China’s top court highlights first Anti-Foreign Sanctions Law ruling amid global tensions
Supreme People’s Court says judgment was first to ‘explicitly establish the mandatory application’ of five-year-old law
SCMP
The case, heard by the Shanghai Maritime Court, centred on a dispute that involved US sanctions, a Singapore shipping company, a Hong Kong-based company and electronic goods shipped from Shanghai.
In 2022, the Hong Kong-based company hired a Singaporean shipping firm to transport electronic goods from Shanghai to Panama, but the Singaporean firm later refused to deliver them and eventually returned the cargo to Shanghai, citing the Hong Kong company’s inclusion on a United States sanctions list. That caused losses for the Hong Kong company.
A court judgment unveiled last month showed the Shanghai court ruled against the Singaporean firm in February, ordering it to pay more than 4.99 million yuan (US$739,600) in damages plus interest and holding that it could not use a foreign country’s “discriminatory restrictions” as a defence under Article 12 of China’s Anti-Foreign Sanctions Law.
The case was included in a selection of illustrative maritime cases by the Supreme People’s Court that was released in June. In its commentary on the selection, the top court said the case was “the first judicial ruling to explicitly establish the mandatory application of the Anti-Foreign Sanctions Law”.
It added that the case carried “strong exemplary significance” in demonstrating how China’s maritime courts implement the Anti-Foreign Sanctions Law – which took effect in 2021 – and safeguard the stability of supply and industrial chains.
Chinese companies can no longer rely solely on a passive compliance approach to deal with external regulatory pressureJia Yuan Law Offices, Beijing
The highlighting of the case comes as China strengthens its legal and regulatory safeguards amid an increasingly fragmented geopolitical landscape shaped by sanctions and counter-sanctions.
A month before that, the State Council issued regulations to counter foreign “improper extraterritorial jurisdiction”, further expanding Beijing’s legal and regulatory toolkit against the overseas reach of foreign laws and sanctions.
Citing the application of the law in the two cases, lawyers from the Beijing-headquartered Jia Yuan Law Offices said in a social media post last month that it “provided Chinese companies with more concrete legal tools and guidance for responding to sanctions spillovers”.
“Faced with increasingly complex sanctions tools and the continued expansion of sanctions measures by jurisdictions such as the US and [European Union], Chinese companies can no longer rely solely on a passive compliance approach to deal with external regulatory pressure,” they said.
They added that Chinese companies should monitor China’s counter-sanctions and anti-discrimination measures and use the available legal tools to protect their legitimate interests, while also familiarising themselves with foreign rules to avoid compounding risks through misjudgment.