Opinions on executing IP judgments in China released

China
The difficulty of executing IP judgments in China has long been a matter of concern. On May 27 2011, in yet another attempt to address the issue, the Supreme People’s Court released Several Opinions of the Supreme People's Court on Legally Punishing Acts of Evading Enforcement.

Article 1 (5) of the opinion provides for the establishment of a property reporting system, which will enable a party seeking to enforce a judgment to apply to the enforcement authorities for an announcement to the general public of a reward – paid by the party seeking enforcement – for the provision of information relating to property held by the party against whom the judgment is to be enforced.

Article 4 of the opinion introduces the rights of subrogation and revocation (from the Contract Law of the People’s Republic of China) to punish acts of enforcement avoidance – for instance, if a party transfers property without charge or at an obviously unreasonable price.

Article 6(20) of the opinion allows for the alteration of, or addition to, the party against whom the judgment is to be enforced or, where there is sufficient evidence to demonstrate that property has been maliciously transferred (eg, in the context of liquidation proceedings), the filing of new proceedings.

Viewed in isolation, the opinion may be seen as a positive development, but a broader analysis of the situation might suggest that more work needs to be done.

Currently, for example, the Supreme People’s Court of China provides annual reports that indicate the number of IP cases concluded (the most recent report indicated that 41,718 IP cases had been concluded by Chinese courts in 2010, representing a year-on-year increase of 36.74%, with only 1,369 first-instance IP civil cases involving foreign parties, an increase of 0.59% over the 2009 figures). The report makes no mention, however, of the number of successfully executed judgments. No explanation is provided for the omission, and the fact that it exists leaves the merits of civil litigation in China open to speculation.

More damning than this omission is the fact that the Political and Legislative Affairs Committee of the Communist Party of China Central Committee, to which the Supreme People’s Court reports directly, has expressed concern as to the effectiveness of the execution of civil judgments. 

It is perhaps in response to the Central Committee’s concern that the Supreme People’s Court has been so active over the past four years in issuing opinions and interpretations relating to the execution of court judgments. The current opinion is the latest in a long list, which includes: 
  • A circular of the Supreme People's Court, the Supreme People's Procuratorate and the Ministry of Public Security on Some Issues Concerning Seriously Investigating and Prosecuting the Crime of Refusing to Execute Any Judicial Decision or Order and Resisting Judicial Enforcement (August 30 2007).
  • Interpretation of the Supreme People's Court of Several Issues Concerning the Enforcement Procedures in the Application of the Civil Procedure Law of the People's Republic of China. (March 11 2008). 
  • Several Provisions of the Supreme People’s Court on the Execution of Property-oriented Penalties (November 30 2009).
  • Several Provisions of the Supreme People's Court on Restricting Extravagant Spending of Enforcees (May 17 2010).
  • Opinions on Several Issues Concerning Establishing a Sound Mechanism of Joint Efforts in Enforcement (July 7 2010).
It may be that the growing number of civil cases in China indicates that IP owners now have greater confidence in China’s legal system, and the activity of the Supreme Court over the last few years in addressing the execution of civil judgments is meant to clarify the law for successful plaintiffs. However, without greater transparency as to the number of Chinese IP civil judgments having been successfully executed, property owners may be justified in continuing to wonder whether China’s legal system is better at issuing civil judgments in IP cases than executing them.

George Chan, Rouse, Beijing

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