Monthly Archives: December 2015

Threshold to Bankrupt Your Debtor in China

When your debtor defaults in your payment, one of the options, probably the most well known one, is to file a petition with court to bankrupt your debtor such that the court can stop all the operation of your debtor, seize whatever is left, turn them into cash and apply the same towards the amount owing to you.

However, this may not be easy in China. Although China has promulgated a western style Bankruptcy Law back to 1 June 2007, most PRC courts had been most reluctant to accept creditors’ applications for insolvency/bankruptcy of enterprises unable to pay their debts as they fell due. That was partially due to other economical, social or even cultural reasons, but technical set back, such as absence of clarity and guidance on the proof of insolvency and the burden of proof, certainly plays a role.




Is it True That Arbitration Has No Appeal?

In most pro-and-con analysis between arbitration and litigation, one traditional wisdom about the advantage of arbitration is that arbitration should be faster as it has no appeal mechanism. At least in the perspective of PRC, such notion may deserve some critical thinking as it may overlook a very bloody fact: the assets of the correspondent will not turn into cash unless the court where the assets locate are involved.

Unlike litigation proceedings, the arbitration award made by foreign related arbitration tribunal (such as CIETAC) or international arbitration tribunals (such as AAA or ICC) can be relied upon to commence the mandatory enforcement directly in a PRC court. It will not be subject to the PRC court’s substantive judicial scrutiny of the contents thereof, which means that the PRC court shall not hear the merits of the case again. The parties shall not bring other litigation proceedings on the same subject matter.