Meaning
Judicial restraining orders that prohibit a party from initiating or continuing litigation in a foreign court protect the jurisdiction of the issuing tribunal or enforce an exclusive forum agreement. Chinese people’s courts issue an anti-suit injunction primarily through act preservation orders under Article 103 of the Civil Procedure Law. The Supreme People’s Court confirmed this practice in intellectual property disputes involving standard essential patents, establishing that preservation measures can restrain extra-territorial legal actions.
The measure stops applying once parallel foreign proceedings conclude, when the parties settle, or if the applicant fails to provide the court-ordered counter-security within the statutory period.
Enforcement Mechanism
Daily coercive fines and judicial detention secure compliance when a respondent disobeys a prohibitive order. The Intermediate People’s Court or specialized Intellectual Property Court assesses whether foreign proceedings would frustrate Chinese jurisdiction or render an eventual domestic judgment unexecutable. Chinese courts evaluate the impact on public interest and international comity, balancing these against potential losses suffered by the applicant.
Daily penalties accumulate against non-compliant foreign litigants, often reaching statutory maximums rapidly to compel withdrawal of foreign motions. Contempt findings lead directly to the freezing of domestic operational assets or supply chain revenues.
Counter Injunction
Conflicting jurisdictional assertions arise when a foreign court issues an anti-anti-suit injunction against the Chinese claimant. The Supreme People’s Court treats such foreign countermeasures as direct interference with Chinese judicial sovereignty. When a foreign tribunal penalizes a domestic patentee for seeking relief in China, the domestic court increases the daily preservation fine or issues immediate preservation orders against the infringer’s Chinese bank balances.
These competing orders place multinational manufacturing entities under concurrent contradictory commands from two sovereign courts.
Operational Exposure
Global supply chain contracts containing foreign dispute resolution clauses face operational disruption when domestic manufacturers initiate act preservation proceedings inside China. Foreign buyers cannot rely on home-jurisdiction forum selection clauses to stay Chinese proceedings if the court asserts jurisdiction over local manufacture or distribution. An order disrupts global licensing negotiations by setting court-mandated royalty rates under threat of daily commercial penalties.
The extraterritorial reach remains tethered to tangible assets within Chinese territory, as foreign courts routinely refuse to recognize Chinese prohibitive orders that conflict with their own forum determinations.
