Beijing, China – On March 23, 2025, the State Council of China implemented the Regulations on the Implementation of the Anti-Foreign Sanctions Law (AFSL), marking a significant step in the nation’s effort to counteract foreign sanctions. These newly established regulations, which take effect immediately, build upon existing frameworks, particularly the AFSL and the Law on Foreign Relations. They lay out definitive administrative procedures and designate authorities responsible for executing countermeasures against foreign sanctions.
China’s response to unilateral sanctions is now bolstered by a comprehensive legal system that includes various regulatory instruments aimed at opposing extraterritorial applications of foreign laws. This legal framework not only serves to uphold China’s foreign policy independence but also outlines explicit operational strategies to protect its domestic enterprises from foreign legal actions deemed hostile.
Central to these regulations are four focal areas of operation. Firstly, they introduce targeted countermeasures against those involved in foreign litigation or enforcement actions that infringe upon China’s sovereignty or security. Notably, Article 19 empowers the government to sanction entities or individuals that participate in hostile legal actions initiated by foreign nations.
In addition to conventional sanctions such as entry bans and asset freezes, the regulations reserve the right to impose more stringent measures, including compulsory asset enforcement. This expansion of authority allows China’s government to respond more comprehensively to actions perceived as antagonistic.
The regulations also establish a set of procedural standards for the imposition of countermeasures. This includes a dual-track inquiry process to maintain diplomatic engagement while allowing thorough investigations. Transparency mandates require the public disclosure of sanctions details, including the identities of targeted entities and the specifics of the measures being enacted.
Furthermore, the regulations delineate the responsibilities of various State Council ministries—such as foreign affairs, commerce, and justice—in sanction enforcement. Enhanced inter-agency coordination aims to ensure a unified approach to implementing counter-sanction measures, thereby streamlining operations across government entities.
In an effort to safeguard the rights of Chinese citizens and organizations, the regulations reinforce civil litigation options against discriminatory foreign actions. Organizations that facilitate foreign sanctions against Chinese interests may now face legal consequences in domestic courts, including claims for damages and injunctions.
In a significant milestone, the Supreme People’s Court’s 2025 report details a landmark case where a Chinese maritime engineering firm successfully reclaimed over 84 million yuan (approximately $11.5 million) in shipbuilding payments via court-mediated arbitration. The case, which arose after a foreign equipment manufacturer terminated a contract due to unrelated third-country sanctions, represents the judiciary’s initial application of the AFSL in actual sanction-related disputes.
While this case sets a precedent for future legal interpretations, it left unresolved substantive legal questions that will require further clarification in subsequent rulings. As a result, Chinese businesses are encouraged to adopt robust compliance systems that include due diligence, sanctions exemption clauses, and targeted risk assessments to navigate this evolving legal landscape.
As companies confront the challenges posed by foreign sanctions, they may also pursue legal claims in Chinese courts to mitigate damages, employing asset preservation orders if required. This regulatory enhancement is seen as a clear advancement in China’s capabilities to retaliate against foreign sanctions effectively.
In conclusion, the enactment and immediate implementation of these regulations signify a pivotal development in China’s approach to countering foreign sanctions. The new measures are expected to enhance enforcement, ultimately deterring foreign governments and entities from acting against Chinese interests without considering potential legal ramifications.
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