By Yuanxi Chen
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The Saturday of January 9, 2021 is unusual to the International Law community in China - on this day, the Ministry of Commerce of PRC has released the Measures as mentioned in the title of this article and it is effective immediately. The community members believe the Measures is a beginning for the counter-back to the long-arm jurisdiction from the U.S. government.
Since 1950, the U.S. government has been enforcing US laws on foreign corporations operating business inside or outside the U.S. territory. The Office of Foreign Assets Control ("OFAC"), an agency of the U.S. Treasury Department, is in charge of the sanctions.
OFAC has extended its extraterritorial reach in a dramatic fashion in recent years, by imposing fines, freezing assets, setting trade banning orders or even pursuing criminal charges against corporate management, OFAC changed the international business environment for numerous non-US enterprises, European and Asian in particular.
Most recently, OFAC are targeting Chinese entities, government officials, tech companies and their corporate management.
In early 2018, Chinese Telecom Corporation ZTE was imposed roughly $1,000,000,000 in penalties and trade ban, for exporting goods to Iran and North Korea. Later the same year, the CFO of Huawei, Meng Wanzhou, was arrested by the Canadian government under the request of the US government. Soon Huawei was also banned from trading with any U.S.-related entity, and added to the Entity List by the U.S. Department of Commerce.
On August 7, 2020 ,according to the Treasury Department public release, the Department of the Treasury imposed sanctions on 11 individuals for undermining Hong Kong's autonomy and restricting the freedom of expression or assembly of the citizens of Hong Kong. Among those 11 individuals including officials of the Hong Kong Special Administrative Region, the Chief Executive, the current and former Commissioner of Police Force, the Secretary for Security, the Secretary for Justice; Xia Baolong, Director of the Hong Kong and Macao Affairs Office of the State Council of China, along with four other Chinese state officials were also on the list. The officials were sanctioned for their involving in developing, adopting, or implementing the Law of the People's Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region.
Under the newly enforced Measures, any Chinese entities, personnel have obligations to report to the Chinese DOC for encountering any foreign sanctions, trade bans or other foreign laws and regulations affecting international economic and trading.
Chinese DOC and NDRC shall have the preemptive to evaluate and determine if such foreign laws and regulations are in violations of international rules, Chinese national security and interests, impact on the legit rights of Chinese entities.
Chinese entities may apply to the Chinese DOC for an exemption injunction, while they can also recover remedies for applying and following such exemption injunction.
It is advised that we shall not be over optimistic about the Measures. Though any entities failed to report or follow the exemption injunction will be warned or imposed with a fine, it is unclear and without precedent example how far the Chinese governemnt or the Chinese court system will pursue. If Chinese government failed to enforce the Measures, it will not necessarily be a strong argument of any Chinese enterprises in a U.S. court.
AUTHOR: Yuanxi Chen
Shanghai
+886-2-2707-9976
Copyright Yuanxi Chen
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author directly.
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