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International investors have long been concerned that Chinese court will take social public interest as a ground to refuse enforcing foreign related awards so as to provide extra protection to Chinese parties.
6. Practical Difficulties for Enforcement
Besides the institutional issues mentioned above, there are also some practical difficulties in the enforcement of foreign related awards. For the party that fails to enforce an award after winning in the arbitration tribunal, these difficulties are equally as frustrating as those institutional ones. Parties may find that the respondent has hidden or fraudulently transferred his properties, or there are several strong competitors, politically or legally, going after the same subject matter of enforcement.
a. Investigation and Seizure of Property
Finding the respondent’s properties is often difficult. China does have a registration system for real properties, but at least in some areas, the information of such a system is not open to the general public. Very often parties may have to rely on person relations (guanxi) for access to a defendant’s real property registration. Lawyers from western jurisdictions may suggest applying for a court order to compel the registration to open such information. But unfortunately, courts in China do not have such a tradition. Relevant laws and regulations have never provided for a strong institution of judicial orders. And frankly court orders do not have that much authority over the general public, especially over the government. Even in administrative litigations, many Chinese government agencies still refuse to appear as the defendant. It is, therefore, not difficult to understand why court orders are not complied by many governments.
Parties may intend to motion the court to conduct such property investigation and seizure. This is also unrealistic. It is fairly common that parties have to submit detailed information of the respondent’s properties before the court becomes willing to conduct any seizures. The court will not investigate due to its limited financial and human resources.
The dilemma is therefore very clear here. Parties need the court’s assistance and authority in investigation of the respondent’s property, and the court is very often unwilling to issue such order. And even court orders are weak and without actual authority. But in enforcement practice, the court turns to the enforcement-seeking party for property information. The enforcement-seeking party may face serious difficulties in such situations.
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