Do state-owned enterprises enjoy sovereign immunity?

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

2020/11/10Do state-owned enterprises enjoy sovereign immunity? | China Law Insight

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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

Against the backdrop of the Belt & Road Initiative and more Chinese state-owned

enterprises (“SOEs”) going outbound, if you are a prudent stakeholder, you are possibly

concerned about whether you have a probable path to judicial resolution of recovery

from an SOE in case there is any dispute. It can be confusing whether SOEs qualify for

state immunity. In this article we consider this issue in light of the practice in the

United Nations Convention on Jurisdictional Immunities of States and Their Property

(the “UN Convention”), the People’s Republic of China (the “PRC”), Hong Kong SAR,

the United States (the “US”), and the United Kingdom (the “UK”).

The legal doctrine of sovereign immunity, or state immunity initially provided that a

state is immune to the jurisdiction of foreign courts and the enforcement of court

orders, even if the acts involved are commercial in nature, unless it chooses to waive

such immunity. This is referred to as the doctrine of “absolute immunity”. Not until the

mid-twentieth century when governments became more active in commercial activities,

was the doctrine condemned to be unfair to private companies. Since 1970s, the US

and some European countries have switched to the doctrine of “qualified immunity” or

“restrictive immunity” by codifying exceptions to limit the application scope with

respect to, for example, commercial transactions, personal injuries, and patents.