The period of application for enforcement is two years. The Chinese legislature is now drafting a new act to extend the period to three years.
This post was first published in CJO GLOBAL, which is committed to providing consulting services in China-related cross-border trade risk management and debt collection. We will explain how debt collection works in China below.
1. When does the period commence?
(1) Usually, the period shall commence from the last day of the debt performance period specified by the judgment or arbitral award.
For example, if the judgment requires the debtor to pay indemnification to you within 90 days from the effective date of the judgment, then you should apply with the court for enforcement of the judgment within 2 years from the 91st day. Otherwise, the court will not enforce the judgment for you.
(2) If the judgment or arbitral award requires the debtor to pay the debt in several installments, the period shall commence from the date of expiration of the performance period of the last installment.
For example, if the judgment requires the debtor to pay the first indemnification to you within 30 days from the effective date of the judgment and the second indemnification to you within 90 days, then you can apply with the court for enforcement of these two indemnifications within 2 years from the 91st day.
(3) If the judgment or arbitral award does not specify a performance period, then the period of application for enforcement shall commence from the effective date of the legal instrument.
For example, if a judgment requires the debtor to refund the deposit to you, but fails to specify the time of refunding, then you can apply with the court for enforcement of the deposit refund within 2 years from the effective date of the judgment.
2. Is this period applicable to the enforcement of foreign judgments and arbitral awards in China?
Yes. If you want to enforce a foreign judgment or arbitral award in China, then you also need to apply with the Chinese court within the aforementioned period.
What if you fail to apply for enforcement within the aforementioned period? Well, in practice, we have found a solution to this.
In China, the enforcement of foreign judgments or arbitral awards is divided into two stages: recognition and enforcement. For the recognition stage, the law does not specify the time limit; for the enforcement stage, the requirements of the aforementioned period shall be observed.
Most parties apply for recognition and enforcement at the same time, which renders them to be bound by the aforementioned period.
However, some parties will first apply with the Chinese court for recognition of foreign judgments or arbitral awards, which is not subject to the aforementioned period. After obtaining a ruling recognizing the judgment or arbitral award rendered by the Chinese court, the party concerned can further apply for enforcement within two years from the effective date of this ruling.
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Contributors: Meng Yu 余萌
