In this episode of Trade Compliance Brief - Export Control and Sanctions Insights, we unpack a landmark judicial development out of China that fundamentally alters how multinational companies manage international sanctions clauses.
The Supreme People's Court of China recently published a representative case in which the Shanghai Maritime Court ruled against a Singaporean carrier for refusing to transport goods for a Hong Kong shipper. The carrier's defense? The shipper was on a foreign sanctions list. The court's response? Under Article 12 of China's Anti-Foreign Sanctions Law (AFSL), compliance with foreign unilateral sanctions is not a valid defense for breach of contract.
Key Takeaways in this Episode:
The Power of Article 12: Why Chinese courts consider the AFSL an overriding mandatory provision that supersedes your contractual sanctions clauses.
The Danger of Overcompliance: How acting with excessive caution regarding foreign entity lists (like the US BIS Entity List) can now expose your business to severe litigation risk and financial penalties in China.
Future Enforcement Trends: Why experts predict a significant rise in Chinese companies using the AFSL as an affirmative litigation tool.
Whether you are drafting carrier agreements or managing global supply chain risks, understanding this shift away from traditional contractual "safe harbors" is critical.
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