Three days post the adoption of a pioneering foreign state immunity law by China’s top legislature, China set a historic precedent in rule of law related to foreign affairs. The legislation seeks to shield legitimate rights and interests, uphold state sovereignty equality, and foster amicable global relations, according to the Chinese Foreign Ministry. This move underpins China’s intention to further open its doors to the world.
Passed by the National People’s Congress (NPC) Standing Committee and set to be effective from January 1, 2024, this legislation comprises 23 provisions. Notably, it signals a pivot from the long-standing absolute theory of foreign state immunity, embracing instead a restrictive approach.
Categorized by an NPC official as a “vital realignment” of sovereign immunity policy, this legislation aims to safeguard Chinese citizens’ rights and interests while reinforcing national sovereignty, security, and developmental goals. As per the law, Chinese courts will now be equipped to handle cases involving foreign states as defendants, given specific prerequisites, Director-General Ma Xinmin of the Foreign Ministry highlighted.
Previously, Chinese courts refrained from processing cases against foreign states or their assets. This abstention posed two main challenges:
- Chinese entities and citizens found themselves unable to defend their rights in domestic courts against foreign state disputes.
- Given that certain foreign courts regularly took on unfounded lawsuits against China, there was a clear imbalance, with Chinese courts devoid of similar authority.
The Foreign Ministry has described this legislative move as a typical activity that strictly adheres to international standards and reflects common state practices globally. The law recognizes the principle that foreign states and their properties are immune within Chinese territories. However, there are exceptions, especially for non-sovereign acts. In such instances, Chinese courts can exercise jurisdiction, like in cases resulting from commercial disputes or those related to personal injuries and property damages. Moreover, the law allows Chinese courts to take necessary judicial measures against foreign states’ commercial assets, albeit in very limited scenarios.
Ma Xinmin articulated concerns regarding foreign courts, influenced by anti-China sentiments, pursuing unwarranted legal actions against China. The introduction of this law furnishes China with a solid legal ground to counteract such advances.
In 2020, during a significant parliamentary gathering, 35 legislators emphasized expediting the formulation of this law. The objective was to grant Chinese entities and individuals the right to litigate against other nations domestically. This motion was partly in response to litigation cases against China in the U.S. courts, linking China to the COVID-19 pandemic liabilities.
Simultaneously, certain Chinese individuals expressed a desire to sue the U.S. for tarnishing China’s reputation. But China’s unwavering stance on absolute immunity hindered these pursuits, leading to an uneven scenario where foreign courts could oversee cases against China, yet the reverse wasn’t feasible.
Furthermore, experts posit that after this law’s enactment, several Chinese firms, that have faced U.S. sanctions, might be in a position to challenge the U.S. government in Chinese courts. This could be a consequential move, reminiscent of China’s Anti-Foreign Sanctions Law passed in June 2021.
A pertinent question that arises post-enactment is whether Chinese courts can now deal with rights infringement cases of its fishermen, especially in light of Japan’s nuclear-contaminated water dumping. Is it feasible for a Chinese entity or individual to sue Tokyo Electric Power Company after the law’s enforcement? While theoretically plausible, proving tangible economic or physical harm might pose a challenge, says legal expert Huo.
Enhancing China’s openness, this legislation not only solidifies the defense of national sovereignty, security, and development goals but also champions legislative efforts centered on the populace. The move can further catalyze China’s quality-centric growth trajectory and bolster its high-level international engagement.
Louis Chen, from the Hong Kong Legal Exchange Foundation, clarifies that the law’s “exercising jurisdiction” encompasses scenarios where a foreign state concedes to specific jurisdiction, commercial-related litigations, labor or service contract-related cases, tortious act compensations, and arbitration-related issues.
As the law rolls out, both Hong Kong and Macao, being special administrative regions, should align with the central government’s immunity rules and policies.
Chen emphasizes that the law’s provisions, which delineate the circumstances for Chinese courts to exert jurisdiction, adhere stringently to international treaties and dominant international norms.
Long-term, China’s adoption of restrictive immunity will mirror its responsible stance towards foreign investors, ensuring a consistent protective shield for their investments. Such measures undoubtedly amplify China’s global engagement initiatives, enhancing the Belt and Road Initiative’s expansive growth.
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