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An Analysis of PRC Anti-Foreign Sanctions Law

2021.07.24 ZHOU, Yong (Z.)、WangJin、LiuLuYaHui

From a PRC legal perspective, some foreign sanctions fall under improper extraterritorial jurisdiction and are unilateral sanctions deviating from international law. The Standing Committee of the 13th National People's Congress voted to adopt the Anti-Foreign Sanctions Law of the People’s Republic of China (hereinafter referred as “AFSL”) at the 29th session on June 10, 2021. This new law is another legal tool to deal with foreign discriminatory and restrictive measures in addition to the Provisions on Unreliable Entity Lists and the Measures on Blocking Improper Extraterritorial Application of Foreign Laws and Measures promulgated by the Ministry of Commerce in September 2020 and January 2021, and has a larger legal reach. The promulgation of the AFSL diversifies the legal toolbox for China to deal with foreign unilateral sanctions. It also marks an improvement in China's legal vision and methods in dealing with extraterritorial "long-arm" jurisdictions.

 

The AFSL consists of 16 Articles, which are concise and have distinctive features. In addition to reiterating China's basic foreign policy and principles, the AFSL stipulates the circumstances and targets for which countermeasures are applicable, the types of countermeasures available, the establishment of a coordination mechanism, and the obligations of relevant organizations and individuals.


I. Interpretation of key clauses


(I) Legal Hierarchy and Authorization

 

The AFSL was adopted by the Standing Committee of the National People's Congress. Formulated in accordance with the Constitution, the AFSL authorizes the Ministry of Foreign Affairs and other relevant departments of the State Council to take countermeasures against particular individuals and organizations based on their respective responsibilities and tasks, which provides a clear legal basis for China's countermeasures in the future. A series of previous countermeasures, such as MOFCOM's Provisions on Unreliable Entities List and the Measures on Blocking Improper Extraterritorial Application of Foreign Laws and Measures (“PRC Blocking Rules”), are departmental regulations with limited effect. For sanctions imposed by the Ministry of Foreign Affairs ("MFA") on certain institutions and personnel from western countries and regions, there was no explicit legal authorization. Article 6 of the AFSL enumerates the countermeasures that can be taken by relevant departments of the State Council, such as travel bans, freezing of assets, and transaction prohibition, all of which are actually countermeasures that MFA has already taken.

 

It is not uncommon for the international community to implement and enforce sanctions and countermeasures through legislation. The US initiates sanctions based on national legislation. The US president issues an executive order announcing sanctions and authorizes the relevant departments to develop specific sanctions lists. As mentioned in the article "Coping with the Extraterritorial Jurisdiction of Other Countries: The PRC Blocking Rules ", blocking rules in the EU are adopted as the EU's highest-level law "Regulation", which is of universal applicability and is ranked similarly to the laws of China. The Regulation shall enter into force as a domestic law in all member states once it comes into effect, without the need of any other measures to be taken by the domestic legislature of the member states to give effect to it. Russia signed the Law on Measures to Influence (Counteract) Unfriendly Acts between the United States and Other States1 in June 2018, aiming to protect Russia's interests, security, sovereignty, territorial integrity, as well as its freedom and rights from encroachment.

 

The relevant departments of the State Council are authorized by the AFSL to suspend, change or cancel countermeasures if the circumstances under which they were undertaken have changed. The MFA or other relevant departments of the State Council shall issue an order to promulgate such measures. In order to promote coordination, joint coordination and information sharing among relevant departments, Article 10 of the AFSL establishes a coordination mechanism for counter-foreign sanctions, which is responsible for the overall coordination.  

 

Article 13 of the AFSL also stipulates that the relevant administrative regulations and departmental rules may stipulate the adoption of other necessary countermeasures against acts that endanger China's sovereignty, security and development interests. It is likely that this Article will be adopted as the source of authorization in future administrative regulations and departmental rules concerning counter-foreign sanctions.

 

Another noteworthy aspect of the authorization is that Article 7 of the AFSL stipulates that decisions made by the relevant departments of the State Council under the AFSL shall be final. As provided in Article 13 of the Administrative Procedure Law of the People's Republic of China, the people's court shall not accept lawsuits that are "administrative acts that are finally adjudicated by administrative authorities according to the law." Therefore, citizens, legal persons or other organizations are not allowed to file administrative lawsuits against the countermeasure decisions made by the relevant departments of the State Council. However, the Law of the People's Republic of China on Administrative Reconsideration does not have an exclusion clause like the Administrative Procedure Law, and therefore it seems unlikely to completely exclude the possibility of administrative reconsideration. Among the countermeasures, sealing up, detaining, and the freezing of assets are typical administrative coercive measures, and they are specific administrative acts that can be the object of administrative reconsideration. Further clarification is needed as to whether administrative reconsideration can be filed against the countermeasure decisions made by the relevant departments of the State Council.

 

(II) Scope of Application

 

The scope of the application of the law is one of the key points in understanding the provisions of the law to predict the impact of the law’s enforcement on enterprises or individuals. We believe that there are three different levels of issues relating to the scope of the application of the AFSL: firstly, the applicable circumstances of the AFSL; secondly, the scope of the application of countermeasures; and finally, the scope of organizations and individuals to perform the obligations under the law.

 

1. Applicable circumstances of the AFSL

 

Paragraph 2, Article 3 of the AFSL stipulates the circumstances under which China can adopt countermeasures: if a foreign country, in violation of international laws and basic norms governing international relations, contains or suppresses China using various excuses or according to its own laws, adopts discriminatory restrictive measures against China's citizens or organizations, or interferes in China's internal affairs, China has the right to take corresponding countermeasures.

 

This provision is separated by a comma with four qualifications. The AFSL does not specify whether the four qualifications must be satisfied simultaneously or just in part. However, from the perspective of legislative intent, it seems that the full text of the AFSL intends to provide broad legal authorization for China's countermeasures. We are therefore inclined to broaden the understanding of this Article and believe that this Article does not require the fulfillment of all four conditions. We understand that the two most important conditions are "in violation of international laws and basic norms governing international relations" and "adopts discriminatory restrictive measures against China's citizens or organizations." This is consistent with the PRC Blocking Rules. The PRC Blocking Rules also explicitly target foreign laws and measures that "violate international laws and basic norms governing international relations" and "improperly prohibit or restrict China's citizens, legal persons or other organizations …"

 

Both the circumstances and to whom the countermeasures apply relate to a key phrase: discriminatory restrictive measures. The AFSL does not define discriminatory restrictive measures, but it is certain that its coverage is very broad. In a general sense, discriminatory means unequal treatment. In the context of this Law, discriminatory restrictive measures can be understood as foreign unilateral sanctions made directly against Chinese citizens or organizations, or so-called primary sanctions, as distinguished from secondary sanctions2, which are primarily targeted by the PRC Blocking Rules. The head of the Legislative Affairs Commission of the National People’s Congress also confirmed this view in a press conference regarding the AFSL, saying that "the purpose of the AFSL is to counter and oppose the so-called unilateral sanctions imposed by foreign countries on China."

 

In addition, Article 15 of the AFSL provides that "where necessary countermeasures need to be taken when foreign countries, organizations or individuals commit, assist or support acts that endanger China's sovereignty, security and development interests, the relevant provisions of the AFSL shall apply mutatis mutandis." We believe that this Article aims to cover all the circumstances under which countermeasures shall be taken and do not fall under Article 3. In the future, it cannot be ruled out that other foreign laws, measures and acts other than primary sanctions, including secondary sanctions, can be dealt with in reference to the relevant provisions of the AFSL.

 

2. Scope of application: are the countermeasures applicable to Hong Kong?

 

The PRC Blocking Rules are a departmental regulation and are not applicable to Hong Kong. There is no clear provision as to whether the AFSL covers Hong Kong in its scope of application. As far as the wording practices of China's legislations and official documents are concerned, Hong Kong and Macao are generally not included in the scope of implementation unless explicitly stated. For example, the MFA once announced countermeasures against a certain country that "persons concerned and their lineal relatives are prohibited from entering the country (including Hong Kong and Macao)."

 

According to Article 18 of the Basic Law of Hong Kong, national laws of China shall not be applied in the Hong Kong Special Administrative Region except for those listed in Annex III to the Basic Law of Hong Kong. Laws listed in Annex III shall be confined to those relating to defense and foreign affairs as well as other matters outside the limits of the autonomy of the Hong Kong Special Administrative Region as specified by this Law. Therefore, theoretically, the AFSL may only be enforced in Hong Kong after it is included in Annex III to the Basic Law of Hong Kong. Among the three countermeasures listed in the AFSL, it is quite possible to impose travel bans in Hong Kong, and it is quite difficult to impose seizure, impoundment and freezing of assets and transaction prohibition measures.

 

3. Scope of Organizations and Persons Performing Obligations under the AFSL

 

Articles 11 and 12 of the AFSL provide two types of obligations for relevant organizations and individuals. On the one hand, all organizations and individuals within the territory of China shall implement the countermeasures adopted by the relevant departments of the State Council; on the other hand, no organization or individual may implement or assist in the implementation of discriminatory restrictive measures adopted by foreign countries against the citizens and organizations of China. The scope of subjects performing these two types of obligations is different. The subjects performing the obligations of countermeasures are organizations and individuals within the territory of the PRC (excluding Hong Kong and Macao). The subjects that may not implement or assist in the implementation of discriminatory restrictive measures are not limited to the territory of our country, but also include foreign organizations and individuals.

 

(III) Legal Liability

 

According to Articles 11 and 14 of the AFSL, there are two types of consequences arising from the violation of China's countermeasures: firstly, organizations and individuals within the territory of China shall be punished by the relevant departments of the State Council in accordance with the law, and such organizations and individuals shall be restricted or prohibited from engaging in relevant activities; secondly, any organization or individual that fails to implement or cooperate in the implementation of countermeasures will be investigated for legal liability in accordance with the law. Theoretically, the use of "any organization or individual" in Article 14 does not exclude the possibility of including overseas organizations and individuals. However, from the perspective of the major measures listed in Article 6 and China's current practice, all entities and individuals that need to implement countermeasures are organizations and individuals within the territory of China. Of course, given that Article 6 contains a catch-all provision and the phrase "any organization or individual" used in Article 14, there is room in theory for imagination as to whether the entities and individuals that need to implement countermeasures in the future can include overseas organizations and individuals. Of course, there are other corresponding legal issues arising therefrom, which will not be discussed here.

 

Article 12 of the AFSL provides that where the obligation of "not enforcing or assisting in enforcing any foreign discriminatory restrictive measures" is violated and the legitimate rights and interests of any citizen or organization of our country are infringed upon, the citizen or organization of our country may bring a lawsuit to the people's court in accordance with the law, requiring them to cease the infringement and compensate for the losses. Differing from the former category, the AFSL only provides for settlement through civil litigation but does not clearly require public authorities to pursue liability for the violation of these obligations. However, does this mean that the relevant administrative authority is not authorized to take punitive measures?

 

We hold that although it is not listed as a direct consequence of the violation of obligations, from the literal perspective, if any organization or individual of our country implements or assists in the implementation of foreign discriminatory restrictive measures, it may fall within the scope of application of countermeasures stipulated in Article 4. That is to say, even though it is less likely to occur, the implementation or assistance in the implementation of foreign discriminatory restrictive measures by organizations or individuals of our country may be deemed as a direct or indirect implementation of foreign discriminatory restrictive measures, and thus be included in the countermeasure list(反制清单) or be subject to countermeasures. Of course, it is not ruled out that the relevant authorities will promulgate new provisions under Article 13 to further clarify the specific administrative punishment measures and legal liabilities for the violation of such obligations by organizations and individuals within the territory.

 

An obligation to "refrain from enforcing or assisting in the enforcement of foreign discriminatory restrictive measures", particularly the potentially serious consequence of any countermeasures that might be imposed, can pose a dilemma for many enterprises. However, for enterprises having difficulty in complying with the new rules, the AFSL does not establish an exemption mechanism as the PRC Blocking Rules did. We understand that the exemption mechanism under the PRC Blocking Rules has the effect of precluding the illegality of the companies complying with foreign sanctions. Thus, theoretically the exemption can also preclude the illegality under the AFSL and exempt the relevant organizations and individuals from penalties. However, it remains to be seen whether this is feasible in practice.

 

(IV) Putting the countermeasures under the AFSL into practice

 

The AFSL does not establish a separate enforcement body for countermeasures. According to the AFSL, the state will "set up a coordination mechanism for counter-foreign sanctions, and is responsible for the coordination of related work". However, the subject to take countermeasures under the AFSL is still the "relevant departments under the State Council". The relevant departments under the State Council may set up sanction lists and decide to take countermeasures according to their respective responsibilities and tasks based on actual situations.

 

The AFSL only provides for the competent authorities to take countermeasures in principle. The practical implementation of the countermeasures under the AFSL still depends on further implementing rules.

 

Under China's current practice in response to foreign sanctions, it has usually been the MFA issuing sanctions lists against the relevant foreign persons and entities. We expect that after the AFSL comes into effect, the MFA will still take the lead in the process of finalizing and publishing the countermeasures. With respect to the countermeasures set out in Article 6 of the AFSL, (1) "no visa issuance, no entry, cancellation of visa, or deportation" are within the purview of the Ministry of Foreign Affairs and the National Immigration Administration, and will be implemented by them; (2) "seizing, detaining or freezing movable real estate and other types of property within the territory of our country" may involve a wide range of authorities, such as the Banking and Insurance Regulatory Commission and the Ministry of Natural Resources. According to the Administrative Enforcement Law, enforcement of such measures may be carried out by administrative bodies with administrative enforcement power or by people's courts upon application by administrative bodies; and (3) "prohibiting or restricting organizations and individuals within the territory of the country from conducting relevant transactions, cooperation or other activities with such organizations and individuals," and these countermeasures directly impose legal obligations on organizations and individuals within the territory of the country.

 

(V) The right to action by Chinese citizens and organizations under the AFSL

 

In accordance with Article 12 of the AFSL, where any organization or individual enforces or assists in enforcing discriminatory restrictive measures taken by foreign countries against our citizens or organizations, thus infringing upon the legitimate rights and interests of our citizens or organizations, our citizens or organizations may file a lawsuit with a people's court in accordance with the law, requiring them to cease such infringement and compensate for losses. This provision explicitly provides the legal basis for civil lawsuits filed by Chinese citizens or organizations against organizations or individuals that enforce or assist in enforcing discriminatory restrictive measures taken by foreign countries against their citizens or organizations.

 

Organizations and individuals that may be sued under Article 12 of the AFSL do not have any nationality or territorial restrictions. We understand that under Article 12 of the AFSL, organizations and individuals that may be sued under Article 12 of the AFSL include Chinese organizations and individuals, as well as organizations and individuals of a third country or located in a third country, and from a literal understanding even include organizations and individuals from countries initiating discriminatory restrictive measures. However, is it possible to conclude from Article 12 of the AFSL that organizations and individuals from countries initiating discriminatory restrictive measures can also be sued? We believe that this issue needs further discussion.

 

The discriminatory restrictive measures set out in the AFSL constitute part of the legal order of the country initiating the discriminatory restrictive measures. Requiring citizens and organizations of this country as well as citizens and organizations located in this country to comply with the laws of this country is in accordance with the principles of personal and territorial jurisdiction as defined in international law. The AFSL emphasizes international laws and the fundamental norms of international relations. It also states the importance of upholding the international system with the United Nations at its core and an international order based on international law. If Article 12 of the AFSL is interpreted to include organizations and individuals from countries initiating discriminatory restrictive measures, it is possible that this provision in the AFSL is incompatible with universally recognized international law and fundamental norms of international relations. Considering the legislative intent of the AFSL and the emphasis on international law and fundamental norms of international relations under the AFSL, we believe that excluding organizations and individuals from countries initiating discriminatory restrictive measures from Article 12 of the AFSL may also be a possible interpretation. Therefore, it is unclear whether organizations and individuals from countries initiating discriminatory restrictive measures can be sued in Chinese courts pursuant to Article 12 of the AFSL. It depends on the interpretation of the legislative body and the practice of Chinese courts in the future.

 

II. Countermeasures under the AFSL


Compatibility between China's Obligations under International Treaties


The AFSL stipulates a wide range of countermeasures, including restrictions on entry into China, the seizure and freezing of property within China, and prohibiting or restricting domestic organizations or individuals from entering into transactions or cooperation with such domestic organizations or individuals. Article 13 of the AFSL also stipulates that "in addition to the provisions of this Law, relevant laws, administrative regulations, and departmental rules may stipulate the adoption of other necessary countermeasures against any act that endangers China's sovereignty, security, and development interests". In fact, Article 7 of China's Foreign Trade Law also stipulates that "where any country or region adopts discriminatory prohibitive, restrictive, or other similar measures against the People's Republic of China in respect of trade, the People's Republic of China may, in light of the actual circumstances, take corresponding measures against such country or region."

 

(I) Compatibility of the Countermeasures with WTO Rules

 

Laws, regulations, and rules embodied by the AFSL often overlap with those under WTO jurisdiction (such as trade, investment, and trade-related movements of persons). When China and the targeted country are both WTO members (almost necessarily), a potential question is whether China's countermeasures under the AFSL may conflict with WTO rules.

 

Article 23 of the WTO Understanding on Dispute Settlement Rules and Procedures provides that where a party violates any of its obligations under the WTO, the other party shall resort to the WTO dispute settlement mechanism and shall not resort to retaliation on its own. Countermeasures under the AFSL bypass the WTO dispute settlement mechanism. Under these circumstances, if China imposes restrictions on trade, investment, and trade-related movements of persons on nationals or enterprises of another WTO member pursuant to the AFSL, does it imply that China may be in violation of the WTO rules?

 

We believe that, with respect to countermeasures implemented pursuant to the AFSL, when the countermeasures overlap with the WTO jurisdiction, the security exceptions in the WTO-covered agreements may be the basis for China to unilaterally implement its countermeasures. However, it is still necessary for the Chinese government to pay attention to meeting the conditions set forth in the WTO security exceptions when implementing the countermeasures.

 

Nothing in the GATT shall be construed to prevent a Contracting Party from taking any action which it considers necessary for the protection of its essential security interests "in time of war or other emergency in international relations" in accordance with the security exceptions provisions of Article XXI of GATT 1994. The security exceptions in Article XIV of the WTO General Agreement on Trade in Services (“GATS”) are almost identical to Article XXI of GATT 1994. Article III of the WTO Agreement on Trade-Related Investment Measures also provides that the security exceptions under the GATT 1994 shall apply to this Agreement.

 

US foreign sanctions are often proclaimed by the US president as a "state of emergency," citing very broad national security grounds. Claims by other countries that their sanctions violate WTO obligations are often subject to national security exceptions. However, the invocation of the WTO national security exception is not entirely free of limitation. The key point is how the terms "other emergencies in international relations" and "essential national security interests" are interpreted. Not all cases are "other emergencies in international relations" and not any consideration is about "essential national security interests". The abuse of the national security exception by the United States has been widely criticized by the international community, which is one of the major reasons for China's enactment of the AFSL.

 

In addition, we believe that countermeasures implemented in accordance with the AFSL and other laws can also be found in the Draft Articles on State Responsibility for Internationally Wrongful Acts of the United Nations International Law Commission (hereinafter referred to as the "Draft State Responsibility"). Although the Draft State Responsibility is not yet a treaty, it is already considered as constituting a customary rule of international law concerning State responsibility. According to Article 49 of the Draft State Responsibility, an injured State may take countermeasures against the State responsible for an internationally wrongful act in order to induce the latter to fulfil its obligations in accordance with its international responsibility. Meanwhile, according to Article 22 of the Draft State Liability, countermeasures shall not constitute internationally wrongful acts provided that the qualified conditions are satisfied. Relevant countermeasures implemented in accordance with the AFSL and other laws do comply with international law provided that they constitute countermeasures as defined in the Draft State Responsibility and satisfy the conditions for implementing countermeasures.

 

(II) Compatibility between Countermeasures and BITs China has concluded

 

China has concluded BITs with 130 countries or regions, among which 109 have come into force. If China's countermeasures under the PRC AFSL are directed against individuals or enterprises in countries or regions that have concluded BITs with China, there is also the question of whether China's countermeasures may violate the Chinese government's obligations under the BITs.

 

The United States has included fundamental security exceptions in all its BITs. After 2004, the United States Model BIT has stated the fundamental security exceptions as follows: "Nothing in this Agreement shall be construed as preventing a Contracting Party from taking measures it deems necessary in fulfilment of its obligations to maintain and restore international peace and security or for the protection of its essential security interests." Compared with the security exceptions under the WTO-covered agreements, the basic security exceptions provided in the U.S. Model BIT have a broader coverage and more lenient implementation conditions.

 

The situation in China is different. There are no fundamental security exceptions in earlier BITs concluded by China, but security exceptions have already been included in recent BITs. For example, the BITs signed by China and Canada in 2012 and effective in 2014 provided for fundamental security exceptions consistent with the security exceptions in the WTO-covered agreements: "Nothing in this Agreement shall be construed as preventing Contracting Parties from taking any measures which they deem necessary for the protection of their essential security interests in time of war or other emergency in international relations." Moreover, the China-Canada BIT also provides that: " a measure or series of measures, that are designed and applied by the Contracting Parties for a legitimate public purpose for the protection of the welfare of the public, such as health, safety and the environment, does not constitute indirect expropriation, except in such rare cases as in which a measure or series of measures is so severe by the nature of its objective that these measures cannot be considered to have been adopted and applied in good faith."

 

Given the large number of BITs concluded by China and the diversity of security exceptions, the compatibility of countermeasures with BITs under the PRC Anti-foreign Sanctions Act needs to be analyzed in the light of the specific provisions of specific BITs, which will not be included in this article.

 

III. Suggestions for Enterprises Which may be Affected by the new PRC Anti-Foreign Sanctions Law


The AFSL is a new compliance challenge for both multinational companies and Chinese companies which are conducting significant international business. It is not easy for any enterprises to comply simultaneously with the sanction law of one country and the anti-sanction law of China if the requirements of the sanction law and the anti-sanction law conflict.

 

The AFSL took effect on June 10, 2021. If the products and/or services of a foreign company are sensitive under the sanction law and a company has important commercial interests in China, we suggest the foreign company and its Chinese subsidiaries take the initiative to assess the sanction and anti-sanction compliance risks it may face and develop its mitigation strategy in advance. The same suggestion is also applicable to a Chinese company and its overseas subsidiaries if they are in a sanction sensitive business and its supply chain is heavily dependent upon the products and/or services on which export control of a foreign country may be imposed.

 

The risk assessment may include:

  • Carefully check the products and/or service lines of the company to find out those on which export controls and/or sanctions of foreign countries have been or may be imposed;

  • Assess the possibility that the sanctions imposed belong to the "discriminatory restrictive measures against China's citizens or organizations" under the AFSL;

  • Assess the possibility that foreign governments may increase, strengthen, relax or remove the relevant sanctions;

  • Assess the possibility of obtaining an exemption from sanctions imposed by the foreign government;

  • Assess the possibility of obtaining an exemption from countermeasures imposed by the Chinese government, e.g., the prohibition order exemption from the Ministry of Commerce of PRC under the PRC Blocking Rules; and

  • Determine the measures that need to be taken to control risk exposure if the company cannot be exempted from sanctions imposed by foreign governments as well as the countermeasures imposed by the Chinese government.

 

It should be noted that the AFSL has just set up a framework for China to deal with discriminatory restrictive measures of foreign countries. The relevant departments of the State Council may formulate more detailed implementation rules next. It is advisable for enterprises that may be affected by the AFSL to pay close attention to the forthcoming implementation rules and the practice of the AFSL by the Chinese government, and companies should update their sanction and anti-sanction compliance risk assessment and their mitigation strategy in a timely manner.

 

In addition, many economic contracts currently have incorporated "sanctions clauses" upon the request of the foreign party i.e., the compliance clause requiring a Chinese party to comply with the sanction laws of other countries (e.g., the US). Some Chinese subsidiaries of multinationals also incorporate foreign sanctions requirements (e.g., sanctions provisions of the United States) into their internal compliance system. The AFSL has taken effect; the said compliance clause may be held illegal and invalid in China once the sanction requirements thereof are deemed to be discriminatory restrictive measures against Chinese citizens and organizations under the AFSL; and the compliance clause itself may be used as evidence of violation of the AFSL, thus a company could be exposed to punishment by the Chinese government and/or the litigation claims from other Chinese companies and individuals.

 

We suggest that concerned enterprises should carefully consider the wording of "compliance" clauses in their contracts and internal compliance systems and avoid excessive compliance with foreign sanctions law which may lead to a violation of the AFSL and the PRC Blocking Rules; the wording of "subject to the provisions of the AFSL" or the like should not be omitted where it is necessary to include the compliance requirements of the sanction laws of other countries in the contracts and/or the internal compliance systems of the company.

 

Summary and Evaluation


Countermeasures against foreign wrongful sanctions are "conflicts of laws" or even "legal wars" at the national level; the essence of legal wars is sovereign competition. From a corporate perspective, many Chinese companies are now actively developing compliance systems, which is undoubtedly a huge step forward. There is no doubt that Chinese companies operating overseas or engaged in cross-border M&A, FDI or international trade are subject to both Chinese and foreign laws. The author would like to remind that to comply with certain discriminatory restrictions imposed by other countries is also regarded as “compliance” by some non-domestic companies, out of consideration of the international business reality. With the implementation of the PRC AFSL, there are new compliance challenges for multinational companies and Chinese companies, but companies can also be "empowered" by these new legal tools. Of course, the most important thing is how to make use of these new tools.

 


1. Putin signed anti-sanctions laws against the U.S. and other countries http://www.xinhuanet.com/world/2018-06/04/c_1122936013.htm. Last visited on June 12, 2021.

2. Under United States law, primary sanctions are to cut off economic and trade transactions between United States firms and individuals and the sanctioned country, with restrictions put on United States firms and individuals; secondary (or secondary) sanctions extend to firms and individuals in any third country.

 


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