Guidance case 121
China bank shares of haichua industrial limited
The company's director, zai zhou branch, hunan province
Property conservation and enforcement of limited companies
(supreme people's court trial committee discussed and adopted on 24 december 2019)
Implementation/execution review/assistance in enforcement obligations/custodial expenses
Decision points
The object of preservation in the case of the preservation of property is movable property other than monetary property and is kept in the custody of another person, who, upon notification by the people's court, shall assist in its enforcement. When the custody contract or the lease contract is not renewed upon expiry and the protected person does not pay the cost of the custody or lease, the assisting person has no obligation to continue to keep it free. If the value of the object of preservation is sufficient to cover the cost of preservation, the people's court may maintain the seizure until the legal instrument in force in the case, the price of the object of preservation shall be paid as a matter of priority to the custodian; the value of the object of preservation shall not be sufficient to cover the cost of preservation, and the person applying for the preservation of custody may continue to take measures of attachment without the cost of custody, and the objects of the object of preservation may be disposed of and the variation of the price maintained。
Relevant legal provisions
Article 225 of the civil procedure law of the people's republic of china
Basic cases
The hunan provincial high people's court (hereinafter referred to as the hunan high court), in a dispute over financial borrowing contracts, such as that between the chairman of the china bank co. Ltd. (hereinafter referred to as the china bank co.) and the dexiong metal materials co. Ltd. (hereinafter referred to as the dexiang company) in hunan province (hereinafter referred to as the hunan high court), issued a civil action decision for the preservation of property, freezing deposits of $48 million in dexiang bank or seizing and seizing other property of equal value. Deutsche hong, for its production and operation, rented the premises of haichon industries limited (hereinafter referred to as seachon) until 1 march 2015, where all of the company's co-carried and pledged to the chinese branch of chai cai. On 4 june 2015, the hunan high court issued a letter of assistance for the enforcement of the law and a proclamation stating that the people's court had seized the country. During the period of time when all of the zhong company's piles of lead concentrates are stored in the haikawa company's warehouse, no unit or individual may transfer, conceal, destroy, sell, mortgage, offer, etc. Of the above-mentioned seized assets without permission, otherwise they will be held legally liable. On 1 march 2015, after the expiration of the deutsche hong lease contract with haikawa, deutsche hong neither renewed nor returned the rented plant to haikawa, let alone paid rent and utilities. Seagawa then sued deutsche hong for a lease contract dispute before the shifu people's court of shifu city, hunan province. The people's court of shichuang city, hunan province, handed down a ruling dismissing the lease contract, returning the leased plant to haikawa within 15 days of the date of the judgement, removing the goods stored in the rental plant, and paying the unpaid rent and interest within 15 days of the date of the judgement. On the basis of the judgement, haikawa applied for enforcement in relation to the clearing-up of deutsche hong. At the same time, haikawa, as an interested party, challenged the execution of the letter of assist and the communiqué issued by hunan high court and requested that the applicant's bank keep the aforementioned lead ore removed from the warehouse and compensate him for the loss of rent。
Decision
On 23 november 2016, the hunan provincial high people's court handed down executive decision (2016) no. 15, rejecting the challenge of haichua industrial limited. The limited liability company haichon applied to the supreme people's court for reconsideration. On 2 september 2017, the supreme people's court handed down the second executive ruling of supreme law (2017): firstly, the second executive ruling of the hunan higher people's court (2016) was revoked. 2. The people's high court of hunan province shall ascertain the status of the case involving the seizure of property, determine by law the custodian of the seized property and establish its rights and obligations。
Decision
The supreme people's court held that it was not inappropriate for the hunan high court, in the case concerning the execution of the decision on the preservation of property in the case of a loan contract dispute between the china-china branch and dexiang company, to block the deposit of $48 million in dexiang's bank or to seize or seize other property of equal value, in accordance with the relevant civil ruling of the court, to take measures to seize all the lead ore deposits held in haigawa's warehouse. In the course of enforcement, however, although it cannot be denied that haikawa has an obligation to assist the court of protection, it is not reasonable to impose a full and unconditional duty of assistance on haikawa to the extent that the lease contract between the protected person and the site owner has expired and has not been renewed, and that there are legal instruments in force ordering the preservation person to remove the goods from the storage. The objection of the executing officer, haikawa, is in essence a claim that, in the event of the expiry of the lease of the premises, the property seized by the people's court continues to occupy the premises, making it difficult to obtain compensation for the resulting loss equivalent to the rent. Having discovered this, the hunan high court should not avoid the issue of rent losses or custodial costs for the actual custodians, and the custody of seized goods should be further improved to clarify the relationship of rights and obligations. If the seized pledge does have a high value sufficient to cover the loss of rent, the attachment is maintained until after the effective judgement has been rendered, and priority is given in the execution proceedings to compensate the custodian for the loss of rent in respect of the price obtained from the disposal of the seized deposit. However, the inspection report commissioned by haikawa to the quality monitoring and inspection agency indicates that the fact that lead concentrates are worthless residues should be verified by the hunan high court in its implementation. If this is the case, the attachments should be dealt with in an appropriate manner and it would not be appropriate to request assistance in the continued custody of worthless property at no cost. The value of the object of preservation is not sufficient to cover the cost of preservation, and the person applying for preservation costs may continue to take measures of sequestration, without payment of the cost of preservation, and may dispose of the object of preservation and continue to preserve the variation. The enforcement court rejected seagawa's objection on the sole ground that it was lawful to take protective measures against dexiang's property and that the dispute over the lease contract between haikawa and de xuan was another legal relationship and should be corrected。
(judges at trial for entry into force: golden dragon, liu shaoyang, ma lin)
