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China Passes New Law to Counter Foreign Sanctions | Perkins Coie




The Law of the People’s Republic of China on Combating Foreign Sanctions (Anti-Sanctions Law) was adopted by the Standing Committee of the 13th National People’s Congress on June 10, 2021. President Xi Jinping signed a presidential decree authorizing the application of the new law. in effect on that day. This law has only fifteen provisions, but it complements the so-called “untrusted entity” list and related rules adopted by the Ministry of Commerce (MOFCOM) in September 2020 and MOFCOM’s extraterritorial blocking rules adopted in January 2021.

Chinese academics and state media have described the anti-sanctions law as a welcome addition to Beijing’s legal toolkit to resist Western coercion, establishing retaliatory mechanisms against foreign sanctions and mitigating their impact. on Chinese entities and individuals. However, to address the concerns of the foreign affairs community, Foreign Ministry spokesman Wang Wenbin stressed that “China always welcomes and supports foreign companies doing business and pursuing cooperation in China and protects their rights. and interest in accordance with the law ”.

This update answers the most frequently asked questions regarding anti-sanctions law such as applicable parts of anti-sanctions law, countermeasures against the parties, the regulator in charge and legal responsibilities for violation of the anti-sanctions law. It further provides general guidance on the relationship between anti-sanctions law and other similar rules, including the provisions of the list of untrusted entities, the Export Control Law of the People’s Republic of China and rules on combating unwarranted extraterritorial application of foreign law and other measures.

Who is subject to the anti-sanctions law?

In accordance with Article 3 of the Anti-Sanctions Law, the criteria for China to take corresponding countermeasures are as follows: (1) any foreign country that violates international law and basic standards of international relations, (2 ) uses various pretexts or laws to contain or suppress China, (3) takes discriminatory restrictive measures against Chinese citizens or organizations, and (4) interfere in China’s internal affairs.

Then, Article 4 of the Anti-Sanctions Law stipulates that these countermeasures are applicable to a list of people and organizations that are directly or indirectly involved in the formulation, decision-making and implementation of the discriminatory restrictive measures provided for in article 3 of the anti-sanctions law.

More generally, Article 5 of the Anti-Sanctions Law also includes the following people and organizations on the list of countermeasures:

  • Spouses and immediate family members of persons on the list of countermeasures;
  • Management personnel or actual controllers of organizations on the list of countermeasures;
  • Organizations in which people on the countermeasures list serve as senior managers; and
  • Organizations controlled by individuals or organizations on the Countermeasures List, or organizations in which individuals or organizations on the Countermeasures List have participated in the establishment or operations of such an organization.

Significantly, Article 15, which is the last provision of the anti-sanctions law, states that “[r]reference will be made to the relevant provisions hereof when necessary countermeasures must be taken against foreign countries, organizations or individuals for having carried out, aided or supported acts which endanger the sovereignty, security and China’s development interests.

In this spirit, with the exception of a discriminatory restrictive measure taken by a foreign country, any activity carried out by a foreign organization and individual which may be considered to endanger the sovereignty, security or development interests of the China could trigger countermeasures under the anti-sanctions law. . Therefore, Article 15 appears to broaden the scope of the Anti-Sanctions Law beyond a simple “discriminatory restrictive measure” taken by a foreign country as provided for in Article 3 of the Anti-Sanctions Law. .

What are the countermeasures?

Article 6 of the Anti-Sanctions Law lists three types of countermeasures and they can be applied separately or simultaneously against the individuals and organizations on the list of countermeasures. These countermeasures include the following:

  • Refusal to issue a visa, refusal of entry, cancellation of visa or deportation;
  • Sealing, seizing or freezing the movable property, real estate and other various types of property of such persons and organizations located in the territory of Mainland China;
  • Prohibit or restrict organizations and individuals in the territory of Mainland China from engaging in transactions, cooperation or other relevant activities with such individuals and organizations; and or
  • Other necessary measures.

In particular, the decision to take one or more of the above countermeasures is taken by the competent services of the Council of State according to the actual circumstances and such a decision is final and final once rendered.

However, article 8 of the anti-sanctions law provides for an exception according to which, in the event of a change in the circumstances on which the applicable countermeasures are based, the competent services of the Council of State may suspend, modify or lift the countermeasures. – relevant measures. Accordingly, the Ministry of Foreign Affairs or other relevant departments of the Council of State will issue orders to promulgate the confirmation, suspension, modification or cancellation of the list of countermeasures and countermeasures.

Who is in charge?

Uniquely, Article 10 of the Anti-Sanctions Law designates the regulatory department as “a coordination mechanism for foreign anti-sanctions work” as responsible for the overall planning and coordination of relevant work.

Together with the Coordination Mechanism for Foreign Sanctions Work, relevant departments of the State Council are required to strengthen coordination and information sharing, as well as to identify and implement relevant countermeasures in according to their respective responsibilities and the division of tasks.

What are the legal responsibilities?

Overall, the anti-sanctions law requires individuals and entities in China to assist in the implementation of applicable countermeasures and not to cooperate with any discriminatory restrictive measures imposed by a foreign country. More specifically, if the individuals or entities, regardless of their nationality, cause harm to the Chinese citizen or entity that has been sanctioned by a foreign country, the concerned Chinese citizen or entity has the right to bring a claim. lawsuit in a Chinese court for a cessation. and-order to refrain and compensation for their loss.

The potential legal responsibilities are as follows:

  • First, organizations and individuals in the territory of Mainland China who do not comply with the countermeasures will be punished by the relevant departments of the State Council. These sanctions include restrictions or prohibitions on engaging in relevant activities. (article 11 of the anti-sanctions law)
  • Second, the organization or individual must not implement or provide assistance for the implementation of discriminatory restrictive measures taken by foreign countries against Chinese citizens and organizations. If any organization or individual violates this rule and violates the legitimate rights and interests of a Chinese citizen or organization, the Chinese citizen or organization can take legal action in the people’s court according to the law to claim. violation, obtain a cease and desist from ordering and seeking redress for their damage. (article 12 of the anti-sanctions law)
  • Third, any organization or person that does not comply or cooperate in the implementation of countermeasures should be investigated for legal liability according to the law. (article 14 of the anti-sanctions law)

Are there similar compensatory laws in China?

The short answer is “Yes. ”

MOFCOM issued the Provisions on the list of untrusted entities, as of September 19, 2020. The list of “unreliable entities” enables MOFCOM to take corresponding action against the following actions of foreign entities in the course of international economic and commercial activities and related activities: (1 ) endangering China’s national sovereignty, security and development interests; and (2) violating the regular principles of market transactions, interrupting regular transactions with Chinese companies, other organizations or individuals, or taking discriminatory actions against Chinese companies, other organizations or individuals , causing serious damage to the legitimate rights and interests of Chinese enterprises, other organizations or individuals.

Subsequently, the Standing Committee of the National People’s Congress adopted the Export Control Law of the People’s Republic of China, entered into force on October 17, 2020. It empowers the People’s Republic of China, depending on the situation, to take reciprocal action against any country or region whose abuse of export control measures endangers its security national and interests of the People’s Republic of China.

Subsequently, MOFCOM released rules on combating unwarranted extraterritorial application of foreign law and other measures, effective January 9, 2021. These rules allow the Chinese government to take necessary countermeasures based on actual circumstances and needs in response to unwarranted extraterritorial application of foreign law and other measures.

In this context, Article 13 of the Anti-Sanctions Law echoes the above legislation by stating that in addition to the Anti-Sanctions Law, relevant laws, administrative regulations and departmental rules may provide for the adoption of ‘other necessary countermeasures against acts which sovereignty, security and development interests. With this in mind, we can anticipate that it is possible that a foreign offender is simultaneously subject to the list of “untrusted entities”, export control measures, non-enforcement of foreign laws, as well as the list of countermeasures.

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