The European Commission’s foreign subsidies investigation of Nuctech 18 May 2026 Once a measure is identified, Article 13 authorises entity-specific prohibition orders against any party implementing orassisting in it.2Please refer to our recent publication for moredetails about the regulations: “China’s New Countermeasures Just one week afterthe Ministry of Commerce issued its first blocking order, on 15 May 2026, the Ministry of Justice of thePeople’s Republic of China (MOJ) invoked the Regulationsof the People’s Republic of China on Counteracting UnlawfulForeign States’ Extraterritorial Jurisdiction (Counter-Extraterritoriality Regulations), identifying the EuropeanCommission’s (Commission) investigation of Nuctech Co.,Ltd. (Nuctech) under the EU Foreign Subsidies Regulation(FSR) against Chinese entities as an unlawful extraterritorial The Nuctech investigation The Nuctech investigation has served as the principal testcase for the FSR’s reach into data and personnel informationoutside of the EU. On 23 April 2024, the Commissionconducted the FSR’s first unannounced inspections at Nuctech’s Warsaw and Rotterdam subsidiaries, demandingaccess to records on Beijing servers. In Case T-284/24 RNuctech Warsaw and Nuctech Netherlands v. Commission,the president of the EU General Court refused, on 12August 2024, to suspend the inspection decision in aninterim ruling – technicallyobiter dictaon the Chinese-lawquestion, since interim relief failed on other grounds – holdingthe qualified-effects doctrine to sustain extraterritorial Background The Counter-Extraterritoriality Regulations Promulgated on 13 April 2026, the regulations tookimmediate effect, consolidating into a single StateCouncil-level instrument the identification, blocking andcountersanctioning tools assembled since 2020. The 20articles establish an interagency working mechanism, 1Regulations of the People’s Republic of China on Counteracting Unlawful Foreign States’ Extraterritorial Jurisdiction, State Council Decree No. 835(promulgated and effective 13 April 2026); Ministry of Justice of the People’s Republic of China, Announcement No. 5 of 2026, Announcement on theIdentification of the European Union’s Foreign Subsidies Regulation Investigation Practices Against Nuctech as an Unlawful Extraterritorial JurisdictionMeasure (15 May 2026).2Counter-Extraterritoriality Regulations,supran. 1, arts 3, 4, 6, 8, 13 and 14;Anti-Foreign Sanctions Law of the People’s Republic of China (10 June 2021), art 12;State Council of the People’s Republic of China, Notice on Countermeasures Against Foreign States’ Unlawful Extraterritorial Jurisdiction (13 April 2026). The identification and Prohibition Order Consequences of noncompliance Under Article 13, the State Council legal department,following the working mechanism’s procedures, may issue anentity-specific prohibition order against any organisation orindividual that ignores the general prohibition. Noncompliancewith such an order may attract administrative penalties,including monetary fines and restrictions on procurementin China; on imports and exports of goods, technologiesand services; on cross-border data; and on exit, entry or The identification Issued jointly with MOFCOM and other State Councildepartments under Articles 3 and 6, the Prohibition Orderdetermines that the Commission’s FSR-based investigative residence. Foreign parties that promote or participate inthe identified measure may, in parallel, be added to the The MOJ’s reasoning, set out in the accompanyingspokesperson’s question-and-answer document, rests on twopropositions: that the Commission’s demands for broad andunrelated information within China violated international lawand the basic norms of international relations, and that those The Prohibition Order The operative ordering language is that “no organizationor individual shall implement or assist in implementing suchunlawful extraterritorial jurisdiction measures.” The ProhibitionOrder prohibits implementing or assisting in implementingthe Commission’s FSR-based investigative actions againstChinese entities in the Nuctech matter. In other words, it doesnot extend to the FSR investigations against Nuctech’s EUsubsidiaries. The regulations, by their name and fundamentalprinciples, aim to restrict extraterritorial jurisdiction. Therefore, Comparative analysis The MOFCOM refinery blocking order The Prohibition Order is the second blocking action by Beijingin roughly two weeks: on 2 May 2026, MOFCOM issued ablocking orderagainst US sanctions on five independentChinese refineries and Hengli Petrochemical (Dalian) Co., Ltd.,administered by the Office of Foreign Assets Control. Thetwo sit within different statutory regimes, MOFCOM’s underthe 2021 Rules on Counteracting Unjustified ExtraterritorialApplication of Foreign Legislation and Other Measures The Prohibition Order accordingly sits within a wider EU-Chinapolicy confrontation rather than alongside it. Institutionalretreat