Overview
China’s Anti-Foreign Sanctions Law (the “Law”), which was enacted and became effective on June 10, 2021, authorizes the Chinese government to develop an “anti-sanctions list” and to impose countermeasures on listed persons involved in “discriminatory restrictive measures.” It also creates a private right of action for Chinese citizens and organizations to sue in a Chinese court.
The anti-sanctions list and related countermeasures resemble some of the measures that have already been taken by the Chinese Ministry of Foreign Affairs (“MOFA”), which has announced sanctions against dozens of organizations and individuals in the U.S. and other countries in connection with issues relating to Xinjiang, Hong Kong, and Taiwan. Some of those previous sanctions have included denial of entry into China, a prohibition against conducting business with China, and in some cases also freezing of assets. In addition, the Chinese Ministry of Commerce (“MOFCOM”) announced an “Unreliable Entity List” regime in May 2019 (see our previous blog post on this here), which similarly targets foreign entities, e.g., for taking “discriminatory measures” against Chinese individuals or organizations. However, unlike the MOFA sanctions, MOFCOM has not yet taken any actions under the Unreliable Entity List regime. Most recently, MOFCOM promulgated Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures (the “MOFCOM Blocking Rules”), released in January 2021 (see our client advisory on the MOFCOM Blocking Rules here). Those ministry-level measures had certain limitations, and the enactment of the Law has been a priority of Chinese legislators in order to provide a clearer statutory basis for administrative measures that will ultimately enhance the country’s anti-sanctions “toolkit.”
The Anti-Sanctions List and Related Countermeasures
The Law authorizes the Chinese government to create an “anti-sanctions list,” and to designate on this list individuals and organizations that directly or indirectly participate in the formulation, determination, or implementation of “discriminatory restrictive measures.” While there are still questions surrounding what specific acts are targeted, generally they include actions (a) by a foreign country, in violation of international law and “the basic norms of international relations,” (b) “using various pretexts or its own laws to contain or suppress China,” (c) to “take discriminatory restrictive measures against Chinese citizens or organizations,” and “interfere in China’s internal affairs.” This broad definition leaves considerable discretion to the Chinese government to target foreign sanctions that it finds to be contrary to China’s interests. MOFCOM’s Unreliable Entity List provisions use a similar term—“discriminatory measures,” and MOFCOM’s Blocking Rules use the term “unjustified extraterritorial application” of foreign legislation and other measures. The Law’s focus on restrictive measures that are viewed as being in violation of international law or “basic norms of international relations” similarly indicates an intent to target “extraterritorial” foreign sanctions.
The countermeasures that may be imposed on persons designated on this “anti-sanctions list” may include the following:
- denial of entry into China or deportation from China;
- freezing of assets located in China;
- prohibition against doing business with individuals and organizations located in China; and
- an undefined set of “any other necessary measures.”
- listed individuals’ spouses and immediate family members;
- listed organizations’ senior management or actual controllers;
- other organizations for which a listed individual serves as part of senior management; and
- organizations that are effectively controlled by, or in whose establishment or operation a listed individual or organization participates.