A restriction on high spending does not make a person a laolai

On 9 November the China Enforcement Information Disclosure website announced that the Jiading District People's Court in Shanghai had issued an order restricting consumption against Wang Sicong. The order records that on 12 August 2019 the court opened enforcement of an application by Cao Yue in a contract dispute with Shanghai Panda Interactive Entertainment Culture Co., Ltd.; because Panda had not performed the payment obligation set by an effective legal document within the period specified in the enforcement notice, a consumption restriction was imposed, barring Wang Sicong, as its legal representative, principal officer, person directly responsible for affecting performance of the debt and actual controller, from high-level consumption and from consumption not necessary for daily life and work.

Wang, aged 31, was again trending on Weibo that day. Some online comment wondered whether the "nation's husband" had become the "nation's laolai". In fact Wang is not yet a laolai, though he is a person subject to enforcement. What is the difference between the two?

What is a person subject to enforcement?

A person subject to enforcement is a party who, after the statutory appeal period has expired or a final judgment has been given, refuses to perform the court's judgment or the arbitral award. Where, after a civil judgment takes effect, a party fails to complete the obligation required by the judgment within the period it specifies and the court enforces it, that party is the person subject to enforcement in the enforcement proceedings.

What is a dishonest judgment debtor?

A dishonest judgment debtor, known colloquially as a laolai, is a person subject to enforcement who has the means to perform but does not perform an effective legal document. Under Article 1 of the Several Provisions of the Supreme People's Court on Publishing Information on the List of Dishonest Judgment Debtors, a person falls within the list on any one of six grounds:

(1) having the means to perform and refusing to perform the obligation set by an effective legal document;

(2) obstructing or resisting enforcement by forging evidence, violence, threats or other means;

(3) evading enforcement by sham litigation, sham arbitration, or concealment or transfer of property;

(4) breaching the property reporting system;

(5) breaching an order restricting consumption;

(6) refusing without proper reason to perform an enforcement settlement agreement.

A person subject to enforcement who, after being restricted from high-level consumption, still fails to perform the judgment is therefore listed as a dishonest judgment debtor, or laolai. The two are distinct, but both carry the restriction on high-level consumption. What does that restriction cover?

What conduct does the restriction cover?

Under Article 3 of the Several Provisions of the Supreme People's Court on Restricting High-Level Consumption and Related Consumption by Persons Subject to Enforcement, in force since 22 July 2015:

a person subject to enforcement who is a natural person may not, once restricted, do any of the following:

(1) choose air travel, soft sleeper on a train, or a cabin above second class on a ship;

(2) engage in high-level consumption at star-rated hotels, nightclubs, golf courses and similar venues;

(3) buy real property, or build, extend or expensively renovate a house;

(4) lease high-grade office space, hotels, apartments and similar premises for business use;

(5) buy a vehicle that is not necessary for business;

(6) travel or take holidays;

(7) send children to high-fee private schools;

(8) pay high premiums for insurance or wealth management products;

(9) take any seat on a G-series high-speed train, a first-class or higher seat on any other high-speed train, or engage in other consumption not necessary for daily life and work.

Where a court has restricted high-level consumption,

what routes are open to resolve the matter?

Under Article 9 of the Several Provisions of the Supreme People's Court on Restricting High-Level Consumption by Persons Subject to Enforcement, the court may lift the order during the period of restriction where the person provides genuine and effective security or the applicant for enforcement consents; and where the person has completed the obligations set by the effective legal document, the court shall promptly lift the order by notice or announcement within the scope of the notice or announcement under Article 6 of the Provisions.

And once a person is on the list of dishonest judgment debtors, what routes are open?

Under Article 10 of the Several Provisions on Publishing Information on the List of Dishonest Judgment Debtors, the court shall delete the information within three working days in any of the following circumstances:

(1) the person has performed the obligations set by the effective legal document, or the court has completed enforcement;

(2) the parties have reached an enforcement settlement and performed it in full;

(3) the applicant for enforcement has applied in writing for deletion and the court has examined and approved the application;

(4) after the current enforcement proceedings are terminated, a search of the person's property through the online enforcement control system on two or more occasions has found no property available for enforcement, and neither the applicant nor anyone else has provided a useful lead as to property;

(5) the court has lawfully ruled to suspend enforcement against the person by reason of trial supervision or insolvency proceedings;

(6) the court has lawfully ruled that enforcement is not to be carried out;

(7) the court has lawfully ruled to terminate enforcement.

The preceding paragraphs do not apply where a period of listing has been set. The court shall delete the information within three working days after that period expires. Where information is deleted under item (3) of the first paragraph, the court may list the person again if any of the grounds in Article 1 applies. Where information is deleted under item (3) and the applicant applies within six months to have the person listed again, the court will not support the application.

In this case, then, Wang need only perform the obligation set by the effective judgment of his own accord, or reach an enforcement settlement with the applicant, to have the consumption restriction lifted. If he evades or sidesteps the obligation and refuses to perform, he will without question be found to be a dishonest judgment debtor, subject to restrictions on consumption and on leaving and entering the country, and may even face fines, detention and other compulsory measures.