On June 10, 2021, the Standing Committee of China’s National People’s Congress (“NPC”) passed the Counter Foreign Sanctions Law (the “Law”), which is effective immediately. The Law has been described by Chinese officials as a significant step forward in upgrading China’s “legal toolbox” in response to sanctions, import prohibitions and export control restrictions imposed by foreign governments. The Law is drafted broadly and provides for retaliatory sanctions in response to what Chinese officials describe as “arbitrary” and “unilateral” foreign sanctions toward China, including import and other sanctions restrictions imposed recently on the basis of alleged human rights and forced labor violations in China, as well as a range of financial, export and technology transfer restrictions that have been imposed on various other foreign policy and national security grounds.1 The Law is the latest in a series of Chinese actions intended to establish a legal framework to counter foreign sanctions, import prohibitions and export controls targeting Chinese entities and sectors, and codifies a number of retaliatory sanctions already taken by China over the past several months.2  

Although important questions remain regarding the scope, manner and extent to which China will implement these measures against non-Chinese parties (particularly private-sector entities), the Law has a number of important elements, including: (i) expanding on existing authorities to provide for the creation of a “counter-sanction list” of individuals subject to a range of restrictive measures (the “Countermeasures”) based on involvement in the formulation or implementation of covered foreign sanctions against China; and (ii) codifying a private right of action for aggrieved parties to sue for losses incurred as a result of covered foreign sanctions. The Law has significant implications for both Chinese and non-Chinese companies and individuals, located within or outside China, and poses challenging conflict-of-laws issues and potential private litigation risks for parties who may be subject to conflicting legal obligations.

This Legal Update summarizes the key features of the Law and discusses its implications for the relevant businesses.


The Law is the latest in a series of Chinese countermeasures aimed at foreign sanctions and export control laws impacting Chinese entities, individuals and interests. Prior actions taken by the Chinese authorities include the imposition of sanctions against a number of foreign individuals and entities determined to be involved in acts viewed by China as impacting its sovereignty and interests; the establishment by the Ministry of Commerce (“MOFCOM”) of formal mechanisms in September 2020 to sanction foreign entities and individuals based on a determination that they are “unreliable” under the Unreliable Entity List; and MOFCOM’s establishment of a legal framework to “block” foreign extra-territorial sanctions and export controls targeting Chinese actors (the “Blocking Rules”). The Law codifies and provides a statutory basis of authority for many of these existing measures. As discussed further below, it is notably broader in certain respects. Whereas the January 2021 MOFCOM Blocking Rules target “extra-territorial” application of foreign sanctions impacting China’s dealings with third countries (e.g., an EU entity’s restriction of trade to comply with US sanctions measures), the Law explicitly targets “unilateral” foreign sanctions measures (such as those imposed by the United States or European Union directly against Chinese entities), and not solely “extra-territorial” application of such sanctions measures that may impact China’s dealings with third countries (e.g., an EU entity’s decision to restrict dealings with a Chinese party to comply with US sanctions). As such, any US or other foreign government’s sanctions measures targeting China can be scrutinized by the Chinese government as a basis for a Countermeasure under the Law. As discussed further below, the Law is similar to the MOFCOM Blocking Rules, in that both allow Chinese parties to sue those that do not comply with the Law, creating a mechanism for private enforcement of the Law.


What types of sanctions are targeted by the Law?

Like both the MOFCOM Blocking Rules and the Unreliable Entity List, the Law is broadly designed to counter sanctions and export control measures that impact China’s interests, but has several notable features:

  • Not limited to “extra-territorial” sanctions. The Law explicitly targets “unilateral” foreign sanctions measures (such as those imposed by the United States or European Union directly against Chinese entities). This is a notable expansion from the MOFCOM Blocking Rules, under which the covered sanctions must have an “extra-territorial” application impacting China’s dealings with third countries (e.g., an EU entity’s decision to restrict dealings with a Chinese party to comply with US sanctions, or a US measure that impacts China’s dealings with a third country such as Russia or Iran). Without displacing the MOFCOM Blocking Rules, the Law targets and provides a basis for action in relation to “unilateral” foreign sanctions directly targeting Chinese entities without any “extra-territorial” effect.
  • No published list of foreign sanctions laws is required. Also in contrast to the MOFCOM Blocking Rules, the Law imposes prohibitions (described further below) regarding offending foreign sanctions generally (e.g., those that “discriminate” against China) without requiring that such offending sanctions first be identified by the Chinese government. This is also a notable departure from the existing MOFCOM Blocking Rules, under which MOFCOM must first identify the offending foreign sanctions measures (or elements thereof), which then trigger compliance prohibitions (and which MOFCOM has not to date identified). In contrast, absent clarifying guidance, the Law potentially applies to any foreign sanctions measures that Chinese authorities may determine meet broad concepts such as violating “basic principles of international relations;” “contain[ing] or suppress[ing] China by using any pretext;” imposing “discriminatory restrictive measures;” “interfere[ing]” in China’s internal affairs;” or otherwise “endanger[ing]” China’s sovereignty, security and development interests.3 Thus, the Law is broadly worded such that it can effectively apply to any number of unilateral sanctions China determines constitute serious violations of its sovereignty and interests.4

Who can be subject to the Countermeasures?

A key feature of the Law is that it provides for imposition of sanctions not only against individuals and entities directly or indirectly engaged in the conduct that forms the basis for retaliatory action, but also affiliates of that party (including but not limited to owned and controlled affiliates). In particular, the Countermeasures target:

  1. individuals or organizations that have been “directly or indirectly” involved in the “formulation, adoption and implementation” of “discretionary restrictive measures” against Chinese citizens and organizations (the “Listed Individuals” or “Listed Organizations”);
  2. the spouse and immediate family of a Listed Individual;
  3. the senior executives or actual controllers of a Listed Organization;
  4. the organization in which a Listed Individual serves as a senior executive; and
  5. the organization which is actually controlled by, or is established by or operated with the participation of, a Listed Individual or a Listed Organization (collectively, the “Targeted Persons”).

This is consistent with recent sanctions countermeasures announced by China against various US, EU, UK and Canadian entities and individuals (including, in some instances, targeting their direct family members).

What are the Countermeasures?

The Targeted Persons can be subject to one or more of the following Countermeasures:

  1. refusal to issue a visa, denial of entry into China, cancellation of a visa or deportation;
  2. seizure or freezing of property located within China;
  3. ban or restriction on any transaction or cooperation with any organization or individual that is located within China;
  4. any other necessary measures.

Who will adopt the List and the Countermeasures? Is it possible to change or cancel the adopted List and Countermeasures?

A “counter foreign sanctions working coordination mechanism” (the “Coordination Mechanism”) will be established, under which, the relevant departments of the State Council will share information; cooperate and, within their respective areas of jurisdiction, decide on the inclusion of a person onto the List (the “Listing”); adopt and implement the Countermeasures. A decision made by such departments to include an individual or person on the list is a “final decision.”5

However, the relevant department(s) of the State Council can suspend, amend or cancel such Countermeasures.

The Listing and the adopted Countermeasures, as well as their suspension, amendment or cancellation, will be announced by the Ministry of Foreign Affairs (“MFA”) or the other relevant department(s) of the State Council.

What are the consequences of non-compliance?

The Law imposes obligations not only on businesses that are located within China, but also on those outside of China:

  • Any organization or individual located within China must implement the Countermeasures, failing which, they will be restricted or prohibited from engaging in the “relevant activities.”
  • Any organization or individual, irrespective of its location, must not implement or assist in the implementation of the “discriminatory restrictive measures” against Chinese citizens or organizations.

Notably, like the MOFCOM Blocking Rules, the Law gives Chinese citizens or organizations the right to sue in Chinese court any individual or organization that fails to comply.


The full scope and focus of this Law remain unclear, and it remains to be seen how China will interpret and implement it in practice. That being said, the Law further expands the risks for both Chinese and non-Chinese companies and individuals who have operations or dealings in or with China, particularly those who may be subject to conflicting legal obligations. Potentially impacted companies should carefully assess their risk of exposure to conflicting legal obligations in light of this Law.

Going forward, certain aspects of the Law (such as the process for inclusion on the List and the adoption and/or modification of the Countermeasures) are expected to be clarified by more detailed implementing rules. Companies should closely monitor these events as they develop.

1 See the two press releases published on the NPC website here and here.

2 For more information, see our recent coverage on the PRC Ministry of Commerce “Blocking Rules” (here), the Unreliable Entities List (here) and the PRC National Security Law for Hong Kong (here).

3  By way of example, in announcing the Law, the NPC release referred to actions it has already taken to impose countermeasures based on acts of “advocating, inciting and financing” the independence of Taiwan, Xinjiang, Tibet or Hong Kong.

4 Explanatory Note on the Draft of the Counter Foreign Sanctions Law, which was made on April 26, 2021, and published on June 11, 2021.