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	CIRCULAR OF THE SUPREME PEOPLE'S COURT ON THE ISSUE REGARDING THE PROTECTION OF FINANCIAL CREDITS ACCORDING TO LAW AND PREVENTING ANY LOSS OF STATE-OWNED ASSETS IN CIVIL TRIAL AND THE ENFORCEMENT

	(No. 32[2005] of the Supreme People's Court, March 16, 2005)


SUBJECT : COURTS; CIVIL TRIAL AND THE ENFORCEMENT; PREVENTING ANY LOSS OF STATE-OWNED ASSETS
ISSUING DEPARTMENT : THE SUPREME PEOPLE'S COURT
ISSUE DATE : 03/26/2005
IMPLEMENT DATE : 03/26/2005
LENGTH : 821 words
TEXT :

To protect financial credits and to prevent any loss of state-owned assets, which concerns the security of national economy, has been an important issue in the process of China's economic restructuring and financial system reform. As the work on disposing of non-performing financial loans has reached a crucial stage in the face of increased disposal difficulties and diversified disposal means, the masses and all walks of the society have set forth higher requirements for the people's courts to protect the financial credits according to law and to prevent any loss of state-owned assets when they hear cases concerned with non-performing financial loans or enforcing the rulings thereof. In order to adjudicate the relevant cases of aforesaid disputes in a correct manner, ensure the smooth progress in the disposal of non-performing financial loans and prevent any loss of state-owned assets, we hereby notify as follows:

1. We should give full play to the functions of civil trials and the enforcement thereof in respect of coordinating all kinds of economic relationships in the society and maintaining the order of socialist market economy. The Civil Procedural Law, Contract Law, Guarantee Law and such judicial interpretations as the Provisions on Some Issues Concerning the Trial of Enterprise Bankruptcy Cases and the Provisions on Some Issues Concerning the Trial of Civil Disputes with Respect to the Restructuring of Enterprises as issued by this Court shall be implemented in a strict manner in the trial and enforcement of cases concerning non-performing finial loans so as to accurately grasp the purposes of legislation and judicial interpretations and unify the judicial measurement.

2. The people's courts at all levels and all judges shall enhance their judicial capability, elevate their judicial level, maintain the unification of the national legal system and discard and resolutely resist any regional protectionism. In the trial of cases concerned with non-performing financial loans, they shall insist in the conformity between the legal effect of settling the cases with the social effect thereof, properly handle the relationship between national interests and regional interests and protect the financial credits and the legal rights and interests of the enterprise employees.

3. Intensifying the research of cases concerned with non-performing financial loans. As China's reform of financial system goes deeper and deeper, the people's courts may frequently encounter new situations and problems when dealing with the trial and enforcement of cases concerned with non-performing financial loans. These problems are of a strong policy-oriented nature and have great social impacts as well while the corresponding laws and regulations thereof may have not been formulated. The people's courts shall, on the basis of summarizing their experiences, reinforce the investigation and research and incessantly enhance the quality and efficiency of case handling. The people's court on a higher level shall intensify the supervision and guidance over the people's courts on lower levels and carry out well-aimed examination over the justice administration and shall correct any problem in a timely manner.

4. In the trial or implementation of the aforesaid cases, where it is necessary to conduct any appraisal or audit on the non-performing financial loans and related assets, the people's courts shall, in strict accordance with the provisions of laws, entrust the qualified intermediary agencies with good credit standing and carry out strict examination on the appraisal and auditing procedures as well as the results thereof. Where it is necessary to sell any of the assets of any person against whom a judgment or order is being enforced, an open auction as conducted by an auction institution shall be adopted where possible, and shall recover non-performing financial loans to the largest degree.

5. Where any people's court, in civil trial or enforcement, discovers that anyone working in a financial institution commits any malicious collusion with any assignee or intermediary agency and conducts illegal disposal of non-performing financial loans, if there is any clue leading to any economic crime, it shall transfer the said clue to the procurator organ in a timely manner.

6. The communication and coordination between the people's courts and the departments of financial supervision and state-owned asset administration. For any case that has a great impact on the jurisdiction or is easy to arouse social concern, the opinions of those aforesaid departments shall be solicited before any disposal is made so as to do a good job with combined efforts.

7. In the implementation of cases concerned with non-performing financial loans, a preparatory plan shall be made for handling any unexpected incident that may occur so as to guard against the few lawbreaking persons' instigation and organizing employees or the masses who are unaware of the facts to dash into the court or the enforcement spot or besiege the personnel of the court or go to the party or governmental organs to file complaints in group. Any unexpected severe event shall be reported to the local CPC party committee, people's congress and the people's court on the higher level.