CHINA Law and Practice Contributed by: Xing Nan (Nancy), AnJie Broad Law Firm
perpetrator violates sanctions measures, endangers national security or discloses state secrets, he or she may be held criminally liable under the Criminal Law of the People’s Republic of China. Persons as well as organisations that have committed the following acts may be subject to criminal sanctions: • betraying the state, financing criminal activities endangering national security, espionage, steal - ing, spying on, buying, and illegally providing state secrets and intelligence for foreign countries pro - hibited by Chapter 1 of the Criminal Law; • crimes endangering national security; • leaking state secrets prohibited by the Criminal Law; • acts stipulated in the Criminal Law; • infringing on commercial secrets; • stealing, spying on, buying, and illegally providing commercial secrets for foreign countries; and • infringing on citizens’ personal information. Pursuant to the Law of the People’s Republic of China on Countering Foreign Sanctions, organisations and individuals within China are obligated to follow the countermeasures determined by the relevant state departments. Failure to comply with these measures can lead to administrative liabilities, including orders to cease the activities, fines, and potential restrictions or prohibitions on related activities. 2.2.3 Civil Enforcement Action In October 2024, a Chinese court accepted the first anti-foreign sanctions infringement lawsuit filed by a Chinese company under the Law of the People’s Republic of China on Countering Foreign Sanctions. The case was eventually settled through mediation. In 2023, a Chinese marine engineering company (hereinafter referred to as the “Chinese company”) signed a contract with a foreign equipment company (hereinafter referred to as “Company S”) to build a ship equipment module, with a settlement amount of approximately USD19.45 million (approximately RMB140 million). After the final assembly was com - pleted on 7 June 2024, due to the “long-arm juris - diction” sanctions imposed by a third country on the Chinese company, Company S suspended payment of the final payment of USD11.86 million and closed the dialogue channel with the Chinese company. In
order to safeguard its own rights and interests, on 18 September 2024, the Chinese company applied to the Nanjing Maritime Court for pre-trial arrest of the ship involved and was approved. On 11 October, it filed a lawsuit in accordance with Article 12 of the Law of the People’s Republic of China on Countering Foreign Sanctions, claiming RMB86 million from Com - pany S. After the Nanjing Maritime Court accepted the case, Company S applied for payment permission from a third country and paid a counter-guarantee of RMB99.743 million to the court account to release the ship from arrest. During the reply period, the court explained to Company S the legal consequences of assisting foreign sanctions, and after several rounds of mediation, an agreement was finally reached within 39 days, stipulating that any disputes that may arise from the mediation agreement will be under the juris - diction of the court and subject to Chinese law. The Chinese court accepted the case in accordance with the law, clarified its negative position on the “domestic effect of foreign sanctions measures”, and strength - ened the effect of legal countermeasures. 2.2.4 Criminal Enforcement Action The United Nations economic sanctions implement - ed by the Chinese government through administra - tive notices do not provide for criminal penalties for violations, but the corresponding violations may still constitute criminal offences under the Criminal Law of the People’s Republic of China. For example: • The act of conducting financial transactions with sanctioned individuals or entities may constitute the crime of money laundering under the Crimi - nal Law, and the financial institutions and directly responsible supervisors and other directly respon - sible persons may be subject to criminal penalties including confiscation of the proceeds of the crime and the proceeds generated, and a maximum of ten years’ imprisonment and a fine. • In the trade of goods, the act of importing or exporting goods to sanctioned individuals or enti - ties may constitute the crime of smuggling other goods and articles prohibited from import and export by the state under the Criminal Law. In seri - ous cases, the offender may be sentenced to more than five years’ imprisonment and a fine.
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