China’s new financial court given jurisdiction to handle lawsuits involving overseas firms

Extraterritorial application of China’s financial laws said to play a role in further opening up the domestic market

Announcement comes as China’s overseas financial interests are increasing rapidly, and as Chinese companies have been targeted by American sanctions

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The Supreme People’s Court says the extraterritorial application of China’s financial laws would help further open up the domestic market. Photo: Shutterstock

Published: 8:00pm, 17 Mar 2021Updated: 8:36pm, 17 Mar 2021

China’s top court has authorised the newly created Beijing Financial Court to hear lawsuits against overseas financial entities that have allegedly damaged the “legitimate interests” of Chinese domestic investors.

The move to “increase international influence” and “improve the extraterritorial application of Chinese laws” comes at a time when many Chinese firms have been targeted by United States government sanctions, even as China’s overseas financial interests are increasing at their fastest pace in decades.

The announcement also comes just before US Secretary of State Antony Blinken and National Security Adviser Jake Sullivan are due to meet China’s top diplomats, Yang Jiechi and Wang Yi, in Alaska on Thursday. Beijing has complained bitterly about Washington’s application of its “long-arm jurisdiction” of American laws and regulations on Chinese companies amid escalating US-China tensions in recent years.

The Supreme People’s Court decision on the Financial Court’s jurisdiction took effect on Tuesday, according to a statement on the Supreme People’s Court website.

The extraterritorial application of China’s financial laws will play a bigger role in further opening up the domestic market

Supreme People’s Court

The Beijing Financial Court is the second of its kind in China, following the Shanghai Financial Court, which was established in August 2018. A total of 25 judges were appointed by the Beijing municipal legislature last week, and the Beijing Financial Court’s official inauguration could come in the near future.

The Supreme People’s Court has not yet published the full text of the 13-article regulation outlining the new financial court’s jurisdiction. However, the articles’ contents were touched upon in the online statement, which said that Article 2 stipulates the new court’s “centralised jurisdiction” over securities and futures disputes involving overseas-listed Chinese or foreign companies, as well as in cases involving alleged legal violations by “overseas providers of other financial products or services”.

“The extraterritorial application of China’s financial laws will play a bigger role in further opening up the domestic market,” the court said, without elaborating.