{"id":377,"date":"2026-07-29T14:09:48","date_gmt":"2026-07-29T14:09:48","guid":{"rendered":"https:\/\/nationalconsumerreportss.com\/?p=377"},"modified":"2026-07-29T14:09:48","modified_gmt":"2026-07-29T14:09:48","slug":"sued-by-the-state-judged-by-the-state","status":"publish","type":"post","link":"https:\/\/nationalconsumerreportss.com\/?p=377","title":{"rendered":"Sued by the State, Judged by the State"},"content":{"rendered":"
\n

China\u2019s procuratorates, the state\u2019s prosecutors and legal supervision organs, have spent a decade acquiring a power unusual by Western standards\u2014the right to sue in the public\u2019s name over harms that no single plaintiff owns, from polluted rivers to unsafe food. On June 23, the Standing Committee of China\u2019s National People\u2019s Congress (NPC) took up the second reading of the proposed Procuratorial Public Interest Litigation Law, which gathers that scattered authority into a single statute. A proposed law in China normally receives three deliberations before a vote, and a text that has cleared its second reading is usually adopted at the third. This one also acquired a provision aimed at foreign entities that the first reading, submitted in October 2025, did not contain.<\/p>\n

Read more Lawfare Daily: Dispatches from the 2026 Aspen Security Forum<\/a><\/p>\n

The clause, Article 51 of the , sits alone in the law\u2019s supplementary provisions and is one sentence long: \u201cWhere foreign organizations or individuals commit illegal acts that harm China\u2019s national interests or the public interest, people\u2019s procuratorates may bring public interest litigation in accordance with law.\u201d That sentence hands the prosecutorial service standing to sue foreign companies in the public\u2019s name. The official newspaper of China\u2019s courts put its purpose plainly, describing the clause as enriching the state\u2019s \u201clegal toolbox\u201d for defending national and public interests.<\/p>\n

That toolbox is the one Beijing has spent this year filling against foreign firms. In an earlier piece, I traced two of its new tools: the 2024 Nanjing Maritime Court case that turned an act of U.S. sanctions compliance into an actionable civil wrong, and State Council Order 834 and Order 835, issued on March 31 and April 7, 2026, that handed the same logic to regulators.<\/p>\n

Article 51 is built differently. The earlier instruments punish compliance with foreign sanctions; the new clause is a general-purpose weapon, reaching any conduct the state deems to have harmed an interest it defines for itself. What follows maps the four channels China now holds against foreign firms, shows why the newest is built for abuse, and asks what Washington can do while the text is in flux.<\/p>\n

Four Channels, One Foreign Target<\/strong><\/p>\n

Chinese law already reaches a foreign company through three familiar forms of liability: criminal, civil, and administrative. Each form has its own channel. The proposed law opens a fourth. The four make a ladder, and the constraints thin as you climb.<\/p>\n

The criminal channel is the oldest. Chinese prosecutors indict, and Chinese courts convict, foreign firms\u2019 local entities and staff. GlaxoSmithKline\u2019s China subsidiary took a record 3 billion yuan criminal fine for bribery in 2014, and the counter-espionage sweep of 2023 held due diligence staff in Beijing in detention for two years. The machinery is entirely the state\u2019s, but it is tethered, at least formally, to the criminal code\u2019s defined offenses and standards of proof.<\/p>\n

The second channel is private. Article 12 of the Anti-Foreign Sanctions Law lets a Chinese company or citizen sue anyone who implements or assists a foreign discriminatory measure against it. The plaintiff can demand a halt and damages. The 2024 Nanjing Maritime Court case set the template. When a Swiss buyer withheld an $11.86 million installment from a Chinese marine-engineering firm newly under U.S. sanctions, the court froze the buyer\u2019s vessel in a Chinese yard.<\/p>\n

The case settled through mediation only after the buyer obtained a specific license from the U.S. Office of Foreign Assets Control (OFAC). For four years, the channel sat nearly idle. No longer. In May, Wingtech sued Nexperia, the chipmaker it lost to Dutch intervention, in a Guangdong court for a provisional 8 billion yuan, and another Chinese firm has sued Citibank and JPMorgan over payments frozen under U.S. sanctions. But whatever public interest it serves is incidental, a by-product of a plaintiff suing over its own losses, and the channel moves only when a victim chooses to sue.<\/p>\n

The third channel is administrative. Orders 834 and 835\u2014part of a regulatory family that includes the Unreliable Entity List provisions, the 2021 blocking rules, and this year\u2019s counter-jurisdiction regulations\u2014allow regulators to investigate a foreign firm\u2019s commercial decisions and punish them with no lawsuit at all. Article 15 of Order 834 authorizes fines, import and export bans, entry bans on corporate personnel, and an Unreliable Entity List designation for when a foreign firm interrupts normal dealings with Chinese parties and thereby threatens supply chain security. No court appears at any stage; an agency finds the facts, names the harm, and sets the penalty. This is the channel my earlier piece analyzed.<\/p>\n

Article 51 opens the fourth channel. The procuratorate sues foreign organizations and individuals in the name of national and public interests in the criminal channel\u2019s same architecture. A state prosecutor sues and a state court judges. What it sheds are that channel\u2019s tethers. Line the four up: The criminal channel binds the state to offenses defined in advance, the private channel waits on an injured plaintiff, and the administrative channel answers at least to its own regulations\u2019 criteria. The fourth keeps the machinery and drops every constraint. There is no defined offense, no victim, and no criterion beyond an interest the state names for itself.<\/p>\n

From Polluted Rivers to Foreign Firms<\/strong><\/p>\n

Procuratorial public interest litigation is young, fast growing, and politically prized. A 2014 Communist Party plenum ordered its exploration; a two-year pilot in 13 provinces followed in 2015; and 2017 amendments to the Civil Procedure Law and the Administrative Procedure Law wrote it into national law in two fields, ecological protection and food and drug safety. The pilot set the tone. By its close, Chinese courts had decided 222 cases, and, based on Xinhua\u2019s official tally, the procuratorates had won every one.<\/p>\n

More than two dozen successive statutes wrote clauses allowing public interest litigation in fields from personal information to antitrust to national heroes and martyrs. The Supreme People\u2019s Procuratorate\u2019s (SPP\u2019s) own count estimated the system has handled more than 1.1 million cases since 2017. The draft law now before the NPC consolidates that sprawl into a single statute. Its Article 3 carefully lists what domestic public interest litigation may reach: administrative suits in nine fields, from the environment to workplace safety to \u201cethnic unity,\u201d and civil suits against five categories of conduct, from monopolies to mass infringement of workers\u2019 rights to insults to national heroes.<\/p>\n

Article 51 has no list at all\u2014any \u201cillegal act\u201d that \u201charms\u201d China\u2019s national or public interests qualifies. The asymmetry is the point. A Chinese defendant can be sued by a prosecutor only for conduct the legislature took care to enumerate. A foreign defendant faces an open-ended standard whose every operative term\u2014the illegality, the harm, and the interest\u2014the state defines for itself. The draft\u2019s other safety valves are keyed to the domestic list, not to the foreign clause. The screen against docketing a civil case when an administrative fix would do attaches to Article 3\u2019s categories.The 30-day notice that gives nongovernmental organizations and designated agencies first crack applies only where some other body holds a statutory right to sue. For an \u201cillegal act harming national interests\u201d by a foreigner, no nongovernmental organization holds one. On the text, the foreign defendant gets the broadest exposure and the fewest filters.<\/p>\n

Read more The Subpoena Detective: A Dispatch from the Times Hearing<\/a><\/p>\n

None of this is improvised. By the NPC Legislative Affairs Commission\u2019s account, the clause entered the draft at the suggestion of deputies seeking a legal basis for foreign-related public interest litigation. And the SPP published the target list two years ago. A 2024 article by a deputy director of its public interest litigation department mapped the coming foreign docket by asking which element of a case carries the foreign connection. It may be the defendant, as with a foreign company that unlawfully processes personal information inside China; the conduct, as with a monopoly agreement signed and performed abroad; or the property itself, as with cultural relics lost overseas. The taxonomy is exhaustive by design, covering every way a case can reach across the border. An apparatus built to protect rivers is being aimed\u2014by its designers\u2019 own description\u2014at foreign enterprises and agreements concluded abroad.<\/p>\n

A Fourth Penalty the State Controls End to End<\/strong><\/p>\n

What makes the fourth channel dangerous is visible in how the tool already behaves at home, starting with what counts as an \u201cillegal act.\u201d The phrase reaches any violation of Chinese law, and nothing in it requires an American measure to set the case in motion. The SPP\u2019s own map bears this out, leading with data processing and offshore monopolies rather than anything to do with sanctions. But the statute book is also stocked with provisions that routine Western compliance violates. A firm that stops sourcing from a Chinese supplier to satisfy the commits the discriminatory act the Anti-Foreign Sanctions Law and Order 834 condemn. A multinational that hands China-held data to a foreign regulator without Beijing\u2019s approval violates Article 36 of the Data Security Law. One that honors U.S. secondary sanctions in its China business now risks being designated on the \u201cmalicious entity\u201d list under April\u2019s counter-jurisdiction regulations. Even the supply chain diligence U.S. law demands has been treated as a security offense under the expanded Counter-Espionage Law. Each of these is an \u201cillegal act\u201d; a prosecutor need only add that it \u201charms national interests,\u201d a conclusion the state reaches by consulting itself.<\/p>\n

The suit that follows lands on top of everything else. The three familiar liabilities each carry their own design and ceiling. Public interest litigation lays a fourth layer over them, and although Chinese law files it as a remedy, it works as a second punishment. In a widely reported 2022 case, the operators of a Chengdu hotpot restaurant that reused \u201cold oil,\u201d the recycled base long treated as traditional in Sichuan hotpot, were convicted of producing toxic food, imprisoned, and fined 2.6 million, 100,000, and 60,000 yuan. Then, the subsequent public interest suit filed on the same facts ordered the same defendants to apologize in a newspaper and pay more than 13.76 million yuan\u2014ten times their proceeds\u2014in punitive damages. The criminal fine already carried the deterrent weight the legislature designed; the suit added a second penalty many times larger, in the public\u2019s name. For a foreign firm, the stacking now spans channels. Dropping a supplier from Xinjiang can draw an Order 834 penalty and an Article 51 lawsuit, each keyed to the same fact.<\/p>\n

And the state oversees the proceedings from end to end. The procuratorate is no ordinary plaintiff. Under the Chinese constitution, it is the state\u2019s legal supervision organ, whose to how courts handle cases. The courts have behaved accordingly, from the pilot\u2019s unbroken record forward. The proposed law hardwires the tilt in the state\u2019s favor. A losing defendant may appeal, but a procuratorate that thinks the judgment wrong files a \u201cprotest,\u201d a supervisory instrument that requires the appellate court to reopen the entire case. Nor is settlement a real exit. The draft permits mediation, but the agreement must survive public notice and judicial review for whether it damages national or public interests\u2014the very interest the suit asserts\u2014so the plaintiff\u2019s own cause of action polices the compromise. The Nanjing defendant, sued privately, could mediate its way out; a defendant sued in the public\u2019s name negotiates inside a circle the state draws.<\/p>\n

The draft\u2019s defenders will point to its restraints, and some are real on paper. Article 5 instructs prosecutors to exercise \u201cnecessary prudence.\u201d Article 17 bars asset freezes during the investigation. And Article 6 subjects the procuratorate\u2019s work to supervision by people\u2019s congresses and the public. But the freeze returns the moment a suit is filed, and the only institutional supervisor is an organ of the same party-state that is suing. For a foreign defendant, the restraints amount to the state promising to watch itself.<\/p>\n

Put these pieces together, and the likeliest design comes into view. Most public interest remedies\u2014such as restoring a cultural site or ending an environmental harm\u2014mean nothing against a foreign firm accused of injuring an abstract national interest. What remains is money, on the scale the hotpot case shows, awarded through a courtroom so the penalty arrives dressed as a judicial finding rather than an administrative fine. The teeth of Article 51 are on firms with a presence in China, whether subsidiaries, assets, or personnel. Firms caught between Chinese and Western law are the most exposed, but any company the state decides has harmed its interests is a target.<\/p>\n

No Symmetric Answer, and What to Build Instead<\/strong><\/p>\n

The instinctive question is whether the United States has an equivalent legal tool and should build one if not. As it stands, the United States does not have one, nor should it. Washington already has channels through which the state sues in the public\u2019s name. State attorneys general sue on behalf of their residents to protect the state\u2019s own broad interests, and private relators sue in the government\u2019s name under the False Claims Act. Each is bounded in ways Article 51 is not. They require a cognizable injury or a real state interest rather than an undefined national interest, and they are heard by courts independent of the plaintiff. Copying the Chinese design\u2014a state plaintiff, a state referee, and a blank standard\u2014would trade away the very features\u2014judicial independence and a defined injury requirement\u2014that make the U.S. legal order a strategic asset. It would also buy little, since Chinese firms hold far less exposure inside the United States than multinationals hold inside China, so the weapon would deter far less than it corrodes.<\/p>\n

The better response is defensive, and it has a model. The European Union\u2019s so-called blocking statute refuses to recognize or enforce foreign judgments that give effect to the extraterritorial laws in its annex and lets EU operators recover what those laws cost them. The United States, long the target of such statutes, could turn the instrument on Chinese judicial coercion through legislation denying recognition and enforcement to Chinese public interest judgments premised on a firm\u2019s compliance with U.S. law, with a clawback for what such a judgment extracts. The European experience carries a warning. Broad authorizations to comply have hollowed out the statute in practice, and a U.S. version should not repeat the escape hatch.<\/p>\n

The nearer-term work is administrative. Two federal agencies, one at Treasury and one at Commerce, decide what a firm may sell and whom it may deal with. OFAC maintains the list of blocked persons and can lift the bar it creates through a general license for an entire category of transactions or a specific license granted on application. The Bureau of Industry and Security (BIS) controls exports through its Entity List and, under the Affiliates Rule, reaches companies majority-owned by listed parties. None of this is automatic. An administration picks who goes on a list, who comes off, and what gets licensed, and it can suspend a rule outright, as the White House did with the Affiliates Rule, which is set to snap back in November 2026.<\/p>\n

That discretion cuts both ways. When OFAC weighs a license, or BIS weighs a designation under the Affiliates Rule or OFAC\u2019s standing 50 Percent Rule, the exposure to Chinese litigation that follows, now including a state suit brought in the public\u2019s name, belongs in the compliance calculus the agencies hand firms rather than being left for each firm to discover in a Chinese courtroom. And allies that already operate blocking regimes are the natural partners for mutual nonrecognition of these judgments.<\/p>\n

The text is not yet final. The second-reading draft is open for public comment through July 25, and past practice points to a third and likely final reading by year\u2019s end. Until that vote, the ask writes itself. Define the conduct, define the interest, or strike the clause. Beijing will almost certainly do none of it, but objections put on the record now will matter later, when the first foreign defendant argues it faced a standard no firm could have known in advance. None of this stops China from opening the channel; it determines whether an allied firm meets it with a backstop or alone. The alternative is a legal order in which Beijing defines the offense, prosecutes it and judges it, and the foreign defendant faces it by itself.<\/p>\n

Read more The AI Sovereignty Paradox<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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