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The year 2024 witnessed various changes in employment law in the People’s Republic of China. This article summarizes the key developments from the past year and offers an outlook on the changes we have seen and further anticipate as we move through 2025.

January

On 10 January 2024, the Ministry of Emergency Management of the People’s Republic of China issued new workplace health and safety regulations: Regulations on Penalties for Production Safety Accidents, which apply to all employers. The regulations clarify the specific meaning of the four situations referred to as “delayed reporting, omission reporting, false reporting, and concealment reporting.” They also specify who may be held accountable and outline a range of fines – up to RMB 20 million- based on the severity of the accident. The new regulations took effect on 1 March 2024 and establish clearer accountability for reporting workplace accidents.

March

On 22 March 2024, the Cyberspace Administration of China issued Provisions on Promoting and Regulating Cross-Border Data Flows, clarifying scenarios that are exempt from security appraisals for cross-border data transfers, as a new step for the Chinese government to adjust control models in the field of cross-border data transfers.

The Provisions on Promoting and Regulating Cross-Border Data Flows introduce the following categories of “exemption scenarios”, under which pre-export data procedures are exempt:

  1. data collected and generated in activities such as international trade, cross-border transportation, academic cooperation, transnational manufacturing, and marketing, which is provided abroad and does not contain personal information or important data;
  2. personal information collected and generated overseas, transmitted to China for processing, and then provided abroad, where no domestic personal information or important data is introduced during processing;
  3. where it is necessary to provide personal information abroad to conclude or perform a contract in which an individual is a party, such as cross-border shopping, mailing, remittances, payments, account opening, flight and hotel bookings, visa processing, and examination services;
  4. where it is necessary to provide employees’ personal information abroad for cross-border human resource management in accordance with legally formulated labor rules and collective contracts;
  5. where it is necessary to provide personal information abroad in emergencies to protect the life, health, and property safety of natural persons;
  6. data processors, other than critical information infrastructure operators cumulatively providing personal information of fewer than 100,000 individuals (excluding sensitive personal information) abroad since January 1 of the current year; and
  7. data processors in free trade zones providing data abroad that is not on the negative list.

This regulation signals that the Chinese government has relaxed its control over cross-border data transfers, exempting many common international affairs scenarios from the cross-border data transfer rules.

April

On 15 April 2024, the Supreme People’s Procuratorate, the All-China Federation of Trade Unions, and the All-China Women’s Federation jointly released an update on typical cases to safeguard the rights and interests of women and children. The typical case of protecting the special rights of “three period” female employees highlights the effective use of public interest litigation by the procuratorate to protect the special rights of female employees during pregnancy, maternity, and lactation (“three period”). Chinese laws clearly prohibit employers from reducing wages, dismissing, or unilaterally terminating the employment of female workers during any of the three periods. Through detailed investigations and collaboration with government agencies, the procuratorate reinforced legal protections for women, ensuring their rights are better safeguarded.

These cases highlight the importance for employers to pay attention to specific legal protections for female employees during the three periods and the need to establish corresponding internal policies and procedures applicable to “three period” employees.

On 26 April 2024, the Ministry of Human Resources and Social Security, Ministry of Finance, and the State Taxation Administration, jointly issued favorable policies in terms of unemployment insurance.

Key measures include: (1) continuing the reduced unemployment insurance contribution rate for employers and employees of 1% (in total, reduced from the original 1.5%) until 31 December 2025; and (2) extending the unemployment insurance job stabilization refund for eligible enterprises – a policy first introduced in September 2023 in favor of employers- under this policy, large enterprises could receive up to 30% and small and medium-sized enterprises up to 60% of their previous year’s unemployment insurance contributions; however, note that this program expired on 31 December 2024.

This serves as a reminder that employers can utilize these favorable policies to reduce their costs in terms of unemployment insurance.

On 30 April 2024, the Supreme People’s Court released six typical cases of labor disputes, summarized as follows:

  1. an employer abused a contractor relationship to avoid employment;
  2. upon the expiry of the second labor contracts, the employee keeps the discretion to require a permanent labor contract;
  3. a court ruled that the scope of a non-compete obligation should be limited to a reasonable extent;
  4. investing in the employer’s competitor by an ex-employee’s spouse constituted a breach of the non-compete obligation of the employee;
  5. an employee leaving the employer refused to conduct a job handover which led to losses; accordingly, the court ruled that the employee should compensate the employer and;
  6. an employee’s legal right to take paid paternity leave after the birth of his child cannot be rejected by his employer.

These cases not only involve the protection of the legitimate rights and interests of workers but are also closely related to the overall economic and social development of China.

June

On 14 June 2024, the Ministry of Human Resources and Social Security amended the Measures for the Application and Distribution of Unemployment Insurance Benefits, and the revised Measures took effect immediately. To implement the newly revised Administrative Reconsideration Law, the Ministry has decided to amend Article 27 of the Measures to add litigation as a means to resolve disputes over unemployment insurance benefits.  This signaled that going forward employees may bring more litigation in terms of unemployment insurance.

September

On 13 September 2024, the State Council’s Measures on Gradual Delay of the Statutory Retirement Age were approved. From 1 January 2025, the statutory retirement age will gradually be delayed over a 15-year period, to 63 for men, 55 for women in blue-collar jobs, and 58 for women in white-collar jobs. The minimum period to make contributions into pension funds in order to receive a monthly pension will also gradually increase from 15 to 20 years, starting from January 2030.

Flexible retirement shifts the retirement age from a fixed date to a range, which may increase management costs and complexity for employers. HR departments will need to verify employee information, consult with employees on retirement dates, and ensure timely processing to avoid errors. Employers may also consider adjusting their HR strategies – including recruitment, training, and promotion – to adapt to the varied retirement timelines.

Local practice for such new legislation includes, upon mutual agreement between employers and employees, employees’ statutory retirement age could be postponed up to 3 years.

On 27 September 2024, the Ministry of Human Resources and Social Security and the Ministry of Finance issued the Provisional Measures on Basic Endowment Insurance Disability Benefits for Enterprise Employees. The measures, which came into effect on 1 January 2025, fill the gap in protection for employees who become ill or disabled due to non-work-related causes before reaching the statutory retirement age, providing them with stable financial support.

December

On 10 December 2024, China rolled out a personal pension scheme in response to its aging population. All workers participating in urban employee or resident basic pension insurance can now join this supplementary pension scheme through designated online platforms or banks and enjoy applicable tax incentives, including deductible contributions and reduced withdrawal tax rates. This nationwide rollout incentivizes long-term retirement savings and provides employees with broader access to diverse financial products for pension planning. The scheme was implemented on 15 December 2024.

On 11 December 2024, the National Health Commission, in conjunction with the Ministry of Human Resources and Social Security, the National Center for Disease Control and Prevention, and the Federation of Trade Unions, issued an updated Occupational Disease Classification and Directory. The updated Occupational Disease Classification and Directory expands from 10 categories and 132 diseases to 12 categories and 135 diseases, including four open-ended provisions. It will come into effect on 1 August 2025.

2025 Outlook

We continue to anticipate various developments and changes in employment law in the People’s Republic of China in 2025, including the following:

  • The statutory retirement age began to gradually increase with effect from 1 January 2025.
  • Also on 1 January 2025, the Provisional Measures on Basic Endowment Insurance Disability Benefits for Enterprise Employees came into effect.
  • In December 2024, the National Health Commission issued an updated Occupational Disease Classification and Directory, which expands the scope of occupational diseases. This update will come into effect on 1 August 2025.
  • It is expected that the expansion of public interest litigation will play a role in enforcing labor protections, particularly for vulnerable employee groups such as female workers. This shift will allow advocacy groups and trade unions to initiate legal actions on behalf of these employees, ensuring that their rights are protected.
  • It is expected that strengthened workplace safety regulations will be implemented in high-risk industries like mining and power engineering, with stricter safety standards, more frequent inspections, and harsher penalties for non-compliance. Employers in these sectors will need to enhance their safety protocols, provide regular training, and ensure proper compliance to avoid legal consequences and safeguard workers’ health and safety.

Seyfarth Shaw LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from their professional advisers. 

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You may have a judgment from a United States court against a Chinese company, and are about to contemplate the possibility of enforcing it in the far east.  Prior to the commencement of your enforcement journey, perhaps you wonder if this judgment could be enforced at all and if so, whether it would be a costly exercise? Well, due to the one-country-two-systems policy in place, one should first identify if the enforcement target is in Hong Kong Special Administrative Region (“SAR”) or Mainland China. Depending on the location of the target, the procedure, consideration and outcome could be different.

Enforcing U.S. Judgments in Hong Kong SAR

Generally speaking, foreign judgments may be enforced in Hong Kong either through the statutory route (Foreign Judgments (Reciprocal Enforcement) Ordinance (“FJREO”)) or the common law route. Whilst the FJREO covers 15 foreign countries such as Australia, Singapore, France and Germany, it does not include the United States. In the absence of any statutory mechanism to register judgments from the U.S., an American judgment holder could only rely on the common law regime, i.e., commence fresh proceedings by way of a Writ of Summons seeking to recognize the foreign judgment.

In order to be recognized as a Hong Kong judgment via the common law route, one must demonstrate to the satisfaction of the court the following questions:

  • The foreign judgment must be final and conclusive;
  • The foreign judgment be in the nature of a money award; and
  • The foreign judgment must be “in personam”, i.e., against an individual or entity.

While the Hong Kong court will not re-try the case, the judgment debtor may raise defenses such as lack of jurisdiction, fraud or natural justice to strategically delay or even challenge the enforcement process.

Once an order recognizing the judgment is granted, the judgment creditor may proceed to enforce the judgment, depending on the types of assets available. Some common enforcement actions in Hong Kong are garnishee orders (i.e., to garnish properties from third parties who are indebted to the judgment debtor; for example, monies in a bank account) and charging orders (i.e., to place a charge over the properties of the judgment debtor, which requires subsequent application for a court order for sale), provided that it is known to the judgment creditor the whereabouts of the assets.

It is therefore advisable for judgment creditors to conduct an asset search against a judgment debtor prior to any enforcement actions. At times, a judgment creditor may also need to seek from the court an oral examination order against the director of a company to obtain information on the whereabouts of the assets. 

Enforcing U.S. Judgments in Mainland China 

If the target company is situated in Mainland China, the position would be very different. Enforcement of foreign judgments in Mainland China is governed by the Chinese domestic law, in particular the Civil Procedure Law (“CPL”). Currently, the CPL provides that a Chinese court may enforce a foreign judgment either through (i) an international convention or bilateral treaty (not applicable to the U.S.) or (ii) the principle of reciprocity.

Historically, it was extremely difficult to enforce any foreign judgments in Mainland China, but in recent years, there appears to have been a change in the attitude of the Chinese courts. Since 2017, there have been several successful cases where the Chinese courts recognized and allowed the enforcement of U.S. judgments based on the principle of reciprocity. Unfortunately, the principle of reciprocity is not defined by law and may be subject to different interpretations depending on the attitudes of the local courts. Broadly speaking, the interpretation of reciprocity has been that if a Chinese judgment has in the past been enforced in a particular state in the U.S., the Chinese local court would be more receptive to allow the enforcement of a U.S. judgment from that particular state in Mainland China.

China amended its Civil Procedure Law in 2023 to provide for wider coverage of enforceable foreign judgments. Notwithstanding the changes, the principle of reciprocity has yet to be widely adopted by the Chinese courts, leaving the situation uncertain and difficult for a U.S. judgement creditor.

Conclusion

The recognition and enforcement of U.S. judgments in Hong Kong SAR and Mainland China are quite different: it is more judgment creditor-friendly in Hong Kong, whereas the position remains uncertain in Mainland China, although enforcement may nonetheless be available. Extra attention should be given when drafting the dispute resolution clause of a contract, and parties should consider whether court litigation is most appropriate forum (as opposed to arbitration, which is generally enforceable by virtue of New York Convention) should you be in a dispute against a Chinese, non-Hong Kong party.

Hong Kong neons
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Asia-Pacific
Tuesday, June 17, 2025
10:00 a.m. to 11:30 a.m. Hong Kong and China Standard Time (UTC+8)
12.00 p.m. to 1:30 p.m. Australian Eastern Standard Time (UTC+10)

U.S.
Monday, June 16, 2025
7.00 p.m. to 8.30 p.m. Pacific Time (UTC-7)

Register Here

About the Program

Hong Kong’s employment law landscape is both nuanced and evolving, shaped by statutory frameworks, common law principles, and international influences. As a dynamic global business hub, Hong Kong continues to refine its legal protections for employees while maintaining flexibility for employers. From statutory entitlements and workplace protections to termination procedures and dispute resolution, the legal environment demands that employers stay informed and agile.

This webinar will provide a practical overview of the key legal principles and processes that govern employment relationships in Hong Kong, helping employers and professionals better understand their responsibilities within the broader legal context.

Topics include:

  • The Legal Framework: Understand the key statutes and common law principles governing employment in Hong Kong, including the Employment Ordinance and other critical legislation.
  • Employment Structures: Learn about different types of employment contracts, the concept of “continuous contract”, and statutory entitlements such as rest days, statutory holidays, annual leave, sickness allowance, maternity and paternity leave.
  • Termination and Disciplinary Procedures: Gain insights into lawful termination practices, summary and constructive dismissal.
  • Employee Rights and Protections: Discover how Hong Kong law addresses workplace safety, anti-discrimination, and equal opportunity.
  • Dispute Resolution: Get an overview of the mechanisms available for resolving employment disputes, including the roles of the Labour Department, Labour Tribunal, Equal Opportunities Commission and other relevant bodies.

Please bring your questions! We will leave time at the end of our session for Q&A.

Who should attend: HR Directors, Employment Counsel, General Counsel and others with responsibility for workforces in Hong Kong.

Speakers

Kathryn Weaver, International Employment Partner in Seyfarth’s Hong Kong office
Joni Wong, International Employment Associate, Seyfarth Shaw

Register Here

If you have any questions, please contact Natalie Ng at nng@seyfarth.com and reference this event.

Learn more about our International Employment Law practice.

Pinned locations on map of globe.
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In today’s global workplace, managing sexual harassment complaints is no longer a matter confined to a single jurisdiction. As companies expand across borders, their legal obligations become increasingly complex. A recent Seyfarth Shaw webinar brought together employment law experts from the US, UK, France, Spain, Italy, and Latin America to explore the challenges of conducting cross-border investigations into sexual harassment.

The key takeaway? There is no universal playbook. Each jurisdiction brings its own legal framework, cultural expectations, and procedural nuances. For multinational employers, understanding these differences is not just helpful—it’s essential to managing risk and ensuring fairness.

A Patchwork of Legal Duties and Definitions

Across jurisdictions, the legal duty to prevent harassment varies significantly. The UK has recently introduced a positive duty on employers to prevent sexual harassment, requiring proactive risk assessments and preventative measures, much like health and safety obligations. This marks a move from reactive compliance to active prevention.

In Italy, Mexico, and Brazil, the obligation is framed within broader duties to take all necessary measures to protect employee health and safety. France goes further by incorporating the duty in the Labor Code and mandating disciplinary action against perpetrators. France also requires that the sexual harassment has happened at least twice unless the act relates to obtaining a sexual act, which is limited to a single act.

Spain also requires employers to prevent sexual harassment but has also introduced new obligations under its “Only Yes Means Yes” law, requiring employers to implement training and protocols to prevent sexual violence in the workplace.

In contrast, the US legal framework is rooted in Title VII of the Civil Rights Act and shaped by decades of case law. However, recent political developments have introduced uncertainty, particularly around protections for gender identity and sexual orientation. The legal landscape remains dynamic, and employers must stay vigilant.

The Fragile Shield of Legal Privilege

One of the more challenging aspects of cross-border investigations is managing legal privilege.  In the UK and US, privilege is a well-established principle, but how it is applied in the context of an investigation will vary depending on whether the privilege relates to attorney advice or attorney work product.  In jurisdictions like France and Spain, the concept of legal privilege is defined differently and is governed by the rules of confidentiality and professional secrecy. However, what material is protected will vary depending on whether the lawyer is external or an in-house and the application of this principle varies between EU states.

This creates a strategic challenge: conducting a thorough investigation while minimizing the risk of exposing sensitive information to the public. The solution often lies in the early involvement of external counsel, the preservation of confidentiality, which includes limiting the circulation of material in-house.

Timing Is Everything

In some jurisdictions, timing can make or break an investigation. Although all jurisdictions encourage investigations to be conducted promptly and diligently.  France and Spain, for example, impose strict deadlines for initiating disciplinary action once an employer becomes aware of misconduct. In Spain, these can be as short as 10 days. But what constitutes “awareness” is often debated. Employers must be able to demonstrate that they had sufficient knowledge to act and justify any delay.

Companies should start investigations promptly and document every step. Delays can undermine the credibility of the process and expose the company to legal risk.

Jurisdictional Overlap and Legal Complexity

When misconduct involves employees from multiple countries, determining which law applies becomes a critical and complex question. The location of the incident, the residence of the complainant and the accused, and the governing law of their employment contracts all play a role. Often, multiple legal systems must be considered simultaneously.

This reinforces the need for a coordinated, multi-jurisdictional approach to investigations. Failing to align with local legal requirements can compromise the investigation and limit the company’s ability to take effective action.

Confidentiality Isn’t Optional

In many jurisdictions, once a complaint is made, the employer has a legal obligation to act even if the complainant requests confidentiality or later withdraws the complaint. Ignoring such a report is not an option. In the UK, for example, the duty to prevent harassment means that employers must investigate to understand the risk and take appropriate action.

This underscores the importance of having clear, well-communicated policies and trained HR professionals who can manage these situations with sensitivity and legal awareness.

Cultural Norms vs. Legal Standards

Cultural context can influence how behavior is perceived, but it does not override legal standards. In many jurisdictions, the focus is on the impact of the behavior on the victim, not the intent of the accused. While cultural norms may be considered when determining the severity of disciplinary action, they do not excuse inappropriate conduct.

Employers must ensure that their global workforce understands and adheres to a consistent standard of workplace behavior, regardless of local customs.

Retaliation and Redundancy: A Legal Minefield

One of the most sensitive areas in cross-border investigations is the risk of perceived retaliation. If an employee who has raised a complaint is later selected for redundancy or disciplinary action, the company must be able to demonstrate that the decision was based on objective, unrelated criteria.

In jurisdictions like Spain, France, and Italy, the burden of proof often shifts to the employer once a retaliation claim is raised. This makes documentation, transparency, and multi-person decision-making essential. Even the appearance of retaliation can damage trust and lead to costly litigation.

Practical Next Steps for Managing Risk in Cross-Border Investigations

To protect the interests of all parties involved in what are often complex and sensitive matters, requires careful planning and early engagement with local in-house experts or counsel.  Each jurisdiction presents its own legal landscape and procedural nuances, which rarely align neatly with global policies or internal protocols. Missteps at the outset can have serious consequences, including the risk of undermining a company’s legal position.

 In-house counsel and HR professionals should consider the following practical steps:

  1. Review global grievance and disciplinary polices to ensure they allow flexibility to defer to local policies where it is necessary to comply with local laws.
  2. Conduct a jurisdictional risk assessment and engage local counsel early to accurately interpret and apply relevant local laws.
  3. Do not assume US law and policies will automatically apply to conduct committed overseas by employees of a US company.  Often multiple jurisdictions will be engaged.
  4. Initiate investigations promptly upon becoming aware of potential misconduct. Document the timeline of awareness, decisions made and actions taken to justify any delays. A clear audit trail is essential to defend against claims of inaction or procedural unfairness.
  5. Provide targeted training to key stakeholders so they understand the jurisdiction specific timelines and procedural requirements for investigations and disciplinary processes.

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On May 21, 2025, Hong Kong’s Legislative Council passed the Stablecoins Bill, establishing a regulatory framework for stablecoins–cryptocurrencies whose value is tied to an external asset or commodity. This marks an important step in positioning Hong Kong as a progressive hub for digital finance. The legislation introduces a licensing regime for fiat-referenced stablecoin (FRS) issuers and strengthens the city’s broader regulatory approach to virtual asset (VA) activities. It aims to enhance market integrity, consumer protection, and financial stability.

Key Provisions of the Bill

Under the new regime, any person who, in the course of business, issues an FRS in Hong Kong, or issues an FRS that purports to maintain a stable value by reference to the Hong Kong dollar (whether in or outside Hong Kong), must obtain a licence from the Hong Kong Monetary Authority (HKMA).

Licensed issuers will be required to meet high regulatory standards, including:

  • Proper segregation of client assets;
  • A sound and transparent stabilisation mechanism; and
  • The ability to redeem stablecoins at par value on reasonable terms.

In addition, issuers must comply with existing obligations on anti-money laundering and counter-terrorist financing, risk management, disclosure, and auditing–promoting greater transparency and trust in the ecosystem. 

Retail investors may only be offered FRS issued by licensed entities (specified licensed institutions), and issuers must  provide clear and transparent information on the asset backing of their stablecoins.

The HKMA will have oversight of the new framework, including powers to issue, suspend or revoke licences, appoint statutory managers, conduct investigations, and impose sanctions. Aggrieved parties may apply to the Stablecoin Review Tribunal for a review of decisions under the Ordinance, with a further right of appeal to the Hong Kong Court of Appeal.

Implications for Stakeholders

Stablecoin issuers will need to prepare for the licensing process and ensure their operations meet the new regulatory standards. This may involve significant investment in compliance, legal, and technology infrastructure.

Financial institutions should consider the impact of the framework on their existing services and evaluate potential opportunities for collaboration with licensed stablecoin issuers, including the development of innovative financial products.

For investors and consumers, the introduction of a clear regulatory regime provides greater security and confidence in engaging with stablecoins.

Looking Ahead

The Stablecoins Ordinance is expected to come into force later this year. Its passage marks a pivotal development in Hong Kong’s evolving financial landscape. By setting out a clear framework, Hong Kong continues to promote responsible innovation in the virtual asset space.

Stakeholders should remain engaged and consider how this new regime may affect their operations and investment strategies.

Seyfarth Shaw LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from their professional advisers. 

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On February 13th 2025, Supreme People’s Court of The People’s Republic of China (“PRC”) issued the Reply on Validity of Agreements by Hong Kong and Macao-Invested Enterprises Registered in Mainland Cities of the Guangdong-Hong Kong-Macao Greater Bay Area to Choose Hong Kong or Macao Law as the Governing Law or to Designate Hong Kong or Macao as the Place of Arbitration (the “Reply”), which took effect on February 14th 2025.  The two key breakthroughs are as follows. 

1. Litigation

According to the Reply, “If one or both parties to an agreement are Hong Kong-[1] or Macao-invested[2] enterprises registered in Shenzhen or Zhuhai of the Guangdong-Hong Kong-Macao Greater Bay Area, and they have agreed to apply the laws of HKSAR or MSAR as the governing law of their contract and assert the application of such law in litigation, the People’s Court shall uphold the agreement, provided that it does not contravene the mandatory provisions of national laws or harm public interests.”

Prior to this, the People’s Court generally held that foreign-invested enterprises were not considered foreign-related cases, so the relevant dispute concerning the agreement has to be governed by the laws of the PRC.

2. Arbitration

According to the Reply, “If one or both parties to an agreement are Hong Kong- or Macao-invested enterprises registered in any of the nine Mainland cities of the Guangdong-Hong Kong-Macao Greater Bay Area and have designated Hong Kong or Macao as the place of arbitration, the People’s Court shall not uphold a party’s request to invalidate the arbitration agreement on the grounds that the dispute lacks Hong Kong or Macao-related elements.

If the parties submit their dispute to arbitration as agreed, and after an arbitral award is rendered, one party claims that the dispute lacks Hong Kong or Macao-related elements and asserts that the arbitration agreement is invalid to resist the recognition and enforcement of the arbitral award, the People’s Court shall not uphold such a claim. ”

Previously, according to Answers to Practical Issues in Foreign-Related Commercial and Maritime Trials (Supreme People’s Court Fourth Civil Division, December 2008), the Supreme People’s Court Fourth Civil Division held that the law does not permit domestic parties to submit disputes without foreign-related elements to foreign arbitration.

The Reply grants parties greater autonomy in the choice of governing law. Foreign investors looking to invest in Greater Bay Area through a Hong Kong or Macau entity may now be able to adopt the laws of HKSAR or MSAR and designate Hong Kong or Macao as the place of arbitration to resolve disputes in respect their investment agreements.  Such change further strengthens the convenience of Hong Kong seated arbitrations in addition to the existing “friendly policy” on the recognition of Hong Kong arbitration awards in Mainland China under the Arrangement Concerning Mutual Enforcement of Arbitral Awards and its subsequent Supplemental Arrangement.

Seyfarth has experience in advising on foreign investments in China and our attorneys has profound experience in cross-border transactions and litigations in the region of Greater Bay Area.

[1] Hong Kong-invested enterprises refer to enterprises wholly or partly invested by natural persons, enterprises, or other organizations from the Hong Kong Special Administrative Region and legally registered in Mainland China.

[2] Macao-invested enterprises refer to enterprises wholly or partly invested by natural persons, enterprises, or other organizations from the Macao Special Administrative Region and legally registered in Mainland China.

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President Trump has issued three executive orders imposing new tariffs on imports from Canada, Mexico, and China effective February 4th. Canada has responded with retaliatory tariffs on imports from the U.S. On February 3rd, the U.S. and Mexico reached a deal to delay the start of U.S. tariffs for one month. 

The de minimis exception for tariffs applied to small import shipments of less than US$ 800 has also been suspended. This exemption has been used frequently by online retailers, particularly in China, to sell products into the U.S. duty-free.

U.S. Tariffs on Imports from Canada 

  • Tariff rate:  25%, effective February 4th on almost all imports from Canada.
  • There is an exception for “energy or energy resources” imported from Canada. These will be subject to a lower tariff rate of 10%. However, Trump has also stated that tariffs will be increased on oil and gas from Canada, as soon as later this month. “Energy or energy resources” is defined as crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, and critical minerals. A list of critical mineral has been published by the Department of the Interior.

Canadian Tariffs on Imports from the U.S.

  • Two tranches of 25% tariffs, the first effective February 4 and the other going into effect 21 days later.
  • The initial target for the tariffs is a wide range of consumer products, including: food, cosmetic, hygiene and toiletry products, tires, clothing, footwear, accessories, wood and paper products, household appliances, glassware, flatware and utensils, and other consumer products.
  • The second round of products will be broader, and include cars, steel, aluminum, and a wide range of agricultural products.
  • Canadian importers may apply for refunds if inputs cannot be sourced within Canada or if there will be “severe adverse impacts on the Canadian economy.”

U.S. Tariffs on Imports from Mexico 

  • Tariff rate:  25% on all imports from Mexico.
  • No reduced tariff rate for energy imports from Mexico.
  • Mexico was reportedly planning tariffs on steel, aluminum, and food imported from the U.S., although an agreement has postponed the onset of U.S. tariffs and Mexican retaliatory tariffs.

U.S. Tariffs on Imports from China

  • New Tariff Rate: 10% on all imports from China. The new tariffs will apply in addition to any other customs duties and other fees applicable to the imports from China.
  • Hong Kong/Macao Exempt: Under the executive order, the tariffs do not appear to apply to products from Hong Kong or Macao.

Rationale for Tariffs

The executive orders state the president is imposing the tariffs under the broad powers granted to him under the International Emergency Economic Powers Act (IEEPA) and in response to drug smuggling (particularly fentanyl) from the countries targeted, as well as in response to illegal immigration.

Other Tariff Measures Coming

The executive orders state that the US will apply tariffs further if the targeted countries retaliate. In addition, Trump has discussed raising tariffs against the E.U., Brazil, Russia, India, Indonesia and various countries in the Middle East and Africa. In additional Trump has proposed tariffs on semiconductors, pharmaceuticals, oil, steel, aluminum, and copper imported from all countries.

Supreme Court of the United States located in Washington DC which interprets laws. It is the Judicial Branch of the US government.
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On December 3, 2024, the U.S. Supreme Court heard argument in Republic of Hungary v. Simon. The case involves Hungary’s theft of valuable items from Jewish families during the Holocaust. The plaintiffs sued the Republic of Hungary and its national railway in the United States, arguing that a federal court in Washington, D.C. could exercise jurisdiction over Hungary under the Foreign Sovereign Immunities Act (FSIA). FSIA provides that foreign sovereigns can be sued in the United States in cases where “rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States” and is used for a commercial activity. The plaintiffs argued that the valuable items stolen by Hungary were sold and the proceeds placed in Hungary’s bank accounts. Since Hungary currently uses funds in its bank accounts for commercial activities in the United States, the plaintiffs argued that Hungary could be sued there as a result of its conduct during the Holocaust.  

The D.C. Circuit Court of Appeals agreed. The Circuit Court held that the plaintiffs do not have to “trace funds in the foreign state’s…possession to proceeds from the sale of their property” because to do so “would render the FSIA’s expropriation exception a nullity for virtually all claims involving liquidation.” The Circuit Court relied upon “the fungibility of money” and contended that holding otherwise would “create a safe harbor for foreign sovereigns who choose to commingle rather than segregate or separately account for the proceeds from unlawful takings.” Hungary sought review in the U.S. Supreme Court, which agreed to hear the case. During oral argument on December 3, 2024, the justices heard from both sides and from the United States, which argued in favor of Hungary. The justices asked tough questions, but a majority appeared to disagree with the D.C. Circuit. 

Justice Elena Kagan appeared sympathetic to the D.C. Circuit’s holding, worrying that Hungary’s position would “provide a roadmap to any country that wants to expropriate property.” Other justices, such as Justice Ketanji Brown Jackson, questioned whether the D.C. Circuit’s approach was consistent with the statutory text, noting that under the FSIA, “we have to find the connection between the original expropriation and [the property] they’re pointing to today.” Justices Neil Gorsuch and Samuel Alito suggested that courts should apply “tracing rules from” cases outside the sovereign immunity context, such as cases involving misappropriation of funds by fiduciaries.

Justice Clarence Thomas suggested that once the proceeds from expropriated goods are deposited “in a general account,” the funds are “off limits to FSIA claims.” Justice Brett Kavanaugh worried about the “friction” the D.C. Circuit’s holding might create with other countries, while Chief Justice John Roberts raised concerns that the plaintiffs were advocating for “throwing out the whole sovereign immunity principles under which the rest of the world operates.” Justices Sonia Sotomayor and Amy Coney Barrett questioned whether, once property has been liquidated and the resulting cash used to purchase something else, that ultimate purchase meets the FSIA requirement that the property in the United States was “exchanged for” the stolen property, given the chain of transactions involved. 

Despite the dark underlying subject matter, the justices drew a few laughs during oral argument. When Justice Gorsuch asked the United States why it did not offer much argument on the issue of who bears the burden of proof on this issue, and the United States responded that “we are word-limited in our briefs,” Justice Gorsuch replied that “[y]ou can always use them wisely too.” When the United States later asked for more time during the argument to “push back” on a point Justice Gorsuch made, he responded “I think you’ve pushed back enough.” Justice Barrett caused some chuckles when she raised a hypothetical in which she “steal[s] Justice Gorusch’s car.”

Although the issue before the Court is limited to unique facts and the FSIA’s expropriation provision, the Court’s decision could potentially impact other aspects of FSIA jurisdiction. The Court’s opinion could address issues of who bears the burden of proof in establishing that FSIA’s jurisdictional exceptions do or do not apply, and the extent to which FSIA plaintiffs have to allege a nexus between the United States and certain funds or property at issue. The Court’s decision is one to watch.

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EJ Yao, Unsplash

On Wednesday, December 11th, Seyfarth attorneys Steve Kmieciak and Sara Beiro Farabow will present the third installment of a series of micro-webinars focused on key legal perspectives and considerations for those operating in the hospitality industry. This session will address key considerations for adapting construction forms for international hospitality renovations, including whether to modify or draft new contracts, navigating local laws and practices, working with local counsel, and crafting effective dispute resolution provisions.

Click here for more information and to register.

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Perhaps you represent a U.S. company that is entering into a contract with an overseas entity, or vice versa.  You are contemplating whether the contract should provide for arbitration or litigation in the event of a dispute.  In deciding that question, you may ask: if your client wins in the proceeding against the other party, is it easier to enforce a non-U.S. court judgment or a non-U.S. arbitration award in the United States?

As it turns out, each scenario presents unique challenges.  There is no uniform U.S. law governing the recognition of non-U.S. judgments, but rather a patchwork of varying state laws, which can make recognition more complicated.  Confirmation of non-U.S. arbitration awards, on the other hand, is governed by a single, uniform federal statute in the United States.  Even so, U.S. proceedings to confirm an arbitration award have to be made on a shorter timetable than proceedings to recognize a non-U.S. judgment, and confirmation of arbitration awards can raise other, complicated issues. 

Dispute resolution provisions in contracts are often treated as “boilerplate,” but the choice between arbitration and litigation can be an important one.  Lawyers drafting contracts involving both U.S. and non-U.S. parties should think carefully about the differences between enforcing judgments and arbitration awards in the United States to decide whether court or arbitration proceedings are the right choice for their clients.

Continue Reading Judgment Gymnastics: Enforcing Overseas Judgments and Arbitration Awards in the U.S.