Relief options for third parties affected by court judgments

Q: How should matters be handled when an effective judgment or ruling of a court harms the interests of a third party?

A: Such a third party can seek relief either by lodging an opposition to enforcement or instituting a third-party action to quash the judgment or ruling.

Q: What are the conditions and the review procedures for lodging an opposition to enforcement?

A: The circumstances have mainly been of the following three types: 1) an objection lodged in a situation where a third party reckons that ownership of the subject matter on which the effective judgment or ruling has a bearing does not belong to any party to the original judgment or ruling, rather to the third party; 2) an objection lodged in a situation where a subject matter unconnected to the judgment or ruling is, in the course of enforcement, treated as a subject matter of enforcement, and enforcement is carried out thereon; and 3) an objection lodged where it is sensed that the act of enforcement will affect one’s right to use the subject matter of enforcement. The situation that corresponds to the lodging of an opposition to enforcement where a third party is injured by an effective judgment or ruling is the first above.

Pursuant to article 227 of the Civil Procedure Law, if, in the course of enforcement, a party not involved in the case files a written objection in respect of the subject matter of enforcement, the people’s court will conduct a review within 15 days from the date of receipt of the written objection, and will rule to suspend enforcement against the subject provided that the grounds are tenable.

If the grounds are untenable, it will rule to dismiss the objection. If the party not involved in the case, or a concerned party, is dissatisfied with the ruling, being of the opinion that the original ruling was erroneous, matters will be handled in accordance with the procedure for the monitoring of trials. If the dissatisfaction of the party not involved in the case or the concerned party is unrelated to the original ruling, the party may institute a legal action in a people’s court within 15 days from the date of service of the ruling.

Q: Under what circumstances may a third party act to quash a judgment or ruling be instituted?

A: If a third party not a participant in a legal action has evidence showing that part or all of a legally effective judgment, ruling or written mediation statement is erroneous, harming his civil rights and interests, the party may institute a legal action in the people’s court that rendered the effective judgment, ruling or written mediation statement requesting that it revise or quash the original judgment, ruling or written mediation statement.

In recent years, in judicial practice in PRC civil procedures, there have occasionally been instances where a party has sought to infringe another’s lawful rights and interests by such means as instituting a legal action in bad faith.

Particularly since people’s courts have strengthened their mediation work, the phenomenon of certain parties taking advantage of mediation to practise litigation fraud, malicious collusion, evasion of debts or appropriating the property or benefits of third parties has become increasingly salient. How to protect third-party interests that have been harmed has become an important issue in the legislation of civil procedure law, giving rise to the system of third-party actions to quash judgments or rulings.

Article 56 of the Civil Procedure Law specifies that if a third party deems that it has an independent right of claim in respect of the subject of the action of the two concerned parties, or it has a material interest in the outcome of the handling of the case, it may apply to join in the action, or the people’s court will notify the third party to join the action. If such third party fails to participate in the action for a reason not attributable to it, but has evidence showing that part or all of the judgment is erroneous, harming its civil rights and interests, it may, within six months of the date on which it learned or ought to have learned that its civil rights and interests had been harmed, institute a legal action in the people’s court that rendered the judgment.

When a court tries a case of a third party action to quash a judgment or ruling, it first reviews the grounds for quashing presented by the third party. If the grounds are tenable, the court will quash or revise the portion of the original judgment that is unfavourable to the third party and render a new judgment or ruling in respect of the relationship of substantive rights and obligations between the original parties and the third party. All parties may lodge an appeal against the judgment or ruling rendered in the new action.

Q: Of opposition to enforcement and an action to quash a judgment or ruling, which is better for safeguarding the interests of a third party?

A: The main difference between these two means of relief is the difference in their conditions of application. An opposition to enforcement may only be lodged after the enforcement procedure has commenced, whereas a third-party action is not so limited. If a third party, after commencement of the enforcement procedure for an effective judgment or ruling, discovers that the original judgment or ruling harms its interests, it may either institute a third party action to quash the judgment or ruling, or lodge an opposition to enforcement in the capacity of a party not involved in the case.

If a case has not entered the enforcement procedure, there may be no possibility for it to do so, for example, in a judgment or ruling that does not involve payment. When the concerned party to the case freely performs the obligations specified in the judgment or ruling, the case also will not enter the enforcement procedure. In such a circumstance, a third party can protect its rights only by instituting an action to quash the judgment or ruling.

An action to quash a judgment or ruling is an adjudication procedure, is subject to the two-tier trial system, and the trial procedure is stringent, offering more comprehensive safeguarding of the parties’ rights, but also requiring a longer period of time. An opposition to enforcement is not an adjudication procedure, in practice basically taking the form of a hearing, with a relatively flexible review method as well as relatively short handling times. However, because the two-tier trial system does not apply, it is not as comprehensive as an action to quash a judgment or ruling in terms of safeguarding the rights of the parties. A party should make its choice based on the actual circumstances of the case and its own requirements.

Gao Ping and He Yu are partners at AnJie Law Firm