Procedural Rules for the PRC Foreign State Immunity Law Released

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In late 2023, the Chinese government released the Foreign State Immunity Law of the People’s Republic of China (FSIL), the first legislation on sovereign immunity in China.[1] The FSIL, which became effective on 1 January 2024, establishes the general principle of jurisdictional immunity for foreign states and their property in China and defines the exceptions in which Chinese courts may adjudicate civil cases involving foreign states and their property.

Recently, the PRC Supreme People’s Court (SPC) issued procedural guidance on implementation of the FSIL. On 26 March 2025, the SPC released the Notice on Procedural Matters Concerning Civil Cases Involving Foreign State Immunity (Notice), which provides guidance to courts on procedural issues such as case acceptance, jurisdiction, service of process, and jurisdictional review of civil cases brought under the FSIL.

The FSIL and the Notice provide a clear legal basis for Chinese courts to hear civil cases involving a foreign state or its property within the immunity exceptions under the FSIL. The Notice, when read with the FSIL, may also provide a mechanism to enforce investment treaty awards against foreign state property in China.

We highlight key provisions of the FSIL and potential implications of the Notice below.

Circumstances in which Chinese courts may exercise jurisdiction over foreign states

The FSIL adopts a “restrictive” approach to foreign state immunity, which departs from China’s previous policy of “absolute” immunity and allows enumerated exceptions to foreign state immunity.

Under the FSIL, Chinese courts may exercise jurisdiction over the following types of civil disputes involving foreign states and their property:

1. Express consent to jurisdiction: where a foreign state expressly consents to Chinese court jurisdiction through international treaty, written agreement, written submission to the court, or diplomatic channel (Article 4);
2. Voluntary participation in Chinese court proceedings: where a foreign state initiates litigation as a plaintiff or participates as a defendant or third party in proceedings before a Chinese court (Article 5);
3. Commercial activity disputes: where a dispute arises from commercial activity between the foreign state and an organization or individual of another state, including China, which takes place in China or takes place outside of China but causes a direct effect within China (Article 7);
4. Employment or service contract disputes: where a dispute arises from a contract entered into by a foreign state for the procurement of labor or services provided by an individual that is performed, in whole or in part, in China (Article 8);
5. Tort claims: where a claim for compensation arises due to personal injury, death, or damage to movable or immovable property caused by an act of a foreign state in China (Article 9); and
6. Intellectual property disputes: where a dispute arises concerning the determination of a foreign state's ownership of and related rights and interests in intellectual property protected under Chinese law or concerning allegations of infringement by a foreign state, in China, of intellectual property and related rights and interests protected under Chinese law (Article 11).

The FSIL also contains provisions that allow a Chinese court to hear arbitration cases involving a foreign state.

Article 12 of the FSIL addresses exceptions to foreign state immunity from suit. Article 12 provides that where a dispute arising from commercial activity between a foreign state and an organization or individual of another state, including China, is submitted to arbitration according to a written agreement or an international investment treaty, the foreign state does not enjoy immunity from the jurisdiction of Chinese courts in proceedings concerning (i) the validity of an arbitration agreement or (ii) the recognition, enforcement, or setting aside of an arbitral award.

Articles 13 and 14 of the FSIL address foreign state property immunity from execution. Article 13 states that foreign state property is generally immune from execution unless an exception to immunity applies. Article 14 outlines the exceptions to immunity and provides that foreign state property will not be immune from execution where (i) a foreign state has expressly waived immunity from execution in an international treaty, written agreement, written document submitted to the court or through other means; (ii) a foreign state has allocated or designated property for judicial enforcement; or (iii) foreign state property located in China is used for commercial activity related to the proceedings.

A potential path to enforce international investment arbitration awards against foreign state property in China

Before the FSIL, there was no clear legal basis to enforce investment treaty awards against foreign states in China. 

Article 12 of the FSIL clarifies this issue by providing an exception to foreign state immunity from suit in proceedings to recognize and enforce an arbitration award rendered pursuant to a written agreement or an international investment treaty.

When determining whether to recognize and enforce an investment treaty award, Chinese courts may refer to the legal bases provided in international treaties to which China has acceded.

China is a signatory to the New York Convention, which provides a basis to enforce foreign arbitration awards in China, but made a reservation when signing the Convention that limits its enforcement commitments to disputes arising from a “commercial” relationship. In practice, Chinese courts interpret a “commercial” relationship to exclude disputes between a foreign investor and host state government.[2] Consequently, enforcing an investment treaty award pursuant to the New York Convention may still not be feasible under the current legal framework, even with the promulgation of the FSIL as supplemented by the Notice.

China is also a signatory to the ICSID Convention, pursuant to which it committed to enforce awards rendered under the ICSID Convention as if they were “final judgments of Chinese courts”. While China has not yet issued regulations or guidance specifically on the enforcement of ICSID awards, Article 12 of the FSIL provides a legal basis for courts to accept jurisdiction in proceedings to enforce an investment treaty award against a foreign state. The Notice further provides procedural guidance on the handling of these types of cases under the FSIL. The FSIL and the Notice may thus create a potential pathway to seek recognition and enforcement of an ICSID award against a foreign state in China. These provisions may also provide a foreign state a legal basis to enforce an adverse costs award against a losing investor in China.

To execute an investment treaty award against foreign state property in China, an exception in Article 14 of the FSIL must apply. It is uncommon for foreign states to incorporate express waivers of immunity in investment treaties or otherwise or to allocate or designate property for judicial enforcement, as contemplated in Article 14. Whether foreign state property located in China is used for commercial activity related to the proceedings, as further contemplated in Article 14, will be fact-dependent.

Procedural rules for civil cases involving foreign states and their property

The Notice introduces procedural rules for the handling of cases under the FSIL in Chinese courts. These rules include the requirements for case acceptance, jurisdiction, service of process, and jurisdictional review, as we summarize below.  

1. Case acceptance: The Notice clarifies the minimum criteria for a Chinese court to accept a complaint against a foreign state or its property. When reviewing an application to file complaint against a foreign state or its property, Article 1 requires a Chinese court to examine whether the complaint clearly states an exception to foreign state immunity under the FSIL. If it does not, the court must seek clarity from the applicant. If the applicant fails to provide the requisite clarity, the court may reject the application.
2. Jurisdiction: The Notice clarifies which courts have jurisdiction over cases involving foreign states or their property. Article 2 provides that first instance civil cases under the FSIL are subject to the jurisdiction of intermediate courts in provinces, autonomous regions, and certain municipalities where foreign-related civil and commercial cases are handled, as well as maritime, financial, and intellectual property courts. The Notice lists 31 courts that have jurisdiction over cases under the FSIL and requires cases accepted by other courts to be transferred to a court with jurisdiction.
3. Service of process: The Notice provides guidance on service of process in cases involving foreign states or their property. Article 3 requires service of summons and other legal documents to be in accordance with the international treaties between China and the foreign state, or other methods accepted by the foreign state and not prohibited by Chinese law.[3] If neither method is successful, the SPC may serve documents through diplomatic channels using diplomatic notes.
4. Jurisdiction review procedures: The Notice provides further guidance on Chinese court review of jurisdiction over cases involving foreign states or their property. Articles 5 and 6 require that if a foreign state objects to jurisdiction on the basis of sovereign immunity, the court must comprehensively review and determine whether the foreign state enjoys jurisdictional immunity under the FSIL. Even if a foreign state fails to object to jurisdiction or fails to appear in court, the court must still consider whether the foreign state enjoys immunity under the FSIL. During this review, the court may consider opinions of “the parties” as appropriate. The Notice does not clarify whether “the parties” is limited to parties to the proceedings or whether third party briefing may be considered.

Concluding remarks

The FSIL substantially changed the foreign state immunity position in China. It provides the legal framework to first clarify that foreign states generally enjoy immunity from suit and execution in civil proceedings in China unless an enumerated exception to immunity applies. The FSIL aligns with the prevailing position internationally and clarifies the circumstances in which foreign states and their property will not be immune from suit or execution in civil cases in China. The Notice provides guidance on implementation of the FSIL and clarity on core procedural issues for parties and Chinese courts when handling cases under the FSIL. The FSIL is still in its infancy, and no cases under the FSIL have been reported. How the FSIL will be applied in practice, including the enforcement of investment treaty awards, is to be determined.

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