Distraining disputed property is one of the interim urgent measures that may be applied in both civil proceedings and arbitration.3 However, if applied improperly, this measure can seriously affect the legitimate rights and interests of the party against whom it is requested. Therefore, any decision to distrain disputed property must be based on a careful review of the legal grounds before it is implemented. This article outlines the legal grounds for applying the interim urgent measure of distraining disputed property under the 2015 Civil Procedure Code (CPC 2015).
According to Clause 1, Article 111 of the CPC 2015, during the resolution of a case under the civil procedure law, litigants, their legal representatives, or agencies, organizations, or individuals initiating lawsuits under Article 187 of the CPC 2015 have the right to request the Court handling the case to apply one or more interim urgent measures as prescribed in Article 114 of the Code, including the measure of distraining disputed property.
Article 120 of the CPC 2015 stipulates that the distrainment of disputed property may be applied if, during the course of proceedings, there is evidence that the person in possession of the disputed property is attempting to disperse or destroy it. An analysis of Article 120 shows that this measure aims to prevent the dissipation or destruction of the disputed property, thereby ensuring the effective resolution of the dispute and facilitating the subsequent enforcement of the judgment.
However, not all requests for interim urgent measures to distrain property can be accepted by the Court. Pursuant to Article 7 of Resolution No. 02/2020/NQ-HDTP issued by the Council of Judges of the Supreme People’s Court, the Court shall only issue a decision to apply an interim urgent measure to distrain disputed property when both of the following conditions are satisfied: (1) The property in question is the subject of a dispute that the Court is currently handling; and (2) There are documents and evidence proving that the person in possession of the disputed property is dispersing or destroying it.
Regarding the first condition, the name of this interim urgent measure itself indicates that it applies only to “disputed property.” Disputed property refers to property that is the subject of a legal dispute under the Court’s jurisdiction. Therefore, for any property that is not the subject of the ongoing dispute, the Court cannot apply an interim urgent measure to distrain it.
For example: A files a lawsuit against B at a competent People’s Court, requesting the resolution of a dispute concerning the ownership of a house located in Province X. The Court accepts the case for adjudication. While the case is pending, A requests the Court to apply interim urgent measures to distrain both the house in Province X and another house owned by B in Province Y. In this scenario, the Court may only order the distraint of the house in Province X provided there is sufficient basis because it is the subject of the dispute being handled. The house in Province Y, on the other hand, is not part of the dispute, so the Court lacks grounds to apply interim urgent measures to distrain it at A’s request.
Regarding the second condition, the Court shall only apply the interim urgent measure of distraining disputed property when there are documents and evidence proving that the person holding the disputed property has committed acts of dispersing or destroying such property. As noted above, the purpose of this measure is to prevent the holder of the disputed property from dispersing or destroying it. Therefore, the party requesting the application of this interim urgent measure must submit supporting documents and evidence demonstrating such acts of dispersal or destruction. For example, Article 7 of Resolution No. 02/2020/NQ-HDTP of the Council of Judges of the Supreme People’s Court provides guidance that notarized documentation, such as a bailiff’s report confirming that the property holder has destroyed the disputed property, may serve as valid proof.
However, it should be noted that this interim urgent measure applies only to the “holder” of the disputed property and not to the “owner”, even though the owner may also have the ability to disperse or destroy the property despite not possessing it. As a result, there have been proposals to amend the law to allow for the application of this measure in cases where the owner (not the holder) is found to be dispersing or destroying the disputed property.4 However, such amendments have not yet been implemented in practice. Therefore, parties seeking to request the Court to apply this interim urgent measure should take this limitation into careful consideration.
In practice, the application of the interim urgent measure of distraining disputed property is frequently requested by litigants. However, parties should ensure that sufficient legal grounds exist when making such a request, to avoid adverse impacts on their own interests, those of the party against whom the measure is requested, or any third party involved.
(3) Clause 6, Article 114 of the 2015 Civil Procedure Code and Point c, Clause 1, Article 49 of the 2010 Law on Commercial Arbitration.
(4) Thai Chi Binh (2020), Difficulties and obstacles in applying some temporary emergency measures in civil proceedings and recommendations for improvement, Legislative Research Journal No. 11 (411) – Issue 1 – June 2020.
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