MOFCOM just issued some interesting clarification on the Chinese Blocking Statute:
1. Injunctions prohibiting firms and individuals from recognizing, enforcing and complying with foreign sanctions only apply to Chines entities, NOT foreign entities;
2. Entities harming interests of Chinese entities by complying with foreign sanctions only include Chinese entities;
3. But entities benefiting from foreign judgments include both Chinese and third-country entities.
To illustrate with examples:
1. US issues sanctions against Chinese entity A dealing with third-country entities B. MOFCOM issues injunction against compliance with the sanction. Only Chinese entity C is required to comply with the injunction. But not third-country entity D.
2. Both Chinese entity C and third-country entity D refused to comply with the injunction and caused damage to Chinese entity A. A can only sue C in a Chinese court, but not D.
3. D gets a judgement in US court against A for contractual damage. Now A can sue D in Chinese court.
So overall, the impact of the new regulations seems mostly limited to Chinese entities, but not foreign entities (except #3 mentioned above). But foreign-invested entities in China are also considered to be Chinese entities, which includes China subsidiaries of foreign companies.

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More from @henrysgao

9 Jan
MOFCOM just issued its first order for 2021: Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures. Key message:
We are going to prohibit firms from complying with foreign laws prohibiting transactions with Chinese firms. Image
Key provisions:
1. The legislative basis is National Security Law;
2. Chinese firms and individuals are required to report foreign sanctions;
3. MOFCOM may issue injunctions prohibiting firms and individuals from recognizing, enforcing and complying with foreign sanctions. Image
4. Chinese firms suffering loss from another party's compliance with foreign sanctions can sue for damages in Chinese courts. Image
Read 7 tweets
30 Dec 20
Thanks @loyaladvisor for this. This would be the most detailed info on the #CAI before the text is out. Here are a few gems I found in the internet sector:
1. Cloud services "will now be open to EU investors subject to a 50% equity cap". Good for EU but they are late to the Party, as Amazon AMS has been in China since 6 years ago;
2. The ‘technology neutrality' clause, which ensures that equity caps imposed for telecom VAS won't be applied to other online services such as financial, logistics, medical etc. AFAIK these have never been regarded as VAS to start with and never been subject to VAS equity caps.
Read 12 tweets
15 Sep 20
The decision is hardly surprising, but there are two interesting points in the panel report:
1. Whether the Phase 1 deal constitutes a mutually agreed solution;
2. whether the US tariffs could be justified under the public morals exception.
The first one was easy, while the second one is more tricky, as the US measures were allegedly taken against IP theft, misappropriation and unfair competition by China. The Panel ruled against the US, not because the US couldn't do so, but due to the lack of nexus and necessity.
I'm most amused by the argument by China that the criminalization of a conduct under domestic law doesn't really provide sufficient justification for invoking public morals exception. I wonder if its lawyers ever realized that this argu could be used against China in another case
Read 4 tweets

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