China Special Situations Insight (Volume 4, Issue 6)

New Pilot Program: Conducting Remote Registration for Real Property Seizures via a “Head Office-to-Head Office” Mechanism

In previous judicial practice, enforcement judges were required to physically visit the location of a real property in order to carry out a cross-regional seizure. However, these judges often faced challenges such as heavy caseloads and limited personnel, which could result in delays in property preservation for investors. These difficulties were further exacerbated in cross-regional cases due to delays in document service.

On February 7, 2024, the Supreme People's Court of the PRC (the "Supreme Court") and the Ministry of Natural Resources of the PRC (the "Ministry of Natural Resources") issued the "Notice on Carrying Out the Pilot Work of 'Head office-to-Head office' Online Seizure Registration of Real Property" (Fa [2024] No. 32) (the "Pilot Notice"). This stipulates the methods for online seizure registration and aims to reduce the difficulty of cross-regional seizures, enhance judicial efficiency, and lay a practical foundation for a nationwide online seizure registration mechanism.

1.?Introduction to the Pilot Notice

1)?Conducting seizure registration through a "Head office-to-Head office" mechanism

As set out in the Pilot Notice, the "Head office-to-Head office" mechanism refers to the connection between the Ministry of Natural Resources' real property online seizure registration system (the "Ministry of Natural Resources Registration System") and the Supreme Court's online enforcement system. Courts at all levels may initiate a request for seizure registration (or renewal, or release of seizure), and sequential seizure registration to the Supreme Court, who will collect and transmit such requests to the Ministry of Natural Resources Registration System. The system will then forward such requests to the local real property registration system at the municipal and county levels for processing. The notice and receipt in relation to the seizure may be in an electronic file format, which has the same legal effect as paper instruments.

2) The applicable areas and time of the Pilot Notice

The Pilot Notice shall be applicable to eight pilot provinces and cities, namely Beijing, Shanghai, Tianjin, Chongqing, Jiangsu Province, Zhejiang Province, Shandong Province, and Gansu Province. The pilot period began in January 2024 and goes until December 2024.

3)?Registering the seizure according to the service time of the request

The sequence for seizures on a real property shall be based on the chronological order of the service time of the request, i.e. the time when the local registration system receives the seizure request from the Ministry of Natural Resources Registration System. If a court submits a request for seizure through the offline window of the competent registration authority, the time when the on-site staff of the authority actually receive the request shall be regarded as the service time.

4)??The real property registration authority does not conduct substantive reviews of the seizure registrations

The real property registration authority does not conduct substantive reviews of the court's request for seizure. For the same real property, the real property registration authority shall handle the seizure registrations in chronological order based on the above mentioned service time. If there is a dispute regarding the priority of seizure registration between different courts, it should be reported to a higher-level court for coordination and resolution.

2.?Significance of the implementation of the Pilot Notice

The Pilot Notice has been implemented in the eight pilot cities and promotes online real property seizure registration by courts at all levels. It also explores a feasible path for building a nationwide "Head office-to-Head office" real property seizure online registration system.

With the implementation of the Pilot Notice, the cost of enforcement is expected to be greatly reduced. For NPL investors applying for asset attachment, the Pilot Notice offers a more streamlined and efficient approach. We will continue to monitor the practical implementation and the progress of the nationwide roll out of the "Head office-to-Head office" real property seizure online registration system.

For further information, please contact Catherine Miao, Head of Special Situations and Alternative Investment at JunHe LLP: [email protected] or +86-21-22086350.