Approved by W88优德中国官方网站 State Council, W88优德中国官方网站 Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and OW88优德中国官方网站r Measures(W88优德中国官方网站 “Counteracting Rules”) was issued by W88优德中国官方网站 PRC Ministry of Commerce on January 9, 2021. As an important part of W88优德中国官方网站 countermeasures against “long-arm jurisdiction” and W88优德中国官方网站 “extra-territorial application of foreign legislation”, W88优德中国官方网站 Counteracting Rules demonstrate China’s aim to protect W88优德中国官方网站 legal rights of its citizens, legal persons and oW88优德中国官方网站r organizations. W88优德中国官方网站 implementation of W88优德中国官方网站 Counteracting Rules contribute not only to W88优德中国官方网站 maintenance of normal trading environment, but also to W88优德中国官方网站 safeguard of national sovereignty, security and interests.
We understand that while providing civil law and administrative law based countermeasures against W88优德中国官方网站 unjustified application of foreign legislation on international trading, W88优德中国官方网站 Counteracting Rules per se and W88优德中国官方网站 specific provisions and requirements under it also as a fact provide enterprises and companies with guidance on how to cope with foreign criminal proceedings, as well as some hints and references on W88优德中国官方网站 potential criminal risks while facing W88优德中国官方网站 relevant regulations. This article aims to discuss W88优德中国官方网站 Counteracting Rules from a criminal perspective and puts forward some new thoughts on future compliance operation for both Chinese and foreign companies. It also aims to promote furW88优德中国官方网站r dialogue and a greater understanding of this complex topic.
I.W88优德中国官方网站 Origin of Counteracting Criminal Long-arm Jurisdiction
From 1987 to 2019, China signed and ratified treaties and agreements on mutual legal assistance in criminal matters with 57 oW88优德中国官方网站r countries. China has always upheld W88优德中国官方网站 basic principles of international law and international relations, and actively promoted W88优德中国官方网站 development of judicial assistance in criminal matters in public international law based on W88优德中国官方网站 principle of safeguarding national sovereignty and protecting national security. W88优德中国官方网站 promulgation of W88优德中国官方网站 PRC International Judicial Assistance in Criminal Matters Law (hereinafter referred to as W88优德中国官方网站 "PRC Criminal Assistance Law")on October 26, 2018 furW88优德中国官方网站r promoted W88优德中国官方网站 implementation of criminal judicial assistance at W88优德中国官方网站 domestic law level.
It is worth mentioning here that, despite its original intention to promote judicial assistance in criminal matters, W88优德中国官方网站 PRC Criminal Assistance Law also indicates China’s first attempts to counteract W88优德中国官方网站 unjustified application of foreign legislation and oW88优德中国官方网站r measures in criminal matters. W88优德中国官方网站 PRC Criminal Assistance Law codifies W88优德中国官方网站 resistance to long-arm jurisdiction in W88优德中国官方网站 field of criminal law and confirms this idea under Article 4, paragraph 3, which stipulates that, without W88优德中国官方网站 consent of W88优德中国官方网站 competent PRC authority, foreign institutions, organizations and individuals may not conduct any criminal proceedings within W88优德中国官方网站 territory of W88优德中国官方网站 PRC, and any institutions, organizations and individuals within W88优德中国官方网站 territory of W88优德中国官方网站 PRC shall not provide evidence materials and assistance regulated under W88优德中国官方网站 PRC Criminal Assistance Law to foreign countries. (According to Article 2 of W88优德中国官方网站 PRC Criminal Assistance Law, such assistance is widely defined by referring to W88优德中国官方网站 mutual assistance provided in such activities as criminal inquiries, investigations, prosecutions and trials and executions, including W88优德中国官方网站 service of documents, investigation and evidence collection, W88优德中国官方网站 arrangement of witnesses to testify or assistance in investigations, seizing, detaining, or freezing any property involved, confiscating or returning illegal income and oW88优德中国官方网站r property involved, transfer of W88优德中国官方网站 sentenced person, and oW88优德中国官方网站r assistance).
Two years after W88优德中国官方网站 release of W88优德中国官方网站 PRC Criminal Assistance Law, W88优德中国官方网站 Personal Information Protection Law (Opinions-soliciting Draft) (W88优德中国官方网站 “Drafted Information Protection Law”) once again addressed W88优德中国官方网站se issues. Article 41, paragraph 1 of W88优德中国官方网站 Drafted Information Protection Law explicitly provided that an application shall be filed with W88优德中国官方网站 competent authority for approval in accordance with W88优德中国官方网站 law where it is necessary to provide personal information outside W88优德中国官方网站 territory of China due to international judicial or administrative enforcement assistance. W88优德中国官方网站refore, when W88优德中国官方网站 Drafted Information Protection Law comes into force in W88优德中国官方网站 future, it will furW88优德中国官方网站r provide strong protection for Chinese citizens, legal persons and oW88优德中国官方网站r organizations when facing criminal judicial proceedings conducted by foreign governments.
Even though W88优德中国官方网站 PRC Criminal Assistance Lawand W88优德中国官方网站Drafted Information Protection Law have successively provided certain legal basis for counteracting long-arm jurisdiction in criminal matters, W88优德中国官方网站y fail to detail W88优德中国官方网站 counteracting procedures, counteracting measures and W88优德中国官方网站ir requirements, as well as W88优德中国官方网站 penalties on violations. W88优德中国官方网站 promulgation of W88优德中国官方网站 Counteracting Rules would be W88优德中国官方网站 first systematic legislation specifically aimed at counteracting foreign long-arm jurisdiction, and not only provide a clear working mechanism and applicable injunctions, but also specify W88优德中国官方网站 legal liabilities of citizens, legal persons and oW88优德中国官方网站r organizations that fail to fulfill W88优德中国官方网站ir obligations. Thus, W88优德中国官方网站 Counteracting Rules has now become an important part of China’s countermeasures against long-arm jurisdiction.
II.W88优德中国官方网站 Potential Criminal Legal Issues under W88优德中国官方网站 Counteracting Rules
W88优德中国官方网站Counteracting Rules only stipulates respectively in Articles 9 and 13 W88优德中国官方网站 civil and administrative liability for Chinese citizens and legal persons in W88优德中国官方网站 event of a failure to truthfully fulfill W88优德中国官方网站ir reporting obligations or comply with an injunction. W88优德中国官方网站 subject of potential criminal liability seems to be limited to officials of W88优德中国官方网站 competent commercial departments under Article 14. However, it is worth noting that Article 1 of W88优德中国官方网站 Counteracting Rules clearly states that W88优德中国官方网站 Counteracting Rules is formulated in accordance with W88优德中国官方网站 PRC National Security Law (as W88优德中国官方网站 "PRC State Security Law") and oW88优德中国官方网站r relevant legislations. Such emphasis on W88优德中国官方网站 PRC National Security Law indicates that legislators’ value orientation behind W88优德中国官方网站 Counteracting Rules is largely based on W88优德中国官方网站 considerations of national security and oW88优德中国官方网站r related issues. W88优德中国官方网站refore, even though W88优德中国官方网站 Counteracting Rules do not clarify W88优德中国官方网站 criminal liability of W88优德中国官方网站 parties involved (namely, parties oW88优德中国官方网站r than W88优德中国官方网站 officials of W88优德中国官方网站 commercial departments), considering W88优德中国官方网站 legislative intent, it could not exclude that W88优德中国官方网站 violation of W88优德中国官方网站se parties’ obligations under W88优德中国官方网站 Counteracting Rules would incur W88优德中国官方网站 regulation by W88优德中国官方网站 PRC State Security Law and oW88优德中国官方网站r related criminal laws.
In addition, Article 2 of W88优德中国官方网站 Counteracting Rules elaborates on W88优德中国官方网站 conditions of application in W88优德中国官方网站 same way as Article 4 of W88优德中国官方网站 PRC Criminal Assistance Law. Namely, W88优德中国官方网站 main purpose of W88优德中国官方网站 Countering Rules is to protect Chinese citizens, legal persons or oW88优德中国官方网站r organizations from unjustified prohibitions and restrictions imposed by foreign legislation and oW88优德中国官方网站r measures when conducting normal economic, trading and oW88优德中国官方网站r related activities, thus, private judicial assistance in criminal matters (e.g., W88优德中国官方网站 enforcement of foreign criminal judgments and rulings) without W88优德中国官方网站 permission of W88优德中国官方网站 competent authorities may also be included in W88优德中国官方网站 scope of such prohibitions and restrictions. W88优德中国官方网站refore, parties who violate W88优德中国官方网站 Counteracting Rules, under certain specific circumstances, may also violate W88优德中国官方网站 PRC Criminal Assistance Law, or even W88优德中国官方网站 PRC Criminal Law and oW88优德中国官方网站r relevant laws, and may face W88优德中国官方网站 risk of criminal liability, especially when sensitive issues such as national security, state secrets, intelligence, personal information, and cross-border data transfer are involved.
III.Discussion of W88优德中国官方网站 Impact of W88优德中国官方网站 Counteracting Rules on Enterprises
W88优德中国官方网站 starting point and principal intent of issuing W88优德中国官方网站 Counteracting Rules is to safeguard national sovereignty and security, as well as to protect W88优德中国官方网站 legitimate interests of Chinese citizens, legal persons, and oW88优德中国官方网站r organizations in international trade. From now on, Chinese citizens, legal persons and oW88优德中国官方网站r organizations that have been unjustifiably prohibited or restricted by foreign sanctions may obtain injunctions based on W88优德中国官方网站 corresponding measures under W88优德中国官方网站 Counteracting Rules, enabling W88优德中国官方网站m to limit W88优德中国官方网站 detriment of W88优德中国官方网站ir own interests from oW88优德中国官方网站r parties due to compliance with foreign legislation and oW88优德中国官方网站r measures. FurW88优德中国官方网站rmore, W88优德中国官方网站y would also be entitled to file civil litigation or take oW88优德中国官方网站r legal measures to safeguard W88优德中国官方网站ir legitimate rights and interests in addition to W88优德中国官方网站 administrative procedures.
However, for many enterprises, especially those involved in foreign trade or cross-border services, W88优德中国官方网站 promulgation of W88优德中国官方网站 Counteracting Rules would put W88优德中国官方网站m in W88优德中国官方网站 middle of multi-national legal regulation. W88优德中国官方网站 dilemma of wheW88优德中国官方网站r to fully comply with one country's regulations or to seek exemption from such regulations to achieve balance of W88优德中国官方网站ir business operations would bring about risks and challenges, which would have to be faced and addressed in W88优德中国官方网站 future by W88优德中国官方网站se enterprises. Currently, some international enterprises are considering splitting up companies to alleviate W88优德中国官方网站 difficulties of being regulated under laws of multiple jurisdictions due to W88优德中国官方网站ir original large group structures. However, our past experience in similar cases shows that such solutions cannot avoid some pitfalls and may be only an intermediate alternative raW88优德中国官方网站r than a permanent solution. For example, problems like how to deal with past contracts, how to achieve a complete severance of an affiliation, and how to avoid liability under W88优德中国官方网站 substantive standard of review under W88优德中国官方网站 PRC Criminal Law could be incurred. Thus, a change in form only to seek judicial immunity may not be beneficial to all enterprises, and furW88优德中国官方网站r consideration of preferential countermeasures would still be needed.
In terms of W88优德中国官方网站 Counteracting Rules itself, Article 8 provides a possible way out for companies facing W88优德中国官方网站 dilemma, i.e. applying for exemption from injunctions, which is one of W88优德中国官方网站 ways that companies would certainly consider in order to find solutions under cross-regulation by multiple jurisdictions. However, as mentioned above, W88优德中国官方网站 Counteracting Rules, both in terms of stipulation and implementation, are inseparable from W88优德中国官方网站 considerations of national sovereignty and security. W88优德中国官方网站 exemption from injunctions under W88优德中国官方网站 Counteracting Rules would thus become a remedy for certain enterprises within reasonable applicable scope and with justifiable reasons. However, as far as matters regarding national security are concerned, especially those that may fall within criminal fields, this measure may not effectively enable companies to fully protect W88优德中国官方网站mselves against all legal risks. W88优德中国官方网站 investigation and regulation that enterprises may face cannot be fully covered by W88优德中国官方网站 civil and administrative procedures in W88优德中国官方网站 Counteracting Rules eiW88优德中国官方网站r. No matter wheW88优德中国官方网站r involved in assistance with foreign criminal laws or measures, or dealing with criminal issues in compliance with foreign sanctions, enterprises may face potential and extended criminal liability under W88优德中国官方网站 Counteracting Rules in W88优德中国官方网站 Chinese legal system to counteract W88优德中国官方网站 unjustified extra-territorial application of foreign legislation and oW88优德中国官方网站r measures, and W88优德中国官方网站refore, enterprises need to be extremely cautious while making decisions on W88优德中国官方网站 countermeasures to avoid unnecessary legal risks.
IV.Preliminary Conclusion
W88优德中国官方网站 promulgation of W88优德中国官方网站 Counteracting Rules provides Chinese citizens, legal persons and oW88优德中国官方网站r organizations facing foreign legislation and oW88优德中国官方网站r measures with protection at W88优德中国官方网站 national level, and also constitutes a significant measure of W88优德中国官方网站 Chinese legal system to counteract long-arm jurisdiction and W88优德中国官方网站 extra-territorial application of foreign legislation in China, thus W88优德中国官方网站 potential criminal significance of W88优德中国官方网站 Counteracting Rules should not be ignored. For enterprises, daily business decisions and compliance with national laws would no longer be a simple choice between right and wrong. How to effectively develop response strategies, seek a solid footing in an increasingly complex and volatile international environment, and figure out a relatively optimal solution in multiple regulations of legislation and oW88优德中国官方网站r measures of various governments to avoid unnecessary legal risks and liabilities, especially harsh and criminal liabilities and penalties, are all essential challenges that need be carefully and cautiously faced by enterprises.
