PRC Foreign State Immunity Law (Draft)

Article 1:This Law is formulated on the basis of the Constitution to ensure that courts of the People’s Republic of China (PRC) correctly apply the law in adjudicating civil cases involving foreign states and their property, to protect lawful rights and interests of litigants, to safeguard national sovereignty, and to promote friendly exchanges with other countries.

Article 2:“Foreign states” as used in this Law refers to:

(1) sovereign states other than the PRC;

(2) agencies or constituent parts of the sovereign states referred to in item 1;

(3) natural persons, legal persons, and unincorporated organizations that, as authorized by the sovereign states referred to in item 1, exercise sovereign authority on their behalf and that engage in activities on the basis of such authorization.

Article 3:Foreign states and their property enjoy immunity from the jurisdiction of PRC courts, except as otherwise provided by this Law.

Article 4:Where a foreign state has expressly consented to the jurisdiction of PRC courts by any of the following means with respect to a particular matter or case, the foreign state does not enjoy immunity from the jurisdiction of PRC courts in litigation over the matter or case:

(1) by international agreement;

(2) in a written agreement;

(3) in a particular case, by submitting a written document to the PRC court handling the case to consent to its jurisdiction;

(4) by submitting a written document to the PRC through diplomatic channels and such other means to consent to jurisdiction;

(5) other means by which the jurisdiction of PRC courts is expressly consented to.

Article 5:A foreign state is deemed to have consented to the jurisdiction of PRC courts in any of the following circumstances:

(1) where it filed a lawsuit in a PRC court as a plaintiff;

(2) where it participated in a lawsuit accepted by a PRC court as a defendant, and has filed an answer or a counterclaim on the merits of the case. However, where the foreign state can prove that it could not have known facts based on which immunity can be invoked until after it has filed the answer, it may, within a reasonable period time after it knew or should have known such facts, invoke immunity from jurisdiction based on those facts;

(3) where it participated in a lawsuit accepted by a PRC court as a third party;

(4) where it filed a lawsuit as a plaintiff or filed a claim as a third party in a PRC court, and a counterclaim arising from the same legal relationship or facts as said lawsuit or claim was filed against it.

Article 6: A foreign state shall not be deemed to have consented to the jurisdiction of PRC courts in any of the following circumstances:

(1) where it answered a lawsuit only to invoke immunity;

(2) where a representative of the foreign state appeared before a PRC court as a witness;

(3) where it agreed to the application of PRC law with respect to a particular matter or in a particular case.

Article 7:Where a commercial activity between a foreign state and a natural person, legal person, or unincorporated organization of another state, including the PRC, took place in PRC territory, or has had a direct effect in PRC territory even though it took place outside PRC territory, the foreign state does not enjoy immunity from the jurisdiction of PRC courts in any litigation arising from such commercial activity.

“Commercial activities” as used in this Law refers to any transaction or investment involving goods or services or other act of a commercial nature that does not constitute an exercise of sovereign authority. In determining whether an act constitutes a commercial activity, a PRC court shall take into account the act’s nature and purpose.

Article 8: Where a contract concluded by a foreign state with an individual to obtain the labor or personal service provided by the individual was, in whole or in part, performed in PRC territory, the foreign state does not enjoy immunity from the jurisdiction of PRC courts in litigation arising from the contract, except in the following circumstances:

(1) where the labor or personal service provided by the individual was obtained to perform specific functions relating to the foreign state’s sovereign authority;

(2) where the individual was a diplomatic agent, a consular officer, a staff member of the PRC representative office of an international organization that enjoys immunity, or any other individual enjoying the relevant immunity;

(3) where the individual, when filing suit, is a national of the foreign state and has no habitual residence in PRC territory;

(4) where the foreign state and the PRC have otherwise agreed in writing.

Article 9: A foreign state does not enjoy immunity from the jurisdiction of PRC courts in litigation for compensation arising from personal injury or death or damage to movable or immovable property caused by the foreign state in PRC territory.

Article 10:A foreign state does not enjoy immunity from the jurisdiction of PRC courts in litigation over the following property matters:

(1) any right, interest, or obligation of the foreign state with respect to immovable property located in PRC territory;

(2) any right, interest, or obligation of the foreign state with respect to movable or immovable property arising by way of gift, testamentary gift, succession, or bona vacantia;

(3) any right, interest, or obligation of the foreign state that is implicated in the administration of trust property or bankruptcy property or in the liquidation of a company.

Article 11:A foreign state does not enjoy immunity from the jurisdiction of PRC courts in litigation over the following intellectual property matters:

(1) determination of ownership and related rights and interests in intellectual property of the foreign state that is protected by PRC law;

(2) infringement by the foreign state, in PRC territory, of intellectual property rights protected by PRC law and related rights and interests.

Article 12:Where a dispute arising from the commercial activity between a foreign state and a natural person, legal person, or unincorporated organization of another state, including the PRC, has been submitted to arbitration in accordance with a written agreement they have concluded, or where a foreign state has agreed to, by an international investment treaty or otherwise in writing, submit to arbitration an investment dispute between it and a natural person, legal person, or unincorporated organization of another state, including the PRC, the foreign state does not enjoy immunity from the jurisdiction of PRC courts in litigation over the following matters:

(1) the validity or interpretation of the arbitration agreement;

(2) the confirmation or setting aside of the arbitral award;

(3) other matters with respect to which laws have provided for judicial review of the arbitration.

Article 13:The property of a foreign state enjoys immunity from judicial compulsory measures, except in one of the following circumstances:

(1) where the foreign state has expressly waived immunity from judicial compulsory measures by international agreement, by an arbitration agreement, in a written contract, or by submitting a written document to a PRC court;

(2) where the foreign state has allocated or earmarked property for enforcement by judicial compulsory measures;

(3) where [the measures are taken] to enforce an effective judgment of a PRC court, and the property of the foreign state is used for commercial activities, is connected to the litigation, and is located in PRC territory.

A foreign state’s consent to the jurisdiction of PRC courts shall not be deemed a waiver of its immunity from judicial compulsory measures.

Article 14:The following property of a foreign state shall not be deemed property used for commercial activities as provided for in paragraph 1, item 3 of the previous article:

(1) property, including bank accounts, that is used or intended for use by [the foreign state’s] diplomatic mission, consular posts, special missions, missions to international organizations, or delegations to international conferences, for official business;

(2) property of a military character, or property used or intended for use in military affairs;

(3) property of the central bank of a foreign state or a regional economic integration organization, or the financial management institution thereof that performs the functions of a central bank, including cash, negotiable instruments, bank deposits, securities, foreign exchange reserve, gold reserve, and the immovable property and other property of the central bank or the financial management institution performing the functions of a central bank;

(4) property forming part of the state’s cultural heritage or archives and not for sale or intended for sale;

(5) property that is an object of scientific, cultural, or historical value used for exhibition and not for sale or intended for sale;

(6) other property that PRC courts consider shall not be deemed as being used for commercial activities.

Article 15:Where this Law has no provision on the adjudication or enforcement procedures of PRC courts with respect to foreign states and their property, apply the provisions of the civil procedure laws and other relevant laws of the PRC.

Article 16:Service of process or other litigation documents on a foreign state is to be made in accordance with the following means:

(1) following the means provided for in the international agreements concluded between the foreign state and the PRC or to which they are both parties;

(2) using other means accepted by the foreign state and not prohibited by PRC law;

(3) if service cannot be made by the means under the previous two items, [the documents] may be transmitted to the foreign state’s foreign affairs department through a diplomatic note, and service is deemed to have been made on the day the diplomatic note is sent.

A litigation document served by the foregoing means shall be accompanied by a translation into the relevant language in accordance with the provisions of international agreements concluded between the foreign state and the PRC or to which they are both parties; or, where there is no relevant international agreement, be accompanied by a translation into an official language of the foreign state.

When serving a copy of a complaint on a foreign state, the foreign state shall be notified at the same time to file an answer within three months of receiving the copy of the complaint.

After a foreign state has answered on the merits in litigation brought against it, it may not thereafter object to the means by which litigation documents were served.

Article 17:After service has been made, where a foreign state has not entered an appearance within the period of time specified by a PRC court, the court shall sua sponte ascertain whether the foreign state enjoys immunity from its jurisdiction. In a case where a foreign state does not enjoy immunity from the jurisdiction of PRC courts, the court may render a default judgment. The time to render a default judgment is to be determined by the court according to the specific circumstances of the case, but must not be earlier than six months after the service of litigation documents.

Any default judgment rendered by a PRC court against a foreign state shall be served in accordance with the provisions of article 16, paragraphs 1 and 2 of this Law.

The time limit for a foreign state to appeal from a default judgment rendered by a PRC court is six months and begins to run from the day a copy of the judgment is served.

Article 18:PRC courts shall accept certificates issued by the PRC Ministry of Foreign Affairs on the following factual issues concerning acts of State:

(1) whether the relevant state in a case is a “foreign state” under article 2, item 1 of this Law;

(2) whether and when a diplomatic note provided for in article 16 was delivered;

(3) other factual issues concerning acts of State.

The PRC Ministry of Foreign Affairs may issue certificates to PRC courts on other issues concerning foreign affairs and such other major state interests.

Article 19: The provisions of this Law do not affect the privileges and immunities enjoyed by foreign diplomatic missions, consular posts, special missions, missions to international organizations, delegations to international conferences, and relevant persons of the foregoing institutions under PRC laws and regulations and the international agreements the PRC has concluded or to which it is a party.

The provisions of this Law do not affect the privileges and immunities enjoyed by foreign heads of state, heads of government, foreign ministers, and other officials of comparable status under PRC laws and regulations and the international agreements the PRC has concluded or to which it is a party.

Article 20:Where foreign states accord the PRC and its property narrower immunity that is provided by this Law, PRC courts may apply the principle of reciprocity.

Article 21:Where international agreements the PRC has concluded or to which it is a party have provisions different from those of this Law, apply the provisions of the international agreements, except for clauses with respect to which the PRC has made a reservation.

Article 22：This Law takes effect on xxxx-xx-xx.