Editor’s Note: The Fourth Seminar of the International Commercial Expert Committee of the Supreme People’s Court and Reappointment (New appointment) Ceremony of Expert Members was held successfully on September 25, 2024. Over 40 experts from more than 20 countries and regions focused on the theme of the “Collaborative Dialogue, Diverse Integration, Peaceful Development” during the seminar. Extensive and in-depth discussions were held within the framework of four specific issues. The texts of speeches delivered by the members of expert committee and distinguished guests during the discussion session on Topic Two International commercial transactions from a comparative law perspective: navigating legal intersections of international and domestic law would be posted on the CICC’s website.

The Interaction of Public Law and Private Law in Cross-Border Commercial Transactions

XIAO Yongping

President of the Wuhan University Academy of International Law and Global Governance

Standing Vice Chairman and Secretary General of China’s Society of Private International Law

First, I would like to share my personal insights on the interaction of public law and private law in cross-border commercial transactions. In today’s world, where interdependence among countries is deepening and competition in comprehensive national power is intensifying, the rule of law has become an important competitive factor. The concept of “cross-border” directly links the legal systems of different jurisdictions. The basic principles of new institutional economics tell us that different institutional designs and arrangements generate different institutional costs, affecting the efficiency of resource allocation. People generally choose those institutions that hold advantages in competition. Institutional advantages can be converted into resource advantages, prompting institutional improvements to win competition with lower costs. From a macro perspective, the laws affecting cross-border commercial transactions exist in a global interactive environment. However, laws are difficult to classify in absolute and mutually exclusive terms. Therefore, the interaction of public law and private law in cross-border commercial transactions involves not only the interaction of public and private law within a country’s legal system but also the interaction of one country’s public law with another country’s private law, as well as the interaction between domestic private law and international public law or domestic public law and international commercial law. This also includes issues of public law becoming private and vice versa. Currently, this issue has not received sufficient attention either theoretically or practically, and many theoretical and practical problems urgently need to be resolved.

Since cross-border commercial transactions encompass many areas, their forms and content are constantly evolving and expanding. Different forms of cross-border transactions involve different public and private law interaction issues. For example, current goods trade faces increasingly strict import and export controls; cross-border direct investment encounters increasingly generalized national security reviews and heavier ESG burdens; technology trade faces growing antitrust and national security scrutiny; and cross-border labor trade undoubtedly involves different countries’ labor and tax laws. Cross-border financial trade cannot escape public law regulatory issues related to foreign exchange controls, external debt filing, data security, and technology application. Cross-border e-commerce involves even more public law issues, including intellectual property infringement, customs procedures, consumer rights protection, privacy data protection, false advertising, and tax compliance, all of which are subject to the regulation of relevant domestic and international public laws.Therefore, the key to avoiding and resolving cross-border commercial disputes lies in the understanding of the similarities and differences between legal systems in different jurisdictions, particularly the interaction between public law and private law. Chinese courts, arbitration institutions, and other dispute resolution agencies need to continuously enhance the cross-border influence of Chinese law and the quality of legal products. In this sense, the topic discussed today holds profound theoretical and practical significance, and I hope that academia and the practice community will continue to conduct in-depth research on this issue in the future.

Due to time constraints, I will only address a small aspect of this issue. According to incomplete statistics, over 5,000 Chinese enterprises and organizations have been sanctioned by the U.S. Article 12 of Anti-Foreign Sanctions Law of PRC states: “No organization or individual may implement or assist in the implementation of discriminatory restrictive measures adopted by foreign countries against Chinese citizens and organizations.Where any organization or individual violates the provision of the preceding paragraph, infringing upon the lawful rights and interests of a Chinese citizen or organization, the Chinese citizen or organization may institute an action in the people’s court in accordance with the law to request the organization or individual to cease the infringement and compensate for losses.” This provision is a typical example of foreign public law influencing China’s private law. Our courts should construct specialized procedural and substantive rules for such foreign-related special lawsuits based on the dual functions of countermeasures and remedies, clarifying whether Chinese organizations and individuals can become defendants, whether centralized jurisdiction and review are required, and how to coordinate the recognition and enforcement of foreign court judgments and arbitration awards. Furthermore, it needs to be determined what conditions constitute “discriminatory restrictive measures”, whether there are requirements for the severity of “implement or assist in the implementation”, how to determine the validity of sanction clauses in commercial contracts, what the basis for claims in these lawsuits is, and how to calculate losses from a substantive law perspective. Additionally, whether contract performance obstacles caused by international sanctions constitute grounds for parties to be exempted from contractual obligations requires a categorical analysis. This must consider the nature and effectiveness of foreign sanction laws and determine based on the actual circumstances of individual cases whether to support parties claiming exemption or delay in fulfilling contractual obligations on grounds of force majeure or changed circumstances. I look forward to our courts actively implementing the provisions of Article 12 of the Anti-Foreign Sanctions Law of PRC and continuously improving the judicial remedy mechanisms for countering foreign sanctions through case law in the interaction of public law and private law.

*The original text is Chinese and has been translated into English for reference only. If there is any inconsistency or ambiguity between the Chinese version and the English version, the Chinese version shall prevail.