Exit restrictions can be imposed by courts to prevent a debtor from escaping

A foreign national, e. g., who owes money to a Chinese creditor can be prevented from leaving the country until the debt is (at least partially) paid

Who is affected?

  • Exit restrictions can be applied to natural persons, in case of a company, to the ‘legal representative’
  • For organisations, the ‘principal head’ is responsible
  • Certain provisions extend to the scope of application to ‘persons in charge’
  • Due to unclear legal definition, this could even be a higher manager

On which legal grounds?

  • Exit restrictions can be imposed as enforcement measure, which aims to enforce existing court decision
  • Exit restrictions can also be imposed as preservative measure, which is an injunction imposed during litigation
  • Courts restrict exit of the defendant upon application by the plaintiff
  • Applications are only checked formally

Why does it matter?

  • Apart from China, only few countries apply exit restrictions in civil litigation
  • Exit restrictions are often decided upon without substantive examination, although they infringe on personal freedom and should be used as last resort
  • Preservative measures were originally intended to only preserve the asset in dispute, but courts developed the application to also include exit restrictions
  • Scope of application of exit restrictions is not conclusively clarified
  • Unpredictable restrictions may deter foreign companies from investing

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