistance agreements between the two countries.
According to the Summary Table of Mutual Legal Assistance Agreements Signed by China with Other Countries, China has established bilateral agreements on mutual legal assistance in civil or commercial matters with 39 countries, of which 38 are currently in force. Among these 38 agreements, except for those with Belgium, Singapore, South Korea, and Thailand—which do not cover the recognition and enforcement of court rulings—the remaining 34 agreements include provisions for mutual recognition and enforcement of court decisions.
(2) Based on reciprocal relations between the countries and the applicable provisions in the domestic laws of the requested country.
If there are no bilateral agreements between China and a foreign country, a party seeking to recognize and enforce a Chinese court judgment in that foreign country must follow the local laws of that country. Typically, these laws are based on principles of judicial comity or reciprocity, and are shaped by the judicial history and practices of the country in question.
For instance, since there is no bilateral agreement on judicial assistance in civil and commercial matters between the United States and China, the recognition and enforcement of Chinese court decisions in the United States must be carried out according to U.S. domestic law.
In the United States, the principles of judicial comity and the recognition of foreign money judgments are outlined in the Uniform Act on the Recognition of Foreign Money Judgments, created by the U.S. Commission on Uniform State Laws. This Act has been adopted by over 30 states, each with its own judicial system and state laws. States that have adopted the Uniform Act can use it to apply for the recognition and enforcement of Chinese court judgments. For states that have not adopted this Uniform Act, they rely on U.S. case law, which generally upholds the principle of reciprocity.
Feel free to contact us if you need more information.
Saway Wang
Email: sawaywang@billionslawyer.com
Tel/Whatsapp: +86 18017682422
Essential Steps After Experiencing Domestic Violence
Domestic violence is a serious social issue that threatens the safety and dignity of victims, while also disrupting family harmony and social stability. The law strongly condemns and penalizes acts of domestic violence.
At the civil law level, the Supreme People’s Court addressed this issue by passing the Provisions on Several Issues Concerning the Application of Law in Handling Cases of Personal Safety Protection Orders on June 7, 2022 (the “Provisions”).
These Provisions, effective August 1, 2022, ensure the thorough implementation of the Anti-Domestic Violence Law and provide comprehensive protection for the legal rights and interests of domestic violence victims in marriage.
1. Definition of domestic violence
(1) What kind of behaviors constitute domestic violence?
Article 2 of China’s Law on Combating Domestic Violence defines domestic violence as both physical and mental aggression among family members.
This includes actions such as beating, binding, maiming, restricting personal freedom, frequent verbal abuse, and intimidation. Article 3 of the Provisions further clarifies domestic violence by including behaviors like freezing, starvation, frequent insults, slander, threats, stalking, and harassment.
(2) What are the boundaries or restrictions concerning domestic violence?
Violence can occur between spouses, between parents and minor children, between adult children and elderly parents, and between individuals living together outside the immediate family, such as daughters-in-law, sons-in-law, in-laws and others.
2. What to do when experiencing domestic violence
(1) Seeking relief
(i) Who are the eligible parties to seek relief?
In addition to the victim’s right to seek help, their legal representatives and close relatives are also entitled to report the situation and seek assistance. Furthermore, when domestic violence involves minors, schools, medical institutions, residents’ committees, and their staff have a mandatory obligation to report the abuse.
(ii) There are three primary methods to seek assistance after encountering Domestic Violence.
(a) Reporting to the police
To report domestic violence, call 110 or visit the nearest police station. For minor incidents, law enforcement may issue a warning or provide education to the aggressor. In more serious cases, the police will enforce public security management penalties according to the law. If the violence is especially severe and constitutes a crime, authorities will pursue criminal charges.
(b) Filing for a personal protection order from the court.
If someone has experienced domestic violence or is in immediate danger, they can apply to the court for a personal safety protection order. The court will issue or reject the application within seventy-two hours, or within twenty-four hours in urgent cases.
(c) Filing complaints with relevant organizations.
Complaints, reports, or requests for assistance can be made to the parties’ workplaces, residents’ committees, villagers’ committees, women’s associations, and other organizations. Upon receiving a complaint or request for help related to domestic violence, these units are obligated to provide assistance and address the situation.
(iii) Retain evidence of domestic violence.
(a) Medical records
After experiencing domestic violence, it’s crucial to visit a hospital and keep all medical documentation, such as diagnostic reports, medical records, hospitalization and discharge summaries, and medical bills. It’s also important for the doctor’s diagnostic records to detail the extent of the injuries and, if possible, specify the cause, such as “struck by an external force.”
(b) Evidence gathered following the report.
However, medical records alone may not be enough to prove that an injury resulted from domestic violence. To build a stronger case, it is advisable to keep police records, receipts, and notification materials. If possible, take photos of the victim’s and abuser’s interrogation transcripts from the police. Additionally, retain any warning letters or public security management penalty decisions issued by law enforcement.
Additionally, if law enforcement conducts an assessment of the victim’s injuries, it is important to retain the injury assessment report.
(c) Additional evidence.
This includes, but is not limited to:
① the abuser’s letter of apology or confession;
② records of requests for help and mediation from the village (neighborhood) committee, women’s federation organizations, anti-domestic violence groups, and the employers of both parties;
③ electronic evidence such as surveillance footage, video, and audio recordings; and
④ witness statements.
3. Personal Protection Order
(1) Do I need to file a civil lawsuit first to apply for a personal protection order?
Victims of domestic violence can seek a personal safety protection order directly from the People’s Court to promptly and effectively ensure their safety, without requiring the filing of a divorce lawsuit, such as divorce, as a prerequisite.
(2) Who can apply for the Personal Protection Order?
(i) The victim themselves.
(ii) Close relatives, public security authorities, women’s associations, residents’ committees, villagers’ committees, and relief organizations may apply for a protection order on behalf of the victim in cases where the individual is incapacitated, has limited civil capacity, is coerced or intimidated, or is elderly, disabled, or seriously ill, thus unable to apply independently.
(3) In which court should one apply to for a personal protection order?
File the application with the Basic People’s Court in the jurisdiction where either the applicant or the respondent resides, or where the domestic violence took place.
(4) What level of proof is necessary for granting a Personal Protection Order?
If there is a reasonable belief that the applicant is at risk of domestic violence or facing immediate danger, a personal safety protection order can be issued under the law without the need to establish a “high likelihood”. This approach reduces the burden of proof on the parties involved.
(5) How long does it take to issue a Personal Protection Order?
Upon receiving an application for a protection order, the People’s Court generally issues a ruling within 72 hours. In urgent cases, this ruling is expedited to within 24 hours.
(6) What does a Personal Protection Order include?
The measures may encompass one or more of the following options simultaneously, depending on the applicant’s request :
(i) Issuing an order to prevent the respondent from committing domestic violence.
(ii). Ordering the respondent to refrain from harassing, stalking, or contacting the applicant and their close relatives.
(iii) Directing the respondent to maintain a distance from the applicant’s residence, school, workplace, or other frequented locations
(iv) Directing the respondent to vacate the applicant’s residence.
(v) Additional measures aimed at ensuring the applicant’s personal safety.
(7) How long does a Personal Protection Order last?
The People’s Court sets the duration of the personal safety protection order based on the applicant’s request and the circumstances of domestic violence, typically up to six months. If continued protection is needed beyond this period, the applicant may request an extension of the order’s validity.
(8) Do applicants need to cover court costs for a Personal Protection Order application?
The People’s Courts accept applications for protection orders without requiring payment of litigation fees.
(9) What are the legal ramifications of breaching a Personal Protection Order?
(i) If the violation of a protection order is not severe and does not yet constitute a criminal offense, the People’s Court generally issues a warning. Depending on the seriousness of the case, they may also impose a fine of up to 1,000 yuan or a detention period of up to 15 days.
(ii) If the respondent violates a protection order to a degree that meets the criteria for the “crime of refusing to execute a judgment or ruling” as defined in Article 313 of the Criminal Law, they may face criminal penalties, including imprisonment for up to three years, criminal detention, or a fine. In cases deemed exceptionally serious, the punishment may range from three to seven years of imprisonment, along with a fine.
(10) What happens if the respondent is found to have violated a Personal Protection Order?
If the respondent violates the protection order, the applicant has the option to report the breach to either the People’s Court or the public security authorities.
4. Relationship between domestic violence and divorce
(1) Can domestic violence serve as a legitimate basis for divorce?
Domestic violence serves as a legal justification for establishing that the marriage has irreparably deteriorated and warrants a divorce. As stipulated in Article 1079 of the Civil Code, the court will grant a divorce upon substantiated evidence of domestic violence.
(2) It is not appropriate for the abusive party to directly care for the child.
In cases involving an abusive party, the court often recognizes the potential danger of domestic violence and deems it inappropriate for that party to have primary custody of the child. Therefore, unless the couple agrees otherwise on custody arrangements, the injured party typically receives custody of the child.
(3) Domestic violence constitutes legal misconduct, and if it leads to divorce, the innocent party has the right to seek compensation.
In cases of divorce resulting from domestic violence, the innocent party may pursue damages from the party at fault.
(4) The division of property in divorce is based on the principle of taking care of the party not at fault, and the abusive party may be given a smaller share of the property.
In cases of divorce related to domestic violence, the court may, depending on the specifics of each case, choose to allocate a smaller portion of the property to the abuser as a form of penalty, prioritizing fair treatment for the innocent party.
If you have any other questions, please feel free to contact us.
Saway Wang
Email: sawaywang@billionslawyer.com
Tel/Whatsapp: +86 18017682422
Get to Know Custody and Alimony of International Divorce in China
Divorce can be a complex and emotionally taxing process, especially for expatriates in China. Understanding the complexities of custody and alimony laws is crucial for ensuring a fair and smooth resolution. This article aims to provide expatriates with essential insights into the custody and alimony issues that may arise during a divorce in China, helping them navigate this challenging period with greater confidence and clarity.
Part 1. Who does custody of the child belong to after divorce ?
Chinese law prioritizes children’s welfare in custody decisions. Article 1058 of the Civil Code grants both parents equal rights and responsibilities for their upbringing. Custody arrangements consider factors like stability, care giving abilities, and the child’s preferences when applicable.
Here are key circumstances where custody may be granted to either parent.
(1) Who gets custody if the children are under the age of two?
If children are under two, the mother typically has custody. However, the People’s Court may grant custody to the father if the mother is in specific circumstances such as:
(i) If the mother is suffering from long-term contagious disease or serious illness making it unsuitable for the children to live with her.
(ii) If the mother is able but unwilling to fulfill her support obligations, and the father requests custody.
(iii) If other factors, such as economic or living environment issues, make it unsuitable for the child to live with the mother then the court may grant guardianship to the father.
Additionally, the courts often favor the father’s custody of children under two if both parents agree it’s best for the child’s well-being.
(2) What about Children who have reached the age of two and have not yet reached the age of eight?
For a child aged two or older, custody should be decided by mutual agreement. If both of the parents cannot agree on child support, the court will consider each parent’s ability and circumstances to support the child, prioritizing the child’s healthy development.
In cases where both parents seek direct custody, Article 46(I) of the Judicial Interpretation of the Marriage and Family Codification (I) (the “Interpretation”) outlines the following criteria for the court to prioritize guardianship in the child’s best interest:
(i) If either of the parent is sterilized or otherwise unable to have children.
(ii) If the child has lived with one parent for a long time, changing their living environment would clearly be detrimental to the child’s healthy development.
(iii) One of the parents has no other children, while the other parent does.
(iv) The child lives in a healthy environment with one parent, while the other parent has a serious illness or conditions harmful to the child’s health, making it unsuitable for them to live together.
(3) Who gets custody for Children aged eight and older ?
If the child’s parents cannot agree on custody for a child aged eight or older, the child may choose the parent he/she wishes to live with based on their own judgments and choices.
However, children over the age of eight are not entirely free to choose which parent to live with. The child’s wishes are given consideration only if both parents are willing and able to take on the responsibility of support. This balanced approach provides assurance that the child’s preferences are respected while also guaranteeing that environment will also benefit to their development.
(4) What other specific cases may influence the decision of custody?
(i) If both parents are capable and willing to care for the child, but the child has lived with a grandparent who is willing and able to continue care, the court may consider this in custody decisions. The stable living arrangement and emotional bond with the grandparent can influence custody prioritization.
(ii) In a divorce between a biological parent and a stepparent, custody reverts to the biological parent if the stepparent opts out of raising the stepchildren. The stepparent can choose to provide financial support voluntarily, but it is not legally required.
(iii) Adopted children have the same rights and responsibilities as biological children, so the same provisions apply. However, if one spouse consistently opposed the adoption, custody after divorce goes to the adopting parent.
(iv) When determining custody for multiple children, courts prioritize mutual parental agreement, pursued through litigation if needed. If children are no longer breastfeeding, the court aims to assign custody fairly, considering financial obligations, child development, and parental capabilities. For breastfeeding infants, decisions prioritize the child’s best interests, often leading to equal custody division.
(v) In unusual case if both parents agree to switch guardianship responsibilities, the court may allow it if it benefits the children’s well-being.
Part 2. Change of Child’s Guardianship
(1) Are parents allowed to change arrangements of custody by agreement after divorce?
Yes, both parents have the ability to modify child support arrangements through a mutual agreement. If one parent fails to uphold the terms of the agreement, the other parent can seek legal action to enforce the changes to the child support arrangement as agreed upon.
(2) Any changes in specific circumstances that may lead to change of custody?
In certain circumstances either of the parent can seek the change custody under the following conditions:
(i) The parent with whom the child currently resides is unable to continue caring for them due to arisen of significant illness or disability.
(ii) If the custodial parent neglects their duty to care for the child, engages in child abuse, or if their lifestyle negatively affects the child’s physical or mental well-being.
(iii) An eight-year-old child expresses a desire to reside with the other parent, who is fully capable of providing for their needs.
(iv) There are additional legitimate grounds for requesting modification.
Part 3. How is Alimony calculated by the court?
(1) What is generally included in the alimony?
The alimony primarily includes the costs for the child’s living expenses, education, and medical care.
(2) How is the alimony support assignment to custodial and non custodial parent?
Upon divorce, the non-custodial parent is required to contribute to child support financially. The amount and duration of these payments are either mutually agreed upon or determined by the court if no agreement is reached but most importantly, even if the custodial parent changes the child’s surname without consent, the non-custodial parent remains obligated to pay support.
(3) Under what circumstances can a child request an increase of the original alimony amount?
In the following situations, a child may ask the parent with the financial means to provide additional support.
(i) The initial alimony is inadequate to maintain the local standard of living.
(ii) The child’s actual needs have surpassed the original amount due to illness or educational expenses.
(iii) Other valid reasons to justify the increase.
(4) What are the criteria for alimony in practice?
(i) Parents with a fixed income: child support is generally 20% to 30% of their gross monthly income. If supporting two or more children, this may increase but usually does not exceed 50%.
(ii) Parents without a fixed income: alimony is typically based on their annual income or industry average, usually 20% to 30% of their average annual earnings or the previous year’s local cost of living.
(iii) In rare cases, alimony may be adjusted up or down by mutual consent or court decision.
(iv) Child support is based on a percentage of the parents’ income, the child’s needs, parents’ financial capabilities, and local living standards. Support should meet basic needs if the parent’s income is low and cover regular expenses if the parent’s income is higher, without being excessive. The aim is to benefit the child without misusing funds for asset redistribution.
(5) What are the payment methods of alimony?
The alimony should be paid regularly or as a lump sum if feasible. In unusual cases where there is no income generated by the parent or the whereabouts of the custodian or non custodian parent are unknown, the child’s maintenance may be deducted from their assets.
(6) How long is the typical duration for alimony?
(i) Usually until the child turns 18.
(ii) Parents may cease alimony payments for children aged 16 to 18 if their main source of income is from employment.
(iii) Under certain circumstances, adult children who are not yet self-sufficient may receive essential support. This includes those still pursuing education up to high school level or below, or those having lost the ability to work due to reasons beyond their control, preventing them from maintaining a normal standard of living.
(7) What are the consequences if maintenance payments are not made on time?
If alimony payments are not made in due time, the recipient can seek court enforcement, compelling the defaulting party to fulfill their obligations. In response, the court may freeze bank accounts, real estate and other assets. The court can restrict their travel on high-speed trains and airplanes, and potentially limit their ability to leave the country.
If you would like to know more about the custody and alimony of divorce in China, please feel free to contact us.
Saway Wang
Email: sawaywang@billionslawyer.com
Tel/Whatsapp: +86 18017682422
Find Out How to Divide Assets in International Divorce Lawsuit in China
Exploring the complexities of asset divisions in international divorce cases often proves contentious and intricate.
In this second part of our International Divorce article, we cover extensively regarding asset division and ownership of foreigners and their spouse in the divorce process in China.
1.What property belongs to the personal property of one of the spouses in the event of divorce?
Article 1063 of the Civil Code clearly outlines the personal assets of an individual spouse, which, upon marriage, remain separate and do not become shared property with the other spouse.
(i) Premarital property, defined as assets owned by an individual prior to marriage registration, retains its status as personal ownership unless otherwise specified by mutual agreement.
(ii) Personal Injury Compensation: Any damages or compensation received by either party for bodily injury sustained by an individual, directly associated with the injury, is considered personal property.
(iii) Property designated in a will or gift agreement as belonging exclusively to one party.
(iv) Household items set aside for personal use by an individual, like clothing and personal care items, are typically regarded as personal property.
(v) The law also offers a broad guideline to encompass other instances of clearly personal property and to accommodate the varied aspects of social life. When determining the allocation of property, an asset can only be classified as personal property if it doesn’t fit into the first four categories mentioned above but exhibits distinct personal exclusivity. If the classification of the property is ambiguous, it is treated as shared property.
2．What property belongs to the joint property of husband and wife?
The Civil Code and the Interpretation on the Application of the Marriage and Family Part of the Civil Code specify that the following assets constitute the shared property of the spouses.
i) Earnings, bonuses, and compensation for work performed.
ii) Income generated from production, business activities, and investments.
(iii) Income derived from intellectual property rights.
(iv) Inherited or donated assets, excluding those specifically designated in a will or gift contract as belonging solely to one party.
(v) Profits obtained from investments made by one of the parties using their personal assets.
(vi) Housing subsidies and housing funds received or entitled to be received by both spouses.
(vii) Basic pension and bankruptcy resettlement compensation received or eligible for both parties.
(viii) Other assets that are designated for joint ownership
3. Can the spouses agree that property acquired during the marriage and pre-marital property shall belong to each of them?
Yes. Indeed, both parties should sign a written agreement, or the assets acquired during the marriage will be deemed joint property of the spouses unless otherwise provided in laws. We strongly recommend notarizing the relevant property agreement to guarantee its validity and recognition by the court in the event of any disputes.
4. How is the joint property of husband and wife distributed by the Chinese court in case of divorce?
In principle, assets are typically distributed equally, following a 50/50 division. However, Chinese courts have the discretion to allocate a larger portion to the party responsible for childcare, the woman, or the innocent party, based on the specific circumstances of the property.
5. How is the property purchased for both parties at the expense of one parent to be distributed in the event of divorce?
If the house was bought by the parents of one party of the spouses before their marriage, it shall be deemed as the gift to their own child unless expressly stated by the parents that the gift belongs to the spouses. If the house was bought by the parents of one party of the spouses after their marriage, it follows the agreement made by the couple regarding the house at that time. If there is no agreement or the agreement is ambiguous, unless the parents explicitly intended the gift for only one of the spouses, the property is considered a gift to the spouses and thus becomes joint marital property.
Question & Answers
(1) Can the spouse who has contributed more to the family ask for compensation from the other spouse?
In accordance with Article 1088 of the Civil Code, a spouse who has taken on more significant responsibilities such as child-rearing, elderly care, or supporting the other spouse in their endeavors, holds the right to seek compensation from the other party in the event of divorce. However, the Civil Code does not define specific criteria for this compensation, often resolved through negotiation between the spouses or by the court’s decision.
(2) In the event of a divorce, if one of the parties is cheating on his/her spouse, how can the other party maximize his/her interests in the division of property?
As per Article 1091 of the Civil Code, if one spouse cohabits with another individual, leading to divorce, the innocent party is entitled to seek compensation from the party at fault.
Article 1091 of the Civil Code grants the innocent party the right to seek compensation in cases where circumstances leading to divorce are attributable to the fault of the other party.
(i) Bigamy
(ii) Living together with someone else.
(iii) Family violence
(iv) Abuse or abandonment of family members
(v) Other major faults.
(3) What should be done if one of the spouses is found to have transferred property during the divorce?
If one of the spouse is found to have concealed, transferred, sold, damaged, or recklessly spent shared marital assets, or attempted to incur joint debts deceitfully to seize the other spouse’s property, the court may, during the divorce asset division process, allocate a reduced or no share of the marital assets to that spouse. If such misconduct is discovered by the other party after the divorce, they have the right to petition the court for a reconsideration of the division of the couple’s shared assets.
(4) What debts are shared by both spouses?
(i) Debts jointly signed and acknowledged by both spouses.
(ii) Debts accumulated by one spouse, for which the other spouse subsequently acknowledges joint responsibility.
(iii) Debts accumulated by one spouse in their own name during the marriage to cover the family’s everyday necessities (excluding debts exceeding these needs.
(5) How are joint debts to be paid by both spouses?
Both parties are responsible for payment.
If you have any queries, please feel free to contact us
Saway Wang
Email: sawaywang@billionslawyer.com
Tel/Whatsapp: +86 18017682422
Do You Know the Methods and Jurisdiction of International Divorces in China?
With the growing number of foreigners residing in China, there is also an increasing divorce cases among international couples, whether between two foreign nationals or a mix of Chinese and foreign individuals. Exploring these situations requires a thorough understanding of the complex laws and regulations governing foreign-related divorces in China.
This article aims to provide comprehensive insights into the relevant Chinese laws that underpin these divorces, offering readers a nuanced understanding of the process. In China, there are two primary methods for filing for divorce: mutual consent and divorce litigation.
1. How To Get Divorced in China
(1) Methods of Divorce
Divorce in China can be broadly classified into two main avenues: mutual consent divorce and divorce via litigation. Mutual consent divorce entails the voluntary agreement between a married couple to dissolve their union, which is formalized through the marriage registration authority. On the other hand, litigation divorce involves one or both spouses resorting to the people’s court to initiate divorce proceedings.
(2) What are the advantages of divorce by mutual agreement?
Mutual agreement divorce offers a more streamlined and expedited process compared to litigation divorce. Essentially, if both parties reach consensus on the divorce, they can directly visit the Civil Affairs Bureau, China’s administrative body for marriage registration, to initiate the divorce registration.
Following a mandatory 30-day cooling-off period from the application date, if both individuals remain steadfast in their decision to divorce, they can return to the Civil Affairs Bureau to obtain the official divorce certificate.
(3) Can a foreigner get divorced by mutual consent in China?
If both spouses are officially married in China, they can pursue a mutual agreement divorce at the Civil Affairs Bureau. However, if both individuals are foreigners and their marriage wasn’t registered in China, divorce can only be achieved through litigation.
(4) Under what circumstances is a litigated divorce necessary?
If both parties are unable to reach a mutual agreement on the divorce or if both parties did not register marriage in China, it will proceed through litigation.
(5) If a divorce is obtained through litigation, under what circumstances will the court grant a divorce?
In the legal proceedings of China, when one spouse initiates a divorce lawsuit for the first time, the court typically doesn’t immediately approve the divorce. However, the court will grant the divorce unless specific circumstances exist.
i) Being married to more than one person simultaneously or living together with another individual while still married.
ii) Engaging in acts of family violence or maltreating and abandoning family members.
iii) If the individual has a history of repeatedly engaging in activities such as gambling or drugs abuse.
iv) Two years of separation resulting from irreconcilable differences.
v) Additional factors contributing to the deterioration of the couple’s relationship.
(6) What should I do if the court decides not to grant a divorce?
If the court does not grant a divorce in the first legal action, a second divorce petition can be filed after six months from the judgment’s effective date. If the spouses continue to live separately for one year following the first judgment, and one of them files for divorce again, the court is mandated to grant the divorce.
(7) How long does it normally take to file for divorce?
A divorce process typically spans from six months to a year. The duration may vary depending on the workload of individual courts, with those handling heavier caseloads potentially requiring more time. Opting for mediation can shorten this timeframe.
2. Determining Jurisdiction in Foreign Divorce Matters
Determining jurisdiction in foreign divorce matters involves understanding which court has the authority to hear the case. For international couples, this typically depends on the domicile or habitual residence of the parties involved. We have outline a framework to address the divorce court jurisdiction in each individual scenarios that may take place.
Scenario 1：Chinese + Foreigners
(1) If the marriage took place in China, and both parties settled abroad.
The jurisdiction will be prioritize granting to filing the divorce case in the courts of the country where the parties reside.
If the courts in the country of residence refuse to accept the divorce case and determine that it falls under the jurisdiction of the court where the marriage took place, or where one of the parties last resided in the country, then jurisdiction lies with the court in that location.
(2) If the marriage took place in abroad and both parties settled abroad.
The jurisdiction will be in the country where the individual lives is given priority for the divorce case.
If this court declines to hear the case, stating it falls under the jurisdiction of the individual’s home country, then the court in the individual’s original or last known residence in their home country will have jurisdiction.
(3) If the marriage took place in China or foreign countries, and one party has settled abroad，the other one has settled in China
The domicile of one of the domestic parties will have the jurisdiction, as stipulated in Article 23 of the Civil Procedure Law and elaborated in Article 15 of the Judicial Interpretation of the Civil Procedure Law.
(4) If the marriage took place in China or foreign countries, and both parties have settled in China
Then the defendant’s place of domicile or habitual residence will have the jurisdiction. (Article 22 of the Civil Procedure Law, “CPL”）
Scenario 2：Foreigners + Foreigners
(1) if the marriage took place in foreign countries, and one party has settled abroad, the other party has settled in China.
The People’s Court where one of the domestic parties resides has the jurisdiction (Articles 4 and 23 of the CPL)
(2) if the marriage took place in foreign countries, and both settled in China.
Jurisdiction is established based on the defendant’s domicile or habitual residence, in accordance with the plaintiff-versus-respondent principle (Article 4,22 of the CPL)
(3) At what level of court do foreign divorce proceedings need to be brought?
The Basic People’s Court holds jurisdiction over all foreign divorce cases.
(4) Can the parties to a foreign-related divorce choose by agreement to be subject to the jurisdiction of the Chinese courts?
In accordance with Article 277 of the updated Civil Procedure Law as of 2023, parties involved in foreign-related divorce proceedings have the option to select the jurisdiction of a Chinese court through written agreement, irrespective of their residence status or any affiliation with China.
If you have more queries about international divorce, please feel free to contact us
Saway Wang
Email: sawaywang@billionslawyer.com
Tel/Whatsapp: +86 18017682422
