Do state-owned enterprises enjoy sovereign immunity?

• Author: Guan Feng (James)
• Published date: 27/09/2018
• Citation: jd0112
• Date: 27 September 2018
• Subject Matter: Dispute Resolution

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CHINA LAW INSIGHT

Do state-owned enterprises enjoy sovereign

immunity?

By King & Wood Mallesons on September 27, 2018

by：Guan Feng (James) King & Wood Mallesons

Introduction

Agai nst the back drop of the Belt & R oad Init iati ve a nd m ore Chin ese stat e-ow ned

enterprises (“SOEs ”) g oing out boun d, i f yo u ar e a prud ent stak ehol der, you are pos sibl y

conc erne d ab out whet her you have a p roba ble path to judi cial res olut ion of r ecov ery

from an SOE in c ase ther e is any dis pute . It can be conf usin g wh ethe r SO Es q uali fy f or

stat e im muni ty. In this art icle we cons ider thi s is sue in l ight of the prac tice in the

Unit ed N atio ns C onve ntio n on Jur isdi ctio nal Immu niti es o f St ates and The ir P rope rty

(the “UN Convention”) , th e Pe ople ’s R epub lic of C hina (th e “PRC”), Hong Kong SAR,

the Unit ed S tate s (t he “ US”) , an d th e Un ited Kin gdom (th e “U K”).

The lega l do ctri ne o f so vere ign immu nity , or sta te i mmun ity init iall y pr ovid ed t hat a

stat e is imm une to t he j uris dict ion of f orei gn c ourt s an d th e en forc emen t of cou rt

orde rs, even if the acts inv olve d ar e co mmer cial in natu re, unle ss i t ch oose s to wai ve

such imm unit y. T his is r efer red to a s th e do ctri ne o f “a bsol ute immu nity ”. Not unti l th e

mid- twen tiet h ce ntur y wh en g over nmen ts b ecam e mo re a ctiv e in com merc ial acti viti es,

was the doct rine con demn ed t o be unf air to p riva te c ompa nies . S ince 197 0s, the US

and some Eur opea n co untr ies have swi tche d to the doc trin e of “qu alif ied immu nity ” or

“res tric tive imm unit y” b y co dify ing exce ptio ns t o li mit the appl icat ion scop e wi th

resp ect to, for exam ple, com merc ial tran sact ions , pe rson al i njur ies, and pat ents .