A tale of two immunities: the ongoing transition from absolute to restrictive sovereign immunity in China

ABSTRACT

This article examines the doctrine of sovereign immunity and its implications in the context of China’s evolving stance on this principle. The paper delves into the historical foundations and theoretical underpinnings of sovereign immunity, distinguishing between absolute immunity and the more recent concept of restrictive immunity. The analysis focuses on China’s position on sovereign immunity, considering its historical adherence to absolute immunity and its endorsement of the United Nations Convention on Jurisdictional Immunities of States and Their Property. The paper also addresses China’s law on foreign state immunity and critically examines the impact of this law and its difference compared with the FSIA and UN Convention. Drawing on comparative legal analysis and case studies, the paper evaluates China’s shift from absolute to restrictive immunity, taking into account the interests of the private sector and the need for a fair and predictable legal framework. It explores the challenges and benefits associated with this transition, emphasizing the importance of harmonization with international legal norms and the enhancement of China’s reputation as a reliable player in global commerce. Ultimately, the paper argues that China’s transition towards restrictive immunity is not only necessary to protect its economic interests but also crucial for maintaining diplomatic credibility and fostering international cooperation. By embracing this shift, China can contribute to the harmonization of global legal norms and enhance its standing as a responsible participant in the international legal landscape.

KEYWORDS:

• Sovereign immunity
• China’s law on foreign state immunity
• the Congo case
• FSIA
• the UN Convention

Acknowledgements

The author wishes to acknowledge the recommendations of the two anonymous reviewers, whose comprehensive evaluations addressed both foundational topics and recent regulatory shifts. Additionally, the editorial expertise provided by the team at the Asia Pacific Law Review, which aided in refining the article, is also duly recognized.

Notes

1 H Fox and P Webb, The Law of State Immunity (3rd edn, OUP, 2013) 1. See also M Brenninkmeijer and F Gélinas, ‘The Problem of Execution Immunities and the ICSID Convention’ (2021) 22(3) The Journal of World Investment & Trade 429; J Martin Hunterand JG Olmedo, ‘Enforcement/Execution̓ of ICSID Awards Against Reluctant States’ (2018) 12(3) The Journal of World Investment & Trade 307; S McKenzie, ‘Sovereign Immunity of Uncrewed Surveillance Vehicles and the Limits of Enforcement Jurisdiction’ (2023) Nordic Journal of International Law (published online ahead of print 2023) <https://doi.org/10.1163/15718107-bja10062>.

2 D Gaukrodger, ‘OECD Working Papers on International Investment: Foreign State Immunity and Foreign Government Controlled Investors’ (OECD, 2010) 7, 11, 13–14.

3 Ibid, 11; The movement started in civil law jurisdiction; following the Foreign Sovereign Immunities Act of 1976 adopted in United States, other common law states including the UK, Canada, Australia, South Africa and Singapore also followed the US model to enact national legislation to incorporate the restrictive approach.

4 William Harvey Reeves, ‘Absolute or Restricted Immunity for Foreign Sovereign Litigants – What Is the Law in the United States’ (1964) 8 Sec Int’l & Comp L Bull 11.

5 D Qi, ‘State Immunity, China and Its Shifting Position’ (2008) 7(2) Chinese Journal of International Law 312.

6 Guan Feng (James), ‘Do State-Owned Enterprises Enjoy Sovereign Immunity’ China Law Insight (27 September 2018) <www.chinalawinsight.com/2018/09/articles/dispute-resolution/do-state-owned-enterprises-enjoy-sovereign-immunity/>.

7 Andrew Coleman and Jackson Nyamuya Maogoto, ‘Westphalian Meets Eastphalian Sovereignty: China in a Globalized World’ (2013) 3 AsianJIL 237.

8 The State Council Information Office of The People’s Republic of China, ‘China Adopts Foreign State Immunity Law’ Xinhua (2 September 2023) <http://english.scio.gov.cn/chinavoices/2023-09/02/content_111200459.htm>; John Coyle, ‘China’s Draft Law on Foreign State Immunity Would Adopt Restrictive Theory’ Conflict of Laws.net (2023) <https://conflictoflaws.net/2023/chinas-draft-law-on-foreign-state-immunity-would-adopt-restrictive-theory/>; For example, in Article 7 of China’s law on Foreign State Immunity, a commercial activities exception has been provided. According to this article, when some conditions are met, a foreign state is not shielded from legal action resulting from commercial operations. Additionally, there is an arbitration exception in the Law. Besides, referring to Article 9, a foreign state is not immune from liability ‘for personal injury or death, or for damage to movable or immovable property, caused by that foreign state within the territory of the People’s Republic of China’. What’s more, in accordance with Article 12, a foreign state that has consented to arbitration of disputes is not immune from legal action with regard to ‘the effect and interpretation of the arbitration agreement’ and ‘the recognition or annulment of arbitral awards’. The mentioned articles of the Law all illustrate that China is changing its attitude and accept restricted immunity in its laws.

9 Energoinvest DD v the Democratic Republic of Congo and Société Nationale d’Electricité (S.N.E.L.) (II) ICC Case No 11442/KGA.

10 See Reports of International Arbitral Awards (RIAA), United Nations Publication (Vol IX, 223–24) 331–32 <https://legal.un.org/riaa/volumes/riaa_IX.pdf>.

11 Rosalyn Higgins Dbe Qc, ‘Recent Developments in the Law of Sovereign Immunity in the United Kingdom’ in Themes and Theories (Oxford, 2009; online edn, Oxford Academic, 22 March 2012) 333 <https://doi.org/10.1093/acprof:oso/9780198262350.003.0022>.

12 Jackson v People’s Republic China, 794 F2d 1494 (11th Cir 1986) [Jackson v China]; see also Jill A Sgro, ‘China’s Stance on Sovereign Immunity: A Critical Perspective on Jackson v. People’s Republic of China’ (1983) 22 Colum J Transnat’l L 101.

13 Coyle (n 8).

14 Mariya Tait Slys, ‘Chapter IV – Extraterritorial Consular Jurisdiction in China’ in Exporting Legality: The Rise and Fall of Extraterritorial Jurisdiction in the Ottoman Empire and China (Graduate Institute Publications, 2014) <https://books.openedition.org/iheid/802>.

15 Yilin Ding, ‘Absolute, Restrictive, or Something More: Did Beijing Choose the Right Type of Sovereign Immunity for Hong Kong?’ (2012) 26 Emory Int’l L Rev 1021.

16 Ferdous Rahman, ‘Questioning Chinese Government’s Stand for Sovereign Immunity’ (2017) 9(1) Transnational Corporate Review 321.

17 R O’Brien, ‘Sovereign Immunity and the People’s Republic of China’ (1983) 13(2) Hong Kong Law Journal 202. See also Julien Chaisse and Xueliang Ji, ‘Hong Kong’s Participation in International Dispute Settlement: Deviations from Conventional Sovereignty’ (2022) 17(2) Asian Journal of WTO Law & Health Policy 307.

18 Hong Kong Aircraft [1953] AC 70.

19 J Huang and J Ma, ‘Immunities of States and Their Property: The Practice of the People’s Republic of China’ (1988) Hague Yearbook of International Law 163.

20 See O’Brien (n 17) 203–04.

21 See Qi (n 5) 318–19.

22 Jackson v The People’s Republic of China 794 F 2d 1490 (11th Cir 1986).

23 Ibid, 1491–92.

24 Ibid, 1494. 孙昂, ‘国家豁免案件的法律适用问题研究——在司法与外交复合语境中的探讨’ (2021) 2 国际法研究 4 (Ang Sun, ‘A Study on the Application of Law in Cases of State Immunity: An exploration in the Compound Context of Justice and Diplomacy’ (2021) 2 International Law Studies 4).

25 See Qi (n 5) 323.

26 JA Sgro, ‘China’s Stance on Sovereign Immunity: A Critical Perspective on Jackson v. People’s Republic of China’ (1983) 22(1) Columbia Journal of Transnational Law 106, 119–20; JS Mo, ‘Issues of Sovereign Immunity in the Australia-China Trade and Investment’ (1991) 7 Queensland University of Technology Law Journal 61.

27 Scott v People’s Republic of China, No CA3-79-0836-d (ND Tex).

28 See Huang and Ma (n 19) 172–73.

29 See Mo (n 26) 62.

30 The United Nations Convention on Jurisdictional Immunities of States and Their Property (adopted 2 December 2004) A/RES/59/38 Art 30.

31 ‘CHAPTER III: PRIVILEGES AND IMMUNITIES, DIPLOMATIC AND CONSULAR RELATIONS, ETC’ (United Nations Treaty Collection, 16 July 2023) <https://treaties.un.org/pages/ViewDetails.aspx?src=IND&mtdsg_no=III-13&chapter=3&clang=_en>.

32 Ibid.

33 Article 4 of the Law: ‘The Law enters into force from the date of adoption’. For the official Chinese version, See Law of the People’s Republic of China on Judicial Immunity from Measures of Constraint for the Property of Foreign Central Banks (Zhonghua Renmin Gongheguo Waiguo Zhongyang Yinhang Caichan Sifa Qiangzhi Cuoshi Huomian Fa) and Gazette of the Standing Committee of the National People’s Congress of the People’s Republic of China (Quanguo Renmin Daibiao Dahui Changwu Weiyuanhui Gongbao), No 7, 2005, Published on 15 November 2005, Beijing, 544.

34 CH Wu, ‘One Country, Two State Immunity Doctrines: A Pluralistic Depiction of the Congo Case’ (2014) 9(2) National Taiwan University Law Review 200, 205.

35 Qi (n 5) 316.

36 L Zhu, ‘State Immunity from Measures of Constraints for the Property of Foreign Central Banks: The Chinese Perspective’ (2007) 6(1) Chinese Journal of International Law 81.

37 Morris v People’s Republic of China, 478 F Supp 2d 561 (SDNY 2007); Jackson v The People’s Republic of China 794 F 2d 1490, 11th Cir (1986).

38 Qi (n 5) 325.

39 Wu (n 34) 200.

40 Y Ding, ‘Absolute, Restrictive, or Something More: Did Beijing Choose the Right Type of Sovereign Immunity for Hong Kong’ (2012) 26(2) Emory International Law Review 1024.

41 FG Hemisphere Associates LLC v Democratic Republic of Congo (Congo Case) [2009] 1 HKLRD 410 [43], [44], [71]; [2010] 2 HKLRD 66 [47]; [2011] 14 HKCFAR 95 [138].

42 Elizabeth Chan, ‘The Vulture Swoops and Devours Its Prize: The Unsatisfactory Law of State Immunity in Democratic Republic of Congo v FG Hemisphere Associates LLC’ (2013) 19 Auckland U L Rev 145.

43 See Congo Case (n 41) [170].

44 Ibid, [172].

45 Ibid, [174]–[178].

46 A Butler, ‘Democratic Republic of the Congo v. FG Hemisphere Associates LLC – Hong Kong Conforms with China by Repudiating the Common Law Commercial Exception to Sovereign Immunity’ (2012) 20(2) Tulane Journal of International and Comparative Law 484.

47 UNCTAD (Investment Policy Hub, 5 April 2015) <http://investmentpolicyhub.unctad.org/IIA/CountryBits/93>; According to United Nations Conference on Trade and Development website, Hong Kong has entered into BITs with 17 economic entities compared to 130 entered by China.

48 See Congo Case (n 41) 379 and 392.

49 Democratic Republic of the Congo & Others v FG Hemisphere Associates LLC FACV No 5 of 2010 (8 June 2011) and (8 September 2011) CFA, Basic Law Bulletin (2012) 16, <www.doj.gov.hk/tc/publications/pdf/basiclaw/basic14_3.pdf>.

50 William S Dodge, ‘China’s Draft Law on Foreign State Immunity Would Adopt Restrictive Theory’ Transnational Litigation Blog (2023) <https://tlblog.org/chinas-draft-law-on-foreign-state-immunity-would-adopt-restrictive-theory/>; 中华人民共和国最高人民法院, ‘栗战书主持召开十三届全国人大常委会第一百三十次委员长会议决定十三届全国人大常委会第三十八次会议12月27日至12月30日在京举行’ 新华网 (2022) <www.court.gov.cn/zixun-xiangqing-382651.html> (The Supreme People’s Court of the People’s Republic of China, ‘Li Zhanshu presided over the 130th Chairman’s Meeting of the Standing Committee of the 13th National People’s Congress, which decided that the 38th session of the Standing Committee of the 13th National People’s Congress will be held in Beijing from December 27 to December 30’ Xinhuanet (2022)); 李庆明, ‘加强涉外领域立法的重要成果——《外国国家豁免法》草案述评’ 人民网 (2023) <http://world.people.com.cn/n1/2023/0109/c1002-32602208.html> (Qingming Li, ‘Important achievements in strengthening legislation in the foreign-related field-Review of the draft Law on the Immunity of Foreign States’ People’s Daily online (2023)); 徐航, ‘这6件法律案将提请本次常委会会议继续审议’ 中国人大网 (2022) <www.npc.gov.cn/npc/kgfb/202212/cbc42cfdf64e40cd9fe5a8e3d46246e3.shtml> (Hang Xu, ‘These six bills will be submitted to the Standing Committee for further deliberation at this meeting’ the Chinese net (2022)).

51 Coyle (n 8).

52 See e.g. Zhujun Zhao and Jianping Guo, ‘Settlement of Belt and Road Disputes Between China and Central Asian Countries’ (2021) 29(1) Asia Pacific Law Review 201.

53 Christopher Forsyth and Nitish Upadhyaya, ‘The Spectre of Crown Immunity After the End of Empire in Hong Kong and India’ (2013) 21(2) Asia Pacific Law Review 253; HWR Wade and CF Forsyth, Administrative Law (10th edn, OUP, 2009) 698; Beatrice I Bonafé, ‘Of Rights and Remedies: Sovereign Immunity and Fundamental Human Rights Enzo Cannizzaro’ in From Bilateralism to Community Interest: Essays in Honour of Bruno Simma (Ulrich Fastenrath and others eds, 2011) 825; Dbe Qc (n 11) 330.

54 ‘CHAPTER III’ (n 31).

55 Ibid.

56 Philippa Webb, ‘The United Nations Convention on Jurisdictional Immunities of States and Their Property’ <https://legal.un.org/avl/pdf/ha/cjistp/cjistp_e.pdf>.

57 See The United Nations Convention on Jurisdictional Immunities of States and Their Property (adopted 2 December 2004) A/RES/59/38 Annex.

58 Ibid, Art 2 para 1(b).

59 ‘Report of the International Law Commission on the Work of its Forty-third Session’ (29 April–19 July 1991) UN Doc A/46/10, at 17 <https://legal.un.org/ilc/sessions/43/index.shtml>.

60 See generally A Dickinson, ‘State Immunity and State-Owned Enterprises’ (Clifford Chance Report, December 2008) <http://business-humanrights.org/sites/default/files/media/bhr/files/Clifford-Chance-State-immunity-state-owned-enterprises-Dec-2008.PDF>.

61 The UN Convention 2004 (n 57) Art 2 para 1(c).

62 Danny A Hoek, ‘Foreign Sovereign Immunity and Saudi Arabia v. Nelson: A Practical Guide’ (1995) 18 HastingsInt’l & Comp L Rev 620.

63 Michael A Tessitore, ‘Immunity and the Foreign Sovereign: An Introduction to the FSIA’ (1999) 73(10) Florida Bar Journal 48.

64 Argentine Republic v Amerada Hess Shipping Corp 488 US 428, 439 (1989).

65 The Foreign Sovereign Immunity of 1976 (FSIA) § 1603(b).

66 BP Chemicals Ltd v Jiangsu SOPO Corporation (Group) Ltd 420 F3d 810 (2005).

67 Dole Foods Co v Patrickson 538 US 468 (2000).

68 TNB Fuel Services SDN BHD v China National Coal Group Corporation [2017] HKCFI 1016, para 14.

69 See FSIA (n 65) § 1603(d).

70 Republic of Argentina v Weltover 504 US 607 (1992).

71 See FSIA (n 65) § 1603(e), 1605(a)(2).

72 See D Etlinger, ‘Sovereign Wealth Fund Liability: Private Investors Left out in the Cold’ (2010) 18(1) University of Miami Business Law Review 82.

73 GK Foster, ‘When Commercial Meets Sovereign: A New Paradigm for Applying the Foreign Sovereign Immunities Act in Crossover Cases’ (2014) 52(1) Houston Law Review 380.

74 Ibid, 414.

75 Law on Foreign State Immunity of the People’s Republic of China, Article 3 <https://conflictoflaws.net/News/2023/03/Law-on-Foreign-State-Immunity-of-China-1.pdf> (hereinafter the Law).

76 Ibid, Article 2.

77 Ibid, Article 18(1).

78 Ibid, Article 4.

79 Ibid, Article 5.

80 Ibid, Article 5.

81 Ibid, Article 6.

82 Ibid, Article 7.

83 Ibid, Article 7.

84 Ibid, Article 7.

85 Ibid, Articles 13 and 14.

86 Ibid, Article 13.

87 Ibid, Article 13.

88 Ibid, Article 14.

89 Ibid, Article 14.

90 Ibid, Article 20.

91 Ibid, Article 2.

92 The UN Convention, Article 2(1)(b).

93 Ibid, Articles 7–9.

94 FSIA 1605(a)(1).

95 Ibid, 1607.

96 Ibid, 1605(a)(2).

97 The Law, Article 7.

98 FSIA, § 1603(d).

99 UN Convention, Article 2(2).

100 The Law, Articles 13 and 14.

101 Ibid, Article 13(3).

102 FSIA, 1610(a).

103 The Law, Article 7.

104 Chimène Keitner, ‘China’s Responsibility for COVID-19: Are Lawsuits the Answer?’ Illinois Global Institute (2020) <https://cgs.illinois.edu/news/2020-10-21/chinas-responsibility-covid-19-are-lawsuits-answer>.

105 郭玉军, 徐锦堂, ‘论国家豁免的相对性’ (Yujun Guo and Jintang Xu, ‘On the Relativity of State Immunity’) (2003) 3 <www.sinoss.net/uploadfile/2010/1130/2907.pdf>.

106 黄进,国际私法 (法律出版社, 1999) 195 (Jin Huang, Private International Law (Law Press, 1999) 195).

107 Guo and Xu (n 105).