PRC ADOPTS COMMERCIAL EXCEPTION TO STATE IMMUNITY

The PRC has passed a new law which will apply the “restrictive” approach to foreign state immunity with effect from 1 January 2024.  As a result, foreign states will not be granted immunity from suit or execution in the PRC in respect of certain commercial activities and assets.  The PRC government has indicated that the same approach should apply in Hong Kong and Macau.

The Foreign State Immunity Law was adopted by the Standing Committee of the National People’s Congress (“SCNPC“) on 1 September 2023.  A statement by the Ministry of Foreign Affairs of the PRC said the law aimed to improve the PRC’s state immunity system in line with international practice.

The new law marks a departure from the “absolute” doctrine of immunity previously followed by the PRC (which does not provide any exception for commercial activities).  The PRC joins many other jurisdictions in adopting the restrictive approach (including the USA, the UK, India, Singapore, Australia, New Zealand and most member states of the European Union).

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