On August 10, 2021, Hong Kong’s Chief Executive Carrie Lam indicated during a press conference that she supports adding China’s Anti-Foreign Sanctions Law to the constitution of Hong Kong. While speaking with reporters, Lam revealed that while discussions are still currently underway regarding whether Hong Kong will ultimately implement a local version of the law, there is strong support for such a move.

The law in question, the Anti-Foreign Sanctions Law of the People’s Republic of China (AFSL) was passed in June of 2021 and is designed to provide Beijing with a variety of tools for penalizing companies who chose to comply with western sanctions aimed at China. The law authorizes Beijing to take countermeasures when a foreign country undertakes “discriminatory restrictive measures against Chinese citizens or organizations” or more broadly when a foreign country simply “interferes with China’s domestic affairs.” The AFSL follows several recent moves by Beijing aimed at curbing the impact of western sanctions, including the creation of the “Unreliable Entity List,” the passage of a new Chinese Export Control Law, and the promulgation of the “Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures.” Together, these actions from Beijing are viewed by many as a direct response to the numerous China-related sanctions and export control measures implemented by the US over the past several years.

At the core of the AFSL is the establishment of the “Anti-Sanctions List.” Under the AFSL, any individual or entity “directly or indirectly involved in formulating, deciding, or implementing” foreign sanctions aimed at Chinese individuals or organizations may be added to the newly created list. Under the AFSL, Beijing may then choose to penalize those on the list through a variety of means, including the denial of visas, banning entry into and deportation from China, seizure and freezing of assets located in China, blocking transactions with individuals and entities in China, as well as any “other necessary measures.” In addition, the AFSL opens individuals and entities to civil liability by allowing individuals and organizations to file lawsuits seeking damages and injunctions against those who are deemed to have violated the provisions of the AFSL.

While the AFSL is likely to create compliance challenges for multinational companies operating in mainland China, forcing them to choose between obeying China's laws or adhering to US sanctions, to this point it has remained a relative unknown if or when Hong Kong would follow suit. Although Beijing has shown a growing interest in the expedited reintegration of the Special Administrative Region of Hong Kong (SAR), which changed hands from Great Britain to China in 1997, Hong Kong nonetheless today remains in some ways distinct from mainland China, albeit less so than at any point in recent history. Due to Hong Kong’s unique position as a leading center of global business, implementation of the AFSL in Hong Kong would undoubtedly compound the challenges currently presented by the AFSL in mainland China.

If you have any questions regarding the new Anti-Foreign Sanctions Law do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.