Fa Shi [2016] No. 18

The Provisions of the Supreme People’s Court on Certain Issues Concerning Online Judicial Auctions of the People‘s Courts was passed and adopted by the Judicial Committee of Supreme People‘s Court at its 1,685th meeting on May 30, 2016. It is hereby released and will be implemented from January 1, 2017.

The Supreme People’s Court

August 2, 2016

Provisions of the Supreme People‘s Court on Certain Issues Concerning Online Judicial Auctions of the People’s Courts

(Passed and adopted by the Judicial Committee of Supreme People’s Court at its 1,685th meeting on May 30, 2016; Implemented from January 1, 2017)

To regulate online judicial auction, ensure the open, fair, just, safe, and efficient online judicial auction, and safeguard the legitimate rights and interests of the parties, in accordance with the provisions of the Civil Procedure Law of the People’s Republic of China and other laws, aligning with the actual implementation of the people’s courts, the Provisions is promulgated.

Article 1 The term “online judicial auction" as mentioned in the Provisions refers to the public disposition of property by the people’s court in the online auction way through the online auction platform according to laws.

Article 2 Where the People’s court disposing property by auction, it shall do so by means of online judicial auction, except where laws, administrative regulations, and judicial interpretations stipulate that the property must be disposed of by other means or it is inappropriate to dispose by means of online auction.

Article 3 Online judicial auction shall be fully open to the public on the online auction platform and subject to social supervision.

Article 4 The Supreme People’s Court establishes a nationwide list of Internet service providers. If an Internet service provider applies for inclusion in the list database, the online judicial auction platform provided by it shall meet the following conditions:

(1) it shall be equipped with the interface for comprehensively displaying judicial auction information;

(2) having the functions such as information disclosure, online registration, bidding, settlement, etc., required by the Provisions;

(3) having an independent system with information sharing, complete functions, and technical extending;

(4) having standard procedures, safe and efficient system, high quality and cheap service;

(5) having a high reputation and extensive social participation throughout the country.

The review committee specially established by the Supreme People’s Court shall be responsible for selection, review and delisting of Internet service providers. Each year, the Supreme People’s Court introduces third-party evaluation agencies to review and public the Internet service providers that have been included in the list and those that have newly applied for inclusion in the list.

Article 5 Internet service providers shall be selected by enforcement applicants from the list database. If no Internet service providers are selected or the selections of multiple enforcement applicants are inconsistent, it shall be appointed by the people’s court.

Article 6 In the case of online judicial auction, the people’s court shall perform the following duties:

(1) making and publishing an auction notice;

(2) ascertaining the status, the burden of rights and other information of the property to be auctioned, and making relevant explanations;

(3) determining the auction reserve price, the amount of deposit, and tax burdens, etc.;

(4) determining payment methods of deposit and auction funds;

(5) notifying the parties and preemptive right holders.

(6) making the rules of successful auctions;

(7) handling the delivery of property and issuing a notice on assistance in enforcement of transfer of the property right certificates;

(8) opening a special account for the online judicial auction;

(9) Other duties performed by the people’s court according to laws.

Article 7 In the case of online judicial auction, the people’s court may entrust the following auxiliary auction work to social institutions or organizations:

(1) making written instructions, videos, photos, and other materials on the property to be auctioned;

(2) displaying the auctioned property, accepting consultation, leading the inspection, and sealing up samples, etc.;

(3) the appraisal, inspection, assessment, audit, warehousing, storage, transportation of the property auctioned, etc.;

(4) Other auxiliary work of auction that may be entrusted.

Necessary expenses incurred by social institutions or organizations for undertaking the auxiliary work of online judicial auction shall be borne by the person subjected to enforcement.

Article 8 In an online judicial auction, the following matters shall be undertaken by the Internet service provider:

(1) providing an online judicial auction platform complying with laws, administrative regulations, and judicial interpretations, and guaranteeing the safe and normal operation;

(2) providing a safe, convenient, and compatible electronic payment butt-joint system;

(3) Displaying the sale information provided by the people’s court and the entrusted social institution or organization in a comprehensive and timely manner;

(4) Ensuring the information and data during the whole process of judicial auction are authentic, accurate, complete, and safe;

(5) other work to be undertaken by the Internet service provider.

Internet service providers shall not set up backstage manipulation functions that hinder the registration, participation, or bidding of qualified bidders and monitor the information of bidders in the judicial auction process.

Services provided by Internet service providers shall not be interrupted without justified reasons.

Article 9 Online judicial auction service providers engaging in activities pertained to online judicial auction shall be subject to the administration, supervision, and guidance of the people’s courts.

Article 10 The reserve price shall be determined in the online judicial auction, and the auction reserve price shall be the starting price.

The starting price shall be determined by the people’s court with reference to the appraisal; and where no appraisal is conducted, it shall be determined with reference to the market price, and the opinions of the parties shall be consulted. The starting price shall not be lower than 70% of the appraisal price or the market price.

Article 11 No restriction shall be imposed on the number of bidders in the online judicial auction. Where one person bids and offers a price not lower than the starting price, the auction shall be completed.

Article 12 The online judicial auction shall be announced in advance on the online judicial auction platform, in addition to the statutory channels. In the judicial auction of movable property, the announcement shall be issued 15 days beforehand; and in the judicial auction of immovable property or other property rights, the announcement shall be issued 30 days beforehand.

The auction announcement shall include information as the auction property, price, deposit, conditions of bidders, known defects of auctioned property, relevant rights and obligations, legal liabilities, auction time, network platform, court, and other information.

Article 13 In the case of online judicial auction, the people’s court shall publicize the following information through the online judicial auction platform on the day of the auction announcement:

(1) the auction announcement.

(2) the legal documents on which the enforcement is based, except those that shall not be disclosed as prescribed in law;

(3) the copy of the evaluation reporter the basis for pricing without evaluation;

(4) the auction time, starting price and bidding rules;

(5) the written descriptions, videos, photos, and other materials on statuses of the auctioned property in terms of ownership, possession, use and collateral obligations;

(6) the subject of preemptive right and the nature of right;

(7) the notification or inability to notify the parties of the persons with preemptive right;

(8) the payment methods and accounts for auction deposit and auction proceeds;

(9) the taxes and fees that may incur in the transfer of property right by auction and the ways of bearing them;

(10) the name, contact, and supervision methods of the enforcement court;

(11) other information that shall be disclosed.

Article 14 In the case of online judicial auction, the people’s court shall give special notice to the following matters through the online judicial auction platform on the day of the announcement of the auction:

(1) bidders shall have full capacity for civil conduct. Where laws, administrative regulations and judicial interpretations have special provisions on the qualifications or conditions of the buyer, the bidder shall have the prescribed qualifications or conditions;

(2) when anyone entrusts others to participate in the bidding, he or she shall be confirmed by the people’s court before the bidding procedure commences and notify it to the Internet service provider;

(3) known defects and encumbrance of rights in the auctioned property;

(4) the auctioned property shall be subject to the actual situation, and the bidders may apply for on-the-spot inspection;

(5) the bidder who decides to participate in the auction shall be deemed to have a complete understanding of the auction property and accept all known and unknown defects of the auction property;

(6) the letter of confirmation of the auction transaction, which shows the true identity of the buyer, shall be publicly displayed on the online judicial auction platform;

(7) the deposit will not be refunded after the buyer has repented.

Article 15 The person subjected to enforcement shall provide relevant information and instructions on the quality of the auctioned property.

If the people’s courts has made public notice and special notice in accordance with the requirements of Articles 13 and 14 of these Provisions, and declares in the auction announcement that the authenticity or quality of the auctioned property cannot be guaranteed, it shall not beat the liability for guarantee of defects .

Article 16 Matters of online judicial auction shall be notified to the parties and the known preemptive rights holders in writing or other reasonable ways that can be confirmed 3 days prior to the announcement of the auction. If the rights holder expressly waives his/her right in writing, he/she may not be notified. If the notice cannot be given, it shall be publicized on the online judicial auction platform and explains the reasons for the failure to give the notice. 5 days after the announcement, the notice shall be deemed to have been given.

If the preemptive right holder fails to participate in the bidding upon notification, it shall be deemed as giving up the preemptive right.

Article 17 The amount of the deposit shall be determined by the people’s court within 5% to 20% of the starting price.

A bidder shall pay the deposit in real name before participating in the auction. If the deposit is not paid, the bidder shall not participate in the bidding. If the enforcement applicant participates in the bidding, he or she may not pay the deposit; but if the amount of claims is less than the amount of the deposit, the balance shall be paid.

The bidder can pay the deposit via the account designated by the people’s court. Or the corresponding account of the bidder can be frozen in the payment system provided by the Internet service provider.

Article 18 Bidders shall be qualified for bidding upon the confirmation of the people’s courts or the Internet service providers that they have paid deposits before the end of the auction bidding process. Internet service providers shall give bidding codes and bidding passwords to qualified bidders, and bidders shall participate in bidding with such codes.

Before the end of online judicial auction, the people’s courts and the Internet service providers shall keep confidential the passwords of bidders and other information that can confirm the real identities.

Article 19 After being confirmed by the people’s court, the preemptive right holder shall acquire the preemptive bidding qualification, the preemptive bidding code and participating password, and participates in the bidding with the preemptive bidding code; without confirmation, shall not participate in the bidding as the preemptive right holder.

Where preemptive right holders with different orders apply to participate in the bidding, the people’s court shall confirm their orders and assign the codes of preemptive right holders in different orders.

Article 20 The online judicial auction starts from the starting price and bids in an incremental bidding manner, with the increase range determined by the people’s court. An offer made by a bidder below the starting price is invalid.

The bidding time of online judicial auction shall not be less than 24 hours. If no bid is made within 5 minutes before the end of the bidding procedure, the final bid shall be the transaction price; where there is a bid, the bidding time shall be extended by 5 minutes from the time point of the bid. The bidder’s bidding time shall be subject to the time of entering the service system of the online judicial auction platform.

The bidding code and bidding information shall be displayed in real time on the online bidding page, and the whole bidding process should be stored and displayed.

Article 21 Where the preemptive right holder participates in the bidding, he/she may bid at the same price as other bidders. Where there is no higher bid, the auctioned property shall be obtained by him/her.

Where the preemptive right holders with different orders bid at the same price, the auctioned property shall be obtained by the preemptive right holder with sequential priority.

Where the preemptive right holders with the same orders bid at the same price, the auctioned property shall be obtained by the preemptive right holder who makes the earlier bid

Article 22 In the case that the online judicial auction is completed, the online judicial auction platform will automatically generate the confirmation letter with the buyer’s real identity and make it public.

The ownership of the auctioned property shall be transferred upon the delivery of the auction order to the buyer.

Article 23 After the auction is completed, the deposit paid by the buyer may be used to offset the price; the deposits paid by other bidders shall be refunded or unfrozen within 24 hours after the end of the bidding procedure. If the auction fails, the deposits paid by bidders shall be refunded or unfrozen within 24 hours after the end of the bidding procedure.

Article 24 Where the buyer regrets bidding after the auction is completed, the deposit paid shall not be refunded, and shall be used in turn to pay the losses of expenses incurred by the auction, make up for the difference between the re-auction price and the original auction price, and offset the debts of the persons subject to enforcement of the case and related to the auctioned property.

If the auction resumes after the buyer regrets bidding, the original buyer may not participate in the bidding.

Article 25 After the auction is completed, the buyer shall deliver the remaining price to the account designated by the people’s court within the time limit determined in the auction announcement. Within 24 hours after the auction is completed, the Internet service provider shall transfer the frozen deposit paid by the buyer into the account designated by the people’s court.

Article 26 If no bid is made during the online judicial auction bidding period, the auction shall be aborted. After the abortion of an auction occurs, it should be re-auctioned on the same online judicial auction platform within 30 days. For the judicial auction of movable property, the announcement shall be issued 7 days beforehand; and for the judicial auction of immovable property or other property rights, the announcement shall be issued 15 days beforehand. The range of reduction of the starting price for a second auction shall not exceed 20% of the previous starting price.

If the second auction is aborted again, the property may be sold off on the same online judicial auction platform according to the law.

Article 27 The starting price and the range of price reduction, the range of price increase through bidding, the amount of the deposit, the bidding qualifications and orders of the preemptive right holders shall be assessed and determined by the collegial panel formed by the people’s court in accordance with the law.

Article 28 In the online judicial auction bidding procedure, if the enforcement should be postponed or suspended prescribed by law, the people’s court shall decide to postpone the auction or make a ruling that the auction shall be suspended; the people’s court may, either by itself or by notifying the Internet service provider, stop the auction.

If discovering any emergency such as a system failure or a security hazard, the Internet service provider may postpone the auction in advance and immediately report to the people’s court.

If the auction is postponed or suspended, the reasons shall be announced in time on the online judicial auction platform.

After the postponement or suspension of the auction expires, if it is necessary to continue the auction, the auction shall be resumed within 5 days.

Article 29 the Internet service provider shall keep the electronic data generated by auction in a complete state for no less than 10 years, except as otherwise provided by laws and administrative regulations.

Article 30 The taxes and fees formed by the online judicial auction itself shall be borne by the corresponding subjects in accordance with the provisions of relevant laws and administrative regulations; if there are no provisions or the provisions are unclear, the people’s courts may determine related subjects and the amount of taxes and fees to be borne according to the legal principles and the actual conditions of the case.

Article 31 Where the parties or interested parties file an objection and request to revoke the online judicial auction, once one of the following circumstances are met, the people’s court shall support:

(1) where the written description, video or photo display of the auctioned property and the description of the defects are seriously untrue, thus causing the buyer to have a serious misunderstanding and the purchase purpose can not be realized, except where the technical level at the time of the auction cannot be found or the relevant defects and liabilities have been publicly disclosed;

(2) the result of the auction is incorrect due to system failure, virus intrusion, hacker attack, data error, etc., which seriously damages the interests of the parties or other bidders;

(3) malicious collusion among bidders or between bidders and online judicial auction service providers, which damages the interests of the parties or other bidders;

(4) the buyer does not have the qualifications for bidding required by laws, administrative regulations and judicial interpretation;

(5) illegally restricting bidders from participating in bidding or stipulating different bidding conditions for bidders with the same rights;

(6) other situations where the online judicial auction procedure is seriously violated and the interests of parties or bidders are damaged.

Article 32 Where the online judicial auction is revoked by the people’s court and the parties, interested parties or outsiders believe that the auction conducted by the people’s court violates the law and causes damage to their legitimate rights and interests, they may apply for state compensation according to the law. If it is deemed that the legitimate rights and interests are damaged by other subjects, it may file a separate lawsuit.

Article 33 If the parties, interested parties or outsiders believe that their legitimate rights and interests are damaged due to illegal acts of the online judicial auction service provider, they may file a separate lawsuit; If the reasons are grounded, the people’s court shall support it, except for statutory exemptions.

Article 34 In the case of online judicial auctions, the following institutions and personnel shall not bid and may not entrust others to bid for auctioned properties related to their actions:

(1) the people’s court in charge of enforcement;

(2) Internet service providers;

(3) social institutions or organizations that undertake the auxiliary work of the auction;

(4) the staff and their near relatives prescribed in paragraphs (1) to (3).

Article 35 The Internet service provider shall be removed from the list under any of the following circumstances :

(1) manipulating the auction procedures, modifying the auction information, and committing other acts, which violates the provision of the second paragraph of Article 8 of these Provisions;

(2) malicious collusion, fraud, disclosure of confidential information and other acts;

(3) those who are punished for violating laws, administrative regulations and judicial interpretations and are not suitable to continue to engage in online judicial auctions;

(4) the violation of the provisions of Article 34 of these Provisions;

(5) other circumstances under which the name shall be removed from the list.

Where the Internet service provider fails into any of the circumstances stipulated in the preceding paragraph, the people’s court may handle it in accordance with the relevant provisions of the Civil Procedure Law of the People’s Republic of China.

Article 36 If parties or interested parties believe that an online judicial auction act violates their legitimate rights and interests, they may raise an objection to the enforcement. During the period of objection or reconsideration, the people’s court may decide to postpone the auction or adjudicate the auction’s suspension.

Where an outsider proposes an objection to the subject of the online judicial auction, the people’s court shall handle it in accordance with the provisions of the Article 227 of the Civil Procedure Law of the People’s Republic of China and related judicial interpretations, and decide to postpone the auction or adjudicate the auction’s suspension.

Article 37 Where the people’s court disposes of property by means of auction through the Internet platform, these Provisions shall apply.

Where the auction institutions is entrusted to enforce the online auction through the Internet platform in the enforcement procedure, these Provisions shall apply.

Where there is no provision in these Provisions for online judicial auction, other relevant provisions on judicial auction shall apply.

Article 38 The Regulations shall be effective as of January 1, 2017. In the event that there is any inconsistency between this Regulation and relevant judicial interpretations and normative documents issued by the Supreme People’s Court prior to the implementation hereof, the former shall prevail.