Application, Enforcement to Determine Fate of China’s International Legal Strategy

Alexander Haft October, 2023

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Background

On July 1, 2023, China enacted the Law on Foreign Relations of the People’s Republic of China, or Foreign Relations Law.[1] The law purports to give China a legal basis to counter acts that the Chinese government believes violate international law and norms that harm China’s “sovereignty, security, and development interests.”[2] Since the law’s introduction, questions have arisen as to whether it is more of a doctrine than a shift in policy.[3] To this end, law firms have cautioned clients with business ties in China against shifting strategy in response to the new law.[4] Similarly, the law on its own is unlikely to run afoul of existing international law. However, if the law does indeed signal a shift in extraterritorial policy, China will risk running afoul of existing international law.[5] In particular, Chapter IV of the Law (discussing enforcement)[6] contains language that might give foreign entities pause before conducting business in China. The Foreign Relations Law does not violate international law. Questions about whether China’s updated law’s violates various international laws may emerge in the coming months and years; however, the retooled legal system itself along with the law’s application will reveal the new system’s legality.[7]

Courts & Extraterritoriality

Article 33 of the Foreign Relations Law states that the People’s Republic of China (PRC) has the right to “counter or take restrictive measures” against foreign actors when the State Council and its departments deem such actions necessary. The Article, along with others that address China’s system of foreign relations, use vague language, and repeatedly emphasize that any measures will be either in conformity with international law and fundamental norms surrounding international relations.[8] Contrary to claims by senior foreign relations official Wang Yi,[9] the law does not provide China with any additional means to retaliate against foreign businesses, states, or individuals. The PRC has already been acting in line with the principles stated in the Foreign Relations Law. [10]

Actors with more indirect ties, as opposed to foreign parties operating within China’s borders, may expect to be subject to China’s laws under the Foreign Relations Law. The Law’s broad language aligns with the vagueness inherent in protective extraterritoriality principles of international law.[11] Additionally, some nations’ courts have established that states can apply jurisdiction upon foreign actors for conduct outside the states’ borders, should such conduct have adverse consequences on the states.[12] The Foreign Relations Law does not surpass U.S. standards of extraterritoriality.

The Foreign Relations Law gives the PRC the power to regulate activities carried out “in its territory” by foreign entities.[13] Foreign businesses have struggled to clarify what is considered secret or of national security.[14] On January 1, 2024, China’s updated civil procedure rules will go into effect, massively expanding the scope of conduct that may be subject to jurisdiction of the People’s Court.[15] One clause of the updated laws gives exclusive jurisdiction to litigation related to the validity of intellectual property rights granted in China.[16] The expanded definition of “territory” in conjunction with claiming jurisdiction over IP disputes is facially lawful. However, businesses that were advised to (at most) monitor future legal developments in China[17] following the adoption of the Foreign Relations Law are beginning to discover the specific legal tools the PRC plans to employ.[18]

Expectations

Looking forward, the question of whether China’s Foreign Relations Law violates international law may turn into an evaluation of a newly empowered judiciary system asserting itself on a global stage. Enforcement and application of the Foreign Relations Law will determine whether China violates international law. The updated civil procedure rules may modernize China’s courts to comply with the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) rules.[19] The laws appear facially to modernize Chinese courts[20] and protect Chinese interests in compliance with WTO rules.[21] Given Chinese courts’ lack of dependence,[22] the increasing number of cases the courts hear may well lead China to the receiving end of complaints under the WTO. Once the new laws go into effect, perhaps there will be more data to answer these questions. As it stands, however, any predictions regarding the effects of China’s Law on Foreign Relations are merely speculative.

  1. Bingna Guo, James Hsiao, Bob Li, & Royston C. Tan, The Law of Foreign Relations of the People’s Republic of China Became Effective on 1 July 2023, White & Case, https://www.whitecase.com/insight-alert/law-foreign-relations-peoples-republic-china-became-effective-1-july-2023. ↑
  2. Lester Ross, China Rolls Out Foreign Relations Law, WilmerHale (July 5, 2023), https://www.wilmerhale.com/insights/client-alerts/20230705-china-rolls-out-foreign-relations-law. ↑
  3. White & Case, supra note 1. ↑
  4. Id. ↑
  5. Evelyn Cheng, China Has a New Foreign Relations Law. Here’s What it Means for Business, CNBC (July 10, 2023) https://www.cnbc.com/2023/07/11/chinas-new-foreign-relations-law-heres-what-it-means-for-business.html. ↑
  6. Robert Rust, What China’s Foreign Relations Law Tells Us About Its View of the International Community, The Equation (Sept. 11, 2023), https://blog.ucsusa.org/robert-rust/what-chinas-foreign-relations-law-tells-us-about-its-view-of-the-international-community/. ↑
  7. Andrese Huld, China Amends Civil Procedure Law: Impact on Foreign Companies, China Briefing (Sept. 14, 2023), https://www.china-briefing.com/news/china-civil-procedure-law-amendment-impact-foreign-businesses/; ↑
  8. Chris Devonshire-Ellis, China’s New Foreign Relations Law: Clarifications & Analysis, China Briefing (June 29, 2023), https://www.china-briefing.com/news/chinas-new-foreign-relations-law-clarifications-analysis/, hereinafter Devonshire. ↑
  9. WilmerHale, supra note 2. ↑
  10. GT Staff Reporters, China Stresses Need for WTO Reform, High-Level Opening Up, Global Times (Sept. 27, 2023), https://www.globaltimes.cn/page/202309/1299066.shtml; (中华人民共和国对外关系法) [The Law on Foreign Relations of the People’s Republic of China art. 33] (promulgated at the Third Meeting by the Standing Comm. Nat’l People’s Cong., June 28, 2023) 2023 Standing Comm. Nat’l People’s Cong. Gaz. ↑
  11. Menno T Kamminga, Extraterritoriality, Oxford Public International Law (Sept. 2020), https://opil.ouplaw.com/display/10.1093/law:epil/9780199231690/law-9780199231690-e1040. ↑
  12. Id (explaining that some courts follow the United States’ standards of claiming jurisdiction over conduct that occurs outside of a nation’s borders). ↑
  13. The Law on Foreign Relations of the People’s Republic of China (adopted at the Third Meeting of the Standing Committee of the 14th National People’s Congress on June 28, 2023), art. 38. ↑
  14. China’s New Law Extends Xi’s Combative Foreign Policy Stance, Bloomberg News (June 28, 2023) https://www.bloomberg.com/news/articles/2023-06-28/china-enacts-foreign-relations-law-targeting-western-hegemony?embedded-checkout=true. ↑
  15. Ulrike Glueck & Stephen Wu, Amendment of PRC Civil Procedure Law, Cameron McKenna Nabarro Olswang (Nov. 9, 2023), https://cms.law/en/chn/publication/amendment-of-prc-civil-procedure-law. ↑
  16. Id. ↑
  17. White & Case, supra note 1. ↑
  18. Impacts of Amended Civil Procedure Law on Foreign-Related Litigations in China, Covington (Sept. 25, 2023), https://www.cov.com/en/news-and-insights/insights/2023/09/impacts-of-amended-civil-procedure-law-on-foreign-related-litigations-in-china. ↑
  19. WilmerHale, supra note 9. ↑
  20. China Briefing, supra note 7. ↑
  21. White & Case, supra note 1. ↑
  22. Donald Clarke, Judging China: The Chinese Legal System in U.S. Courts, 44 U. Pa. J. Int’l L. 455, 477-478 (2023) ↑