Chinese anti-sanctions law – Part 2

In one of the last entries, I discussed the possible collision of corporate due diligence regulations with the Chinese Anti-Sanctions Law. At that time, I largely omitted the possible legal consequences provided for in the law. I would now like to make up for this. Specifically, individuals or entities identified as having been “directly or indirectly involved in formulating, deciding, and/or implementing discriminatory restrictive measures” (e.g., economic sanctions) against China or its citizens or entities are included in a list maintained by the Chinese government. Measures that the Chinese government may take against individuals or entities on the list include the following and cannot be challenged (Article 6 Anti–Foreign Sanctions Law):

– the denial of visas, refusal of entry, cancellation of visas, or deportation;
– the seizure, attachment or freezing of property located in China;
– the prohibition or restriction of business with Chinese persons and entities;
– other necessary measures;

Under the law, the Chinese government may also take the same measures against the spouse and immediate family of a listed person, the management or actual controller of a listed company, any company in which a listed person holds an executive position, any company actually controlled by a listed person or listed company, or any company in which a listed person or listed company is involved in the establishment and/or operation (Article 5 Anti–Foreign Sanctions Law).

The law also provides that Chinese citizens and entities harmed by discriminatory measures may sue in a Chinese court to prevent further violations and obtain damages (Article 12 Anti–Foreign Sanctions Law).

Also, Article 15 of Law the new law includes additional provisions that apply not only to foreign countries, policymakers, and government officials responsible for imposing sanctions, but also to foreign “entities or individuals that implement, assist, or support actions that threaten China’s sovereignty, security, or development interests.” In addition, “any entity or individual” that fails to implement or support Chinese countermeasures will be “held legally accountable.”

Taken together, the toolbox that the law offers the Chinese administration – at least on paper – is enormous. It remains to be seen to what extent these possibilities will actually be used in the future.

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