Professional Interpretation

Abstract: As a system to protect the litigation interests of the creditor, property preservation is stipulated as a separate chapter in the Civil Procedure Law. However, that the property losses are caused to the preservation respondent due to improper preservation behavior is also extremely easy to cause the property preservation damage liability dispute in the process of litigation (or before litigation). So, how to identify the preservation error in judicial practice, the dispute resolution team of Beijing DOCVIT Law Firm will analyze combining with the specific cases for reference. 

I. Circumstance of property preservation error 

Article 105 of Civil Procedure Law of China clearly stipulates that, “for property preservation application errors, the applicant shall compensate the respondent for losses due to preservation.” According to the provision, it can be known that whether the preservation behavior compensates for the loss depends on whether the preservation application has errors. According to the summary of juridical practice on preservation error judgment case, the preservation errors usually include three types, i.e., object error, amount error and premise error: 

(I) Object error 

The object error means that the wrong application of the applicant preserves the object which shall not be preserved. Interpretation of the Supreme People’s Court on the Issue concerning Whether the Parties Shall Assume Compensation Liability for the Damage of Any Outsider Caused by Their Falsely Applying for Property Preservation published by the Supreme People’s Court in 2005 stipulates that, “the parties shall assume compensation liability for the damage of any outsider caused by their falsely applying for property preservation. ”

For example: In the (2015) HEZMS(S)Z Zi No. 988 dispute case of China Railway Materials Harbin Logistics Co., Ltd. and Shanghai Minlurun Trading Co., Ltd. due to applying for pre-litigation property preservation damage responsibility of Shanghai No. 2 Intermediate People's Court, the court considered that the property preservation applicant knew that the steels applying for preservation had ownership dispute, but still stuck to applying for preservation; after preservation, the preservation respondent immediately made preservation objection, but the applicant didn’t further verify the true ownership of goods applied for preservation, and also didn’t agree to withdraw the application, and the preservation error occurred eventually, so the preservation applicant actually preserved the property belonging to the outsider by mistake, having a fault for preservation error and shall assume the compensation liability for all losses caused by preservation error. 

(II) Amount error 

The amount error means that the value of property applied by the applicant for preservation is more than the amount supported by the court judgment. There are no uniform rules on whether the preservation of amount error in the practice constitutes the preservation error stipulated in Article 105, and the application shall be required to assume the damage compensation liability, and the specific case is still required for concrete analysis. 

For example: In the (2012) MS Zi No. 1282 property damage compensation dispute case that the respondent appealed the applicant of the Supreme People’s Court, the applicant applied to preserve the stocks, house property and motor vehicle under the name of the respondent in the original suit, a total of RMB 108,600,000, but the court only supported the claim of RMB 23,740,000 of the applicant eventually, and RMB 84,860,000 was attached in the excessive application of the applicant. The court considered that the application preservation was the litigious right of the party, but if the right was exercised improperly, causing the property loss to others, the party shall make compensations. Although the effective judgment didn’t support all claims of the applicant, the evidence of the case was insufficient to affirm that the applicant has the deliberate or obvious negligence in damaging the property of the respondent through preservation. If the People’s Court takes the preservation measure, the parties preserved will not be able to freely dispose the preserved property in fact or law certainty. Therefore, the judgment of the preservation error of the applicant only by amount of claims supported by effective judgment of the court less than the amount of preserved property is inconsistent with the preservation system stipulated in the Civil Procedure Law. 

The above case is the communique case of the Supreme People’s Court. The claim of the applicant in the case is not fully supported by the court, but it is not considered as the preservation error in the judgment result due to applying for property preservation damage liability dispute in litigation, the applicant does not assume the preservation error liability. 

(III) Premise error 

The premise error means the error of appeal as the property preservation application premise raised by the applicant. The premise error includes two types: Firstly, premise illegality on procedure. The applicant automatically withdraws the application if the applicant in the pre-litigation property preservation does not prosecute and litigate within the statutory period, and the People’s Court withdraws the original preservation judgment, etc.; Secondly, premise illegality on entity, i.e., the claim of the applicant is not supported by judgment (special attention: The necessary condition of preservation error is to be not supported by judgment, but we think that it is not the sufficient condition, i.e.,: If the court affirms it as preservation error, it will certainly presume that the original case judgment does not fully or partially support the claim of the plaintiff; But vice versa, if the original case judgment claim is not supported, the court cannot presume that the preservation must be false). Two cases are hereby mainly listed respectively as follows: 

1. The (2016) J01MZ No. 785 dispute case of Avnet Technology Solutions (China) Ltd. and Beijing Control Technology Co., Ltd. due to applying for property preservation damage liability dispute in litigation of Beijing No. 1 Intermediate People’s Court. 

Beijing No. 1 Intermediate People’s Court considers that when the party takes litigious activity in the court, it shall bear the risk brought by litigation behavior, including the risk of defeat and the derived property preservation risk. If the claim of the preservation applicant is not supported by the court eventually, it means that the preservation behavior is false objectively, and for the property loss caused to the respondent eventually due to such error, the applicant shall make compensation no matter whether the applicant has error or not subjectively. 

2. In the (2013) HYZMS(S)Z Zi No. 791 dispute case of Shimao Company and Yabo Company due to applying for property preservation damage liability in litigation of Shanghai No. 1 Intermediate People's Court, 

Shanghai No. 1 Intermediate People's Court considers that: Firstly, the applicant filed a litigation, and filed an appeal after being defeated in the first instance, continued to take the property preservation measure against the respondent, for which, the applicant had fault subjectively; Secondly, the applicant applied to take the property preservation measure against the respondent in No. 572 case, and restricted the right to control the operation fund of account of the respondent. In the case, it was affirmed that the respondent didn’t need to assume the payment liability through final judgment of the first instance and the second instance; the financing loss was caused objectively, and the fact of damage was supported; Thirdly, the above facts of damage were caused by preservation error behavior, and the preservation behavior had the causal relationship with the fact of damage. To sum up, if the party obtains the defeat judgment after the proceedings, it means that its application for the property preservation is improper; if the loss is caused to the other party thereby, the applicant shall assume the damage compensation liability. 

II. Affirmation standard of property preservation error 

We firstly quote one case of the Supreme People’s Court: 

(2014) MS Zi No. 2172 case of applying for retrial of pre-litigation property preservation of Chongqing Wanzhou Suote Handling Co., Ltd. and ZONG Yicheng 

The Supreme People’s Court considers that: The damage compensation case caused by preservation shall be applicable to the fault liability attribution principle stipulated in Tort Liability Law. Whether the application is false or not cannot be simply judged based on whether the claim of the applicant is supported by the People’s Court, and the deliberate or gross negligence of the applicant for the preservation error shall be taken as the standard of error affirmation. 

The similar cases also include (2015) MS Zi No. 1178 case of the Supreme People’s Court. It can be known from such cases as well as the provision of Article 6 of Tort Liability Law “the actor shall assume the tort liability if it infringes on others’ civil rights and interests due to fault; If it is presumed that the actor has faults according to the provisions of laws, and the actor cannot prove itself, it shall assume the tort liability.” and Article 7 “if the actor damages others’ civil rights and interests and it is required to assume the tort liability according to the provisions of laws, no matter whether the actor has fault or not, it shall be subject to such provision” of the Tort Liability Law in China, the tort attribution principle in the tort law of China includes three types. The general tort is applicable to the fault liability; the special tort is applicable to the non-fault or fault presumption liability. The measurement of the preservation applicant for own rights is different from the final affirmation of the court in the judicial practice, and the case where the reasonable appeal considered by the applicant is not affirmed and supported by the court is not rarely seen; if it belongs to the special tort, it is applicable to the non-fault or fault presumption liability principle; when the appeal of the applicant is inconsistent with the court, it is considered to constitute tort, and requires the applicant to assume the false damage liability totally, which does not conform to the original intention of legislation of Article 105 of the Civil Procedure Law. 

Therefore, the preservation application error shall not only include that the judgment result of the court is different from the claim of the applicant, and the claim of the applicant is not fully supported by the People’s Court in the objective aspect, but also include that the applicant has the deliberate or gross negligence and other faults in the subjective aspect. Eventually, there is causal relationship between the subjective and objective aspect. 

(I) Affirmation of preservation error behavior 

Whether the preservation error behavior is constituted may be analyzed from “basic litigation behavior rationality” and “litigation property preservation appropriateness”. 

 “Whether the filing of basic litigation is reasonable” mainly depends on whether the basic litigation filed by the applicant has the fact and legal foundation, and whether the claim is obviously unreasonable. Whether the claim of the applicant is fully or partially supported and whether the amount of the claim is reasonable are the main factors considered, but that the amount of all or part of defeat, withdrawal and final support of the court is lower than the amount of claim cannot certainly presume the preservation error. In two cases quoted in the discussion of Point 3 premise error of Part 1 in the text, it is considered that basic litigation is unreasonable, and the property preservation error is affirmed eventually. But the judgment opinion on whether the preservation error is directly affirmed to assume the damage compensation liability due to defeat of all cases is not unified in the current practice. 

 “Whether the litigation property preservation behavior is proper” is comprehensively judged mainly in combination with whether the preservation is necessary, and the whether amount of subject applied for preservation and object and other property preservation applied by inspection are proper. 

(II) Affirmation of the applicant’s error 

In combination with above analysis, the preservation error behavior of the application does not mean the preservation error and the preservation error can be finally affirmed only when the subjective fault of the applicant is also combined, i.e., whether the preservation applicant has the deliberate or gross negligence shall be judged. 

In the defeat case of the applicant, because the legal knowledge of the party, proof ability for the case fact and the analysis and judgment abilities for legal relation are different, and they cannot usually reach the professional level required by judicial judgment, the judgment of the party on the litigation fact and right and obligation may not be consistent with the judgment result of the People’s Court. The preservation has the characteristics of estimate and property of prevention per se, and the applicant can not be excessively required to predict the result of case processing as the subject of preservation. For the preservation application error, the subjective fault of the application shall be regarded as the important element, and it cannot only depend on that the claim of the applicant is not supported. 

To sum up, the dispute resolution team of Beijing DOCVIT Law Firm considers that the preservation error shall belong to the presumption principle that general tort is applicable to the fault liability in the Tort Law of China, i.e., whether the preservation applicant has the subjective fault for the preservation behavior and whether the property of the preservation respondent has loss and whether the behavior fault has causal relationship with loss shall be firstly considered, rather than that it is simply affirmed to belong to the preservation error on account of that the claim of the preservation applicant is not partially or fully supported by court judgment.