Studies on the Special Procedure of Security Interest Realisation

Studies on the Special Procedure of Security Interest Realisation

实现担保物权的特别程序探究

Applying for realisation of a security interest is a speicial procedure in civil litigation. When the debtor fails to pay the due debt or fails under any circumstance where a mortgage shall be exercised as agreed upon by the parties, the holder of a security interest can apply directly to the court for special procedures of security interest, without a lawsuit, to realise priority compensation of the secured property. The following are the relevant laws regarding the special procedure of security interest realisation:

申请实现担保物权是民事诉讼中的一个特别程序，当债务人不履行到期债务或者发生当事人约定的实现担保物权的情形时，担保物权人可以不通过诉讼，而直接向法院申请执行担保财产，以实现对担保财产的优先受偿。以下是实现担保物权特别程序的相关法律问题：

Legal Basis

法律依据

• Article 410 paragraph 2 of Civil Code: Where the mortgagee and the mortgagor fail to reach an agreement on the means of exercising mortgage, the mortgagee may request the people’s court to have the mortgaged property auctioned or sold off.
• Article 207 of Civil Procedure Law: To apply for realisation of a security interest, the security interest holder or any other party entitled to request realisation of the security interest shall, in accordance with the Civil Code and other laws, file an application with the primary people’s court at the place where the property posted as security is located or at the place of registration of the security interest. 
• Article 208 of Civil Procedure Law: After accepting an application, if the application complies with legal provisions upon examination, the people’s court shall issue a ruling to auction or sell the property posted as security, and the parties may, based on the ruling, apply for enforcement to the people’s court; or, if the application does not comply with legal provisions, the people’s court shall issue a ruling to dismiss the application, and the party may institute an action in a people’s court.
• Article 64 paragraph 1 of Interpretation of the Supreme People’s Court on the Application of the Security System in the Civil Code: In a sale with reservation of title, the seller has the right to retrieve the subject matter in accordance with the law. But if the seller cannot reach an agreement with the buyer, the parties request to auction or sell the subject matter in accordance with the relevant provisions of the Civic Procedure Law on “Cases of Realizing Security Interest”, the people’s court shall allow it. 
• Article 65 of Interpretation of the Supreme People’s Court on the Application of the Security System in the Civil Code: In financial lease contracts, if the lessee fail to pay the rent as agreed and still fails to pay with a reasonable period after demand notice, the lessor requests the lessee to pay the remaining rent and be compensated with the proceeds from auctioning or selling the leased property, the people’s court shall allow it; the parties request to auction or sell the leased property in accordance with the relevant provisions of the Civic Procedure Law on “Cases of Realizing Security Interest”, the people’s court shall allow it.

《中华人民共和国民法典》第四百一十条第二款：“抵押权人与抵押人未就抵押权实现方式达成协议的，抵押权人可以请求人民法院拍卖、变卖抵押财产。”

《中华人民共和国民事诉讼法》第二百零七条：“申请实现担保物权，由担保物权人以及其他有权请求实现担保物权的人依照民法典等法律，向担保财产所在地或者担保物权登记地基层人民法院提出。”第二百零八条：“人民法院受理申请后，经审查，符合法律规定的，裁定拍卖、变卖担保财产，当事人依据该裁定可以向人民法院申请执行；不符合法律规定的，裁定驳回申请，当事人可以向人民法院提起诉讼。”

最高人民法院《关于适用〈中华人民共和国民法典〉有关担保制度的解释》第六十四条第一款：“在所有权保留买卖中，出卖人依法有权取回标的物，但是与买受人协商不成，当事人请求参照民事诉讼法“实现担保物权案件”的有关规定，拍卖、变卖标的物的，人民法院应予准许。”六十五条：“在融资租赁合同中，承租人未按照约定支付租金，经催告后在合理期限内仍不支付，出租人请求承租人支付全部剩余租金，并以拍卖、变卖租赁物所得的价款受偿的，人民法院应予支持；当事人请求参照民事诉讼法“实现担保物权案件”的有关规定，以拍卖、变卖租赁物所得价款支付租金的，人民法院应予准许。”

Application Subject 

申请主体

In Article 361 of Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law, the security interest holder stipulated in the Civil Procedure Law includes the mortgagee, pledgee, lien holder, and other party entitled to request realisation of the security interest, including the mortgagor, pledgor, debtor or owner whose property is detained, etc. In other words, both the obligee and the obligor can file an application in a security interest.

最高人民法院《关于适用<_e4b8ad_e58d8e_e4baba_e6b091_e585b1_e5928c_e59bbd_e6b091_e4ba8b_e8af89_e8aebc_e6b395_>的解释》第三百六十一条规定：“民事诉讼法规定的担保物权人，包括抵押权人、质权人、留置权人；其他有权请求实现担保物权的人，包括抵押人、出质人、财产被留置的债务人或者所有权人等。”也就是说，在担保物权中，权利人或义务人均可提出执行申请。

Jurisdiction Court

管辖法院

According to Article 207 of Civil Procedure Law, the court of jurisdiction is the primary people’s court at the place where the property posted as security is located or at the place of registration of the security interest.

根据《中华人民共和国民事诉讼法》第二百零七条的规定，管辖法院为担保财产所在地或者担保物权登记地基层人民法院。

Trial Procedure

审理程序

After the people’s court accepts the application, it will serve a copy of the application, a notice of objection nights, and other documents to the respondent within five days. If there is no objection or the objection is not established, the court will rule to auction or sell the property posted as security. After receiving the ruling, the applicant can apply to the court for enforcement of the ruling. If there is a substantial dispute between the parties regarding the realisation of the security interest, the court will rule to reject the application and inform the application to file a lawsuit to the people’s court.

人民法院受理申请后，将在五日内向被申请人送达申请书副本、异议权利告知书等文书。被申请人收到后，若无异议或异议不成立，法院将裁定拍卖、变卖担保财产。申请人收到裁定后即可向法院申请执行该裁定。若当事人对实现担保物权有实质性争议，法院将裁定驳回申请，并告知申请人向人民法院提起诉讼。

If the parties have objections to the ruling allowing the realisation of the security interest, they shall submit them to the court that made the ruling within 15 days from the date of receiving the ruling. If the interested parties have objections, they shall raise them within six months from the date of knowing or should have knowing that their civil rights and interests have been infringed. If the objection is valid or partially valid, the court shall issue a new ruling to revoke or change the original ruling after examination; if the objection is not valid, the court shall issue a ruling to dismiss the objection.

对准许实现担保物权的裁定，当事人有异议的，应当自收到裁定之日起十五日内向作出裁定的法院提出；利害关系人有异议的，自知道或者应当知道其民事权益受到侵害之日起六个月内提出。法院经审查，异议成立或者部分成立的，作出新的裁定撤销或者改变原裁定；异议不成立的，裁定驳回。

Pros and Cons Analysis of such procedure

实现担保物权特别程序的利弊分析

The pros of such special procedure is to eliminate the litigation stage, the court shall issue a ruling based on the application of the parties. Generally, the case is concluded within 30 days from the date of filing, which saves litigation time and costs.

实现担保物权程序的优势在于省去了法院的诉讼阶段，法院可根据当事人的申请直接做出裁定，一般自立案之日起三十日内审结，节约了诉讼成本和诉讼时间。

The cons: First, if interested parties raise objections to the ruling, the court will enter examination process, and if the objection is established, the court will issue a new ruling to revoke or change the original ruling and the party can only file a new lawsuit, which actually increases the litigation time. Second, in the special procedure, the court only issue a ruling for the part of the security interest, without involving the main creditor and other guarantors. These parties often need to be sued separately.

其弊端在于：1、如果利害关系人对裁定提出异议，法院要进入审查程序，如果异议成立，则会作出新的裁定撤销或者改变原裁定，当事人只能再重新起诉，这实际上增加了诉讼的时间。2、申请实现担保物权的特别程序只是对担保物权部分进行裁定，没有涉及主债权和其他担保人，这些部分往往还要诉讼，不如一并起诉。

To sum up, the special procedure for realising the security interest can only be initiated when the main creditor’s rights are clear and undisputed, the security interest has value for execution, and the debtor and other guarantors do not have the ablitiy to execute.

综上，在主债权明确且没有争议，担保物权有执行的价值，债务人和其他担保人没有执行能力的情况下，才可以发起实现担保物权特别程序。

Cases of Security Interest Realisation

实现担保物权的案例

Bank A has signed a Comprehensive Credit Agreement with company A, granting a credit of CNY60 million to company A for a period of one year. Company A pledges its accounts receivable from company B to bank A as collateral for the credit. Bank A and company A have handled the pledge registration of accounts receivable in the Credit Information Center of the People’s Bank of China and obtained the registration certificate. Bank A has issued loans to company A gradually, and company A has also repaid them gradually. As of the credit expiration date, company A still owes bank A a loan of CNY10 million that has not been repaid.

A银行与甲公司签订《综合授信合同》，A银行向甲公司授信6000万元，授信期限为一年。甲公司以其对乙公司的应收账款质押给A银行，用于担保该笔授信。A银行与甲公司在中国人民银行征信中心办理了应收账款质押登记，取得了登记证书。A银行陆续向甲公司发放贷款，甲公司也陆续还款，截止授信到期日，甲公司尚欠A银行1000万元贷款未能清偿。

In order to simplify the litigation process, bank A applied to the court for the enforcement of the security interest in accordance with the special procedure of security interest realisation. The court issued a ruling to comfirm that bank A has priority in repaying the creditor’s rights of company A against company B, which is pledged by company A. The court issued a notice of assistance in execution to company B, and company B paid CNY10 million and its interest to the court, and the execution of the case is completed.

为了简化诉讼程序，A银行依照实现担保物权的特别程序向法院申请执行担保物权，法院裁定确认A银行对甲公司质押的甲公司对乙公司的债权享有优先受偿权。法院向乙公司发出协助执行通知，乙公司将1000万元及其孳息支付到法院，该案执行完毕。