Can You Freeze Assets Before or During Arbitration in China?

For many companies, arbitration is attractive because it is private, flexible, and final. But when a dispute involves a financially unstable counterparty, the most important question may have nothing to do with the final award. It may be this: Can we freeze the other party’s assets before they disappear?

In China, the answer is yes, in appropriate circumstances. Property preservation can be available in connection with arbitration, and the new Arbitration Law that took effect on March 1, 2026 makes the framework clearer, including expressly addressing urgent preservation before arbitration is filed.

This is a major practical issue for both Chinese and foreign businesses. An arbitral award may take months or longer to obtain. If the respondent moves its money, transfers equity, sells property, or becomes insolvent during that period, winning the arbitration may produce little economic value.

This article explains how arbitration-related asset preservation works in China and what parties should consider before filing.

1. Arbitration Does Not Mean Courts Are Irrelevant#

A common misunderstanding is that choosing arbitration removes courts from the dispute completely.

That is not true.

Chinese arbitration is supported by the courts in several important areas, including preservation and enforcement. An arbitral tribunal does not ordinarily operate like a court with direct power to freeze bank accounts or register preservation against property. Court involvement is therefore essential when coercive asset measures are needed.

The 2026 Arbitration Law expressly strengthens this court-support relationship.

2. What Changed on March 1, 2026?#

China’s newly revised Arbitration Law took effect on March 1, 2026. Among other reforms, it expressly recognizes that, in urgent circumstances, parties to an arbitration agreement may apply to a people’s court for preservation before the arbitration is formally commenced.

The law also addresses preservation during arbitration. Where a party seeks property preservation or requests an order requiring or prohibiting conduct, the arbitration institution submits the application to the competent court under the Civil Procedure Law framework.

This is important because it gives parties a clearer statutory path to protect assets before an award exists.

3. What Is Property Preservation?#

Property preservation is a court measure designed to prevent a future judgment or award from becoming difficult or impossible to enforce.

Depending on the assets and circumstances, preservation may affect:

• bank deposits;
• real estate;
• vehicles;
• equity interests;
• receivables;
• securities;
• other identifiable property.

The exact measure is determined by the court and applicable enforcement systems.

The objective is not to punish the respondent. It is to preserve sufficient value so that a future award can be enforced.

4. Can You Apply Before Filing the Arbitration?#

Yes, where the statutory conditions are satisfied and the circumstances are urgent.

This is one of the most commercially important features of the 2026 law. A claimant may face a situation where waiting even a few days could be dangerous. The respondent may be selling an asset, emptying an account, transferring equity, or moving inventory.

In such cases, the party to an arbitration agreement may apply directly to the competent people’s court for preservation before commencing arbitration.

However, pre-arbitration preservation is not automatic. The applicant must satisfy legal requirements, and the court may require security.

5. Why Pre-Arbitration Preservation Is Powerful#

Suppose a supplier has a valid arbitration clause against a Chinese buyer owing RMB 10 million. The supplier learns that the buyer is selling its only valuable real property.

If the supplier first spends several weeks preparing and filing the arbitration, the asset may disappear.

Pre-arbitration preservation can potentially allow the supplier to act first and then commence arbitration within the required procedural timeframe.

This can transform the dispute from a paper claim into a realistically recoverable claim.

6. Preservation During Arbitration#

Once arbitration has commenced, a party may also seek preservation.

Under the 2026 Arbitration Law, the arbitration institution transmits the party’s preservation application to the court in accordance with the Civil Procedure Law.

This means the claimant should coordinate closely with the arbitral institution and Chinese counsel to ensure the application is complete and directed to the correct court.

Timing matters. Preservation applications should not be treated as an afterthought.

7. Can an Arbitral Tribunal Freeze the Assets Directly?#

Generally, the coercive preservation measure is implemented by the people’s court, not by the arbitral tribunal itself.

This distinction matters for foreign parties accustomed to arbitration systems where emergency arbitrators or tribunals may issue broader interim orders directly.

In China, even when arbitration is the chosen merits forum, court procedure remains critical to effective asset preservation.

8. What Must the Applicant Show?#

The exact requirements depend on the type of preservation and the procedural stage, but the applicant generally needs to show a legal and factual basis for the request.

Important elements include:

• existence of an arbitration agreement;
• nature of the underlying claim;
• amount to be preserved;
• urgency where pre-arbitration relief is sought;
• risk that enforcement may become difficult;
• information identifying assets;
• security where required.

A vague statement that “the respondent might hide assets” is usually less effective than concrete evidence.

9. Asset Information Is Often the Hardest Part#

Many claimants know they are owed money but do not know what the respondent owns.

A preservation application is much stronger when the applicant can identify specific assets, such as:

• a bank account;
• real property;
• equity in a subsidiary;
• vehicles;
• receivables from a known customer.

Before filing, the claimant should build an asset map using lawful information sources, historic payment details, corporate records, property information, litigation records, and other available evidence.

10. Security Is a Major Practical Issue#

Chinese courts often require preservation applicants to provide security. The reason is straightforward: preservation can damage a respondent if the application is wrongful.

Security may take different forms depending on the court and available arrangements. Businesses should therefore estimate preservation-security costs before choosing the strategy.

A claimant with a strong case but no practical way to provide security may need to consider alternatives or professional preservation-guarantee products where lawful and available.

11. What Happens If the Preservation Application Is Wrong?#

The 2026 Arbitration Law expressly states that if a preservation application is erroneous, the applicant must compensate the respondent for losses caused by the preservation.

This is important. Preservation is powerful, but it is not risk-free.

An applicant should be careful about:

• exaggerating the claim amount;
• targeting unrelated assets;
• filing against the wrong entity;
• seeking preservation without sufficient legal basis.

Strategic aggression should not replace legal precision.

12. How Much Property Can Be Frozen?#

The preservation amount should generally correspond to the claim and legally relevant amounts.

Applicants should avoid requesting obviously excessive preservation. Over-preservation can create disputes and increase liability risk.

A well-prepared application explains the principal claim, interest or damages, and any other recoverable amounts clearly.

13. Which Court Has Jurisdiction?#

The competent court depends on the procedural framework, arbitration-related rules, location of assets, and other statutory factors.

This is a technical issue that should be checked before filing. A preservation strategy can fail if the application is sent to the wrong court or the jurisdictional basis is not established clearly.

Foreign parties should also remember that arbitration seat, institution, respondent domicile, and asset location can each matter in different ways.

14. Preservation Before Arbitration Requires Speed#

Pre-arbitration preservation exists for urgent situations. The applicant should therefore prepare efficiently:

• arbitration agreement;
• claim summary;
• evidence of breach;
• asset information;
• urgency evidence;
• security arrangement;
• corporate authorization documents;
• translations where required.

If foreign corporate documents are involved, formalities may need advance planning.

15. Do You Have to Commence Arbitration After Getting Preservation?#

Pre-arbitration preservation is not a substitute for the merits proceeding. The applicant must proceed with the arbitration as required by applicable procedural rules.

A party should therefore be ready to file the arbitration promptly after obtaining relief.

Using preservation merely to pressure the counterparty without genuinely pursuing the claim can create serious problems.

16. Preservation Can Create Settlement Leverage#

In practice, asset preservation often changes negotiation dynamics.

A respondent may ignore demand letters but react quickly when bank accounts or other assets are frozen. That can create a window for settlement.

However, the claimant should use this leverage carefully. The objective should be legitimate resolution of the dispute, not coercion unrelated to the legal claim.

A settlement reached after preservation should address how and when the preservation will be lifted.

17. What If the Arbitration Is Outside China?#

Cross-border cases require more careful analysis.

Foreign parties may have arbitration seated outside mainland China but still need preservation against assets located in China. The availability and route of interim measures depend on the arbitration structure, applicable arrangements, and Chinese law.

Special frameworks may exist for certain Hong Kong-seated arbitrations administered by qualifying institutions, while other foreign arbitrations may face different rules.

Parties drafting arbitration clauses should therefore think about interim relief before selecting the seat and institution.

18. Hong Kong Arbitration and Mainland Interim Measures#

Hong Kong is particularly important because of the special arrangement between mainland China and Hong Kong concerning court-ordered interim measures in aid of arbitral proceedings administered by qualifying institutions.

For companies that expect important assets to be in mainland China, this can be a significant factor when choosing an arbitration forum.

The exact eligibility requirements should be checked against the current arrangement and institutional status.

19. Domestic Arbitration in China#

Where the arbitration is administered by a Chinese arbitration institution, preservation is often more procedurally straightforward because the statutory path between institution and court is clear.

Parties should still pay attention to:

• institution rules;
• court jurisdiction;
• security;
• filing package;
• asset identification;
• timing.

The merits arbitration and preservation strategy should be planned together.

20. Can You Preserve Evidence Too?#

Yes. Chinese arbitration law also provides mechanisms connected to evidence preservation.

This can matter where documents, data, physical evidence, or other materials may disappear or become difficult to obtain.

In construction, manufacturing, and technology disputes, evidence preservation can be as important as property preservation.

21. Can You Seek Conduct Orders?#

The revised Arbitration Law also addresses requests requiring a party to take certain actions or prohibiting certain actions, linked to court preservation support.

This expands the practical discussion beyond simply freezing money.

The availability and appropriateness of such relief depend on the facts and the Civil Procedure Law framework.

22. Preservation Strategy for Construction Disputes#

Construction and real estate disputes are especially suitable for early preservation analysis because the amounts can be large and the debtor’s financial condition may change quickly.

A contractor pursuing unpaid project fees may consider whether the owner has:

• bank funds;
• property interests;
• receivables;
• equity in project companies.

At the same time, the contractor should analyze any construction-payment priority rights that may exist.

23. Preservation Strategy for International Sales#

A foreign supplier arbitrating against a Chinese buyer should investigate assets before filing.

Historic wire-transfer details may reveal bank relationships. Corporate records may reveal subsidiaries or equity. Litigation databases may show other creditors.

If there are signs of distress, the supplier should not wait until the final award.

24. Preservation Strategy for Shareholder Disputes#

In shareholder or joint-venture disputes, the relevant assets may include equity interests rather than cash.

Preserving equity can prevent transfers that would undermine the commercial purpose of the arbitration.

The applicant should define the relief carefully and avoid unnecessary interference with ordinary business operations.

25. Common Mistakes#

Mistake 1: Waiting Until the Award#

By then the assets may be gone.

Mistake 2: Filing Without Asset Information#

A vague request is less useful than a targeted one.

Mistake 3: Ignoring Security Costs#

Preservation may require substantial security.

Mistake 4: Targeting the Wrong Entity#

Affiliates are not automatically liable for each other’s debts.

Mistake 5: Over-Preserving#

Excessive requests can create legal and commercial risk.

Mistake 6: Choosing an Arbitration Clause Without Thinking About Interim Relief#

Forum design should include preservation strategy.

26. A Practical Pre-Filing Checklist#

Before seeking preservation, ask:

1. Is there a valid arbitration agreement?
2. What is the principal claim amount?
3. Is the situation urgent?
4. What evidence shows dissipation risk?
5. What assets can be identified?
6. Which court is competent?
7. What security will be required?
8. Are foreign corporate documents ready?
9. Can the arbitration be filed immediately after preservation?
10. Is settlement likely once assets are frozen?

27. What the 2026 Reform Means for Businesses#

The 2026 Arbitration Law is important because it makes arbitration-support mechanisms more explicit and modern. The law recognizes that an effective arbitration system requires more than good tribunals. It also requires courts to support preservation, evidence, and enforceability.

For businesses, this should change contract planning. When choosing arbitration, companies should ask not only which institution and seat they prefer, but also how they will protect assets if a dispute arises.

28. The Bottom Line#

So, can you freeze assets before or during arbitration in China?

Yes, in appropriate cases. The 2026 Arbitration Law expressly provides a path for urgent pre-arbitration preservation and continues the court-support framework for preservation during arbitration.

But the effectiveness of preservation depends on preparation. The claimant needs a valid arbitration agreement, a strong factual basis, identifiable assets, the correct court, and a workable security arrangement.

The practical lesson is simple: if collectability matters, asset preservation should be part of the arbitration strategy from day one.

Winning an arbitration is only half the job. The other half is ensuring that something remains available to enforce against when the award arrives.

This article is for general informational purposes only and does not constitute legal advice. Preservation rules depend on the arbitration structure, court jurisdiction, facts, assets, and current Chinese procedural law.

29. Frequently Asked Questions About Arbitration Asset Preservation#

Do I need to prove the respondent is actually transferring assets?#

Not every preservation application requires proof that a transfer has already occurred, but the applicant should present a persuasive basis for believing that enforcement could become difficult or that delay could cause harm. Concrete facts are far stronger than speculation. Examples might include announced asset sales, multiple enforcement cases, sudden changes in business operations, overdue debts, disposal of major property, or communications suggesting an intention not to honor obligations.

Can I freeze the respondent’s entire bank account balance?#

Preservation should be proportionate to the claim. The court determines the measure, and excessive preservation can create risk for the applicant. If the claim is RMB 5 million, seeking measures far beyond the legitimate amount without justification can be problematic. Applicants should calculate principal, relevant interest, and other properly claimed amounts carefully.

What if I know the bank but not the exact account number?#

The usefulness of partial asset information depends on court practice and available systems. Historic payment records can be valuable because they may show banking relationships. Companies should preserve wire instructions and account details from the commercial relationship rather than discarding them after payment. Counsel can then evaluate whether the information is sufficient for a targeted preservation strategy.

Can I freeze shares in a Chinese company?#

Equity interests can be the subject of preservation in appropriate cases. This may be especially relevant in shareholder disputes, M&A conflicts, or cases where the respondent has limited cash but valuable subsidiary holdings. The applicant should consider whether preserving the equity actually protects recoverable value and whether other creditors or encumbrances already affect it.

Will the respondent be notified before the freeze?#

Preservation is designed to be effective, and advance notice can sometimes defeat its purpose. The specific procedure depends on the court and type of measure. Parties should not assume that preservation operates like an ordinary motion with lengthy advance adversarial briefing. This is one reason a respondent may first become fully aware of the seriousness of the claim when the measure takes effect.

Can the respondent challenge or seek release of preservation?#

Yes. Respondents may have procedural routes to challenge measures, offer substitute security, or seek adjustment depending on the circumstances. A claimant should therefore ensure that the original application is well supported. A preservation order that cannot survive scrutiny may create unnecessary liability and weaken settlement leverage.

Can preservation be used simply to force settlement?#

Preservation can create settlement leverage, but it must be sought for legitimate legal purposes. The applicant should have a genuine claim and a proper preservation basis. Using court measures abusively can lead to compensation exposure and reputational harm. Strong strategy and responsible use of process are compatible; abusive pressure is not.

Does arbitration confidentiality protect the preservation application?#

Court preservation proceedings involve a judicial component and should not be assumed to have exactly the same confidentiality characteristics as the arbitration itself. Businesses handling commercially sensitive disputes should plan communications carefully and avoid overpromising secrecy internally.

30. What Foreign Companies Should Prepare Before an Emergency Arises#

Foreign businesses often lose valuable time because Chinese preservation becomes relevant only after the crisis has started. A better approach is to prepare an “enforcement file” when entering significant China contracts.

That file can contain the Chinese counterparty’s registered details, unified social credit code, known bank accounts from prior payments, major subsidiaries, property information available through lawful sources, key contracts, and the arbitration agreement. The foreign company should also keep its own corporate authorization documents organized so that Chinese counsel can move quickly if a filing becomes necessary.

This preparation is especially useful for suppliers selling on credit, foreign shareholders in joint ventures, technology licensors, and companies with large receivables. Emergency relief is only as fast as the documentation supporting it.

31. Drafting the Arbitration Clause With Preservation in Mind#

An arbitration clause should be evaluated as an enforcement tool, not merely as boilerplate. Parties should check whether the institution is clearly identified, whether the seat is appropriate, what language will be used, and how interim measures will work in the jurisdictions where assets are located.

For China-heavy transactions, the location of the respondent’s assets may justify choosing a structure that allows efficient access to Chinese court support. For some parties, a domestic Chinese arbitration institution may be appropriate. For others, a qualifying Hong Kong institutional arbitration may offer advantages under the special mainland-Hong Kong interim-measures arrangement. The right answer depends on the deal.

A generic clause copied from an unrelated contract may create problems at exactly the moment speed matters most.

32. Respondent Strategy When Assets Are Frozen#

A respondent receiving notice of preservation should act quickly and calmly. The first step is to understand exactly what has been frozen and for what amount. The second is to review the arbitration agreement, underlying claim, and preservation basis. The third is to evaluate whether substitute security, a challenge, negotiated release, or expedited settlement makes commercial sense.

A respondent should also preserve evidence showing the operational impact of an excessive freeze. If a measure unnecessarily disrupts payroll, production, or unrelated business far beyond the claim, that information may be relevant to procedural strategy.

Ignoring the measure is rarely wise. Preservation often signals that the claimant is prepared to pursue the dispute seriously.

33. Preservation and Solvency Analysis Belong Together#

A freeze is not the same as successful recovery. If the respondent has many creditors, secured debt, tax liabilities, employee claims, or insolvency proceedings, the preserved asset may still sit within a broader creditor competition.

Claimants should therefore investigate solvency in parallel. A preservation strategy against a healthy business is different from one against a company approaching bankruptcy. In some cases, settlement after preservation may be the best result. In others, insolvency procedures may become unavoidable.

This is why experienced dispute counsel treats preservation as one component of an overall recovery plan.

34. Why the 2026 Arbitration Law Is Commercially Important#

The revised Arbitration Law does more than modernize technical procedure. By expressly addressing preservation before arbitration and reinforcing court support, it recognizes a basic reality of commercial disputes: parties need meaningful remedies before the final award, not only afterward.

This can increase confidence in China-seated arbitration for both domestic and foreign businesses. A party that knows it can act quickly to protect assets has a stronger reason to choose arbitration for high-value contracts. It also encourages better coordination between arbitral institutions and courts.

For practitioners and businesses in regional commercial centers such as Yantai, the reform is especially relevant. Local companies increasingly enter international supply, investment, construction, and technology relationships. Those transactions need dispute clauses capable of functioning under pressure. The new law provides clearer tools, but parties still need to use them strategically.

35. Final Practical Takeaway#

The key question in arbitration should never be only, “Can we win?” It should also be, “Can we collect?” Asset preservation is the bridge between those questions.

A claimant that waits until after the award may discover that the legal victory arrived too late. A claimant that investigates assets, prepares security, chooses the correct court, and acts promptly can materially improve the probability of recovery. A respondent, meanwhile, should understand that arbitration does not insulate assets from court-supported interim measures.

The 2026 Arbitration Law makes this framework more explicit than before. Companies drafting arbitration clauses, preparing claims, or responding to disputes should incorporate preservation analysis from the beginning. In high-value commercial disputes, that procedural planning can be as important as the merits themselves.