(Source: "Rule of Law Daily" 2026-03-23)
Recently, the results of the "Top Ten Cases Promoting the Rule of Law in the New Era 2025" campaign co-sponsored by the Supreme People's Court and other institutions were officially announced. The country's first infringement lawsuit against foreign sanctions was successfully selected. As my country's first infringement lawsuit filed based on Article 12 of the Anti-Foreign Sanctions Law, the case was successfully concluded through mediation. It not only marked a key step in the formal implementation of the Anti-Foreign Sanctions Law from legal provisions to judicial practice, but also clarified the key information that assisting in the enforcement of extraterritorial discriminatory restrictive measures can constitute infringement, and provided an important reference for Chinese companies to deal with the "long-arm jurisdiction" of foreign unilateral sanctions.
Efficiently resolve disputes in 39 days
In 2023, a Chinese offshore engineering company (hereinafter referred to as the "Chinese company") signed a ship construction subcontract with the European S Marine Equipment Company (hereinafter referred to as the "foreign company"). It was agreed that the Chinese company would be responsible for building the equipment modules of the foreign company's offshore floating production and storage ship. The contract value was approximately US$19.45 million. The parties agreed that the dispute resolution method would be overseas arbitration and foreign laws would apply.
On June 7, 2024, the Chinese company completed the module construction and ship assembly as agreed. But soon after, a third country added the Chinese company to its sanctions list. The foreign company suspended the payment of the final payment of US$11.86 million and cut off communication channels on the grounds of implementing the administrative order of economic sanctions from a third country.
In order to defend its legitimate rights and interests, the Chinese company applied to the Nanjing Maritime Court to detain the ship involved in the case before litigation. On September 18, 2024, the Nanjing Maritime Court ruled to arrest the ship involved in the case. On October 11, the Chinese company filed a lawsuit with the Nanjing Maritime Court in accordance with Article 12 of the Anti-Foreign Sanctions Law, demanding that the foreign company pay more than RMB 86 million in compensation. After the court filed the case, the foreign company applied for a payment permission from the third country and paid a counter-guarantee of 99.743 million yuan to lift the seizure.
Under the organization of the Nanjing Maritime Court, the foreign company voluntarily gave up overseas arbitration. In just 39 days, the two parties reached an agreement on the ship construction payment, payment exchange rate and method of performance, and relevant certificate delivery obligations. On November 19, the court issued a civil mediation letter and, based on the application of the Chinese company, allocated settlement funds from the counter-guarantee to the Chinese company through execution procedures.
Both parties mediate to achieve efficient and substantial resolution of disputes, avoiding possible complex international judicial conflicts and the adverse effects of foreign unilateral sanctions, which is of great significance in foreign-related judicial practice.
Broaden the remedies for infringement
Article 12 of the Anti-Foreign Sanctions Law stipulates that no organization or individual may implement or assist in the implementation of discriminatory restrictive measures taken by foreign countries against our citizens and organizations. If an organization or individual violates the provisions of the preceding paragraph and infringes upon the legitimate rights and interests of Chinese citizens or organizations, Chinese citizens or organizations may file a lawsuit with the People's Court in accordance with the law to require them to stop the infringement and compensate for losses.
Chen Weidong, Executive Vice President of the Institute of Foreign-related Law at the w88 casinoIn an interview with a reporter from "Legal Person", he said that this case successfully broke through the overseas arbitration and foreign applicable laws stipulated in the contract. "In traditional international commercial practice, foreign companies often use arbitration clauses and foreign laws as firewalls to avoid the jurisdiction of Chinese laws. In this case, even though the contract stipulated that the dispute resolution method was overseas arbitration and foreign laws were applicable, the court determined that assisting in the implementation of foreign unilateral sanctions constituted an infringement of the rights and interests of Chinese enterprises and characterized the case as a tort dispute. The case is no longer a simple breach of contract dispute, and the injured party can file an infringement lawsuit based on Article 12 of the Anti-Foreign Sanctions Law."
According to Chinese law, the place where the infringement occurs (where the result occurs) is in China, and the Chinese courts have jurisdiction. “This establishes the jurisdiction of Chinese courts over sanctions-related cases and is essentially a powerful judicial weapon against foreign ‘long-arm jurisdiction’.”Chen Weidongbelieves that this case has sent a clear signal to the world: Chinese companies that have been harmed by foreign business partners implementing foreign government sanctions have the right to safeguard their rights through the Chinese judicial system, and foreign unilateral sanctions cannot be a "talisman" to protect foreign business partners from immunity.
Chen Yanhong, founding director of the New Financial Law Research Center of North China Electric Power University and senior partner of Beijing Deheheng Law Firm, believes that this case has established a tort relief path that is independent of contractual relationships and has exemplary value for similar cases. “This case confirmed through judicial procedures that when my country’s domestic market entities suffer from undue restrictions caused by foreign unilateral sanctions in legitimate cross-border transactions, they can seek infringement relief through civil litigation in accordance with the Anti-Foreign Sanctions Law.”
Chen Weidongstated that this case confirmed the feasible idea that the implementation mechanism of the Anti-Foreign Sanctions Law should be based on public enforcement and supplemented by private enforcement. Counter-sanctions mainly rely on public execution by national administrative agencies, that is, the relevant departments of the State Council decide and implement countermeasures, such as banning imports and exports, freezing assets, denying visas, etc. This model has a deterrent effect, but it may suffer from lagging and insufficient pertinence when responding to specific commercial contract disputes, making it difficult to promptly relieve the risks or losses suffered by specific enterprises in specific transactions. In this case, the Chinese company directly invoked Article 12 of the Anti-Foreign Sanctions Law to file a civil lawsuit, which is a typical embodiment of the private enforcement mechanism.Chen WeidongSaid: "Private enforcement transfers the initiative of counter-sanctions to market entities, allowing victimized companies to use domestic judicial channels to directly sue foreign trading partners who cooperate with foreign sanctions and demand compensation for losses. This mechanism improves the response speed and accuracy of counter-sanctions and forms an effective supplement to the country's public enforcement power."
The unique value of Article 12
The efficient resolution of the conflicts in this case is inseparable from the Nanjing Maritime Court’s precise policies and proactive actions. In response to the Chinese company's application to arrest the ship, the court flexibly used the "live arrest" measure in accordance with the Special Maritime Litigation Procedure Law - allowing the ship to continue to be rebuilt in situ under the premise of strictly restricting the ship from leaving the port.Chen Weidongbelieves that this measure not only preserves creditor's rights and enables Chinese companies to take the initiative in negotiations, but also avoids delays in construction and obstruction of international financing caused by "dead detention", forcing foreign companies to make a rational choice between "huge commercial losses caused by long-term detention of ships" and "application for payment permission" and restart dialogue.
After the case was filed, the court clearly explained to the foreign company that assisting in the enforcement of foreign unilateral sanctions under Chinese jurisdiction may infringe legal liability. Afterwards, the foreign company voluntarily gave up the arbitration. After obtaining the payment permission from the third country, the foreign company paid the counter-guarantee to the court account to lift the seizure. The two parties entered the mediation stage and quickly reached a mediation agreement. The mediation agreement not only resolved the current dispute, but also stipulated that subsequent potential disputes would be governed by the Nanjing Maritime Court and Chinese law would apply.
“This case fully embodies the gaming strategy of using litigation to promote negotiation, and fully demonstrates that Article 12 of the Anti-Foreign Sanctions Law has the leverage function and unique gaming value to leverage negotiations.”Chen WeiEastSay.
Liu Rundong, equity partner of Beijing Deheheng Law Firm, further interpreted the scope of rights protection under the Anti-Foreign Sanctions Law based on practical cases. He pointed out that when the law was enacted, rights relief and rights protection practices were fully considered, and the basis of the right to sue was set as tort liability. Therefore, even if the parties have not established a clear legal contractual relationship, the injured party may still file a lawsuit based on Article 12 of the Law. "For example, if a foreign company stops purchasing clothing made from Chinese crops, in addition to the clothing manufacturer who can sue the foreign company based on the contract between the two parties, farmers who supply raw materials to the clothing manufacturer can also sue according to this clause and safeguard their legitimate rights and interests in accordance with the law if they can provide evidence to prove that the foreign company has violated the law and infringed the law."
Also,Chen Weidongbelieves that the foreign company finally fulfills its contractual obligations by applying for a payment license from a third country, which also provides a feasible compliance path for relevant foreign companies. “Under certain circumstances, foreign companies can legally apply for sanctions exemptions or licenses to perform their contractual obligations to their Chinese partners without violating relevant foreign sanctions orders.”
Effectively respond to cross-border sanctions
This case provides valuable inspiration for Chinese enterprises to deal with cross-border sanctions and prevent foreign-related business risks.
In practice, some companies still have many misunderstandings. Liu Rundong believes that in the pre-prevention stage, some foreign w88 companies lack a systematic understanding of sanctions-related regulations and disposal procedures, have not established a corresponding compliance system, and even generally have a fluke mentality that "sanctions have nothing to do with them." “In fact, all foreign w88 companies should pay close attention to matters related to export controls and sanctions, and put risk prevention and control in front of them.”
In the ongoing management and control stage, “When the Ministry of Commerce, Customs and other authorities, as well as banks, insurance companies, ports and other institutions issued risk warnings, some companies did not proactively investigate the risks. Instead, they tried to get through through evasive means and blindly promoted transactions with a sense of luck. For example, in order to sell goods to overseas high-risk countries, some companies deliberately erased or rubbed off product nameplates, designed complex transaction routes to try to avoid sanctions, thinking that they would not be discovered if they did not w88 directly.” Liu Rundong believes that in fact, such evasive behavior is not hidden. Soon after the relevant goods are delivered, the third country will grasp the situation and even conduct "fishing law enforcement" to obtain evidence, which will eventually lead to more serious consequences.
In the post-relief stage, some companies responded passively, either being helpless and giving up relief, or passively accepting losses such as frozen funds as an established fact, ignoring legal relief channels, resulting in many recoverable losses that ultimately could not be recovered. Liu Rundong said, "In fact, sanctions-related disputes are not without the possibility of relief. Whether it is the third country's own administrative relief procedures such as clarification, licensing, and unfreezing, or through dispute resolution methods such as litigation and arbitration, as well as relying on the increasingly mature official rescue guidance system provided by governments at all levels in my country, effective relief can be obtained. Especially in cases of fund freezing, more than half of the cases can be unfrozen through legal channels."
Chen Yanhong gave specific suggestions: after enterprises encounter relevant risks, they should retain evidence as soon as possible and completely preserve all materials such as contracts, communication records, performance vouchers, etc.; promptly evaluate the validity, performance status and claimable rights of the contract; seek professional legal advice as soon as possible to determine whether temporary relief measures such as preservation can be applied; and at the same time, issue formal written letters to state their position in accordance with the law, laying a solid foundation for subsequent litigation or mediation.
It is worth noting that this case has formed a handling model that combines "pre-litigation preservation + ship live arrest + cross-border counter-guarantee + court mediation", which is replicable in similar maritime and foreign-related cases. Chen Yanhong believes that these measures are based on my country's existing civil litigation and maritime litigation systems, are in line with procedural jurisprudence and judicial practice, and can provide important reference for the handling of cross-border transaction disputes such as ships, equipment, and engineering. When specifically applicable, enterprises can make adjustments based on actual circumstances such as the subject matter of the case, property type, transaction structure, etc., to form a dispute resolution solution adapted to individual cases.
In terms of foreign-related contract design, Chen Yanhong suggested that Chinese companies can improve terms in many aspects and enhance risk prevention capabilities. In terms of legal application and jurisdiction clauses, priority should be given to agreeing on the application of Chinese law and the jurisdiction of Chinese courts or arbitration institutions to improve the predictability of dispute resolution; in terms of relevant restrictive measures, legal compliance requirements and inappropriate external pressure should be clearly distinguished to avoid simply including unreasonable extraterritorial restrictions within the scope of exemption; in terms of force majeure clauses, the applicable circumstances and the burden of proof should be clearly defined to prevent foreign parties from arbitrarily citing this clause as a reason for breach of contract. At the same time, notification, negotiation, and risk sharing mechanisms can be set up in the contract to clarify the handling process when one party encounters improper interference. Risk allocation and relief paths can be written into the contract as much as possible to strengthen the protection of one's own rights.
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