Introduction

On 22 July 2026, China's State Council published the Provisions on Exit and Entry Administration (《国务院关于出境入境管理的规定》), promulgated as State Council Decree No. 841. Decree No. 841 is supposed to address issues that have arisen since the PRC Exit and Entry Administration Law entered into force in 2013 and its primary objectives according to officials are to strengthen the safety of Chinese citizens traveling abroad, to tighten the framework governing foreign nationals' entry, and to regulating the immigration intermediary services industry.

However, what Decree No. 841 also does is to formally link Chinese citizens’ freedom to leave the country to China's export control and technology security regime. That linkage has significant implications for multinational companies, technology enterprises, and individuals engaged in cross-border work involving China.

Legislative Context: A Broader Regulatory Architecture

Decree No. 841 is to be seen in the context of a series of State Council regulations issued in recent years that together amalgamate national security considerations into commercial and cross-border governance:

• State Council Decree No. 837 (Provisions on Outbound Investment, effective since 1 July 2026), restricts the transfer of export-controlled goods, technology, services, and data through personnel dispatch, overseas work assignments, remote technical guidance, and cross-border training programs. Where Decree No. 837 addresses the act of transferring technology, Decree No. 841 now addresses the person carrying it.

• State Council Decree No. 835 (Regulations on Countering Improper Extraterritorial Jurisdiction by Foreign States, effective 7 April 2026) established a "Malicious Entity List" targeting foreign organizations and individuals who promote or implement extraterritorial measures deemed contrary to Chinese interests, with consequences including entry bans, asset freezes, and trade restrictions. Decree No. 841 now extends that framework to the personal mobility of Chinese and foreign nationals trying to cross the China borders.

• State Council Decree No. 834 (Provisions on Industrial and Supply Chain Security, effective 31 March 2026) introduced a national security framework for supply chain governance. 

Together, these instruments place compliance with foreign export controls, due diligence requirements, and trade restrictions in increasing tension with obligations under Chinese law. For more details on these prior decrees also have a look at our following publications:

https://www.advant-beiten.com/en/news/new-chinese-outbound-investment-regulations-opportunities-through-compliance-for-chinese-investors-in-germany
https://www.advant-beiten.com/en/news/the-eus-foreign-subsidies-regulation-and-the-chinese-blocking-response-navigating-the-escalating-tensions-between-brussels-and-beijing
https://www.advant-beiten.com/en/news/chinas-new-counter-sanctions-rules-growing-risks-for-global-companies

Core Content: What Decree No. 841 regulates 

State Council Decree No. 841 is a significant regulatory development, not because it creates entirely new government powers, but because it codifies, expands, and integrates existing exit ban authority into a broader cross-border compliance architecture that now spans export controls, technology security, entity-list designations, and immigration intermediary services. For multinational companies, the practical message is that border administration in China is no longer purely a travel and immigration matter. Personnel decisions, technology transfer practices, visa documentation processes, and intermediary service arrangements all now carry regulatory dimensions that require active compliance attention. 

Exit Restrictions on Chinese Citizens (Article 4)

Article 4 sets out three categories of circumstances under which Chinese citizens may be prohibited from departing China:

• Article 4(1): Chinese citizens who have been subjected to administrative detention for fraudulently obtaining exit-entry documents, or for illegally crossing a border, may be barred from leaving China for a period of six months to three years, calculated from the date on which the penalty has been fully served.

• Article 4(2): Chinese citizens who engage in unlawful or criminal conduct abroad that endangers national security or national interests may be prohibited from leaving China for six months to three years following return to China, upon a decision by the competent State Council authority or, after verification by an overseas diplomatic mission, by the provincial-level government of the citizen's domicile.

• Article 4(3): where Chinese citizens have violated export control, technology import and export administration, or related regulations, and that violation "may endanger national industrial or technological security" (可能危害国家产业安全、技术安全), the Ministry of Commerce (MOFCOM) and other relevant State Council departments may prohibit that person from leaving China. No fixed time limit is prescribed for this category. While the phrase "may endanger" sets a precautionary threshold and while it remains undefined what constitutes a threat to "industrial or technological security", the provision requires an actual violation of applicable regulations. That said, with the breadth of China's export control and technology import-export regulatory frameworks, the practical boundary of this provision appears rather fluid, and the absence of a maximum duration means it could, in principle, persist indefinitely, subject to determination by MOFCOM and other relevant departments. For Chinese nationals employed in or contributing to technology-sensitive activities, the undefined scope of Article 4(3) creates a new category of risk in the context of international secondments, research collaboration and cross-border technology projects.

Entry Restrictions on Foreign Nationals (Article 5)

Article 5 addresses the entry restriction on foreign nationals into China through three mechanisms:

• A foreign national who provides false materials or makes false statements when applying for a Chinese visa abroad or at a port of entry may be barred from entering China for one to five years.

• A foreign national who has received criminal punishment for obstructing border administration, or administrative punishment for document fraud or illegal entry/exit, may also be barred from entry for one to five years following completion of the relevant penalty.

• Foreign nationals placed on China's countermeasure list (反制清单), Unreliable Entity List (不可靠实体清单), or Malicious Entity List (恶意实体清单), or subjected to countermeasures or restrictive measures, are subject to entry denial by the immigration administration or visa authorities as a matter of standard enforcement. This is significant because it translates what were previously entity-level designations — affecting commercial rights, market access, and investment activity — into a personal border enforcement consequence. An executive, employee, or adviser associated with a company listed on any of the aforesaid lists may, in their individual capacity, be denied entry into China, independently of any individual finding against them. This creates a material new dimension of exposure for individuals whose employers or clients are, or may become, subject to Chinese countermeasure or entity-list designations.

Notice Requirements and the National Security Exception (Article 6)

A person subject to an exit ban must, in principle, receive written notification of the factual basis, legal grounds, and available remedies. The decision-making authority is required to notify the National Immigration Administration promptly. However, the obligation is qualified by a significant exception: where the matter involves a potential impact on national security or a criminal investigation, the authorities may elect not to notify the individual. Given the overlap between export control violations and national security considerations, this exception has the potential to also become applicable in export control related violations.

Responsibility for Application Materials (Article 3)

Article 3 requires that the stated grounds for any exit, entry, stay, or residence application be truthful and lawful. Immigration and visa authorities are empowered to question applicants and request documents, materials, and electronic data during identity and purpose verification. Article 3 places explicit responsibility on the issuing party of any visa invitation letter or supporting application material: that party must take responsibility for the authenticity of the invitation and the matters being certified and must cooperate with authorities in verifying the information. This transforms a routine administrative function — issuing a visa invitation letter — into a potential legal exposure if the underlying information is later found to be inaccurate.

Regulation of Immigration Intermediaries (Articles 7–13)

This chapters establishes a governance regime for entities providing exit-entry advisory, document-processing, and procedural services in China. Key features include:

• Newly established intermediary agencies must register with the local immigration authority within 15 days of establishment; intermediary agencies already operating when the Decree enters into force have 90 days to complete registration.

• Registered agencies must meet conditions including but not limited to lawful establishment; no criminal record for intentional crimes by the legal representative; qualified personnel with relevant knowledge; and robust management systems covering data security and compliance.

• Overseas enterprises and institutions are prohibited from providing exit-entry intermediary services within China. Foreign-invested enterprises legally established in China may, however, continue to provide such services subject to compliance with Chinese law.

• Prohibited conduct for registered agencies includes publishing false information, assisting clients in fraudulently obtaining visas or travel documents, disclosing client personal information, and organizing or facilitating cross-border illegal activities.

• Intermediaries are specifically required to refrain from assisting public officials or military personnel in unlawfully obtaining foreign nationality, overseas permanent residence, or other exit-entry documents — and must report such requests to supervision authorities.

Violations for individuals / organizations issuing false application materials or intermediaries violating the obligations imposed on them Decree No. 841 face monetary fines (between RMB five to fifty thousand), confiscation of illegal gains and licenses/business suspension or revocation.

Outlook and Practical Implications

From an international corporate perspective, the most significant development in Decree No. 841 is the formal integration of China's export control framework with personal mobility restrictions. For technology enterprises — particularly those in semiconductors, artificial intelligence, advanced manufacturing, biomedicine, aerospace, quantum technology and other tech-sensitive areas — this means that personnel involved in export-controlled activities face a compliance dimension to their travel that previously did not exist in codified form. 

Decree No. 841 establishes an explicit statutory framework under which personnel mobility can be constrained in the context of acquisitions, investments, or joint ventures involving Chinese technology companies. 

The direct linkage of entity-list designations to personal entry denial introduces a qualitatively new risk for multinational companies. A designation of an employer — whether on the Malicious Entity List, Unreliable Entity List, or Countermeasure List — can now translate automatically into an entry ban for the employer's affiliated individuals. Companies should assess whether business relationships create exposure to Chinese designation regimes and should factor that assessment into decisions about personnel assignments to China.

China-based companies issuing invitation letters for foreign employees or business partners are formally accountable for the accuracy of the information such letter certifies and inaccuracies in invitation materials create direct legal exposure.

Companies that rely on Chinese third-party agencies for employee visa, immigration, or relocation services must verify that those agencies are properly registered under the new regime. Overseas-based providers — including global immigration firms without a legally established China entity — are no longer permitted to provide such services in China. Reliance on an unregistered or foreign-based provider creates both operational risk (inability to lawfully process applications) and regulatory exposure.

Susanne Rademacher
Kelly Tang
Lelu Li

The Opinions, which contain 24 provisions, constitute the SPC’s first comprehensive judicial guidance specifically addressing civil and related disputes arising from the development and use of artificial intelligence (“AI”).

Below is an overview of the Opinions:

Principles of Attribution for AI Tort Liability

The Opinions clarify the principles of attribution for AI tort liability, stipulating that where existing legislation does not expressly provide for strict or presumed liability, AI-related tort liability is to be determined on the basis of fault as set forth in the PRC Civil Code. In assessing whether an AI developer, provider or user was at fault, courts are instructed to consider, among other factors, the specific application scenario, the degree of autonomy and transparency of the AI system, the potential risks and their scope, the preventive measures taken by the relevant parties, and the user’s ability to foresee and control potential harm.

This approach is significant for AI developers and service providers. It indicates that the mere occurrence of harm caused by an AI system will not automatically result in liability. Instead, liability will depend on the specific circumstances and the respective ability of the parties to prevent or control the relevant risk.

China does NOT introduce a blanket strict liability regime for AI systems. Harm alone is insufficient for liability; fault remains the baseline unless special statutes mandate otherwise.

Tort Liability in Different Application Scenarios

The Opinions clarify the determination and assumption of tort liability in various scenarios where AI is used to infringe upon personality rights (including the right to privacy), personal information rights and interests, and consumer rights and interests:

Personality Rights: The Opinions explicitly state that generating a virtual digital image or synthesised voice without the individual’s consent or using such assets to engage in improper conduct or spread false information that lowers an individual's social standing, constitutes a violation. People’s courts may, in accordance with the law, determine that the rights to name, portrait, voice, or reputation have been infringed. If the image of a deceased individual is produced or used without authorisation, resulting in damage to their rights and interests, their close relatives have the right to pursue civil liability.

The Opinions further address so-called “doxxing” and “human flesh searches” carried out using AI. Using AI to track and analyse public information for the purpose of obtaining or leaking private information or disturbing the peace of an individual's private life—as well as the unauthorised filming, peeping, or eavesdropping on private spaces and activities—shall be legally deemed an infringement of the right to privacy.

Where conduct in an AI application scenario infringes or is about to infringe upon the fundamental personality rights of natural persons, one may apply to the People’s Court in accordance with the law to issue an injunction against the infringement of personality rights, ordering the perpetrator to cease such conduct or ordering internet and AI service providers to cease providing the relevant services.

Personal Information Rights and Interests: The Opinions impose limits on the use of publicly available personal information for AI model training, clarifying that processing within reasonable limits—and where the individual has not objected—generally does not constitute an infringement. However, consent must be obtained in accordance with the law when such processing has a significant impact on an individual’s rights and interests.

This provision provides some degree of legal certainty for AI developers while making clear that “publicly available” does not mean “freely usable for any purpose”.

Consumer Rights and Interests: The Opinions strictly regulate the practice of “Big Data Differential Pricing” using algorithms, explicitly classifying the imposition of unreasonable differential treatment for the same product based on information such as consumption preferences and payment capacity as an infringement for which liability must be assumed. Furthermore, where the use of AI to impersonate celebrities for product promotion constitutes fraud, courts will, in accordance with the law, uphold consumers’ claims for punitive damages. 

Civil Liability for Specific AI Entities

In addition, the Opinions clarify the tort liability by generative AI services providers, AI products liability, and liability for compensation in traffic accidents involving autonomous vehicles and vehicles equipped with driver-assistance features.

Prudent Determination of Tort Liability for Generative AI Service Providers: The Opinions stipulate that providers of generative AI services are subject to China’s statutory “notice-and-take-down” mechanism. When AI-generated content infringes upon rights or when users maliciously induce the generation of infringing content, if the service provider fails to promptly take necessary measures—such as halting generation or issuing blocking instructions—after receiving a valid notice containing the identity of the infringer and preliminary evidence, the service provider shall bear corresponding civil liability for the resulting damages in accordance with the law.

The Opinions therefore prioritise the distinct roles and control capacities of developers, service providers, and end users, steering away from imposing absolute liability indiscriminately on AI providers.

Product Liability for AI Products: The Opinions clarifie that AI products embodied in physical objects are subject to relevant product liability rules. Manufacturers and sellers bear liability for damages caused by product defects. The assessment requires a comprehensive consideration of factors such as autonomous learning capabilities, software updates, user control mechanisms, and compliance with standards, with a particular focus on whether the inherent limitations and foreseeable risks have been truthfully disclosed and clearly warned against.

Liability Arising from Autonomous and Assisted-driving Vehicles: Liability for accidents involving smart vehicles will be determined in accordance with the PRC Civil Code and the PRC Road Traffic Safety Law. Manufacturers or sellers will be held liable for damages caused by vehicle defects, while both parties share liability if a vehicle defect and the driver's negligence jointly cause the accident; furthermore, false advertising regarding automation levels or performance will be strictly penalised. People's courts have the authority to require data controllers—such as vehicle manufacturers, sellers, or operators— to provide authentic and complete records or data on autonomous or driver-assistance events to ascertain the cause of an accident.

AI and Intellectual Property

The Opinions set forth five rules for adjudicating intellectual property disputes involving AI, covering copyright, open-source software, patents, technology contracts and data:

Copyright Infringement by AI-generated Content: People’s courts are instructed to consider factors such as the type of AI service, industry, sources of training data, the degree of participation by the parties involved, necessary measures taken, and profitability to determine the liability of developers, providers, and users, and will support the punishment of unfair competition practices—such as counterfeiting and false advertising—committed through the use of AI.

Liability for AI Open-source Software: People’s courts are instructed to consider factors such as open-source licence agreements, the specific content of rights restrictions, and security compliance measures, and the extent of information disclosure — to grant appropriate exemptions to open-source software developers and providers. Free-of-charge open-source software developers and providers who have clearly disclosed relevant risks may be exempted from liability for third-party infringements, subject to their own absence of fault.

AI-related Inventions: The Opinions confirm that AI-related inventions that follow natural laws and solve technical problems are eligible for patent protection. Only natural persons who make creative contributions to the substantive features of such inventions shall be recognised as inventors. AI systems per se cannot be named as inventors. The patent specification must be disclosed to a degree that enables a person skilled in the art to carry out the invention.

AI Technology Contract Performance: To determine liability for breach of contract in technology development, transfer, and licensing disputes, People’s courts are mandated to look strictly to contractual provisions, while balancing the unique characteristics of AI technology R&D alongside the developer’s fulfilment of reasonable diligence.

Use and Security of AI Data: The Opinions protect the rights of AI developers to data obtained through legitimate channels. Depending on the nature of the data, protection is provided under either the PRC Copyright Law or the PRC Anti-Unfair Competition Law. Furthermore, legal liability will be strictly pursued against those who use technical means to engage in monopolistic practices, abuse a dominant market position, or compromise the operational security of AI systems.

Four Core Rules for AI-related Evidence and Litigation

To accurately ascertain the facts of a case, People's courts may employ litigation guidance, order evidence preservation, apply unfavourable inferences against parties who refuse to submit evidence, and leverage the auxiliary roles of professionals, such as experts and technical investigators.

People's courts are instructed to focus on verifying the authenticity and scientific validity of big data analysis and blockchain-based evidence preservation, and comprehensively determining facts of infringement regarding AI-generated content from multiple dimensions, including prompt design, similarity of generated content, and model algorithms.

Parties submitting AI-generated pleadings, case law research or other materials must verify their accuracy and disclose the use of AI assistance to the court. They remain responsible for the authenticity and accuracy of the submitted material.

Criminal liability will be pursued for crimes such as using AI to commit fraud, infringing upon privacy, and illegally acquiring data, as well as behaviours involving the unauthorised cracking or bypassing of assisted driving monitoring systems that result in traffic accidents. 

Conclusion

For enterprises developing, providing, or utilising AI technologies within China, the Opinions underline the imperative of robust compliance frameworks. These entail rigorous data governance, meticulous auditing of model training and development, clear-cut contractual risk allocation, transparent liability disclosures, and effective workflows for handling infringement notices.

Practical takeaways:

• Review datasets for AI training in China: pay special attention to publicly sourced personal information and implement opt‑out mechanisms.

• Operators of generative AI services should establish formal internal workflows to process statutory infringement notices.

• Smart vehicle businesses need truthful disclosure of system limits and foreseeable risks, and secure retention of complete vehicle event data.

• Build internal procedures for Chinese court filings: verify AI‑assisted legal materials and comply with the mandatory disclosure obligation for AI‑generated submissions.

While the practical efficacy of the Opinions will ultimately hinge on their case-by-case application by Chinese courts, they nonetheless serve as a pivotal bellwether, providing an important indication of how judicial practice in China is evolving in relation to AI-related disputes.

Kelly Tang
Dr. Jenna Wang
Susanne Rademacher
Lelu Li

A Framework for Strategic Growth

Entering into force on July 1, 2026, the new regulations represent China's commitment to advancing "high-level opening up" and promoting the "high-quality development of outbound investment". This comprehensive approach consolidates previously scattered rules across various ministries and provides Chinese investors with clearer guidance on how to successfully expand internationally while maintaining compliance with both Chinese and foreign regulations.

Key provisions of the new framework include:

• Comprehensive scope and application: The regulations apply to all outbound investments by Chinese investors, including direct or indirect acquisitions of enterprises, assets, or related rights in other countries or regions. Investments in Hong Kong, Macau, and Taiwan are managed under similar rules. 
• General principles governing outbound investment: The framework emphasizes adherence to the overall concept of national security, strengthening the management and service system for outbound investments, and improving the quality and level of such investments. It aligns with high-standard international economic and trade rules, promotes high-quality Belt and Road Initiative cooperation, and fosters international collaboration in industrial and supply chains. Investors are encouraged to make outbound investments on a market-oriented basis.
• Comprehensive service systems: The regulations establish enhanced overseas comprehensive service systems, with provincial and central government departments improving public service capabilities. Professional service institutions are explicitly supported to provide high-quality specialized services to Chinese investors. Industry associations, chambers of commerce, and trade and investment promotion organizations are encouraged to offer information consultation and rights protection services.
• Regulatory oversight and supervision: The framework introduces improved regulatory measures, implementing categorized and graded full-process supervision to strengthen risk prevention and enhance the scientific and secure nature of outbound investments. Investors must comply with national regulations for filing approvals, information reporting, and cross-border capital registration. They are also required to take primary responsibility for the compliance and risk management of their outbound investment activities and avoid disrupting the outbound investment market order.

Enhanced Protection for Chinese Investors

One of the most significant aspects of the new regulations is their focus on protecting Chinese investors' legitimate rights and interests abroad. The framework includes:

• Monitoring mechanisms: Mechanisms to strengthen monitoring, early warning, and risk assessment to help investors prevent security risks
• Mechanisms for investigating investment barriers: New mechanisms to investigate and address discriminatory practices against Chinese investors 
• Dispute resolution support: Encouragement of multiple dispute resolution methods including consultation, mediation, arbitration, and litigation
• Reciprocal countermeasure mechanisms: Authority to take appropriate measures in response to discriminatory restrictions or prohibitions imposed on Chinese investors by foreign jurisdictions, including, where applicable, measures available under the PRC Anti-Foreign Sanctions Law and other relevant Chinese legislation.

Germany: A Strategic Destination for Chinese Investment

These developments come at a particularly relevant time for Chinese-German investment relations. Germany continues to be an attractive destination for Chinese investors, particularly in high-tech manufacturing and advanced services sectors. The new Chinese regulations align well with Germany's own evolving foreign investment framework, which is expected to be updated in line with new EU standards by mid-2026.

For Chinese investors considering German opportunities, the new regulations provide several advantages:

• Clearer compliance pathways: The consolidated framework reduces regulatory uncertainty and provides clearer guidance on approval processes
• Enhanced government support: Improved public services and professional guidance for overseas investments
• Better risk management: Systematic approaches to identifying and mitigating overseas investment risks

The Critical Role of Legal Compliance

The new regulations underscore the importance of professional legal guidance in cross-border transactions. Chinese investors must navigate not only the new Chinese outbound investment framework but also German and EU foreign investment controls, competition law, and sector-specific regulations.

Key compliance areas include:

• Outbound approval processes: Ensuring proper Chinese regulatory approvals and filings
• German investment screening: Navigating Germany's foreign investment control regime under the AWG (Foreign Trade and Payments Act) and AWV (Foreign Trade and Payments Ordinance)
• Ongoing compliance: Meeting reporting requirements and operational restrictions in both jurisdictions

Looking Forward: Opportunities in Uncertainty

While global investment flows face various challenges, the new Chinese regulations demonstrate Beijing's continued commitment to international economic integration. The framework's emphasis on "market-oriented principles" and alignment with "international high-standard economic and trade rules" suggests opportunities for well-advised Chinese investors to continue expanding globally.

For Chinese companies considering German investments, the key to success lies in early engagement with experienced legal counsel who understand both Chinese outbound investment requirements and German regulatory frameworks. This dual expertise is essential for:

• Structuring transactions to meet both Chinese and German regulatory requirements
• Identifying potential compliance risks before they become problems 
• Developing strategies that align with both countries' policy objectives
• Ensuring smooth transaction execution and post-closing compliance

Conclusion

China's new outbound investment regulations represent an evolution, not a retreat, in Chinese international investment policy. By establishing clearer frameworks and stronger support systems, these regulations can facilitate more strategic and sustainable Chinese investment abroad. For Chinese investors with German ambitions, success will depend on understanding and embracing these new compliance requirements as a foundation for long-term international growth.

The regulatory landscape may be complex, but with proper legal guidance, Chinese investors can continue to find significant opportunities in Germany's dynamic economy while meeting the highest standards of international compliance.

Dr Jenna Wang-Metzner
Lelu Li

Introduction: A New Era of Legal Confrontation in EU-China Trade Relations

The European Union's ambitious Foreign Subsidies Regulation (FSR) has rapidly become a central instrument in the EU's competition policy toolbox, aimed at safeguarding the level playing field in the Single Market. However, its vigorous application, particularly against Chinese companies, has triggered a formidable legal and political counter-reaction from Beijing. A pivotal moment arrived on 15 May 2026, when the Chinese Ministry of Justice, jointly with the Ministry of Commerce, issued an official announcement (Announcement No. 5) declaring the EU's FSR cross-border investigation practices against the Chinese security scanner company Nuctech as an instance of "improper extraterritorial jurisdiction" according to Articles 3 and 6 of the Regulations on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Measures (the "Blocking Regulations"). These Blocking Regulations explicitly order all organisations and individuals not to comply with or assist the EU's investigation. This move marks the first operational use of China's newly enacted legal framework, which entered into force on 7 April 2026 (our related blog articleChina's New Counter-Sanctions Rules: Growing Risks for Global Companies | ADVANT Beiten) against foreign extraterritorial jurisdiction, transforming trade tensions into a direct clash of legal systems and sovereignty claims.

The EU's Tool: The Foreign Subsidies Regulation in Action

The FSR, which entered into force in 2023, empowers the European Commission to investigate financial contributions from non-EU governments to companies active in the EU that are deemed to distort competition. While not country-specific, enforcement has prominently focused on Chinese entities. The Commission has initiated several in-depth and ex officio investigations, with cases involving CRRC, Nuctech, Temu, Goldwind and, more recently, JD.com.

The Nuctech case is particularly emblematic. The company, a global leader in security scanning equipment, faced a "dawn raid" by Commission officials at its European offices in April 2024. This escalated into a formal in-depth investigation launched in December 2025. The Commission's probe seeks to determine whether Nuctech's success in EU public procurement procedures was facilitated by distortive Chinese state subsidies. From the EU's perspective, this is a legitimate exercise to protect fair competition within its market against foreign subsidies that undermine it.

Similarly, the scrutiny of the proposed acquisition of CECONOMY by JD.com highlights the expanding regulatory landscape. The transaction, announced in July 2025, requires clearance not only from the German Federal Cartel Office (which was granted) but also under the German investment screening and the EU FSR screening mechanism. Under FSR, the Commission is examining whether JD.com received subsidies from the Chinese government that could have given JD.com an unfair advantage in the acquisition process, potentially distorting competition in the European market. This adds a significant regulatory hurdle, with the deal's completion now contingent on these clearances.

The Chinese Response: Legal Blocking and Accusations of Protectionism

China's reaction to the FSR, culminating in the May 2026 blocking order, is rooted in a narrative that frames the FSR as a unilateral, protectionist tool. Beijing's objections are not new. In January 2025, the Chinese Ministry of Commerce (MOFCOM) concluded a six-month investigation, branding the FSR a "trade and investment barrier" that selectively targets Chinese companies, uses vague definitions, and creates undue burdens.

The 15 May 2026 Announcement represents a qualitative leap from diplomatic complaint to legal countermeasure. The core Chinese arguments are threefold:

1. Extraterritorial Overreach: The EU is accused of grossly overstepping jurisdictional boundaries by demanding data and documents located within China, including sensitive corporate and policy information, thereby violating Chinese sovereignty.

2. Conceptual Overreach: China argues the FSR illegitimately classifies standard industrial policy tools—such as tax incentives and R&D support available to all high-tech firms—as "distortive subsidies".

3. Placing Companies in an Impossible Bind: Chinese firms like Nuctech are described as being caught in a "protracted" process, compelled to choose between violating Chinese data and state secrets laws by complying with EU demands, or facing severe EU penalties for non-compliance.

A Deepening Conflict: Sovereignty vs. Market Integrity

The standoff represents a fundamental conflict of principles. From the EU's perspective, this is about defending the integrity of its internal market. The Commission sees itself as enforcing rules against economic distortions that originate abroad, a logical extension of its competition policy in a globalised economy. The FSR is portrayed as a necessary defence mechanism.

From China's perspective, this is about resisting "long-arm jurisdiction" and defending national sovereignty and the legitimate rights of its companies abroad. Beijing views the FSR's investigatory reach into its domestic sphere as an unacceptable infringement. The blocking order is thus framed not as protectionism, but as a lawful defence against what it deems extraterritorial overreach, providing a "legal shield" for Chinese enterprises.

Practical Implications for Businesses and Legal Practitioners

This evolving conflict creates a highly complex and risky compliance environment for companies operating across these jurisdictions.

For Chinese Companies in the EU: Firms face heightened legal uncertainty. They must navigate the stringent demands of the FSR while being legally prohibited by their home government from fully complying if those demands are deemed extraterritorial. The risk of being caught between conflicting legal orders and facing penalties from both sides is real and acute.

For EU Companies and Transactions Involving Chinese Parties: Deals like the JD.com/CECONOMY acquisition face prolonged uncertainty and potential derailment due to FSR reviews. More broadly, any commercial partnership, merger, or public procurement bid involving Chinese state-linked investment or subsidies is now under a brighter spotlight.

For Legal Advisors: The role of legal counsel has never been more critical. Advising clients requires a delicate, dual-track understanding. On one hand, expertise in EU competition law and FSR procedure is essential to navigate the European regulatory landscape. On the other, a deep grasp of China's evolving counter-sanction and blocking statutes is necessary to assess and mitigate the risks of non-compliance from the Chinese perspective. This complex situation demands strategic advice that anticipates regulatory clashes.

Conclusion: Towards Dialogue or Decoupling?

The EU's FSR enforcement and China's blocking response have moved bilateral trade frictions into the realm of legal and systemic rivalry. This is no longer just about tariffs or market access, but about conflicting views on jurisdiction, sovereignty, and the very rules governing globalisation.

In the short term, this escalation increases compliance costs and legal risks for businesses, potentially chilling investment and cooperation. The pending FSR investigation into JD.com's acquisition plans underscores how this tool can impact major corporate strategies.

The long-term trajectory depends on whether Brussels and Beijing can find a modus vivendi. The EU insists on its right to protect its market, while China insists on its sovereign right to reject external legal intrusion. A path of escalating tit-for-tat measures risks fragmenting the regulatory landscape. A more sustainable path, though challenging, would require renewed dialogue to define clearer boundaries, improve transparency, and establish mutual recognition of certain regulatory processes. For now, companies must brace for continued turbulence, navigating a world where the laws of one major economic actor are met with direct legal countermeasures from another.

Lelu Li

This article shows that the enforcement of arbitral awards from China often offers much better chances of success than the enforcement of Chinese judgments in Germany. This provides an opportunity to take a closer look at the relevant legal framework as well as the current German recognition and enforcement practice with a particular focus on the special features that are relevant for arbitral awards from China.

1. Necessity: recognition and enforcement

The recognition and enforcement of foreign judgments is necessary to ensure uniform legal relationships in international legal transactions. Recognition means that a foreign judgment is legally accepted in Germany and has the same legal effects as a domestic judgment. Without recognition, identical legal issues could be assessed differently across jurisdiction. Enforcement goes beyond that. It enables a recognized judgment to actually be put into effect in Germany, e.g. by attachment, penalty payment or other state measures. Together, recognition and enforcement ensure legal certainty prevent claims from remaining ineffective.

1.1 Recognition and Enforcement of Chinese Judgments

1.1.1 Jurisdiction 

First of all, the fundamental question arises as to how proceedings against a company domiciled in Germany may be brought before a Chinese court in the first place. The decisive factor for questions of jurisdiction is not the location of the company, but concrete points of connection to the factual dispute. In practice, jurisdiction is often based on a jurisdiction agreement in which the parties explicitly designate a Chinese court. In addition, a “proper” connection to China (including the place of signing of a contract, the place of performance of a contract, the location of the subject matter, the location of the property to be preserve and the location of the representative office; Article 276, the Chinese Civil Procedure Law) can justify the jurisdiction of Chinese courts. The appearance of a company without objection, i.e. a defence on the merits without a prior objection to jurisdiction, can also establish such jurisdiction under Chinese procedural law.

In addition, the Chinese courts will usually consider themselves to have jurisdiction over cases having a Chinese element. Even if there is an agreed jurisdiction clause between the parties agreeing on the jurisdiction of a foreign court, and the foreign party has initiated the court proceeding accordingly, once the Chinese party has initiated the court proceeding in a Chinese court, this Chinese court will consider itself having jurisdiction, unless the foreign party can prove that: 1) the majority of the facts took place outside of China and it is obviously inconvenient for all parties to participate in court proceeding in China, 2) the dispute is not subject to the exclusive jurisdiction of the Chinese courts , 3) no sovereign rights, national security or public interests is involved, and 4) it is more convenient for the dispute to be trialed in a foreign court (Articles 282, the Chinese Civil Procedure Law). This would render parallel litigation in practice and eventually double the cost for resolving disputes.

1.1.2 Recognition and enforcement procedures

However, the recognition and enforcement of Chinese court decisions in Germany is associated with considerable hurdles under German law. Since there is no bilateral treaty between Germany and China, recognition is based on Section 328 of the Code of Civil Procedure. In particular, problems with proper service, possible violations of German public policy and reciprocity, which has not yet been ensured, often lead to refusal in practice. Reciprocity means that the country of origin, in turn, recognizes and enforces foreign judgments. However, it has not yet been reliably proven that Chinese courts recognize German judgments to a sufficient extent, which continues to impede German recognition practice. 

Under Article 299 of the Chinese Civil Procedural Law, the recognition and enforcement of a foreign court judgment is based on either 1) existence of a treaty, or 2) the principal of reciprocity. Due to the lack of bilateral treaty between Germany and China, this is eventually a chicken-egg question - if the Chinese court judgements are not recognized and enforced in Germany, the Chinese courts have no sufficient reason to recognize and enforce German court judgment in China.

In addition, the key focuses of the Chinese courts in reviewing an application for recognition and enforcement of a foreign judgment are sovereign right, national security and public interests. The Chinese courts are rather conservative in these aspects and tend to extensively apply sovereign, national security or public interests defense in recognizing and enforcing foreign court judgments. This is also the reason why, till today, the Chinese courts have only recognized German court judgments on family law (divorce) – in these cases, it is highly unlikely for sovereign right, national security or public interests to be involved, and the focus is the personal relationship between the individuals.

For the enforcement of a Chinese judgment in Germany, a declaration of enforceability is also required in accordance with Sections 722 and 723 of the Code of Civil Procedure. In these proceedings, the competent regional court examines whether the judgement has already become final and binding in the state of origin, whether the content of the decision has been formulated with sufficient clarity and whether enforcement would in principle be possible there. It is precisely at these stages that the same structural difficulties regularly arise in practice as in the recognition procedure: uncertainties regarding res judicata, deficiencies in the service of the title or ambiguities in the form of the decision often lead to the court refusing to declare enforceability. In particular, concerns relating to the right to be heard in the case of public service, the strict application of German public policy standards and the continuing lack of reciprocity weigh heavily here. The probability of success of the enforcement of Chinese judgments in Germany is therefore to be assessed as low overall.

1.2 Recognition and Enforcement of Chinese Arbitral Awards 

1.2.1 Jurisdiction

Arbitration proceedings in China usually arise because jurisdiction is established by the will of the parties. In arbitration proceedings, the jurisdiction of Chinese arbitration institutions such as the China International Economic and Trade Arbitration Commission (CIETAC) is based solely on a previously agreed arbitration clause with a specific designation of an administering institution. A non-party may also be bound by an arbitration agreement through legal succession. Such agreements are usually concluded at the contract formation stage and are binding on the parties regardless of the jurisdiction in the country in which they are domiciled. If the contracting parties (e.g. a German and a Chinese company) agree on such a clause, they thereby undertake to settle disputes not before state courts, but before the selected arbitral tribunal in China. In this way, arbitration proceedings can also occur in China, even if one of the companies involved has its operational focus or its branches outside China.

1.2.2 Procedure

In contrast to the enforcement of Chinese court judgments, which regularly fails in Germany due to strict legal requirements and actual hurdles, the recognition and enforcement of Chinese arbitral awards is significantly less complicated. This is primarily due to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC), to which both Germany and China are parties. With 173 contracting states, this NYC is one of the world's most important instruments for international dispute resolution and greatly facilitates the enforcement of foreign arbitral awards. Article III of the NYC, for example, obliges the contracting states to recognize and enforce foreign arbitral awards in principle. Only in narrowly defined cases of Article V can enforcement be refused. In Germany, these provisions apply directly via Section 1061 I 1 of the Code of Civil Procedure, so that the courts' review is based exclusively on the standards of the NYC. 

In an international context, arbitral awards can only be refused recognition or enforcement for a few reasons that must be interpreted narrowly. The grounds for refusal are conclusively regulated in Article V of the NYC and relate in particular to serious procedural violations such as a violation of the right to be heard, a violation of the arbitration mandate or fundamental violations of German public policy. However, such a violation of public policy is only assumed by the case law if the application of foreign law leads to a result that is in intolerable contradiction to the fundamental principles of the German legal system. On the other hand, a mere incorrect application of the law is not sufficient. For example, wrong decisions are to be accepted, since a review of the content of the arbitral award is prohibited (so-called révision au fond). 

The hurdle for refusing recognition or enforcement is therefore high overall, so that in practice arbitral awards are usually declared enforceable in Germany without major difficulties. 

2. General Peculiarities of Arbitration Proceedings Compared to State Proceedings 

In a direct comparison of arbitration proceedings with state court proceedings, a number of special features must be taken into account, which are particularly significant in international commercial transactions. A key difference lies in the far-reaching autonomy of the parties to the arbitration proceedings: the parties can shape the proceedings themselves in essential parts, for example by determining the applicable procedural rules, the procedure or the language of the proceedings, while state courts are bound by mandatory national procedural law.

In addition, there is the possibility of filling the arbitral tribunal, at least in part, through one's own selection decisions. Each party regularly appoints an arbitrator, which promotes a balanced and neutral decision-making body.

Another difference is that state proceedings typically go through several instances (in China, two instances), whereas arbitration proceedings are generally designed in a single-tier procedures. The delays often associated with multi-instance proceedings are therefore largely eliminated. The arbitral award is final and binding and can only be challenged in narrowly limited exceptional cases, which enables a rapid establishment of legal peace and avoids lengthy appeal or revision proceedings.

3. Conclusion 

In summary, especially in relation to China, the choice of arbitration proceedings, insofar as an agreement on this is possible, often proves to be the more promising way to dispute resolution. Chinese court judgments have so far been rarely recognized in Germany, as questions of proper service, the right to be heard and reciprocity in particular continue to create uncertainty. Arbitral awards, on the other hand, benefit from clear international standards and much easier enforceability worldwide. The UN Convention enables enforcement that often cannot be achieved in state decisions in this constellation. For companies, this means a generally faster, more flexible and neutral procedure, which offers additional legal certainty through extensive party autonomy, the composition of the arbitral tribunal and the one-stage nature. This creates an instrument that can be used to efficiently resolve cross-border conflicts.

This is precisely why it is highly advisable to seek legal advice at an early stage and to have existing contracts reviewed in order to include an effective arbitration clause if necessary. It is often precisely this contractual decision that determines whether claims can actually be successfully enforced in practice.

Moritz Kopp
Chiara-Lucia Peterhammer
Katharina Reichert

This article was written in collaboration with experts from the Hui Ye Law Firm:
Cheng Chen
Rachel Tao

Critical Note: The IAA is a proposal, not yet binding law. Final regulations may differ significantly from this proposal, as the legislative process is ongoing. It requires approval from the European Parliament and Council, with adoption expected in late 2026 or early 2027 at the earliest. 

For Chinese investors operating in the four emerging strategic sectors, the most significant challenge is the IAA's foreign direct investment (FDI) screening regime — a new industrial policy — focused framework that will operate separately from existing EU security-based screening mechanisms.

The European Commission's proposal for IAA stems from the need to address growing concerns about external market dominance, strategic dependencies on foreign supply chains for critical technologies, and the necessity to strengthen Europe's industrial base. By shifting towards a more active industrial policy, the EU aims to safeguard its manufacturing capacity, reduce reliance on external actors, and ensure competitiveness in a global landscape increasingly shaped by state-backed investments and strategic interventions.

Beyond "Made in EU" requirements for public procurement and streamlined permitting for industrial projects through digital one-stop-shops and designated acceleration zones, the IAA introduces a novel and strategically significant foreign direct investment screening regime — the focus of this analysis for Chinese investors.

The New FDI Screening Regime: A Distinct Industrial Policy Framework

1. A Separate System from Existing EU Security Screening

The IAA's FDI regime is fundamentally distinct from the existing EU FDI Screening Regulation (Regulation (EU) 2019/452). Where the current EU regime focuses exclusively on security and public order risks, the IAA introduces a new industrial policy-oriented screening mechanism designed to ensure that foreign investments deliver tangible economic benefits to the EU: technology transfer, job creation, value chain integration, and reduced strategic dependency.

This creates a dual-track screening system. Chinese investors will need to navigate both traditional security-based screening under EU Regulation 2019/452 and the new industrial policy conditions upon the adoption of the IAA — two parallel approval frameworks with potentially different timelines and approval criteria.

2. Scope and Triggers

The IAA's screening regime shall apply to investments exceeding €100 million from the date of its entry into force, targeting only the four emerging strategic sectors:

a. battery technologies and its value chain for battery energy storage systems;

b. pure electric vehicles, off-vehicle charging hybrid electric vehicles and fuel-cell electric vehicles, including components related to electrification and digitalisation; 

c. solar PV technologies; 

d. extraction, processing and recycling of critical raw materials.

All other sectors remain unaffected by this new screening regime.

Triggering the 40% Capacity Threshold: The regime only applies to investors from countries controlling more than 40% of global manufacturing capacity in the relevant sector, who is not covered by economic partnership and free trade agreements. China is currently the only country meeting this threshold across all four sectors.

Control Definition: Screening is triggered when a foreign investor acquires 30% or more of voting rights or ownership in a European target through acquisition or establishment. All investments by the same investor and affiliated parties are aggregated to determine threshold compliance.

3. Approval Process and Timeline

The FDI approval process unfolds as follows:
 

This extended process creates substantial execution risk, with potential delays in deal closing, financing complications, and regulatory uncertainty.

4. Value-Added Conditions: The Four-of-Six Test

Approval requires satisfying at least four of six specified conditions, with one mandatory prerequisite:

Mandatory Condition – EU Workforce: At least 50% of employees across all categories, including senior management, must be EU citizens or residents. This is non-negotiable for approval, regardless of other conditions met.

Optional Conditions (Choose 3 of 5):

1. Ownership Cap – Foreign investors shall not hold more than 49% of voting rights or ownership, preventing majority control in any Union target or over a Union asset.
2. Joint Venture Structure – For investment structured through a joint venture with EU partners, the foreign investors' shareholding shall be capped at 49% in any Union entity, ensuring European partners have effective participation in management, technology transfer, and capacity building.
3. Technology Transfer and IP Licensing – Foreign investors must license key intellectual property and know-how to Union entities. Pre-existing European IP remains fully owned by the EU target; jointly-developed IP is shall be owned jointly.
4. R&D Investment – Foreign investors shall commit at least 1% of gross annual revenue of the Union target to research and development within the EU.
5. EU Supply Chain Integration – Foreign investors shall publish a strategy prioritizing EU sourcing, with an aspiration to source at least 30% of manufacturing inputs from the EU.

5. Treatment of Subsidiary Investments: A Potential Regulatory Gap

The IAA proposal primarily targets direct investments by foreign investors. However, Article 18(4) of the proposal allows national Investment Authorities to apply some or all of the six conditions to investments made within the Union by a foreign investor's subsidiary, but only where this is deemed "essential" to prevent circumvention or where no less restrictive alternative measures are available.

This creates a regulatory asymmetry: direct investments face mandatory scrutiny, and the four-of-six test, while subsidiary investments face discretionary screening based on circumvention risk assessment. Investors should assume that sophisticated subsidiary structures designed to avoid the 30% trigger could face retroactive scrutiny and condition-imposition by national authorities seeking to prevent regulatory arbitrage.

6. Enforcement and Penalties

Non-compliance carries substantial consequences: administrative fines of at least 5% of average daily aggregate turnover for violations of notification requirements, false information, or breach of conditions. National authorities can modify or revoke approvals if conditions are materially breached.

7. Projected Timeline to Final Adoption and Entry into Force

The Industrial Accelerator Act (IAA) is currently progressing through the ordinary legislative procedure, which typically requiring 12 to 18 months from proposal to adoption. The public consultation will be closed on May 6, 2026. The negotiation process will proceed through several phases: first, parliamentary committees will elaborate their negotiating positions and amend the Commission proposal during the parliamentary first reading phase; second, the Council will adopt its position and negotiating mandate; third, trilogue negotiations will attempt to reconcile Parliament and Council positions, typically requiring multiple sessions that may extend across a three to six month period; and fourth, final adoption requires passage through both institutions' plenary bodies. Adoption is expected by early 2027 at the earliest, with the IAA entering into force shortly thereafter. 

Implementation will follow a staggered timeline: the FDI screening regime will take effect 12 months after entry into force, public procurement requirements will be phased in over 1 to 3 years, and Member States need to designate national industrial manufacturing acceleration areas within 12 months. This phased approach ensures sufficient time for businesses and administrations to adapt to the new framework.

8. Conclusion

The IAA represents a fundamental reconceptualization of European industrial policy. While the proposal is not yet law, it signals clearly where European regulation is heading.

The concept of IAA mirrors established Chinese industrial policies in striking ways. Both frameworks center on joint ventures and technology transfer as regulatory cornerstones. Both target strategic sectors to strengthen domestic industrial capacity and technological prowess. Both integrate investment screening and conditionality to govern foreign market access. Both establish thresholds — China through sector mandates, the EU through investment scale and market concentration metrics — that trigger regulatory requirements.

These parallel mechanisms pursue converging strategic objectives: maintaining equilibrium in capital flows, securing domestic benefits from foreign investment, and advancing technology transfer and indigenous industrial development. Yet the EU explicitly rejects replicating China's state-capitalist industrial policy model. Instead, the EU employs targeted public investment, regulatory coordination and demand-side instruments within a competitive market framework, fundamentally distinguishing its institutional architecture from China's state-directed approach.

Chinese investors, who may already have concrete plans to invest in Germany, should consider accelerating Greenfield projects before the IAA enters into force. This proactive approach could help mitigate the regulatory challenges posed by the new framework. Additionally, advisory services can play a critical role in guiding Chinese companies through the evolving EU regulatory landscape, ensuring compliance and strategic alignment with European industrial policy goals.

Chinese investors should prepare for a more restricted investment environment by restructuring acquisition strategies around joint venture models, building European partnerships, and recruiting local management teams. The window for accelerating deals under current rules may close in 2028.

Lelu Li

• Regulations on the Security of Industrial and Supply Chains (Regulation No. 834) 
• Regulations on Counteracting Unjustified Foreign Extraterritorial Jurisdiction (Regulation No. 835)

Both regulations came into force upon publication and expand the legal framework developed since 2020, through which China responds to economic and political pressure from abroad. The previous legal framework prior to the enactment of Regulations No. 834 and 835 included:

• Provisions on Unreliable Entity List (UEL), MOFCOM regulation from September 2020: The UEL is an economic and security policy instrument aimed at sanctioning foreign organizations and individuals that, from China's perspective, jeopardize national sovereignty, security, or development interests, or discriminate against Chinese companies or harm them for non-market reasons (e.g., supply stoppages) or violate applicable trade principles. Sanctions under the UEL include import/export bans, investment bans, entry restrictions for personnel, revocation of work/residence permits, and fines.
• Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures (Blocking Rules), MOFCOM regulation issued in January 2021: These rules aim to protect Chinese companies and citizens from the extraterritorial application of foreign laws and to counter  foreign regulations that apply extraterritorially (i.e., outside the territory of the foreign country) and impede Chinese parties in their normal business activities.
  
  The Blocking Rules do not target specific organizations directly, but rather foreign laws, sanctions, embargoes, or export controls that compel companies outside the respective third country to comply and that China deems "unjustified". The rules apply to organizations and individuals in China subject to such foreign regulations. Key provisions include: 
  • Reporting obligation: Affected parties must report if they are impacted by foreign extraterritorial regulations. 
  • Prohibition orders: Chinese authorities can order that the affected foreign regulations must not be followed. 
  • Civil lawsuits: Affected parties can claim damages in Chinese courts if they suffer harm due to the application of such foreign rules. 

  • Exemptions: Companies can apply for permission to comply with foreign regulations.

     

• Anti-Foreign Sanctions Law (AFSL), enacted by the Standing Committee of the National People's Congress of China in June 2021:
  The AFSL is China’s core legal instrument for countering discriminatory or internationally unlawful foreign sanctions. Specifically, it addresses third-country  sanctions targeting China, Chinese organizations, or citizens that are regarded as interference in internal affairs or violations of international law. The AFSL applies to:
  • Foreign states and their authorities. 

  • Organizations and individuals involved in imposing or implementing sanctions against China or supporting or enforcing such sanctions.

    Key countermeasures under the AFSL include: 

  • Sanctions list: Inclusion of individuals/organizations involved in foreign sanctions. 
  • Countermeasures: E.g., entry bans, freezing of assets in China, prohibition of transactions with Chinese partners, other necessary measures. 
  • Extended scope: Countermeasures may apply to affiliated companies and family members. 
  • Enforcement obligations: Organizations and individuals located in China must comply with China’s countermeasures. 

  • Civil lawsuits: Affected parties can claim damages in Chinese courts if harmed by the implementation of foreign sanctions.

     

• AFSL Implementing Regulations issued by the State Council of China in March 2025: These regulations specify, structure, and expand government powers to implement measures under the AFSL. They clarify and broaden measures generally mentioned in the AFSL, particularly:
  • Seizure, confiscation, and freezing of various assets (including financial assets, IP rights, etc.). 
  • Prohibition or restriction of transactions and collaborations (also cross-sectoral, e.g., trade, education, technology). 
  • Possibility of "other necessary measures" (general clause).

Additionally, the regulations focus on institutional and procedural design:

• Responsibilities of various authorities (e.g., foreign, trade, security authorities) are clearly distributed. 
• Introduction and clarification of investigative powers (investigations, evidence collection), decision-making procedures (listing, measure orders), and coordination mechanisms between authorities.

The Blocking Rules do not target specific organizations directly, but rather foreign laws, sanctions, embargoes, or export controls that compel companies outside the respective third country to comply and that China deems "unjustified". The rules apply to organizations and individuals in China subject to such foreign regulations. Key provisions include: 

New Regulations No. 834 and 835

The two regulations No. 834 and 835, introduced in April 2026, add new instruments and consolidate existing mechanisms within the legal framework described above.

What’s new:

• Supply chain information gathering: Organizations are prohibited from conducting supply chain-related investigations or information collection activities in China that violate Chinese regulations. The broad wording potentially covers activities such as ESG audits (e.g., on forced labor or CO₂ footprint assessment), supply chain mapping identifying critical nodes, capacities, or substitution strategies, questionnaires, or on-site inspections of Chinese suppliers by foreign entities. There is also a risk that this restriction under Regulation No. 834 may conflict with due diligence obligations of foreign companies arising from EU/US supply chain requirements.
• Risk of sufficient harm: Chinese authorities may initiate investigations and take measures if foreign organizations or individuals "disrupt normal transactions" or "take discriminatory actions" against Chinese business partners, and such conduct causes or could cause substantial harm to China's supply chains security. Although compliance with foreign sanctions or export controls is not explicitly mentioned, the regulation is broad enough to potentially include business decisions, such as terminating supply relationships or suspending transactions with Chinese business partners, especially if such actions are in response to foreign regulatory requirements. Chinese countermeasures can also apply to entities controlled by foreign organizations, potentially affecting subsidiaries worldwide.
• Malicious Entity List (MEL) and liability extension rules: The "malicious entity" designation is new. It refers to organizations promoting or implementing foreign extraterritorial measures deemed impermissible by China. By including the term "promote," the scope of sanctionable actions extends beyond direct implementation to supportive or advocacy actions. Additionally, the scope is extended to organizations controlled by or affiliated with those listed in the MEL. 
• China’s assertion of extraterritorial jurisdiction: China reserves the right to exercise its jurisdiction over extraterritorial actions with a reasonable connection to China. This marks a shift from a defensive blockade against extraterritorial provisions to proactive actions asserting jurisdiction over foreign activities. In practice, this could mean extending Chinese decisions abroad if the impacts on Chinese companies or interests are deemed sufficiently connected. 
• Criminal liability: Regulation No. 835 also establishes criminal liability for individuals that  violate its provisions, expanding liability beyond previously stipulated administrative measures and travel bans and heightening personal risks for executives based in China. 

What has been consolidated/adjusted:

• The consequences for listed entities (trade restrictions, asset freezes, visa bans, etc.) remain largely identical under the UEL, AFSL, and the new MEL.  
• Regulation No. 834 requires organizations and individuals in China to strictly implement countermeasures taken by the Chinese government. Thus, subsidiaries and executives of foreign companies based in China remain obligated to comply with Chinese countermeasures, even if these directly conflict with foreign sanctions or global compliance guidelines. 
• The core prohibition on complying with foreign measures has existed since MOFCOM’s Blocking Rules and is now also enforced through prohibition orders issued by the Ministry of Justice. 
• The right of Chinese companies to sue parties that comply with foreign measures, derived from the AFSL and Blocking Rules, is reaffirmed.

Outlook and Recommendations
The instruments under the aforementioned norms operate cumulatively, meaning that a specific action can trigger sanctions from various authorities in China. Furthermore, the risk increases that business decisions in China directly conflict with foreign compliance obligations. For example, terminating a contract with a Chinese supplier to comply with US export controls could simultaneously trigger inclusion in the UEL, measures under the AFSL, investigations under Regulation No. 834, measures under extraterritorial jurisdiction under Regulation No. 835, and civil lawsuits by the terminated party. Actions must therefore be considered comprehensively under the existing regulations and not just under one part of the norms. In such cases, it should also be considered whether, for instance, an alternative adjustment/suspension of the contract might be appropriate instead of termination.

Regulation No. 835 includes provisions referring to potential criminal liability under applicable law, thereby expanding liability beyond previously prescribed administrative penalties and travel bans and increasing personal risks for executives in China. If such risks are identified, exposed personnel should refrain from traveling to China. 

Significant uncertainties remain regarding the implementation of the above-mentioned legal provisions. For example, it is unclear what constitutes "disruption of normal transactions," where the boundaries of "impermissible extraterritorial jurisdiction" lie, and what qualifies as "promotion" in connection with the MEL. In the worst case, public advocacy, lobbying, or urging industry peers to sever ties with Chinese companies could be considered "promotion," even if such advocacy does not lead to direct implementation. 

Therefore, companies operating in China should closely monitor how the implementation of these regulations evolves. Already, it is evident that China’s enforcement of countermeasures is increasingly becoming operational practice, as evidenced by the growing number of entries in the UEL and the AFSL sanctions list: the UEL was introduced at the end of 2020, with no entries until February 2023, three entries in 2024, and 67 entries in 2025. By 2025, over 100 entries in the AFSL sanctions list were known. Published cases also show that the option of civil lawsuits under the AFSL/Blocking Rules is being utilized.

Since Regulation No. 834 introduces new restrictions on gathering supply chain information, conducting ESG, forced labor, or supply chain audits in China to comply with EU/US supply chain obligations may conflict with the information-gathering restrictions under Regulation No. 834. Therefore, supply chain audits should be reviewed and, if necessary, adjusted.

General corporate policies that automatically mandate compliance with foreign sanctions across all global business areas (including Chinese subsidiaries) could be considered "implementation" or "promotion" of impermissible extraterritorial jurisdiction under Regulation No. 835 and should be adjusted accordingly.

Susanne Rademacher

Reform of the German Arbitration Law

On 27 January 2026, the German Federal Ministry of Justice presented a revised draft bill to modernize Germany's arbitration framework. While the 2026 version introduces two material modifications compared to the 2024 draft – notably with respect to Sections 55 and 1031 of the German Code of Civil Procedure (ZPO) (Modernisation of German Arbitration Law: Key Changes in the January 2026 Draft | ADVANT Beiten) – it retains the broader reform agenda already set out in 2024.
The overall objective of the reform remains unchanged: to strengthen Germany's position as a competitive place for arbitration, to further harmonize domestic arbitration law with prevailing international standards, and to enhance procedural efficiency in practice. To that end, the draft continues to provide for a number of structural adjustments, including the facilitation of digital proceedings, expressly permitting electronic awards and video hearings, and clearer rules on the publication of arbitral awards (subject to party consent). It also establishes a narrowly tailored retrial mechanism beyond the ordinary set-aside period and clarifies key issues such as multi-party arbitrator appointments, enforcement of foreign interim measures, judicial review of jurisdictional decisions, and the admissibility of dissenting opinions. Collectively, these measures reflect the legislator's intention to modernize German arbitration law in light of international developments and technological process. 

Within this broader framework, the 2026 draft introduces targeted refinements. The revised version of Sec. 55 ZPO now permits reliance on the principle of lex fori and habitual residence of the party concerned, rather than requiring recourse to foreign nationality‑based capacity rules. This approach aligns procedural capacity with modern principles of private international law. 
A further improvement concerns the revised wording of Sec. 1031, Subsection 1 ZPO. Under the draft, arbitration agreements shall be concluded or documented in writing or by any other means of communication that allows the information to be stored. This amendment brings German Law more closely into line with international legal standards while preserving the flexibility required in contemporary commercial practice. 
Taken together, the reform – both in its unchanged core elements and its 2026 refinements – signals a clear policy direction: Germany aims not merely to update its arbitration law, but to position itself proactively within an increasingly competitive global arbitration landscape.

Court of Arbitration for Nazi-Looted Cultural Property: First Cases Underway

The newly established Court of Arbitration for Nazi-Looted Cultural Property began its work in December 2025. It serves as an alternative dispute resolution mechanism for addressing disagreements regarding the restitution of cultural property confiscated as a result of Nazi persecution. Claimants can trigger arbitration unilaterally if public institutions in Germany refuse to return items, utilizing a "standing offer" system. It handles cases of cultural property lost between 30 January 1933 and 8 May 1945 due to persecution on racial, political, religious, or ideological grounds. The court is administered by the German Lost Art Foundation (Deutsches Zentrum Kulturgutverluste) in Magdeburg, with the arbitration office located in Berlin. The panel consists of 36 arbitrators. Its framework was negotiated with the Jewish Claims Conference and the Central Council of Jews in Germany. This institution represents a major shift in Germany's approach to restitution, aimed at providing legal certainty for both claimants and public holders of art. Something which is obviously well appreciated, given that as of February 18, 2026, already two cases have been brought before this institution.

Germany's Commercial Courts

The recent introduction of Commercial Courts in Germany, as part of the broader reform efforts surrounding German arbitration law, cannot be viewed in isolation from developments in arbitration. For decades, arbitration has been the preferred mechanism for resolving complex cross-border commercial or M&A disputes, largely due to its flexibility, international enforceability, specialized decision-makers, and the possibility of conducting proceedings in English. These advantages have increasingly shaped the expectations of multinational companies regarding dispute resolution.
Against this backdrop, the establishment of Commercial Courts represents a deliberate legislative response. By incorporating features traditionally associated with arbitration – such as English-language proceedings, procedural flexibility, specialized senates, and virtual hearings – the German legislator has sought to enhance the competitiveness of its state court system. In doing so, Germany positions its Commercial Courts not as a replacement for arbitration, but as a complementary and, in some cases, competitive alternative within the broader dispute resolution landscape.
Proceedings before Commercial Courts may be conducted in English at the level of certain Higher Regional Courts – a notable innovation within the German judicial system. 
The courts operate through specialized senates, with subject-matter expertise varying by federal state. For instance, two senates at the Hanseatic Higher Regional Court hear commercial disputes with an amount in dispute of EUR 500,000.00 or more, covering areas such as corporate law, post-M&A, banking and insurance law, transport, and shipping. Proceedings may be conducted virtually and offer enhanced confidentiality as well as verbatim transcripts – features traditionally associated with arbitration.
It is therefore unsurprising that the new Commercial Courts have been well received and are widely regarded as a success. Initial experiences suggest that both the Commercial Court and the Commercial Chambers established at certain Regional Courts, such as the Regional Court of Frankfurt am Main, are committed to conducting proceedings efficiently and resolving disputes significantly faster than is typically the case before state courts. 

AI-bitration

The rapid advancement of artificial intelligence has also reached the field of arbitration, bringing significant new developments. AI is increasingly influencing arbitral proceedings by offering transformative tools that promise greater efficiency and enhanced analytical capabilities. While it remains widely accepted that decision-making must rest with human arbitrators, AI's expanding capacity for analysis, interpretation, and drafting raises complex legal, ethical, and practical questions. 
A central issue for arbitral tribunals is whether, and to what extent, arbitration rules permit the use of AI – particularly given that neither international treaties nor most national arbitration laws expressly regulate its deployment. In the absence of legal provisions, parties and tribunals frequently look to institutional guidance. However, such guidance remains in an early stage of development. Examples include the 2024 Guidelines of the Silicon Valley Arbitration & Mediation Center, the SCC's 2024 Guide, and the CIArb's 2025 Guideline. Most recently the American Arbitration Association published its AI Arbitrator focusing on documents-only construction disputes. However, a real arbitrator remains involved and decisive in this procedure.
These initiatives seek to promote the responsible and effective use of AI in arbitration. Yet the existing guidelines remain deliberately broad and preliminary, while technological innovation continues to evolve at remarkable speed. Looking ahead to 2026, the growing relevance of AI in dispute resolution is likely to prompt further institutional guidelines and frameworks. As practical experience accumulates, existing guidelines will be tested, adjusted, and developed further to ensure that arbitral proceedings remain both technologically advanced and firmly anchored in fundamental principles of due process and fairness.

New Arbitration Laws and Rules

Across Asia, 2026, marks a year of significant regulatory reforms. China has introduced comprehensive amendments to its Arbitration Law, effective 1 March 2026. The reform constitutes a strategic step toward modernizing the domestic arbitration framework and further aligning the regime for foreign-related arbitration with international practice. Notable innovations include the nationwide introduction of ad-hoc arbitration, improvements to the recognition and enforcement of foreign arbitral awards, and the incorporation of additional internationally recognized key concepts, including a clearer statutory recognition of the separability of arbitration agreements and enhanced tribunal authority to rule on its own jurisdiction (Kompetenz-Kompetenz) – widely regarded as meaningful progress.
Pursuing a comparable objective of strengthening procedural governance and aligning its framework with internationally recognized best practices, the Asian International Arbitration Centre (AIAC) has introduced the AIAC Suite of Rules 2026. Effective from 1 January 2026, the suite comprises six new or revised sets of rules and guidelines. Key changes include an expanded scope of application, a clarification of party obligations, adjustments to procedural requirements, mandatory disclosure of third-party funding, and revisions concerning arbitrator conduct and tribunal powers.
In Korea, the 2026 version of the KCAB Rules has entered into force. Among the most notable developments are the establishment of the KCAB International Arbitration Court, the introduction of differentiated procedural tracks designed to enhance efficiency, the expansion of virtual proceedings, and the formal recognition of remote hearings.
From a European perspective, the ongoing reform of French arbitration law also merits close attention. The reform, expected to be finalized by autumn 2026, envisaged the codification of a unified and modern Arbitration Code aimed at harmonizing the legal framework and further consolidating France's position as a leading place of arbitration.

Dr. Ralf Hafner
Oliver Korte
Dr. Tobias Pörnbacher

Physical and Electronic Seals

Physical seals have for decades played an important role in Chinese legal and administrative practice: in many situations whoever controls the company seals controls the company - a concept unfamiliar in many other jurisdictions. 

Now, the new electronic seals offer the option of executing electronic documents with electronic seals. Electronic seals are data in specific cryptographic format that represent a seal based on digital technologies to realize reliable electronic signatures for electronic documents. The electronic seals typically contain data related to the seal image, name of the seal, seal owner information (= entity to which the seal is issued), electronic signature certificates and electronic signature production data.

These new electronic seals on electronic documents enjoy the same legal effect as physical seals affixed to tangible documents. They can hence be used for contracts, accounting/invoicing documents, employment/payroll matters and other internal and external documents in electronic formats.

Companies seeking to obtain electronic seals can apply to the officially designated electronic seal creation entities who will create and file the seals for record. Only legally established electronic certification service providers (for business use) or e-government certification providers (for government use) may issue the digital certificates supporting the electronic seals. In case of any change/expiration of the registered information pertaining to the electronic seals, the electronic seals must renewed or cancelled and the relevant applications must be made by the seal owner to the competent authorities without delay.

Functions and Legal Effects of Company Seals 

In China, company seals are more than administrative tools. Seals serve as legal representation of a company’s will, carrying the primary binding force in commercial transactions and official procedures. Whereas other jurisdictions where handwriting signatures or fingerprints are the main form to express legal will, PRC law presumes that a document bearing a company seal reflects the company’s authorized intention. Thus, managing the handling of seals is a very critical aspect of corporate compliance. This applies to physical as well as to the new electronic seals. 

Since company seals are the core tool for an enterprise to exercise its legal rights and assume obligations, the main functions of seals include:

• Validating Contracts and Agreements: Most commercial contracts (e.g., sales, investment, and employment agreements) require the company seal to be legally enforceable, especially for high-value or complex transactions.

• Authorizing Official Documents: Official communications, financial statements, tax filings, banking instructions, court correspondence and regulatory filings must bear the company seal to be recognized by authorities, courts and other receiving parties.

• Certifying Corporate Actions: Decisions approved by the board of directors or shareholders, such as mergers, acquisitions, or asset disposals, often require the company seal to confirm their validity.

Under the PRC Civil Code and the PRC Company Law, the company seals are presumed to reflect the company’s true intent even if the individual affixing the seal acted without proper authorization. Hence, a third party acting in good faith may still hold the company liable for actions validated by the company seal - highlighting the critical importance of robust seal management.

Appearance and Specifications

Chinese Company seals are strictly regulated by authorities and follow standardized specifications to ensure authenticity.  Physical seals usually conform to the following specifications:

Most company seals are circular, with a diameter between 3.8 cm and 4.5 cm. . Company seals typically include the full Chinese legal name of the company arranged around the outer circle of the seal and a five-pointed star in the middle of the seal. Seals are typically also embedded with a unique 13-digit registration code issued by the Public Security Bureau that is the authority in charge of seals engraving. The engraving of official company seals requires strict approval regime and must be processed by units designated by the local Public Security Authority. 

In addition to the primary company seals (公章), also other specific seals such as customs seals, contract seals, finance seals and legal representative seals exist that are used for specific purposes only. Still, the company seal is the most important among these seals. 

Seals Management and Risk Prevention

Given the apparent authority of the company seal, improper management of company seals can lead to severe adverse legal consequences, including financial liability, reputational damage, administrative penalties and even criminal liability and the directly responsible persons of the seal owner (company) can be exposed to personal liability. Core risk areas of seals mismanagement include:

• Unauthorized Use or Forgery: If a company seal is stolen, forged, or used by individuals beyond their authority (e.g., signing contracts without proper authorization), the seal owner (company) may be held liable for resulting debts or legal disputes. Under the PRC Criminal Law, forging a company seal constitutes a criminal offence and may even lead to imprisonment.

• Inappropriate Usage of Seals: Using the wrong type of official seals (e.g., affixing a customs seal to an employment contract) may lead to invalid transactions.

• Careless Seal Usage Recordation: Any usage of the official seals shall be properly documented, recorded and authorized by the company and its in-charge staff. Failure to maintain accurate records— of company seal usage (e.g., no log of who used the company seal, when, for what purpose and who authorized the usage, etc.) may constitute negligence on the side of the company and undermine the company’s legal position. 

Thus, implementing adequate and proactive measures to ensure a compliant seal management regime is mandatory. Companies must appoint dedicated company seal keepers and implement proper approval procedures for company seal usage. Official seals shall be kept in secure locations (e.g. a locked safe) with access restricted to selected authorized personnel.

In addition, compliance officers and designated senior managers shall regularly audit the company seal usage records and conduct random checks to detect any misuse at an early stage. 

In case of loss or theft of any official seals, the company as the seal owner must immediately report the incident to the Public Security Bureau and a public notice invalidating the missing seal shall be made. 

Thus, it is paramount for each company to develop, implement and monitor an Official Seal Management System with clear rules outlining company seal usage procedures, approval hierarchies and storage protocols. These rules shall be incorporated into the company’s internal rules and regulations and must be lawfully adopted through the statutory process to make them binding on all employees.

It is important that all staff (in particular those who have not been previously exposed to the particular seal regime in China) understand the legal significance of the official seals and the consequences of improper usage.  Thus, related training is required as well.

Given the new option to obtain and use electronic seals, all companies shall update their Official Seal Management Systems to properly accommodate digital usage protocols, including but not limited to compliance with mandatory legal provisions such as the PRC Cyber Security and Data Security Laws and the PRC Cryptography Law.

The new Measures for the Administration of Electronic Seals express the principle that “whoever owns the electronic seal shall exercise control, and whoever affixes the seal shall bear responsibility”.

Thus, it is necessary for each company’s Official Seal Management System to include rules and regulations governing the proper and standardized custody and use of the electronic seals. Particular care shall be taken to ensure that appropriate IT and procedural safeguards are implemented to regulate access and signature authorizations for electronic seals, as well as to ensure proper recording of such usage regimes.

Susanne Rademacher
Dr Jenna Wang
Kelly Tang

The new Measures on National Cybersecurity Incident Reporting issued by the Cyberspace Administration of China (CAC) and coming into effect on 1 November 2025 require much faster action - between 1 and 4 hours if network operators detect a cybersecurity incident that has caused harm to networks and information systems, or their data and business applications, and has a negative impact on the country, society, or economy due to human factors, network attacks, vulnerabilities, software or hardware defects or failures, force majeure, etc.

Who is governed by the new Measures?

All network operators are governed by the new Measures, that is, everyone who, as an owner or administrator of networks or network services, builds, operates, or provides services through networks within China. This includes but is not limited to critical information infrastructure (CII) operators (so-called CIIOs, i.e., enterprises that operate CIIs and that have been notified by the competent authorities that they are categorized as CIIOs) as well as government entities.

What is considered a cybersecurity incident under the new Measures?

The new Measures divide such incidents into four different levels based on their severity and impact: 

Note: If any one threshold is met for one of the four incident levels, the network operator must be classified under the higher level of cybersecurity incident that has been met.  In other words, the thresholds for each incident level should be read independently, not cumulatively.

What are the reporting and other obligations under the new Measures?

Once a network operator becomes aware of a cybersecurity incident involving its own network/business, it must conduct an incident assessment following the Guidelines for the Classification of Cybersecurity Incidents which are appended to the new Measures. 

The new Measures allocate different reporting obligations depending on the nature of the network operator and the severity of the incident: 

CAC provides different reporting channels such as the telephone hotline reachable at 12387, as well as email (12387@cert.org.cn) and other reporting modes, all accessible via the CAC’s website https://12387.cert.org.cn/index.html. 

The reporting timelines are calculated from the point in time when the network operator becomes aware of the incident. If the circumstances of the incident cannot be determined in full within the statutory notification deadlines, the network operator shall submit a preliminary report (containing whatever information is available at that time) and then provide an updated comprehensive report as soon as possible once more information becomes available. 

In addition, interim updates on major developments, as well as a final summary report, shall be provided within 30 days after the incident has been remedied (including information on the cause of the incident, remedial measures taken, scope of impact, accountability, and improvements made).

Reports should include the following information:

• Affected entity and system
• Time, place, type, and level of incident; impact, damage, measures taken and results thereof
• Preliminary analysis of the cause of the  incident
• Suggested remedies and support
• Security measures in place at the time of the incident
• Potential attacker information, attack path, vulnerabilities, and, in the case of ransomware incidents, the ransom amount requested and payment method
• Other facts material to the incident

In addition, if for certain industry sectors special reporting obligations apply, these shall be followed as well and in case of any illegal or criminal activities being suspected, PSB must always also be notified.

If network operators employ external IT service providers, the contracts between them must require such providers to immediately notify the network operators of any incidents in their networks and to assist with the mandatory reporting thereof.

Any failure to comply with reporting obligations under the new Measures exposes network operators and their responsible employees or agents to liabilities under the Chinese Cybersecurity Law, Data Security Law, Personal Information Protection Law and other applicable Chinese laws and regulations. Fines can range from RMB 50k to RMB 50 mil depending on the seriousness of the incident and the type of data involved and network operators are exposed to heavier consequences if they delay of proper reporting caused more serious consequences. Any reasonable and necessary protective measures taken by the network operator may mitigate such liability. 

How should network operators react to the new Measures?

Considering the new Measures, network operators should review, revise, prepare and verify: 

• Incident response policies and plans to align with the accelerated notification requirements
• Internal procedures to ensure timely escalation of cybersecurity incidents to the appropriate personnel
• Report templates to align with the information requirements under the new Measures
• External IT service contracts to ensure they stipulate immediate notification and assistance obligations, or are amended accordingly

Susanne Rademacher
Dr Jenna Wang-Metzner
Kelly Tang

Improved governance 

Each arbitration institution shall be governed by one chairperson, two vice chairpersons and seven to eleven additional members. Among them, at least 2/3 shall have expertise in law, trade and economics, and scientific technology and every five years at least 1/3 of them shall be replaced for transparency reasons.

Online arbitration has become a common practice and is now confirmed as a legal and effective means of arbitration unless the parties opt out of this mode.

Prosecutors, judges and civil servants are barred from serving as arbitrators while non-PRC experts in the areas law, trade and economics, maritime, and scientific technology are invited to serve as arbitrators with Chinese arbitration institutions. 

Arbitrators are now by law required to disclose any potential situations to their arbitration institutions in which a reasonable doubt could be cast on their independence or impartiality.

In the case of three-member tribunals, the parties can opt for one of the following appointment modes for the third arbitrator: the chairperson of the arbitration institution shall make the appointment; the parties themselves decide on the appointments or the other two arbitrators appoint the third arbitrator. 

Interim measures in pre-arbitration proceedings

The amended law confirms the right of the parties to apply for interim measures or injunctions before the initiation of the arbitration proceedings but still provides that the competent People’s Court shall handle such applications.Thus, arbitration tribunals still have no power to rule on the parties’ applications for interim measures.

Enhanced evidence collection rules

Arbitral tribunals may collect evidence themselves and also request authorities to assist them in such measures. This gives the tribunals more power to independently collect evidence rather than mainly relying on their requests to the claimants and respondents to provide evidence.

Existence and validity of arbitration agreements

If one party claims the existence of an arbitration agreement while the other party fails to deny such existence prior to the first arbitration hearing, and provided the tribunal made a record of such situation, an arbitration agreement is deemed to exist.

Also, if a party challenges the validity of an arbitration agreement, it may either request a ruling from the competent People's Court or a decision from the chosen arbitration institution/tribunal. If in such case one party requests a ruling from the competent People’s Court while another party asks for a decision by the arbitration institution/tribunal, the ruling of the competent People's Court shall prevail.

Shortened period of setting aside and non-enforcement of arbitral awards

The time limit for applying for setting aside an arbitral award has been shortened from six to three months from the date of receipt of the award. During enforcement, respondents can invoke the same legal grounds of setting-aside the arbitral awards to resist the enforcement of the arbitral awards, thus unifying the legal grounds for setting-aside and non-enforcement applications of arbitral awards.

Seat of arbitration in foreign-related arbitration

Thus far the location of an arbitration commission determined whether the arbitration was considered domestic or foreign-related. From a PRC legal perspective this differentiation is important because therefrom e.g. the law governing the arbitration proceedings, evidence rules, nationality of the award, courts of jurisdiction etc. are derived. Parties to foreign-related arbitrations get to choose a seat of arbitration. Unless the parties chose otherwise concerning the law governing the arbitration proceedings, the seat of arbitration shall determine the law governing the arbitration process and the court jurisdiction. Arbitral awards are deemed to be made at the seat of arbitration. If the parties failed to (clearly) agree on the seat of arbitration, the seat of arbitration is determined according to the agreed arbitration rules. If such rules are unclear on this matter, the tribunal may select the seat of arbitration based on the merits of the case and the principle of best facilitating the resolution of the dispute of the parties. 

Ad hoc arbitration

The amended law allows parties in foreign-related maritime disputes as well as other parties residing in Chinese Free Trade Pilot Zones, in the Hainan Free Trade Port and in other regions approved by the PRC government to choose ad hoc arbitration. In case of such choice, the parties should still notify the Association of Chinese Arbitration about the parties’ names, seat of arbitration, composition of the tribunal and applicable arbitration rules. Such notification shall be made within three days after the formation of the tribunal. Thus, the scope for ad hoc arbitration still remains rather limited in China. 

Foreign arbitration institutions in Free Trade Zones

Foreign arbitration institutions from outside China are allowed to establish entities in Chinese Free Trade Pilot Zones, Hainan Free Trade Port and in other regions approved by the PRC government. The amended law however lacks clear provisions concerning what scope of action such foreign arbitration institutions could engage in in China.

Susanne Rademacher

Anti-abuse rules against entities avoiding employer responsibilities through ambiguous and complex structures

Sometimes, companies try to evade legal responsibility as employers through complex employment structures. Interpretation II stipulates that when project owners subcontract/assign their business to entities without legal business qualifications, or when an entity without the corresponding qualifications conducts business activities externally through "affiliation" with a unit with legal business qualifications, the contractor/affiliated entity with legal business qualification will be legally recognized as the entity bearing the main responsibility as employer. This clarification aims to afford employees with a better protection of their rights in seeking payment of salaries and social insurance benefits because the responsibility for such claims will be borne by entities with legal status and (hopefully) sufficient financial means to honour such commitments.

In cases of so-called "group employment" or "affiliated company employment" (i.e. employment models where within a group of affiliated companies’ staff is transferred across different entities/units), it is often difficult to determine which particular entity is the “true” employer. Interpretation II provides that in determining the true employer, priority shall be given to the entity who signed the labour contract. If no written contract exists, the overall management behaviour and other comprehensive factors shall be considered. Specifically, one shall not only focus on formal aspects such as which entity pays salary and social security but also on actual factors such as which entity manages the staff, allocates work tasks, controls working hours, conducts performance evaluations, etc. and in such case the affiliated entities jointly are liable for salary payment and insurance benefits. This rule aims to better protect employees subject to business outsourcing models involving low-cost models and questionable third parties and is aimed to steer companies to simplify structures they may have set up to evade legal liability through untransparent structures.

Situations qualifying as “two consecutive fixed-term labour contracts” entitling employees to open-term labour contracts

PRC labour laws provide that in certain cases employees are entitled to ask for an open-term contract. Among others, employees are entitled to request an open-term contract after two consecutive fixed-term labour contracts with the same employer. 

Interpretation II provides that any of the following situations shall be considered as "consecutive conclusion of two fixed-term labour contracts":

• The parties agreed to extend the term of the first labour contract for at least one more year and such extension period has expired.

• The labour contract stipulates that the contract automatically renews upon the expiration of the first term for another fixed term and such second fixed term has expired.

• The employee “for reasons not attributable to himself” continues to work at his original workplace or job position after the first term of the contract expires and the employer merely changes the contracting entity of the (new) labour contract but continues to exercise labour management over the employee and the contract term expires. 

This addresses a scenario where the employee continues working in the same position/location after his contract has expired, even though the employer has changed the formal "party" (such as the company or organization) responsible for the contract, but the initial employer continues to manage the worker as before. In such cases, the court may treat this as a continuation of the same employment relationship and recognize it as meeting the conditions for signing two fixed-term contracts in a row, provided the continued performance at the same workplace/position with a new contract party did not stem from a voluntary decision of the employee himself. 

• After the expiration of the first contract, a new labour contract is signed by engaging in other actions that violate the principle of good faith to avoid obligations, and the contract term expires.

This refers to a situation where the employer signs a new labour contract under circumstances that violate good faith principles after the initial contract expires. Despite these circumstances, the contract is still recognized as having expired and requires legal consideration.

In essence, the last two bullet points focus on identifying situations where employers may try to circumvent labour laws by changing the structure of contracts or manipulating conditions, and the courts should still recognize the contracts as consecutive fixed-term contracts under those conditions.

Also, where, after the expiration of a given labour contract, the employee continues to work for his employer and the employer does not raise any objections against such continued performance for more than one month after the previous contract expired, the employee is entitled to a renewed labour contract under the terms of the expired contract. If at this point in time circumstances warranting the conclusion of an open-term labour contract exist, the renewed contract shall be entered into for an open-term if so requested by the employee. Should the employer rather choose to terminate the labour contract, this will subject the employer to bear liability for termination of a labour contract according to law (e.g. make severance payment if so required by law).

Consequences of failure to enter into written labour contracts

Under Chinese labour laws, not entering into a written labour contract with an employee carries serious legal and financial consequences for employers. An employer must sign a written labour contract within one month from the employee’s first day of work.

If the employer fails to sign a written contract within more than one month but less than one year, the employee is entitled to claim double his monthly wage for each full month worked without a written contract, starting from the second month. Interpretation II specifies that for a period of less than one month, the payment shall be calculated according to the employee’s actual working days in that month.  However, the employer is exempt from liability for double wage payment if it can prove any of the following circumstances:

• The labour contract could not be concluded in a timely manner due to force majeure.

• The failure to conclude the labour contract is attributable to the employee's own fault (e.g. refusal to provide necessary information).

• Other circumstances as stipulated in laws and regulations on this subject matter.

If the employer still fails to sign a written contract within one year from the employee’s  work start date, the employee is deemed to have entered into an open-term contract starting from the second year. In this regard, Interpretation II specifies that while the employee is entitled to sign an open-ended labour contract as of such second year, the employee is not entitled to claim double wages for the period as of such second year. The employee however remains entitled to claim double wages from the day following the expiration of one month from his work start date until the day before the expiration of one year from the work start date (so basically up to eleven months of a double wage claim).

Interpretation II further provides that where the term of a labour contract expires under any of the following circumstances and the court determines that the term of the labour contract automatically renewed/extended by operation of law, this situation shall not be regarded as a “failure to conclude a written labour contract”:

• The employer terminated the labour contract despite the terminated employee being under statutory protection against dismissal pursuant to Art. 42 Labour Contract Law (which lists situations such as medical treatment, occupational hazards/disease, maternity, other legally protected conditions). 

• The initial term of the labour contract expired but has been automatically extended 

in accordance with Art. 17 Labour Contract Law Implementing Regulations (extension until the agreed end of the service period after specific technical training under Art. 22 Labour Contract Law).

• The labour relationship is extended in accordance with Art. 19 Trade Union Law under the framework of a valid collective bargaining agreement. 

Clarifications for cases of breach of service period and non-compete agreements

Breach of Service Period: If the parties to a labour contract agreed on a minimum service period for the employee (e.g. following specialized training) and the employee breaches such obligation, PRC labour laws allow the employer to claim compensation for the resulting losses. Such labour contracts or training agreements often stipulate formulas for calculating such compensation. Interpretation II provides that courts shall not rigidly enforce such agreed formulas but comprehensively consider all actual losses of employers, such as the training expenses, housing subsidies, travel costs, the length of service that the employee has fulfilled and other special benefits granted to the employee. The compensation amount shall be proportionately adjusted based on factors such as the degree of fault of both parties regarding the employee's resignation. 

Validity of Non-compete Agreements: Under PRC labour laws non-compete obligations can only be imposed on employees having knowledge of and access to employers’ trade secrets and/or confidential information relating to intellectual property rights. Thus, in case of dispute, employers bear the burden of proof to demonstrate that the obliged employees did in fact have such knowledge/access during their employment period. If employers fail in such demonstration, the non-compete agreement is not binding on the employees. Additionally, when assessing the validity of non-compete agreements, court will put the substance scope, geographical area and duration of the non-compete restrictions into relation to the nature and scope of trade secrets and other protected information that the employee had access to. If a court finds that certain parts of the non-compete restrictions are incompatible with the trade secrets the employee had access to and thus the non-compete restrictions exceed the necessary scope for protecting the trade secrets, courts may determine such parts of the non-compete agreement invalid. Thus, employers are compelled to tailor the scope, geographical location and duration of non-compete restrictions based to the nature of the employee's position, job description and trade secrets he has access to because if excessive in nature/scope, the validity of the non-compete agreement can be challenged.

Procedural aspects regarding labour termination / labour disputes

A labour contract cannot continue to be performed: If an employer terminates a labour contract without being entitled to do so, PRC labour laws provide that employees can either claim for double severance payment or for reinstatement of the labour relationship if it is possible to continue to perform the labour relationship. Regarding the latter, Interpretation II provides that in the following cases, a labour contract cannot continue to be performed (thus making the reinstatement claim mute and compelling the employer to pay double severance):

• The labour contract expires during the labour dispute process and there are no legal requirements that mandate a renewal or extension of the labour contract.

• The employee has begun to enjoy the basic old-age insurance benefits according to law.

• The employer has undergone bankruptcy liquidation, had its business license revoked, been ordered to close down, been dissolved, or has decided to liquidate voluntarily.

• The employee has already been employed by another employer and the new labour relationship seriously affects the continued performance of the original labour relationship or the employee refuses to terminate the labour contract with the new employer. 

• Other circumstances exist make it objectively impossible to restore the labour relationship.

Salary calculation during the period until resumption of contract performance: If the employer is ordered to resume the performance of a labour contract with an employee, the employee's salary during the period from the termination date until the date of work resumption shall generally be calculated based on the normal labour wage standard of the employee (i.e. including base pay and fixed allowances but excluding performance-based salary/bonus, overtime pay and year-end bonuses). However, if the employee contributed to his dismissal and only the employer's dismissal procedure does not comply with the law, the court may, based on the degree of the employee's fault, proportionally reduce the wages that the employer should make up for.

Off-boarding occupational health examination: For employees engaged in operations with occupational disease hazards, conducting pre-departure occupational health examinations is a legal prerequisite for employers to dismiss such employees. If an employer terminates a labour contract without conducting a pre-departure occupational health examination for the employee as required, the employee has the right to request the continuation of the labour contract unless any of the following circumstances can be proven by the employer to exist:

• the pre-departure occupational health examination is completed before the conclusion of the first-instance court hearing, and the examination results show that the employee has no (suspected) occupational disease. 

• The employee refuses to undergo the pre-departure occupational health examination without a valid reason.

Defense of statute of limitation: In legal terms, "statute of limitation" refers to the maximum time within which a party can initiate legal action, such as a labour arbitration claim. If the time limit expires, the party may be barred from pursuing their case. In this regard, Interpretation II provides the following clarifications:

• No Raising the Defense During Arbitration: If a party did not raise the statute of limitations defense during the arbitration process (because of their own reasons), it cannot later use this defense during the litigation process (whether during the first or second instance of litigation). The court will not accept this defense in such cases.

• New Evidence: If the party has new evidence showing that the statute of limitations has indeed expired for the other party’s claim, the court will support this defense even during the litigation process.

• Failure to Raise the Defense in the Proper Time: If a party fails to raise the statute of limitations defense in arbitration or during the early stages of litigation, it cannot later seek a retrial or raise the statute of limitations defense during a retrial. The court will not entertain this defense in such cases.

This clarification encourages parties to raise relevant defenses (like the statute of limitation) in a timely manner during arbitration or earlier litigation stages. This rule prevents parties from using the statute of limitation defense as an afterthought if they failed to address it at the appropriate time.

Cases involving foreign nationals or entities

Foreigners asking for confirmation of their employment relationship: Interpretation II stipulates that foreigners employed in China by local employers are entitles to request courts to confirm the existence of their local employment relationship in the following cases:

• The foreigner obtained Chinese permanent residence status (aka Greencard).

• The foreigner obtained a Chinese work permit and resides legally in China.

• The foreigner has otherwise gone through the relevant legal procedures to work/reside in China.

Labor disputes involving foreign representative offices (FROs): According to Chinese law, FROs do not hold independent legal person status and are not entitled to directly hire Chinese nationals as employees. Rather, FROs must enter into labour dispatch agreements with qualified PRC human resources agencies to hire such Chinese staff through a three-party arrangement where the Chinese staff enters into the labour contract with the qualified agency and the agency in turn enters into a labour dispatch agreement with the FRO (or its foreign parent company). This arrangement has it made debatable how to involve the FRO/its foreign parent company in case of labour disputes involving dispatched staff. Interpretation II now confirms that legally established FROs may be parties to labour dispute cases and that in case any party to such cases applies for the participation of the foreign parent of the FRO to the lawsuit, the courts shall support such requests.

Opting out of mandatory social insurance is illegal 

According to PRC labour and social insurance laws, both employers and employees are obliged to participate in the mandatory basic social insurance in China. 

Any agreement between the parties to a labour contract, or any undertaking by the employee, waiving the employer’s obligation to pay social insurance contributions is invalid. 

If an employer fails to pay mandatory social insurance, the employee may terminate the labour contract for that reason and the employer must pay the statutory severance payment to the employee. 

If under any of these above circumstances the employer makes up the social insurance payments in accordance with the law, he is entitled to recover from the employee the employee portion of contributions.

Susanne Rademacher
Dr Jenna Wang-Metzner
Kelly Tang

Yancoal International Holding Co., Ltd. acquires 51 percent of the shares in CFH GmbH within the scope of the transaction. The parties have agreed not to disclose the transaction volume.

The globally operating CFH Group of Companies bundles under its umbrella a number of subsidiaries and holding companies, all specialising in engineering services enabling innovative solutions related to the topic of air at the workplace. 

Yancoal International Holding Co., Ltd. brings comprehensive experience in global resource allocation and industrial cooperation. The stake of Yancoal International Holding Co., Ltd. represents an important milestone in the international growth strategy of CFH Group of Companies. The partnership opens up new opportunities for technological innovation, global market presence and sustainable development. New standards in developing intelligent ventilation and environmental technologies are defined together - in particular for applications in mining, tunnelling and industry. 

The international team of ADVANT Beiten headed by Dr Martin Rappert (Dusseldorf) and Susanne Rademacher (Beijing) regularly advises companies on investments and business activities in Europe and the People's Republic of China.

Advisors to CFH GmbH: 
ADVANT Beiten: Dr Martin Rappert, Nico Frielinghaus, Prof Dr Hans-Josef Vogel, Dr Winfried Richardt, Sarah Heinrichs, Simon Litterst (all Dusseldorf), Susanne Rademacher (Beijing, all Corporate/M&A), Christian Döpke, Mathias Zimmer-Goertz (Data Protection/IP, Dusseldorf), Christoph Heinrich (Antitrust, Munich), Dr Christian von Wistinghausen (Foreign Trade Law, Berlin), Thomas Herten (Real Estate, Dusseldorf), Vasily Ermolin (Sanctions, Moscow).

Media Contact
Frauke Reuther
Manager Kommunikation
ADVANT Beiten
+49 (69) 75 60 95 - 570
frauke.reuther@advant-beiten.com

Any natural person can serve as DPO and nationality or residency (Chinese or otherwise) is not relevant in this context as long as the data processor is based in China. If the data processor is however located outside China, it must appoint a DPO who is located in China. Either way, best practice regimes suggest that any DPO shall have relevant expertise in the field of IT/data protection as well as a certain proven track record/seniority in the field and a decent understanding of the Chinese regulatory and industry requirements.

On 18 July 2025, the China Cyberspace Administration (CAC) launched its new online registration platform Personal Data Protection System (个人信息保护业务系统, https://grxxbh.cacdtsc.cn/) (Platform) for DPO registration. 

According to PIPL, the "Measures for the Administration of Personal Data Protection Compliance Audits个人信息保护合规审计管理办法", and the "Instructions for Filling out the Personal Data Protection Officer Information Reporting System个人信息保护负责人信息报送系统填报说明", the DPO registration obligation shall apply to data processors who process personal data of more than 1 million data subjects during any twelve months period.

Registration must be completed on the Platform which involves among others uploading the following: 

• information forms for both data processor and the DPO
• IDs and DPO appointment documentation
• authorization letters and commitment statements
• application forms requiring disclosures of some specifics of the personal data processing activities.

From the online registration interface of the Platform, the system also provides an access for non-China based data processors. When registering an account, they need to provide their foreign and Chinese names as well as the names and contact information of their designated DPO in China and other related information.

For any DPO registration application on the Platform, the progress status will be notified via SMS to the person handling the application. Generally, the material review should be completed within 15 working days after the complete submission was uploaded onto the Platform. 

Depending on the actual status, the application status on the Platform will show any of the following: "Information Reporting Completed", "Returned for Rectification" or "Review Failed". If the status reads "Returned for Rectification", the applicant shall submit the missing/corrected documents within 10 business days of such status showing for the first time, otherwise the status will change to “Review Failed” eventually.

Except for the name of the data processor and the progress status, no other information will be available for online review. Thus, data processors are well advised to retain backup copies of the submitted materials.

The following deadlines must be kept in mind for the DPO registration on the new platform:

• 29 August 2025 for data processors who reached the 1 million data subject threshold before 18 July 2025

• for data processors who reach(ed) the 1 million data subject threshold after 18 July 2025, they must conduct the DPO registration within 30 days as of reaching the said threshold

Susanne Rademacher
Kelly Tang

The existence of the AFSL, AFSL Provisions and the IP Dispute Provisions obliges any parties engaged in foreign (= outside China) or domestic legal action involving Chinese parties to carefully assess the risks of any dispute resolution strategies. Not only China-based enterprises but also foreign enterprises are affected by these regulations and must hence balance these Chinese regulatory and compliance requirements with other responsibilities resulting from conflicting sanctions regimes of other jurisdictions such as Europe and the US and general international compliance requirements.

I. Countermeasures under AFSL Provisions in case of “foreign litigation”

The AFSL Provisions allow the Chinese government to take countermeasures against “promoting and implementing litigation by any foreign country, organisation or individual”, which the Chinese government deems will “endanger the sovereignty, security, and development interests of China”. It is thereby irrelevant where such litigation occurs inside or outside China and the “foreign” element is rather established by a foreign (invested) party promoting or implementing such litigation.

The potential countermeasures faced by the affected litigation subjects (including natural and legal persons) range from restrictions to enter/leave China, seizing of any kind of property in China; prohibition/limitation on transactions and cooperation with third parties; compulsory property enforcement and other measures. 

Whether the AFSL Provisions will be applied also to private commercial disputes or are more directed against cases of important strategical/political matters remains to be seen. However, given the far-reaching wording and the lack of excluding private party legal action against Chinese parties, one would be amiss to think this could not become a tool at the convenience of Chinese regulatory bodies to invoke countermeasures even in cases of private commercial disputes against Chinese parties if China deems such legal action could endanger the sovereignty, security, and development interests of China.

II. Particular Importance of IP Disputes - Link between the IP Dispute Provisions & AFSL Provisions

The IP Disputes Provisions are expressly linked to the ASFL and AFSL Provisions. The IP Disputes Provisions emphasise that “containment or suppression” against China and “discriminatory restrictive measures” against Chinese citizens and organisations taken “under the guise of IP disputes” fall within the scope of AFSL. 

While the AFSL uses the terminology of “containment, suppression and discriminatory restrictive measures”, it fails to define these terms. To date there is also no other public legislation known that would specify these terms. This ambiguity makes it very daunting to predict situations in which countermeasures could be taken against what China believes to be a foreign containment, suppression or discriminatory restrictive measures under the guise of international IP disputes in which Chinese enterprises are a party. 

While the IP Disputes Provisions only became effective on 1 May 2025, already on 15 January 2025 the PRC Supreme People’s Court issued a ruling in patent dispute filed by Huawei against Netgear, prohibiting Netgear and its affiliates from seeking anti-suit injunctions in the US and other foreign countries that would restrict Huawei from initiating or continuing patent infringement proceedings in China. 

Given that Chinese enterprises having become increasingly active in the international arena and are leaders in many high-tech sectors, it appears plausible to believe that in the future one will rather see more than less international IP disputes between foreign and Chines parties. 

Therefore, with these new IP Disputes Provisions, any such international IP disputes between foreign and Chinese parties should be subject to a risk assessment if they could create cause for potential countermeasures being invoked by China against the foreign litigants. In addition, foreign parties starting litigation against Chinese parties for IP disputes may also risk other legal consequences such as refusal to recognise and enforce foreign judgments and arbitral awards in China if they would be considered by China to fall under these new provisions.

III. AFSL Provisions in General  

The AFSL obliges China-based organizations and individuals to implement China’s countermeasures to (a) safeguard China’s interests against discriminatory restrictive measures imposed on organizations and individuals, and (b) against interference with China’s internal affairs by foreign countries, or individuals and organisations that have directly or indirectly participated in the formulation or implementation of discriminatory restrictive measures. 

The AFSL entitles Chinese individuals or organisations to initiate civil legal action to demand cessation of infringement and compensation for losses against any organisation or individual that “implements or assists in implementing discriminatory restrictive measures” taken by any foreign country against them. 

Further, the AFSL Provisions allow administrative measures to be taken against such organisations or individuals, including conducting interviews, orders to make corrections and other corresponding measures. 

In both such cases (civil & administrative cases), the related liabilities and administrative penalties apply to China-based and foreign organizations and individuals.

Legal consequences suffered in case of a failure to execute China’s countermeasures can entail the following: being ordered to make a correction, prohibition/limitation to partake in government procurement and in import/export of goods & services in general, prohibition/limitation to transfer/receive data and personal information across borders and prohibition/limitation to enter/exit China. 

Cooperations involving organizations or individuals against whom countermeasures have been taken are generally prohibited or limited unless an exemption is granted as per the AFSL Provisions. Such an exemption application must be submitted to the State Council department and documentary requirements, review timelines, and substantive evaluation criteria of the exemption mechanism remain subject to further clarification. 

Susanne Rademacher

1. Stimulating business vitality

• District and municipal incentives for top-performing software and IT firms with annual revenues over RMB 2 billion and above-average growth.
• One-time cash grants of RMB 5–30 million for SMEs reaching key revenue thresholds.
• Micro and fast-growing small firms may receive RMB 200,000–500,000 depending on scale and growth. 

2. Supporting AI‑driven industry upgrades

• Subsidies for computing power to support innovative AI and cloud-based projects.
• Funding up to 30 percent of investment in industry model projects across sectors including finance, education, health, and new economy services.
• Enhanced R&D pre-tax deduction policies for qualifying software firms.
• Rolling funding through municipal strategic and emerging‑industry funds, covering up to 30 percent R&D expenses, and up to 50 percent for priority strategic projects. 

3. Reducing costs and burdens

4. Cultivating digital content leaders

• A procurement incentives list: eligible software application projects receive subsidies of up to 80 percent of contract value.
• Support for building digital content clusters—covering games, film/TV, micro‑videos, music, live‑streaming.
• Pilot program to treat game titles developed by foreign‑funded studios in Shanghai as “domestic” games for licensing purposes (Pilot).
• Support for copyright-pledge financing trials for digital content firms.

What does this Pilot mean for foreign game developers if their games get classified as “domestic” if developed in Shanghai:

Foreign‑funded entities physically based in Shanghai (with real R&D teams and IP registered under the Shanghai entity) can now apply for game licensing via the domestic track instead of the imported-game route. 

Difference of Imported Games VS Domestic Games and why the reclassification under the Pilot could make a big difference: The China National Press and Publication Administration (NPPA) classifies all games into two categories — imported and domestic — when issuing game approvals, also known as ISBNs. Though there is no official definition distinguishing these two categories, imported games are generally understood to be those whose copyright (including game software and content) is held by foreign entities, including foreign-invested companies established in China. While domestic games are those whose copyright is fully owned by Chinese natural/legal persons. Legally speaking, NPPA should apply the same set of content censorship criteria when reviewing all games and granting the ISBNs. However, practically speaking, it is perceived that foreign game developers face more difficulties in obtaining approvals compared to Chinese game companies that seek approvals for domestic games. Also, much less ISBNs for imported titles are granted and according to public sources, ISBNs for imported titles averaged less than 10% of domestic titles (e.g. in 2024, China issued 1,306 domestic game licenses, but only 110 for imported titles). With the Pilot, a new pipeline for foreign-developed games to access the larger domestic quota could be opened.

Faster approvals: Imported games often take 18–24 months to get licensed; domestic titles typically 6–12 months. Thus, treating Shanghai‑based foreign games as domestic could cut approval times significantly. That being said, it will still be the case that unlike domestic titles tailored for Chinese users, imported titles need a certain degree of localization effort to obtain NPPA approval and meet Chinese users’ expectations. 

A significant number of domestic casual games can benefit from faster track approval, with ISBNs typically granted within 20 working days. This is designed to accommodate the short lifespan and development cycles of casual games. However, imported casual titles are explicitly excluded from this beneficial treatment according to the NAAP’s current rules.

Things to be aware of:

• Although the implementation details and timeline are yet to be disclosed, this Pilot addresses major challenges faced by international game companies.

• While procedural access is via the domestic track, foreign-origin games may still face tighter internal scrutiny compared to domestic Chinese games.

• It remains unclear whether games based partially on internationally licensed IP will qualify under this Pilot. 

• Foreign investors and their subsidiaries in China are still not allowed to engage in game publishing and operation business. Consequently, the prevailing model – licensing foreign-copyrighted games to Chinese partners who handle ISBN acquisition as well as game publishing and operation – should remain unchanged under the Pilot if not adapted further. 

• Without the clear implementation guidelines being issued, the requirements concerning game copyright registration, the number of development team members based in Shanghai and other factors, such as local software development in Shanghai while games are based on offshore-licensed works, remain yet to be clarified.

Thus, Shanghai-developed games of internationally invested companies based in Shanghai may not necessarily enjoy an entirely equal footing with those of Chinese competitors but at least the unequal treatment gap should be closed a bit more under the Pilot.

Susanne Rademacher

1. Data Security & Cross-Border Data Transfers

China’s data regulation regime remains a top concern.

Laws Involved:

• Personal Information Protection Law (PIPL)
• Data Security Law (DSL)
• Cybersecurity Law
• Cross-Border Data Transfer Assessment Measures

Issues for FIEs:

• Whether their operations involve "important data" or large volumes of personal data that must undergo security assessments before export.
• Mandatory localization of certain data.
• Uncertainty around Standard Contract Clauses vs. government-led security assessments.

To-Do’s for FIEs:

• Assess compliance with the PIPL, DSL and Cybersecurity Law.
• Ensure data localization for sensitive or important data, including personal information and key business data.
• Conduct cross-border data transfer assessments and consider Standard Contract Clauses or government reviews.
• Review data-related contracts for data processing and privacy policies aligned with Chinese regulations.

2. National Security Reviews & Anti-Espionage Law

National Security Review Mechanism has been expanding in scope, especially for:

• Investments in sensitive sectors like semiconductors, defence, biotech, energy, and AI.
• Acquisitions of Chinese companies by foreign firms.
• Anti-Espionage Law (revised 2023) now includes broader definitions (e.g., data theft), impacting due diligence, audits, and market intelligence work by FIEs.

To-Do’s for FIEs:

• Review investment in sensitive sectors (e.g., tech, AI, semiconductors, defence).
• Evaluate acquisition targets for national security review risks and submit for approval when necessary.
• Train staff on espionage laws, particularly those handling proprietary data or conducting market intelligence.
• Ensure compliance with China’s Anti-Espionage Law; check protocols for sensitive information handling.

3. Corporate Governance & Compliance Under the Revised Company Law 

The amended Company Law impacts both domestic and foreign-invested entities:

• Capital Contribution Rules: Paid-in capital must be contributed within 5 years, not the open-ended terms allowed before.
• Increased Director Duties: Enhanced obligations on directors and supervisors for corporate misconduct.
• Stronger Compliance Culture: Regulatory expectations for internal compliance systems are increasing, especially in listed companies and FIEs in regulated industries.

To-Do’s for FIEs:

• Update company articles of association to reflect the latest Company Law revision, particularly around capital contributions, director duties, and supervisor roles.
• Enhance internal compliance systems for ensuring corporate governance practices meet legal standards.
• Establish and monitor an effective system for director responsibilities and liabilities under the new laws.

4. ESG, Supply Chain Transparency, and Forced Labor Allegations

Driven partly by Western regulatory pressure (e.g., U.S. Uyghur Forced Labor Prevention Act, EU CSDDD), foreign companies are under pressure to audit and verify supply chains.

China has pushed back, citing sovereignty, but companies need:

• Detailed supply chain due diligence.
• Legal strategies for reconciling Chinese anti-sanctions laws and Western compliance expectations.
• Legal complexity arises when complying with foreign extraterritorial laws might contradict China's Anti-Foreign Sanctions Law.

To-Do’s for FIEs:

• Conduct supply chain audits for forced labour risks, including compliance with the U.S. Uyghur Forced Labor Prevention Act and similar EU regulations.
• Ensure internal systems can track ESG criteria like emissions, human rights, and anti-corruption.
• Assess risk of reputational harm from not meeting global or domestic ESG standards.
• Review supplier contracts and ensure supply chain transparency practices are in place.

5. Foreign Investment Negative List & Encouraged Industries Catalogue

• Although the Negative List has been gradually reduced, some strategic sectors remain restricted or sensitive.
• There’s growing incentive alignment through the Encouraged Industries Catalogue, which offers tax and land policy incentives for investments in western/central China and green technologies.
• Companies must evaluate corporate structure and local partnerships carefully.

To-Do’s for FIEs:

• Ensure compliance with the Foreign Investment Negative List and Encouraged Industries Catalogue.
• Assess potential investments and verify capital structure (e.g., joint ventures, VIEs, wholly foreign-owned enterprises).
• Explore tax incentives and investment opportunities in western/central China or in green tech sectors.

6. Intellectual Property (IP) Protection & Technology Transfer

Enforcement is improving, particularly in IP courts, but:

• Concerns remain about compulsory licensing, local joint venture pressures, and protection of trade secrets.
• Legal scrutiny over non-compete clauses and employee mobility is increasing.

To-Do’s for FIEs:

• Review IP portfolios to ensure it is adequately protected under Chinese IP laws, including trademark, patent, and copyright laws.
• Evaluate risks around tech transfer requirements, especially in joint ventures or local partnerships.
• Strengthen trade secret protection measures for R&D operations in China.
• Stay updated on IP litigation trends in China and enforcement practices in specialized IP courts.

7. Employment Law and Workforce Localization

• Labor disputes are rising, particularly regarding layoffs, contract terminations, and salary adjustments.
• FIEs are being pushed to localize leadership or reduce expat headcounts due to cost and availability reasons.
• Social insurance audits and back payments are becoming more frequent.

To-Do’s for FIEs:

• Review labour contracts and employee handbooks to comply with Chinese labour law, including termination conditions, non-compete clauses, and social insurance.
• Prepare for potential labour disputes by establishing internal dispute resolution procedures.
• Verify social insurance contributions and ensure compliance with local regulations.

8. Exit Barriers & Capital Controls

• Repatriation of profits, dividends, or liquidation proceeds can be delayed due to forex controls.
• Government increasingly monitors suspicious outbound payments under FDI and transfer pricing rules.
• Legal due diligence is critical for structuring exits (e.g., sale vs. asset transfer).

To-Do’s for FIEs:

• Where needed, develop an exit strategy for potential sale, liquidation, or other exit events.
• Review capital controls and profit repatriation procedures to ensure compliance with foreign exchange regulations.
• Consider structure of divestments to minimize regulatory hurdles (asset vs. stock sale, etc.).
• Assess the impact of outbound investment restrictions and foreign exchange controls on your business in general and on any exit plan.

9. Anti-Monopoly Law & Fair Competition Review

China's Anti-Monopoly Bureau (SAMR) is actively reviewing:

• M&A deals involving foreign parties.
• Platform economies and abuses of dominance.
• New focus on fair competition reviews during tendering or market access, especially where foreign companies are bidding against SOEs or domestic champions.

To-Do’s for FIEs:

• Review mergers and acquisitions for potential anti-monopoly issues, especially for deals involving foreign players.
• Conduct fair competition review when participating in government tenders or other market access procedures.
• Evaluate market dominance risks if operating in platform-based businesses or highly regulated sectors.

10. Anti-Money Laundering Law and Disclosure of Beneficial Owners

• With the recent tightening of China's Anti-Money Laundering Law (last revised in 2024), foreign-invested enterprises (FIEs) are also increasingly coming under the scrutiny of regulators.
• A key innovation concerns the obligation to disclose ultimate beneficial owners (UBOs) to financial institutions and potentially also to competent authorities when establishing a company, changing its structure, or conducting certain business transactions.
• The definition of beneficial owner is increasingly aligned with international standards (e.g., FATF), but with local interpretations and implementation requirements.

To-Do’s for FIEs:

• Identify and document the beneficial owners of your Chinese companies in accordance with the current requirements. This includes, for example, natural persons who directly or indirectly exercise control over the company or receive significant economic benefits.
• Review group structures and shareholdings, particularly in complex holding structures, trusts, or cross-border constellations, to meet transparency requirements.
• Ensure compliance with disclosure obligations to banks, authorities, or business registrations, particularly for account openings, corporate actions, or other compliance-relevant events.
• Update internal compliance policies to meet anti-money laundering requirements and train relevant employees on identity verification and reporting requirements.

Susanne Rademacher
Dr Jenna Wang-Metzner

我们在今年五月底的推文“德国收紧关于透明登记簿的法律”中曾经提到《德国透明登记簿和金融信息法》（TraFinG）的草案及其核心内容。目前该法已于8月1日生效，本文旨在对该法案进行概述，特别是适用于中国公司的义务进行分析和说明。

1. 所有公司须履行的新申报义务

新的《德国透明登记簿和金融信息法》旨在对《德国洗钱法》（GwG）下的透明度登记义务作出一些重大修改。该法已于2021年8月1日生效，包括适用于外国公司的义务。

2. 新法案的目的是什么？

该法的主要目的是将德国登记簿与欧洲透明登记簿联网，以便更深入地打击洗钱和恐怖主义融资。

3. 如何实现这一目标？

在此之前，只有在德国一些其他的登记簿（如德国商业登记簿）无法提供受益人的信息时，才需要在透明登记簿进行申报。如此，透明登记簿就无法包含受益人的所有信息（即所谓的“溢出登记簿”）。为了与欧洲透明登记簿联网，有必要将德国透明登记簿转变为一个完整的登记簿。这是保证欧盟成员国的透明登记簿能够以统一的数据格式获取关受益人的所有信息，并且能够从欧洲的任何地方获取该类信息的唯一途径。

4. 新法引入了哪些重大变化？

为了实现这一目标，该法废除了所谓的“假定申报”。在此之前，这个假定申报意味着许多德国有限责任公司（GmbHs），特别是不需要向透明登记簿申报其经济受益人。取而代之的是，关于有限责任公司受益人的信息可以从商业登记处提供的电子股东名单或从投资链中多个股东名单的汇总中收集到。计划中的假定申报的废除将意味着：一般情况下，所有在德国注册的公司将来都必须向透明登记簿提供有关其经济受益人的信息。

即使是在证券交易所上市的股份公司（及其子公司），至今还免于该申报要求，但是今后也必须根据新法案向透明登记簿进行申报。特权地位只适用于已注册的协会。

5. 必须要遵守哪些时限？

根据新法，会适用一个分阶的过渡期。之前根据假定申报免于向透明登记簿对其经济受益人进行申报的公司，将必须在以下期限之前进行首次申报：

• 股份公司（AG）、股份两合有限公司（KGaA）和欧洲公司（SE）必须在2022年3月31日前进行申报；
• 有限责任公司（GmbH）、合作社（Genossenschaft）、欧洲合作社和合伙公司必须在2022年6月30日前进行申报；
• 所有其他需要申报的公司必须在2022年12月31日之前完成申报。

6. 哪些义务适用于外国公司？

自2020年1月1日起，外国公司在计划收购德国房地产（资产交易）的情况下，有义务在德国透明登记簿进行申报。目前，该义务也将扩大至包括股权交易。

根据新的《德国透明登记簿和金融信息法》，如果外国公司希望收购在德国持有财产的德国公司的股份，也必须向德国透明登记簿申报其经济受益人。若计划中的股权交易触发了《德国房地产转让税法》（GrEStG）第1条第3款规定下的支付房地产转让税的要求，则同时也须履行该申报义务。

只有在相关经济受益人的信息已经通知了另一个欧盟成员国的透明登记簿的情况下，才适用申报要求的例外。

如果外国公司在（资产或股权交易的）购买协议公证之前未能履行其申报要求，德国公证处将不能对该协议进行公证。

7. 违反透明登记簿义务的后果是什么？

不遵守申报义务、提供不正确或不完整的信息或未在适用的时间段内申报透明登记簿的行为构成行政违规。如果是一般的违规行为，公司及其董事可能被处以最高15万欧元的罚款；如果是严重的、重复的或系统化的违规行为，罚款最高可达100万欧元，或最高为此违规行为所带来的经济利益的两倍。除了面对罚款的威胁，自2020年1月1日起，任何对违反透明登记簿义务的行为处以罚款的最终决定都会在德国联邦行政机构的网站上公布，任何人都可以在五年内查看到该记录（点名批评）。该网站同时显示公司的名称及其所犯的违规行为的种类。

8. 采取进一步行动的必要性和结论

废除假定申报意味着许多公司（尤其是德国有限责任公司）的工作将会大幅增加。

这些公司不仅必须首次向透明登记簿申报其经济受益人，而且还必须定期审查已提供的信息，并在必要时进行更新。这意味着，公司将需要实施一个合规系统（有效的内部监控和报告系统）。

如果您有任何与透明度登记簿和《德国透明登记簿和金融信息法》有关的问题，我们百达律师事务所很乐意提供支持。我们也很乐意帮助您和您的企业向透明登记簿中进行经济受益人的申报。

《透明金融信息反洗钱法》的核心内容是：

1. 欧洲范围内的透明登记簿将相互联网；
2. 有关透明登记簿的规定将更加严格，以便将透明登记簿转变为一个自主且全面的登记簿；
3. 目前根据《德国反洗钱法》第20条的规定仍然适用的法律上应申报的假定条件将被全面废除。这意味着，即使已经可以从其他能够在线访问的登记簿（附股东名单的商业登记簿、社团登记簿、合作社登记簿等）中完整、正确地获得一个组织团体的实际受益人的详细信息，但这很快将不再适用于法律要求的 "已完成了对实际受益人的申报"。

因此，在《透明金融信息反洗钱法》生效后，所有有义务进行申报的公司必须始终向透明登记簿登记其实际受益人，或在适用的情况下登记其假定的受益人。不遵守规定可能会导致巨额罚款。

因此，请确保您所有有义务进行申报的公司在不久的将来向透明登记簿（www.transparenzregister.de）登记其实际受益人。

1. 提高德国境内的营业额门槛

随着营业额门槛的大幅提高，今后受限于德国合并审查的交易将越来越少。虽然最初的法律草案已经预见到德国国内营业额门槛将大幅提高，但为了进一步减少德国联邦卡特尔局（FCO）的工作量，议会主管委员会在最后一刻作出了修改，从而腾出资源应对数字巨头的市场力量。

今后，只有同时满足以下三个门槛的交易才需要向德国联邦卡特尔局申报：

(1) 所有参与公司的全球营业额合计超过5亿欧元。

(2) 至少有一家参与公司在德国的营业额超过5千万欧元。

(3) (a) 至少还有一家参与公司的德国营业额超过1750万欧元；或

(3) (b) 交易价值超过4亿欧元，目标公司在德国有重要的经济活动，但在德国的营业额低于1750万欧元。

2. 新的合并审查工具

新法引入了一种全新的备案要求。德国联邦卡特尔局可责令大型企业对既未达到营业额门槛也不符合交易价值门槛的某些收购进行申报。此项修正是针对德国废物管理行业内有企业通过收购许多未达到营业额门槛的微型竞争对手企业实现集中化的行为。

然而，新工具将仅在特定的时间内适用于少数的企业。这是因为德国联邦卡特尔局只有在进行行业调查后才能发出这样的命令（并受制于其他的先决条件）。此外，该新工具与国际交易基本无关，因为它只适用于收购在德国实现三分之二以上营业收入的公司。

3. 医院与平面媒体的合并将受益最大

某些医院的合并将至少在2027年之前完全豁免于合并审查的限制。在过去的15年内，德国联邦卡特尔局每年禁止大约一起医院的合并案。这种做法与促进（甚至是补贴！）德国医院部门合并的政治目标从来就不相符合。

印刷媒体行业受益于营业额乘数从8下降至4。相比之下，电台和电视广播的营业额乘数仍为8。

4. 些许的实质性变化

实质性框架除了一个例外情况其余保持不变。德国联邦卡特尔局不得禁止影响已存在至少五年的“微型市场”（"de-minimis markets"）的合并（具有巨大价值的交易案件和免费提供服务的市场除外）。相关的门槛从1500万欧元提高到2000万欧元，但从现今起，所有相关的“微型市场”的总和必须低于这一门槛。

5. 一些程序上的微调

第二阶段程序的最长期限延长了一个月，共计5个月（第一阶段1个月加第二阶段4个月）。实际影响非常有限。如今，对于延期请求、承诺建议和对正式信息请求的延迟答复，德国联邦卡特尔局已经有了更多的时间进行第二阶段审查。

最后，由于增加了以数字方式提交资料的可能性，根据《国际财务报告准则》财务报表提供营业额数字的选择，以及取消了执行通知，减轻了申报公司的行政负担。

6. 应申报的收购交易变少，应申报的合资企业相对增多

实务中德国合并审查制度最重要的变化是，人们期待已久的（也是长久以来德国被诟病）的营业额门槛的提高。在过去的几年里，德国联邦卡特尔局每年审查大约1200至1400份申报，其中大多数的案件对德国的竞争影响不大或没有影响。

我们预计此次修订将使德国的合并审核申报数量减少三分之一。对德国小公司的收购和对德国出口有限的外国公司的收购将受益最大。相比之下，目前需要进行申报的设立合资企业和共同投资还需要继续申报。这是因为一家典型的母公司或共同投资人（连同其公司集团）的规模要比一家典型标的公司更大。

英国脱欧后就这类公司的法律评判适用所谓的公司所在地理论，因此，如果英国有限公司的行政总部（管理地）位于德国，则该有限公司适用德国法律。由于英国法律的中断/不再适用，如果公司有多名股东，该英国有限公司将自动转化成德国法下的民事合伙企业（GbR）或无限责任公司（OHG）。如果英国有限公司只有一个股东，公司就自动成为个体商户（Einzelunternehmen）。最重要的后果可能是，英国法律规定的责任限制在过渡期结束后将不再适用于德国。如果没有德国民法依据，股东或股东个人要对英国有限公司或有限两合公司的债务承担责任。社会保障义务方面也可能会有变化。

因此，建议每一位英国有限以及两合(& Co. KG)公司的股东对此作出相对的回应。

根据《英国脱欧税法配套法案》，德国《公司所得税法》第12条第4款规定，企业资产继续归属有限公司，仅凭英国脱欧一项不会导致德国隐性资产储备的披露。然而，德国联邦财政部针对英国脱欧事宜至今仅针对一家在德国设有行政所在地的英国有限公司发出了关于送达和执行问题的公函。目前，关于实质性税务问题和后果的声明仍未出台。

目前，股东有以下选择：

1. 资产交易

股东可以决定通过资产交易的方式将英国有限公司的所有资产出售或转让给德国有限责任公司（GmbH）或企业主公司（UG）。转让的对象可以是任何一家德国公司，特别是企业主公司或企业主两合公司。原则上，每一项资产、每一个合同关系和每一项责任都必须单独转移到德国公司。契约伙伴和债权人必须对此表述同意。对于资产和合同关系可控的小型公司，建议采用此方案。

随后须在德国和英国将该英国有限公司进行注销删除。为此，该企业必须在德国进行停业登记，并通过德国公证处申请将其从德国商业登记簿中删除。随后可以在英国使用DS01表格申请删除。必须通过税务顾问编制最终的资产负债表，并据此提交或公布。

从税收的角度而言，资产交易一般会导致隐性资产储备的披露，从而确认出售或退出的收益，所以也只有规模较小的公司才会考虑这个方案。

在社保方面，在成立德国有限责任公司或企业主公司时，一般可以保留控股股东的社保豁免。

2. 合并成为德国有限责任公司或企业主公司

作为另一种选择也可以将英国有限公司或相关公司直接合并入德国有限责任公司。这样做的好处是，企业可以无缝衔接地继续得以延续，而且由于是继承全部的权利和义务，该合并不需要合同当事人或债权人的同意。之后，德国有限责任公司是英国有限公司的合法继承人，可以继续经营。此外，隐性资产储备因在德国境内转移，无需纳税。就税收而言，合并可追溯至2020年12月31日。

然而，如果是只有一个股东的英国有限公司，或者在英国脱欧后是个体商户，则必须首先在德国商业注册簿注册为注册商人（e.K.）。这是通过德国公证申请的方式进行的。相应地，如果有几个股东，则必须先申请一个无限责任公司，并在商业登记中登记。合并以需公证的 合并决议的方式实现。

由于合并会涉及到一定的公证处和商事登记的工作量和费用，因此，对于资金充裕或是有保护价值的隐形资产储备的中型和大型的英国有限公司而言，这种方式更为可取。

目前还不清楚英国将如何处理此事（公司合并事宜）。这方面还有待相应的规定。

关于德国的社会保障问题，在合并成德国有限责任公司的情况下，一般可以保留控股股东的社会保障豁免。

3.清算和新设立公司

股东也可以在英国将公司进行清算。但是，这就中断了企业的经营，要想继续履行合同和经营，必须征得合同的债权人和合同当事人的同意。

对于清算，首先需要在德国作出相应的决议，并进行相应的登记或注销登记，然后在英国进行登记。但在英国，清算可能会引发清算税。

在德国，可以新设立一个有限责任公司或者注册资本仅为一欧元的企业主公司。在这种情况下，原来的英国有限公司的资产必须注入给新的德国公司。

4.不采取其他举措

如果没有采取进一步的措施或承诺，英国有限公司自动成为德国的人合公司，或在只有一位股东的情况下成为个体商户。这种所谓的“法律形式变更”，既保留了公司的身份，又不会暴露出任何隐性的资产储备，便于纳税。但是，股东也要对原英国有限公司的之前的债务承担连带责任。

在英国，法律形式的改变也必须进行登记。然而，这一点在英国一般会面临失败，因为不能指望英国的商业登记处届时会在其登记簿保留一家德国公司。

5. 总结

综上所述，应根据英国有限公司的资产状况和股东的数量判定以上何种方案对各类的英国有限或有限两合公司是最为有利的。

在某些情况下，通过资产交易的方式转让单项资产是最佳选择。在其他情况下，例如在隐性资产储备较高的情况下，则建议考虑替代方案。

Founded in 1995, the VITAL Group is a globally active group of companies in the field of materials technology with more than 3500 employees. The business focus is on the areas of special metals, such as germanium, gallium, tellurium and selenium, as well as corresponding recycling activities. VITAL has a leading global market position in functional materials, supplying companies in the electronics, semiconductor, photovoltaic, LED and infrared materials sectors, among others.

PPM had ceased business operations at the Langelsheim site following protective shield procedures with effect from 1 August 2020 for the opening of insolvency proceedings. In the bidding process VITAL was able to succeed in particular due to the sustainable revitalisation concept. As part of the German-French Recylex Group, PPM was a manufacturer of special metals and chemical compounds with a focus on recycling activities.

VITAL will operate the assets through a newly established subsidiary, Vital Pure Metal Solutions GmbH (VPMS). VPMS will be fully integrated into VITAL's global network and operations and will serve as a platform for providing distribution and recycling solutions to its worldwide customer base. With VITAL's state-of-the-art clean technology available at the Langelsheim industrial site, a wide range of services can be offered in Europe, avoiding unnecessary material transport and reducing lead times and the overall environmental footprint. Once the facilities are back in operation, a second phase is planned to expand the capacity and service portfolio, which will involve further investment, jobs and a contribution to the local economy.

VPMS is located in the centre of Europe, in a region with centuries of metalworking tradition, and will serve as VITAL's cost-efficient and responsive distribution centre outside China. VPMS is fully licensed to process and recycle various complex materials, including hazardous substances.

Advisor VITAL

BEITEN BURKHARDT: Dr Christian von Wistinghausen (co-head Corporate/M&A, China Desk, in charge, Berlin), Wilken Beckering (Insolvency Law, Duesseldorf), Dr Patrick Hübner (M&A and Foreign Trade Law), Lelu Li (M&A), Dr Dominik Greinacher (Public Law and Environmental Law, all Berlin).

CONTACT

Dr Christian von Wistinghausen
Phone: +49 30 26471- 351
E-mail: Christian.Wistinghausen@bblaw.com

德国投资审查

《德国对外贸易和支付条例》区分了两种审查程序。（一）特定行业的审查和（二）跨行业的审查，具体可表述如下：

所有外国投资者(包括欧盟国家)

• 特定行业的审查：外国投资者在与安全直接项关的领域（例如军备，但也包括某些加密软件）开展业务活动的德国公司中取得10％或以上的表决权，必须进行申报。

所有来自第三国家的投资者（来自非欧盟/非欧洲自由贸易协定成员国的外国投资者）

• 跨行业的审查：第三国投资者在关键部门开展业务活动的德国公司中获得10%或以上的表决权，必须进行申报；

• 跨行业的审查：第三国投资者收购一家德国公司25%或以上的表决权时无需进行申报（但原则上德国联邦经济能源部可以依职权进行审查）。

因此，直接或间接投资于德国公司的风险投资基金一般情况下必须弄清楚这些投资是否属于《德国对外贸易和支付条例》的范围。自2021年1月1日起，对这一问题的回答可能会变得更加重要，特别是对作为新近获得第三国国民资格，即居住在英国的投资者而言。

申报义务

对于风险投资基金和初创企业，跨行业的审查中的关键性行业将显得尤为重要，即德国联邦政府列为与安全特别相关的产业。该修正案规定将这些产业的范围进行大幅度扩展，特别是扩大到特别有前景的技术领域，因为经验表明许多初创企业在这些领域中都非常活跃。

在这些关键产业中，如果收购该企业10%或以上的表决权，就已经有了申报义务，即直接收购者必须将收购股权的情况告知德国联邦经济能源部，且在审查通过之前不得完成收购。对于创投基金而言，这意味着在须进行申报的交易案中投资轮次无法完成。法律交易的交割（Closing）在未被德国联邦经济能源部批准前无效。

关键性产业

目前须申报的行业包括关键性基础设施的运营商、关键性基础设施运营软件的开发商、云计算服务、电信监控服务和远程信息处理基础设施、媒体以及部分医疗行业。为响应2020年10月生效的《欧盟筛选条例》的要求，未来将进一步覆盖关键技术，联邦经济技术部正计划将这些须申报的产业进行大幅扩展，涉及以下领域：

高质量的地球遥感系统

量子和核技术

人工智能

增材制造("3D打印机")

自动驾驶或飞行

网络技术

机器人技术

智能电表网关

半导体/光电子

信息技术和电信技术服务

网络安全/IT安全产品

关键原材料

航空航天

秘密专利/实用新型

某些两用物品

农业和食品

如果联邦政府对提议的行业群组不进行削减，则该申报义务的扩展将会导致来自第三国或有第三国参与的风险投资基金的投资门槛提高不少。鉴于交割禁令，投资者在投资审批通过之前不会同意通过创投基金对项目支付风险资金。初创企业在融资时一定要考虑到这一点，且应在计划新一轮投资时将进行审查程序的时间纳入考量。

无需审查的投资

所以，值得研究的是那些（仍然）不属于投资审查适用范围的交易类别，特别是：

• 没有第三国参与的德国风险投资基金以及跨行业审查程序中的欧洲风险投资基金；

• 取得低于10%门槛的表决权（前提是不存在非典型控制权）；

• 在保护股份不被稀释的门槛之上追加收购表决权，但收购后的表决权不得超过收购前的表决权份额；

• （追加）收购无表决权的权益。

总结

投资审查的扩大可能会导致德国联邦经济能源部的整体审查工作量的大幅增加。不过，该法案的草案目前的版本能否真正获得通过仍然存疑。特别是在初创企业的风险投资方面仍有很大的改进潜力。例如，可以预见在未来将：

• 免除对初创企业的投资 -- -- 不是免除申报义务，但至少是免除交割禁令；

• 在获取较小比例的表决权时引入实质性门槛；或
• 对初创企业的投资规定一个普遍的“最低限度”（例如100万欧元）。

如果您对德国的投资审查或者其他关于在德国投资的事宜有任何疑问，我们律师事务所的专家很愿意为您提供咨询和帮助。

本文将定期更新。

若您对您的企业是否有资格申请德国（联邦或州）的援助措施以及是否具备政府参与的可能性需要支持或咨询，请您联系我们。

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