Chinese Anti-Foreign Sanctions Law
Adopted on June 10, 2021, China's Anti-Foreign Sanctions Law lets Beijing put those who adopt or apply sanctions against China on a countermeasure list, and opens a civil action in Chinese courts against anyone who implements them.
China's Anti-Foreign Sanctions Law is the statute that lets Beijing put those who adopt or apply sanctions against China on a countermeasure list, and that opens a civil action in Chinese courts against anyone who implements them. The Standing Committee of the National People's Congress adopted the law on June 10, 2021, effective the same day. Five months earlier, on January 9, the Ministry of Commerce (MOFCOM) had issued its blocking rules against the unjustified extraterritorial application of foreign legislation. The rules run to sixteen articles: a duty to report within thirty days any foreign prohibition that stops normal dealings with a third party, the option of a prohibition order, and a damages claim against whoever complies with the blocked law. The 2021 law goes further. Article 4 lets State Council departments put on a countermeasure list the persons and organizations involved in drafting or applying discriminatory restrictive measures; Article 6 provides for visa refusal, deportation, sealing or freezing of property in China, and a ban on dealing with them. Lockheed Martin's defense units have been on it since 2024. Article 12 forbids anyone to implement or help implement such measures and gives Chinese citizens and organizations a claim before the people's courts, to stop the conduct and recover losses. The implementing regulations of March 23, 2025, State Council Order No. 803, set out the procedure. For an insurer the conflict is head-on: the sanctions exclusion clause that lets it decline a claim from a Chinese insured designated by OFAC (Office of Foreign Assets Control) is, seen from Beijing, the implementation of a discriminatory measure. Declining protects the underwriter in London and exposes it to a judgment in China, enforceable against its assets, its subsidiary or its local branch.
Textbook case: a European reinsurer holds 40 percent of an excess of loss treaty written by a Shanghai cedent, retention 5 million dollars, limit 20 million. A factory of the original insured burns: a 17 million loss, so 12 million falls on the treaty and 0.40 x 12 = 4.8 million on the reinsurer. In the meantime OFAC (Office of Foreign Assets Control) has put the factory's owner on the SDN (Specially Designated Nationals) List; the reinsurer invokes its sanctions clause. The cedent sues before a people's court under Article 12, claiming 4.8 million and an order to stop the refusal. The reinsurer must choose between two bodies of law that exclude each other.
- Anti-Foreign Sanctions Law of the People's Republic of China, 10 June 2021
- MOFCOM, Order No. 1 of 2021 of 9 January 2021 (blocking rules)
Anti-Foreign Sanctions Law, AFSL, PRC anti-sanctions law, China countermeasure list, MOFCOM Blocking Rules, Chinese blocking statute, Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation
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