China is rewiring the legal framework around its ports and supply chains and that matters for every UK shipper moving goods to, from or via China.
Two new sets of rules in 2026 change who controls disputes, how far you can probe your supply chain, and how China may respond to Western sanctions and due‑diligence demands.
Below we set out what’s changing and what Metro’s customers should be thinking about.
New maritime law puts China’s courts in the driving seat
From 1 May 2026, China’s revised Maritime Code gives Chinese law a much stronger role in contracts of carriage linked to Chinese ports. Where the port of loading or discharge is in China, Chinese courts can apply Chapter IV of the Code to carriage contracts even if the bill of lading or sea freight agreement points to English law.
Law firm HFW has called this a “substantive change”, noting that “chapter four of the Chinese Maritime Code will apply to a contract of carriage regardless of whether or not another law has been incorporated or chosen by the parties”. In effect, if governing‑law and jurisdiction clauses are unclear, Chinese courts now have more room to assert jurisdiction over disputes involving cargo moving through their ports.
Trading agreements often choose English law and London arbitration, while the carrier’s bill of lading may point a different way. The question is whether, in a dispute, a Chinese court will treat the bill of lading as the main contract and apply Chinese law, despite what the trade agreement says.
Some industry experts see this as part of a broader strategic move, to encourage a switch from FOB to CIF terms so that Chinese exporters control freight, insurance and crucially litigation on home turf.
However, any FOB to CIF shift is commercial, not legal, and Incoterms are an international standard which means that FOB remains fully available for China–UK trade, where the buyer wants to control the main–carriage contract and freight costs.
So, China’s legal changes don’t cancel FOB, and UK buyers can still insist on FOB terms and book their own freight, provided the contracts and practical behaviour match that intention.
Supply chain security rules: due diligence under pressure
Alongside the maritime reforms, China has introduced its first comprehensive Regulations on Industrial and Supply Chain Security, effective 31 March 2026. These rules treat supply chains as part of national security rather than a purely commercial matter, bringing them under the oversight of economic, security and cyber authorities.
The most sensitive provision for Western companies is Article 13, which restricts “information gathering activities” related to industrial and supply chains where these are found to breach Chinese law. The language is broad and undefined, creating uncertainty about whether standard due‑diligence activities, which can include supplier questionnaires, ESG audits, human‑rights assessments or on‑site inspections, could fall within the scope.
This sits uneasily alongside emerging Western rules such as the EU Corporate Sustainability Due Diligence Directive and US forced‑labour legislation, which expect companies to map supply chains and scrutinise suppliers in detail. Legal commentators warn that “the new law creates a direct and unresolved conflict between Chinese law and Western due diligence obligations”, with companies potentially facing legal risk in China for work they are required to do under EU or US law.
The regulations also give authorities wide powers to respond to perceived threats to supply‑chain stability. Investigations can target foreign organisations and individuals where there is a “risk or threat” of harm, not just proven damage, and can lead to restrictions on trade, investment and cooperation in China, along with travel or work limits for individuals.
Counter‑measures against foreign sanctions
A companion set of rules – the Regulations on Countering Foreign Improper/Unjustifiable Extraterritorial Jurisdiction, in force from early April – strengthens China’s ability to push back against foreign sanctions, export controls and data‑disclosure demands applied extraterritorially.
These sit alongside the Anti‑Foreign Sanctions Law, blocking rules and the “unreliable entities” regime, creating what one firm describes as an “integrated counter‑sanctions system”. Authorities can investigate and penalise organisations and individuals who implement or even “promote” foreign measures seen as discriminatory towards China, with tools ranging from import and export restrictions to asset seizures and visa bans.
This framework has emerged against a backdrop of heightened geopolitical tension, including Western tariffs and probes into China’s exports, secondary‑sanctions risks around Iran and disputes over strategic assets like the Panama Canal.
What shippers should do
None of this means that trading with China will suddenly stop or that every UK shipper is about to be investigated. But the risk environment has clearly changed, and it is worth taking some practical steps:
- Check bills of lading, trade agreements and framework contracts to see where Chinese ports are involved, what law and jurisdiction are specified.
Strengthen English‑law and arbitration provisions and clarify that higher‑tier agreements take precedence. - Talk to your insurers about how the revised Maritime Code might affect liability, claims handling and cover for China‑linked moves.
Consider obtaining Chinese‑law input on key routes or contracts where your exposure is greatest. - Map which parts of your ESG and human‑rights due diligence involve Chinese suppliers or sites.
- For higher‑risk work, such as auditing sensitive regions or investigations linked to sanctions, seek specialist advice on how to stay compliant with both Western obligations and Chinese restrictions.
- Be mindful of public statements about “decoupling from China” or “boycotting” particular regions. These may be read as aligning with foreign measures and may increase regulatory attention in China.
- Align messaging between compliance, procurement and communications so that necessary changes to your supply chain are framed around resilience, quality and legal compliance, not politics.
For Metro’s customers, the key takeaway is that China is now using law as an active tool of supply‑chain strategy. Understanding how these new rules work, and adjusting contracts, due‑diligence programmes and communication strategies accordingly, will help keep goods moving while managing a more complex risk landscape.
If you have questions or concerns about any of the developments outlined here EMAIL our Managing Director, Andrew Smith.
