China’s recent adoption of a foreign state immunity law, the first of its kind in the country, represents a significant milestone in foreign affairs-related rule of law. The law, which takes effect on January 1, 2024, is designed to protect the rights and interests of involved parties, maintain sovereign equality among states, and enhance friendly international exchanges, ultimately contributing to China’s increased openness.
Under the new law, China shifts from the absolute theory of foreign state immunity to the restrictive theory, allowing Chinese courts to legally handle cases with foreign states as defendants under specific conditions. Previously, Chinese courts could not process cases involving foreign states as defendants or disputes related to foreign state assets, creating an imbalance.
The legislation aims to protect the legitimate rights and interests of Chinese citizens and legal entities while safeguarding China’s sovereignty, security, and development interests. It also provides exceptions related to non-sovereign actions of foreign states under which Chinese courts can exercise jurisdiction, such as disputes arising from commercial activities, personal injury, and property damage.
This legal framework reaffirms the principle of sovereign equality and demonstrates China’s commitment to international law. It counteracts baseless lawsuits against China in foreign courts and serves as a preventative and deterrent measure, aligning with rule-of-law principles.
The enactment of this law allows Chinese citizens and companies to seek redress in domestic courts against foreign states, addressing situations like the COVID-19-related lawsuits against China. It also potentially enables Chinese entities to sue foreign governments, such as the US, in Chinese courts, a significant step following the Anti-Foreign Sanctions Law enacted in 2021.
While the law expands jurisdiction in theory, its practical application will depend on demonstrating economic or physical damage in specific cases. Overall, the law aligns with China’s commitment to high-quality development and external openness, benefiting foreign investors and supporting initiatives like the Belt and Road Initiative.