6 minute read | June.04.2026
On May 23, 2026, Wingtech Technology Co. Ltd. (“Wingtech”), a publicly listed Chinese semiconductor and smart devices company, revealed in a stock exchange filing that it, together with its subsidiary Yuching Holding Limited (“Yuching”, a Hong Kong company), had filed a lawsuit under China’s Anti-Foreign Sanctions Law (“AFSL”) against three entities of the Dutch chipmaker Nexperia (Nexperia Holding B.V., Nexperia B.V., and ITEC B.V., collectively “Nexperia”) and three Dutch Nexperia executives in a court in Guangdong Province, China, and the court had agreed to hear the case.
This case marks the latest efforts by Chinese companies to invoke the AFSL as the legal basis for claims against non-Chinese companies. The AFSL, which took effect on June 10, 2021, prohibits any organization or individual from enforcing or assisting in the enforcement of “discriminatory restrictive measures” adopted by a foreign state against Chinese citizens and organizations “under various pretexts or on the basis of their domestic laws”, and grants private rights of action to victim Chinese citizens and organizations to seek injunctions and damages in Chinese courts fom organizations and individuals enforcing or assisting in the enforcement of such so-called discriminatory restrictive measures. (AFSL, Articles 3 and 12)
Wingtech acquired Nexperia in 2019 and currently indirectly holds shares in Nexperia through Yuching. In December 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) added Wingtech to the Entity List. The export, reexport or transfer of any item subject to the U.S. Export Administration Regulations to any party included on the Entity List requires a license from BIS, and there is a presumption of denial of the issuance of such a license. On September 30, 2025, BIS published an interim final rule extending the Entity List restrictions to any foreign entities that are owned 50% or more by one or more entities listed on the Entity List (the “50% Rule”), such as Nexperia. On the same day, the Dutch Minister of Economic Affairs issued an order on Nexperia invoking the Goods Availability Act (the “Dutch Minister’s Order”) citing serious governance shortcomings at Nexperia and risk to Dutch and European economic security.
According to Nexperia’s press release, the Dutch Minister’s Order prohibited Nexperia from relocating company parts, firing existing executives and/or making other decisions without explicit permission from the Dutch government for a period of a year.
On October 1, 2025, one day after the Dutch Minister’s Order, Nexperia Holding and Nexperia B.V. filed a petition with the Enterprise Chamber of the Amsterdam Court of Appeals (the “Dutch Enterprise Chamber”) requesting it to order an investigation into the policy and course of affairs of the two Nexperia entities and certain immediate measures for the duration of the proceedings.
The Dutch Enterprise Chamber granted Nexperia’s petition by taking certain immediate measures as of October 7, 2025 including, among others, suspending Zhang Xuezheng (the founder of Wingtech) as the (non-)executive director of Nexperia and appointing a non-executive director of both Nexperia Holding and Nexperia B.V., transferring the shares that Yuching holds in Nexperia Holding, minus one share to an administrator of the shares appointed by the court.
The Dutch Minister’s Order appears to have stemmed from the United States’ export control-related action against Wingtech. According to the Dutch Enterprise Chamber’s decision, the Dutch government and Nexperia became aware of the upcoming introduction of the 50% Rule by the United States in June 2025, and a report of the conversation between the Dutch Ministry of Foreign Affairs and the BIS in June 2025 revealed that the United States would likely require that the CEO of Nexperia (Zhang Xuezheng, the founder of Wingtech) be replaced in order for Nexperia to qualify for an exception to the 50% Rule. (A U.S. inter-agency “End-User Review Committee,” which oversees the Entity List, could grant exceptions to the 50% Rule on a case-by-case basis if it determined that a foreign entity captured by the 50% Rule did not pose a significant risk of diverting items subject to the U.S. Export Administration Regulations to its listed entity parent(s).) The Dutch government also explained at the court hearing that the Dutch Minister’s Order was being prepared in advance of the introduction of the 50% Rule by the United States.
China retaliated against the Dutch Minister’s Order by prohibiting Nexperia China and its subcontractors from exporting specific finished components and sub-assemblies manufactured in China. However, thereafter the Dutch Minister of Economic Affairs indicated in a letter to the Dutch parliament dated November 19, 2025, that the Dutch Minister’s Order was suspended, although it has not been revoked. The suspension occurred after discussions among China, the United States, and the Netherlands, and notably after the public announcement on November 1, 2025 by the United States and China that arrangements had been made to resume the export of Nexperia chips from China, and BIS’s subsequent announcement that effective November 10, 2025, the 50% Rule would be suspended for one year.
Thereafter, in February 2026, the Dutch court granted Nexperia’s petition for an order to investigate the policy and course of affairs of the two Nexperia entities over the period from the end of 2023.
In this AFSL lawsuit, Wingtech and the other plaintiffs have alleged that the Dutch Minister’s Order and the proceedings before the Dutch Enterprise Chamber constitute discriminatory restrictive measures adopted by a foreign state, namely the Netherlands. In the lawsuit, the plaintiffs are seeking from the court:
To understand what may happen in the Wingtech AFSL lawsuit, it may be helpful to review the first lawsuit under the AFSL, which was filed in October 2024 and was settled within 39 days.1 The plaintiff of the first AFSL lawsuit was a Chinese marine engineering company, which, in 2023, contracted with a foreign equipment company to manufacture equipment modules for the defendant’s vessel for approximately U.S.$19.45 million (equivalent to approximately 140 million Chinese Yuan).
On June 7, 2024, the plaintiff completed the construction of the modules and the final assembly of the vessel. On June 12, 2024, the plaintiff was added by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) to its “Specially Designated Nationals and Blocked Persons” list (the “SDN List”) for allegedly participating in a Russian project. Consequently, the defendant, citing the enforcement of U.S. sanctions, notified the plaintiff that it would not pay the outstanding balance of U.S. $11.86 million and refused to engage in further communication.
The plaintiff applied to the Nanjing Maritime Court for a pre-trial seizure order of the vessel in question, and the court issued an order to seize the vessel on September 18, 2024. On October 11, 2024, the plaintiff filed a lawsuit with the same court under the AFSL, seeking damages totalling over 86 million Chinese Yuan, including the balance of U.S. $11.86 million plus interest and other losses. The court agreed to hear the case despite an arbitration clause and non-Chinese governing law in the contract between the parties.
Subsequently, according to a report by the Bureau of Justice in Shenzhen,2 the defendant obtained a license from OFAC authorizing it to make payment, and it paid a counter-guarantee of U.S. $1.4 million to the court to lift the court’s seizure on the vessel. The parties applied to the court for mediation and reached a settlement within 39 days.3 The plaintiff was paid from the court out of the defendant’s counter-guarantee.
The first AFSL case suggests that the main purpose of civil lawsuits under the AFSL is for Chinese courts to help Chinese businesses recover damages from their private counterparties. Such private counterparties have no choice but to comply with so-called discriminatory restrictive measures mandated by a government of the jurisdiction to which they are subject. The AFSL essentially mandates private counterparties to pay damages to Chinese businesses for losses resulting from such measures, although these counterparties likely still need to seek permission to pay the damages from the foreign government that has imposed the measures.
Similarly, by filing the AFSL lawsuit, Wingtech is seeking damages from Nexperia, and is also likely using the lawsuit to force Nexperia to the negotiating table in an effort to either regain control over Nexperia or to unwind Wingtech’s acquisition of Nexperia, or at least Nexperia’s operations outside of China.
In addition to Wingtech, another Chinese company, HY Energy Group Co., Ltd. (“HY Energy”), disclosed that it had sued Citibank and JPMorgan in February and March 2026, respectively, in Shanghai and Beijing courts over approximately U.S.$40 million in payments to China Oil and Petroleum Company Limited (“COPC”) that the two banks froze due to OFAC sanctions.
According to HY Energy, the payments were initiated in July 2023, long before COPC was added to OFAC’s SDN List in February 2024. HY Energy is suing the banks under the AFSL for damages including the payments plus interest.
The AFSL lawsuits described above indicate that Chinese companies may increasingly use domestic legal tools to challenge sanctions and export controls mostly often originating from the United States. Non-U.S. companies should be aware that they face risks under Chinese law when they take actions to comply with OFAC sanctions that adversely affect Chinese customers or counterparties.
[1] The decisions of the presiding court have not been published. The description of the lawsuit below was based on official sources such as a report by the presiding court at https://www.njhsfy.gov.cn/zh/sfal/detail/id/10024.html (last visited May 27, 2026) and a report by the Bureau of Justice in Shenzhen, China at https://sf.sz.gov.cn/attachment/1/1619/1619099/12344866.pdf (last visited May 27, 2026). The names of the two parties have not been revealed by the authorities.
[2] See footnote 1.
[3] The settlement agreement is not publicly available.