Viewpoint | Common situations of changing and adding the executed person during execution

In judicial practice, obtaining an effective judgment does not necessarily mean that the creditor's rights can be paid off. The situation that the person subject to execution does not have the ability to perform or even maliciously evades execution often leads to "execution failure. When there is a situation that hinders the execution, changing and adding the person to be executed can effectively alleviate the difficulty of execution and accelerate the realization of the legitimate rights and interests of the parties. However, changing or adding the person subject to execution means increasing the entity liability of the third party. If the person subject to execution is changed or added at will, the third party not related to the case may bear the debts unrelated to the third party and infringe the legitimate rights and interests of the third party. Therefore, in judicial practice, the judgments and rulings of courts at all levels make it clear that the change and addition of the person subject to execution must follow the principle of legalism. The "Provisions of the Supreme People's Court on Several Issues Concerning the Change and Addition of Parties in Civil Enforcement" clearly stipulates the statutory circumstances under which the person subject to enforcement can be added in the enforcement procedure.

Related cases]

The 28th batch of guiding cases of the Supreme People's Procuratorate: Wei Dongping, Zhang Yi and He Xiaomin's loan contract dispute (2018) Hei 07 Jian No. 3

guiding significance: The division of labor between trial and enforcement procedures is different, the rights and obligations of the parties should be determined by the trial procedure, and the enforcement procedure should not normally directly determine the rights and obligations of the parties, but can only be enforced on the basis of enforcement. The change or addition of the person subject to execution shall follow the legal principle, and shall not be changed or added except for the circumstances stipulated by the law or judicial interpretation, otherwise it will essentially deprive the parties of their litigation rights, which is a procedural violation. Although the specific provisions of "without trial procedure, the husband and wife who have not raised debts shall not be required to bear civil liability" were clearly stated by the Supreme People's Court in February 2017 in the notice on issues related to the proper trial of cases involving marital debts in accordance with the law, the basic principles and procedures for the people's court to add the person subject to execution in the execution procedure have always been determined, this provision is only a reaffirmation of the existing rules for determining the joint debt of the husband and wife.

Liu Jingyan, Kaiyuanxin Space Real Estate Development Co., Ltd. and other loan contract dispute implementation supervision (2021) Supreme Law Enforcement Supervision No. 387

Trial Summary: The addition of the person subject to execution in the execution procedure means that the third party other than the obligor determined by the effective legal document shall bear the substantive responsibility directly through the execution procedure, which will have a great impact on the substantive and procedural rights of the third party. Therefore, the addition of the person subject to execution should strictly follow the legal principle, that is, it must comply with the circumstances stipulated in the "Additional Provisions on Changes. Article 17 of the Additional Provisions on Changes. In this case, according to the facts that have been ascertained, the civil judgment of kaiyuan city court (2017) Liao 1282 Min Chu No. 661 confirmed that Jin Penglong Real Estate Company's zero equity price was transferred to 100 of Xin Space Company, which was an equity transfer. Xin Space Company's creditor's rights and debts were borne by itself, and Jin Penglong Real Estate Company did not bear the creditor's rights and debts of Xin Space Company. Liu Jingyan claimed that the merger between Jin Penglong Real Estate Company and Xin Space Company was an enterprise merger. Jin Penglong Real Estate Company did not make full capital contribution, which was inconsistent with the facts determined by the effective judgment and Articles 17 and 22 of the "Additional Provisions on Changes. Based on this, Liu Jingyan claimed to add Jin Penglong Real Estate Company as the person subject to execution, which did not comply with the legal provisions, so the court did not support his claim.

Justice is the last line of defense to safeguard social fairness and justice, and enforcement is the last link on this last line of defense. In order to effectively solve the implementation problems, we must not only solve the "difficult implementation" problem, but also rectify the "implementation chaos" phenomenon.

Why is the (I) allowed to change or add the executed person during execution?

The function of the right of execution is to realize the relationship of rights and obligations established by the effective legal instrument through the enforcement procedure. Trial provides the basis for enforcement, but in judicial practice, the probability of effective judgments and rulings being actively performed is very low, and it is often necessary to rely on enforcement procedures as the ultimate guarantee for the realization of the rights of the parties. The debtor, in order to avoid the debt or delay the performance of the debt as much as possible, often reduces its own liability property in various ways, and if it is required to go through an entity trial in order to change or add an executor, it will increase the cost of realizing the creditor's claim and exacerbate the difficulty of enforcement. And because of the long trial cycle, the entity trial process may have a new need to hear the matter, so that the court trial work pressure increased at the same time, the relationship between creditor's rights and debts in a long-term uncertain situation, the creditor's rights are difficult to achieve. Therefore, in the implementation of the change, additional enforcement can effectively save judicial resources, improve the efficiency of enforcement, more conducive to the debtor to avoid debt or hinder the implementation of the cause, fully safeguard the legitimate rights and interests of creditors.

(II) principle of separation of trial and execution

Fundamentally, the change and addition of the person subject to execution must follow the principle of legalism, which is actually the embodiment of the principle of "separation of trial and execution. The right of enforcement is the power of the enforcement department of the court, at the application of the right holder, to use the coercive force of the state and in accordance with legal procedures to force the obligor to perform the obligations determined by the effective legal instrument. Different from the judicial power, the executive power has the administrative power color of one-way, compulsory and initiative. Like other public powers, it may be abused and infringe on the rights of the parties. The addition of the executed person at the execution stage involves substantive judgment, which depends on the trial procedure, and the determination of the executed person in the execution procedure actually implements part of the judicial power and expands the authority. In addition, the change and addition of the person subject to execution in the execution procedure means that the third party other than the obligor determined by the effective legal document is directly determined to bear the substantive responsibility through the execution procedure, which will lead to the substantial deprivation of the party's right of action, which will have a great impact on the substantive and procedural rights of the third party. Therefore, the additional person subject to execution must strictly follow the legal principles, and there is no clear provision in law, only the debtor who has been given an effective judgment by the court can become the person to be executed in an enforcement case.

The Opinions of the Supreme People's Court on Further Improving the Mechanism for Restricting Enforcement Power and Strengthening Enforcement Supervision (Law [2021] No. 322) emphasizes that major substantive disputes in enforcement shall be resolved through corresponding litigation procedures in strict accordance with the provisions of the Civil Procedure Law and judicial interpretations, so as to avoid violations of regulations and the use of enforcement on behalf of trial. At the same time, the "opinions" also further clarify how to further deepen the separation of trial and execution, and how to make up for the losses of the parties after the implementation error.

"Justice and efficiency are the eternal pursuit of judicial power", and the introduction of "Change and Additional Provisions" is the product of the balance between justice and efficiency. On the one hand, the "change and additional provisions" stipulates 20 kinds of situations in which the person subject to execution can be directly changed or added in the course of execution, which provides a basis for the efficient execution of relevant cases; on the other hand, the change and addition of the person subject to execution must strictly follow the principle of legalism in accordance with the "change and additional provisions", so as to avoid the infringement of judicial justice in the execution procedure.

The "Provisions of the Supreme People's Court on Several Issues Concerning the Change and Addition of Parties in Civil Enforcement" (2020 amendments, hereinafter referred to as "Changes and Additions") have passed 16 articles to clarify that the law can be changed or added in civil enforcement. Twenty situations in which the person to be executed. For the specific identification of common situations in judicial practice, the key points are as follows:

(I) the person subject to execution is a natural person

In the "Modification and Addition Provisions", for the case where the person subject to execution is a natural person, only Article 10 stipulates that when the person subject to execution is declared missing, dead or declared dead, the person subject to execution may be changed or added. In judicial practice, it is common for applicants to apply for the addition of the spouse of the person subject to execution as the person subject to execution, or to request the addition of their relatives as the person subject to execution on the grounds that the property under the name of the person subject to execution is transferred to the name of their parents or children. However, neither of the above two situations is a statutory situation in which the person to be executed is added to the execution. Even if the heirs of the estate are added in accordance with the provisions of Article 10 of the "Changes and Additions", they can only be added to the heirs who have inherited the estate within the scope of their inheritance.

Related cases]

Tang Jie, Yin Minghui Private Loan Dispute (2019) Gan Zhi Fu No. 130

Trial SummaryAt present, there is no evidence to prove that the executed person transferred or transferred the property to his daughter free of charge after the civil judgment on which the execution was based in this case took legal effect, resulting in the people's court being unable to enforce it. Even if there is evidence to prove the existence of this fact, the person subject to execution should bear the legal consequences of judicial sanctions or criminal responsibility in accordance with the law. The applicant for reconsideration applies for adding a third person as the person subject to execution in this case on this ground, which is inconsistent with the law.

The form of "mixing" of property between the respondent and his daughter as claimed by the applicant for reconsideration is not the property mixing between corporate legal persons, partnerships or partnerships and other organizations and shareholders, partners and other natural persons who should bear debts as stipulated by law. In fact, it claims that the property is transferred maliciously between parents and children in the form of common property, and the circumstances under which the person to be executed should be added are not applicable to the above-mentioned laws. And even if the malicious transfer of property between parents and children in the form of joint property, it does not belong to the "change, additional provisions" should be added as the circumstances of the person subject to execution. The person applying for enforcement may claim rights in separate litigation in accordance with the law.

Li Guofu and Ai Yuping's Contract Dispute (2020) Ganzhi Fu No. 118

Trial Summary: The additional person subject to execution must meet the corresponding legal conditions and must be clearly stipulated in the law and judicial interpretation. There is no legal basis for adding a spouse as the person subject to execution in the execution procedure. And according to Article 2 of the "Notice of the Supreme People's Court on Issues Concerning the Proper Trial of Cases Involving Marital Debts in accordance with the Law", without trial procedures, one of the spouses who has not raised debts shall not be required to bear civil liability. Therefore, if the applicant for execution applies for the execution of the property of the opponent, it must go through the trial procedure, and the court has no right to directly add the spouse as the person subject to execution and execute his legal property.

Liu Chuanjun, Chen Ruisheng and Other Disputes over the Implementation of Lease Contract Disputes (2022) Lu 0103 Zhiyi No. 210

Trial Summary: According to Article 10 of the Provisions of the Supreme People's Court on Several Issues Concerning the Change and Addition of Parties in Civil Enforcement, "The natural person who is the person subject to execution dies or is declared dead, and the person applying for execution applies for the change or addition of the natural person's estate manager, heir, legatee or other subjects who have obtained the estate due to the death or declared death of the natural person are the person subject to execution, and bear the responsibility within the estate, the people's court should support it." The key point is that the additional person must be the subject of the estate of the person being executed and be liable only within the scope of the estate. In this case, Chen Ruisheng, who is the person subject to execution, has died, and the person applying for execution can change the heir of the person subject to execution to the person subject to execution in this case in accordance with these provisions. The third person Chen Zhongwei, Chen Zhonghua, Chen Zhongman, Chen Shuang and Chen Zhongye all issued a statement to give up inheriting Chen Ruisheng's estate, so they do not meet the additional legal conditions for change.

(II) the executor is a sole proprietorship or individual industrial and commercial household.

A sole proprietorship enterprise is a business entity established in China in accordance with the Law on Sole Proprietorship Enterprises, invested by a natural person, the property is owned by the investor, and the investor bears unlimited liability for the debts of the enterprise with his personal property. Because a sole proprietorship enterprise is an unincorporated organization, has no legal personality and does not have the ability to bear civil liability independently, the investors of a sole proprietorship enterprise bear unlimited liability for the debts of the enterprise. Based on this, when a sole proprietorship enterprise is unable to pay off the debts determined by the effective legal instrument, the people's court may, upon application, add its contributor as the person to be executed.

In judicial practice, there is no dispute over the direct execution of the property of the operator when the person subject to execution is an individual industrial and commercial household, but most courts tend not to approve the reverse application of this provision when the operator of an individual industrial and commercial household is the person subject to execution. However, the Guangdong Higher People's Court mentioned in the "Letter of the Guangdong Higher People's Court on the Reply to the Proposal of the Representative No. 1624 of the Fourth Session of the 13th People's Congress of Guangdong Province" (Yue Gao Fa Han [2021] No. 32) that "considering the individual business in practice For individual industrial and commercial households, there is often no difference between their name property and the property of the operator. Therefore, when the operator of an individual industrial and commercial household (individual business) acts as the person subject to execution, he can directly execute the property of the name", and said that he will further understand the specific application of this article by the courts at all levels, unify the judgment standard, and clarify that "if the operator of an individual industrial and commercial household is the person subject to execution, the people's court will find out that the operator is consistent with the person subject to execution on the business license, and its organization form is personal operation, the property of the name can be directly executed to pay off the debts of the operator."

Related cases]

Shen Jian, Shao Liguo and Other Disputes over the Implementation of Sales Contract Disputes (2022) Shan 0111 Zhiyi No. 141

Trial Summary: According to the relevant laws and regulations of our country, if the name of an individual industrial and commercial household is the person subject to execution, the people's court can directly execute the property of the person subject to execution. In this case, the person subject to execution is a natural person, and the objector requests to add the individual industrial and commercial household under his name. Legal basis.

(III) the executor is a partnership.

Based on the difference between a partner and a limited partner, the conditions for additional partners and limited partners are not the same when the partnership is unable to pay off the debts determined by the legal instrument in force. The former may be added when the partnership is unable to pay off the debts established by the legal instrument in force, but the latter is liable only to the extent that it has not paid its contribution in full and on time.

(IV) the person to be executed is a legal person branch

In applying Article 15 of the Alteration and Addition Provisions to add a legal person or other legal person branch of that legal person, it is often necessary to determine that the legal person branch is indeed unable to pay off the debts determined by the legal instrument in force. If the applicant fails to provide relevant proof and the court does not hear it, the ruling may be revoked.

Related cases]

Chongqing Construction Seventh Construction Engineering Co., Ltd., Dulan County Water Conservancy Bureau and other civil enforcement reconsideration (2021) Supreme Law Enforcement No. 17

Trial Summary: If the legal person branch of the person subject to execution is unable to pay off the debts determined by the effective legal document, the people's court shall support the application of the executor to change or add the legal person as the person subject to execution. If the liability property directly managed by a legal person is still unable to pay off the debts, the people's court may directly enforce the property of other branches of the legal person. According to the aforementioned provisions, there are two prerequisites for adding a legal person to the person subject to execution. One is that the branch of the legal person cannot pay off the debts determined by the effective legal document. The other is that the people's court should only respond to changes if the two conditions are met at the same time., Additional applications are supported. As far as this case is concerned, the Dulan County Water Conservancy Bureau listed Chongqing Qijian Qinghai Company as the person to be executed on the grounds that Chongqing Qijian Qinghai Company is a branch that does not have independent civil liability. At this time, the Qinghai High Court should first examine whether Chongqing Qijian Qinghai Company is indeed unable to pay off the debts determined by the effective legal documents, while neither the Qinghai High Court's reversal execution ruling nor the objection ruling have been ascertained. The Qinghai High Court directly listed Chongqing Seven Construction Company as the person to be executed in the execution of the revolving ruling. The basic facts were not clear and the procedures were improper.

(V) additional shareholders subject to execution

When the property of the for-profit legal person is not sufficient to pay off the debts determined by the effective legal instrument, the shareholders and funders who change or add the defects of capital contribution are not controversial, but the focus of the addition in judicial practice often falls on whether the shareholders and funders can prove the existence of the defects of capital contribution or the withdrawal of capital contribution. However, because creditors do not participate in the management of the company, it is difficult to grasp the actual capital contribution of the company and shareholders, if in accordance with the "who claims, who gives evidence" rule of proof, for creditors is obviously too harsh. In this regard, according to Article 20 of the "(III) of the Supreme People's Court on Several Issues Concerning the Application of the the People's Republic of China Company Law" (2020 Amendment): "There is a dispute between the parties on whether they have fulfilled their capital contribution obligations, and the plaintiff provides the performance of the shareholders. If there is evidence of reasonable doubt about the obligation of capital contribution, the defendant shareholder shall bear the burden of proof that he has fulfilled the obligation of capital contribution.", Creditors only need to raise reasonable doubts as to whether there are defects in the contribution of shareholders and contributors, and the shareholders and investors will provide evidence.

Related cases]

China enterprise confederation and China enterprise joint financing guarantee co., ltd. and other outsiders to implement objection (2019) Beijing 01 min Chu 56

Trial Summary: For the suspected withdrawal of capital contributions by shareholders, the court will not accept it because the shareholders fail to produce valid evidence to prove that they have not withdrawn their capital contributions. Instead, the court will add them to the enforcee in accordance with Article 18 of the Provisions on Changes and Additions.

(VI) adds shareholders of one-person limited liability company

In the case of a limited company, if a creditor claims that the shareholders of a limited company are jointly and severally liable for the company's debts, according to the general rule of proof of "who claims, who gives evidence", the creditor shall prove that the shareholder and the company have a mixed personality and other corporate personality denial situation, otherwise it shall bear the consequences of proof.

However, the biggest difference between a one-person company and a limited company is that the will of the company is highly coincident with the will of the shareholders, it is easier for shareholders to use the independent status of the company's legal person to infringe on the interests of creditors, and it is more difficult for creditors to prove that there is a mix of personality between shareholders and the company. If the burden of proof is still borne by the creditor, it is obviously difficult to safeguard the legitimate rights and interests of the creditor. Therefore, Article 63 of the Company Law provides for the principle of inversion of the burden of proof for a one-person company, and if a one-person company fails to prove the independence of the company's property, the shareholders of a one-person company shall be jointly and severally liable for the debts of the company. Article 20 of the "Change and Addition Provisions" also stipulates that when the executed person is a one-person company, if the shareholder cannot prove that the company's property is independent of his own property, he may apply for the change and addition of the shareholder as the executed person and bear joint and several liabilities for the company's debts.

Related cases]

Pang Hua, Shandong Dasheng Group Construction Engineering Co., Ltd. and other applicants for execution of objection (2021) Supreme Famin Shen No. 3711

Trial Summary: After becoming a one-person limited company, Huayang Company violated the provisions of Article 62 of the the People's Republic of China Company Law by failing to prepare financial and accounting reports at the end of each fiscal year and audited by an accounting firm. Although Pang Hua submitted evidence materials such as the audit report of Huayang Company issued by the accounting firm to prove the independence of the company's property, according to the facts found out in the original trial, the above audit report did not include the execution debts involved in the case that could be known through public inquiry into the balance sheet of Huayang Company, and there was obvious audit failure, so the court did not accept it. Pang Hua, as the sole shareholder of the company, cannot prove that the company's property is independent of personal property and should bear the adverse consequences of property mixing.

(VII) actual controller

The actual controller is a person who, although not a shareholder of the company, can actually control the company's behavior through an investment relationship, agreement or other arrangement. Common examples include actual control of corporate affairs through contractual relationships such as proxy shareholding agreements and custody agreements; control of corporate affairs through indirect investments; anonymous shareholders; and control of corporate affairs under special circumstances such as court-appointed administrators in the course of bankruptcy reorganization.

The addition of the actual controller of the company does not belong to one of the situations listed in the "change and additional provisions" that can directly change or add the person to be executed in the execution procedure, and at present, China's current laws related to enforcement do not provide for the direct addition of the actual controller of the company as the person to be executed, so it is impossible to protect the legitimate rights and interests of creditors by directly chasing the actual controller of the company as the person to be executed in the execution procedure.

However, this does not mean that there is nothing to do with the actual controller of the company. According to Article 21 of the Company Law, "the controlling shareholder, the actual controller,Director,SupervisorsSenior managers shall not use their affiliations to harm the interests of the company. Anyone who violates the provisions of the preceding paragraph and causes losses to the company shall be liable for compensation. "Therefore, the actual controller of the company can also be listed as a defendant through litigation.

The Report of the Supreme People's Court on the Work of the People's Courts in Resolving "Difficulties in Enforcement" states that "the enforcement of legal instruments in force is a key part of the entire judicial process. The main task of judicial adjudication is to clarify rights and obligations and to achieve a fixed division to stop disputes, while enforcement is to rely on the coercive force of the State to realize the rights and interests of the parties to win the case, and ultimately resolve conflicts and resolve disputes thoroughly." However, in judicial practice, because the person subject to execution tries to evade execution by transferring hidden property and hiding his whereabouts, a large number of effective legal documents have not been implemented, which not only seriously damages the legitimate rights and interests of the winning parties, but also damages the legal authority and judicial credibility.

The promulgation of the "change and additional provisions" has alleviated the problem of "difficulty in enforcement" to a certain extent, but if there are no restrictions on the change and addition of the person subject to enforcement, it may lead to abuse of power. and then seriously affect the res judicata and credibility of the effective judicial documents. And because the direct change and addition of the executed person in the execution is actually the third party who has nothing to do with the effective judgment document without the entity trial, it will seriously damage the legitimate rights and interests of the third party. Therefore, the addition of the person to be executed must strictly follow the statutory principle, and only when the statutory circumstances are met can the person to be executed be directly changed or added in the execution.