On February 8, 2022, the Supreme People's Court issued the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Cases Involving Judicial Compensation for Execution" (Interpretation [2022] No. 3) (hereinafter referred to as the "Interpretation"), which will come into effect on March 1, 2022.

This Interpretation consists of twenty articles, mainly including the conditions for filing and reviewing cases involving judicial compensation for execution, the procedures for applying for compensation for erroneous execution, the determination and burden of proof for erroneous execution, the determination of compensation liability, the scope and calculation method of damages compensation, etc. This Interpretation more directly addresses the responsibility of the people's court in cases involving judicial compensation for execution, and the relevant provisions are also more operable.

Professor Tan Qiugui from the Institute of Litigation Law at China University of Political Science and Law pointed out in his interpretation of this "Interpretation": "If the previous series of normative documents only hit the wrong execution board on the executing personnel, then this judicial interpretation aims to directly hit the wrong execution board on the court." The specific highlights of this "Interpretation" are as follows:

1、 Identified eleven types of erroneous execution behaviors

Article 2 of the Interpretation stipulates: Citizens, legal persons, and other organizations who apply for compensation for damages caused by the following erroneous execution behaviors shall be accepted by the people's court in accordance with the law:

（一）执行未生效法律文书，或者明显超出生效法律文书确定的数额和范围执行的；（1） Execution of legal documents that have not yet taken effect, or execution that clearly exceeds the amount and scope determined by effective legal documents;
（2） Discovering that the executed person has property available for execution, but intentionally delaying or failing to execute, or failing to resume execution in accordance with the law;
（3） Illegally executing property of a third party, or illegally delivering execution funds and property to other parties or third parties;
（4） Taking enforcement measures against assets such as mortgages, pledges, liens, and retention of ownership, but failing to protect the legitimate rights and interests of the above-mentioned rights holders, such as their priority right to compensation, in accordance with the law;
（5） Illegally executing property that has already been protected or enforced by other people's courts in accordance with the law;
（6） Intentionally failing to perform or neglecting to perform regulatory duties on property that has been sealed, seized, or frozen during execution;
（7） Taking enforcement measures against assets that are not suitable for long-term preservation or are prone to depreciation, but failing to handle them in a timely manner or illegally handling them;
（8） Illegally auctioning, selling, using property as collateral, or failing to evaluate what should have been evaluated according to law, or failing to auction what should have been auctioned according to law;
（9） Illegally revoking auctions, selling, or using property as collateral;
（10） Illegally taking measures such as being included in the list of dishonest persons subject to enforcement, restricting consumption, and restricting exit;
（11） Other actions that involve taking enforcement or coercive measures due to illegality or fault.

2、 Clarified the procedure for applying for compensation for erroneous execution

Article 5 of the Interpretation stipulates: Citizens, legal persons, and other organizations applying for compensation for erroneous execution shall submit their applications after the termination of the execution procedure, and those submitted before the termination shall not be accepted. Except for any of the following situations that cannot be remedied in relevant litigation or enforcement procedures:

（一）罚款、拘留等强制措施已被依法撤销，或者实施过程中造成人身损害的；（1） The compulsory measures such as fines and detention have been lawfully revoked, or personal injury has been caused during the implementation process;
（2） The property subject to execution has been legally confirmed through litigation procedures to not belong to the person subject to execution, or the effective legal documents of the people's court have confirmed that the execution behavior is illegal;
（3） If it has been more than five years since the date of self execution and the execution procedure has been terminated by a ruling, and the person subject to execution has no assets available for execution;
（4） Other situations where compensation can be applied for before the program terminates.

In addition, Article 6 of the Interpretation stipulates that if citizens, legal persons, and other organizations apply for compensation for relevant enforcement measures or compulsory measures during the process of objection, reconsideration, or review of enforcement supervision procedures, the people's court shall not accept it. If it has already been accepted, it shall be rejected and informed that they may apply for compensation in accordance with Article 5 of this Interpretation in accordance with the law after the termination of the above procedures.

Citizens, legal persons, and other organizations who fail to raise objections, apply for reconsideration, or apply for enforcement supervision regarding relevant enforcement measures or compulsory measures during the execution process shall not affect their right to apply for compensation in accordance with the law.

3、 Established the determination and burden of proof for erroneous execution

Article 7 of the Interpretation stipulates: If an effective legal document made through objection, reconsideration or supervision procedures has already been determined as to the legality of the execution, the effective legal document can serve as the basis for the compensation committee of the people's court to determine the legality of the execution.

If the claimant for compensation makes a contrary claim to the legality of the execution and provides corresponding evidence to prove it, the compensation committee of the people's court shall conduct a legality review of the execution and make a determination.

Article 8 of the Interpretation six situations that are not recognized as erroneous execution have been stipulated:

根据当时有效的执行依据或者依法认定的基本事实作出的执行行为，不因下列情形而认定为错误执行：The execution behavior made based on the valid execution basis at that time or the basic facts recognized by law shall not be deemed as erroneous execution due to the following circumstances:
（1） After taking enforcement or compulsory measures, the judgment, ruling, and other effective legal documents based on which the enforcement is carried out are revoked or changed;
（2） The entity subject to enforcement that is sufficient to resist enforcement occurs after the completion of the enforcement measures or is legally confirmed;
（3） The third party has substantive rights over the subject matter of execution that are sufficient to exclude execution, which have been confirmed through legal procedures after the completion of the execution measures;
（4） After the people's court makes a ruling approving the execution of an administrative act and implements it, the administrative act is lawfully changed, revoked, confirmed to be illegal, or confirmed to be invalid;
（5） After taking enforcement measures based on property registration, the registration is legally confirmed to be incorrect;
（6） Other circumstances where the basis for execution or basic facts subsequently change.

Article 9 of the Interpretation stipulates the burden of proof:

The claimant shall bear the burden of proof for the damages claimed. But if the fault of the people's court in not listing or not listing results in the claimant being unable to provide evidence of the damage, the people's court shall bear the burden of proof for the above facts.

If both parties claim that the value of the damage cannot be determined, the party with the burden of proof shall apply for appraisal. If the party with the burden of proof refuses to apply for appraisal, they shall bear the adverse legal consequences; If it cannot be appraised, the compensation committee of the people's court shall make a judgment based on the claims of both parties and the evidence in the case, using logical reasoning, daily life experience, etc.

4、 It has been clarified that the people's court has the right of recourse and is not liable for compensation

Article 11 of the Interpretation stipulates: If improper benefits are obtained due to erroneous execution and cannot be returned, the people's court may, after assuming compensation liability, pursue compensation from the person who obtained the improper benefits based on the compensation decision.

If an effective legal document cannot be executed due to incorrect execution, and the applicant for execution applies for continued execution after receiving state compensation, it will not be supported. After assuming the liability for compensation, the people's court may pursue compensation from the debtor based on the compensation decision.

Article 12 stipulates: In the process of execution, if the actions of the custodian or a third party infringe upon the legitimate rights and interests of citizens, legal persons, and other organizations and cause damage, the custodian or third party shall bear the responsibility. If the people's court fails to fulfill its regulatory duties, it shall bear corresponding compensation responsibilities within the scope of its ability to prevent or stop the occurrence and expansion of damages, and may pursue compensation from the custodian or a third party based on the compensation decision.

Article 13 of the Interpretation specifies six situations in which people's courts are not liable for compensation:

If any of the following situations occur, the people's court shall not be liable for compensation:
（1） The applicant for execution provides incorrect property clues;
（2） The enforcement measures are taken or terminated based on the guarantee provided in accordance with the law;
（3） Personnel of the people's court who engage in personal behavior unrelated to the exercise of their powers;
（4） Assessment or auction institutions engaging in illegal activities causing damage;
（5） Damage caused by force majeure, legitimate defense, or emergency avoidance;
（6） Other circumstances where the people's court should not be held liable for compensation according to law.
In the circumstances mentioned in the preceding paragraph, if the people's court has made an erroneous execution, it shall bear corresponding compensation liability based on its role in the process and outcome of the damage.