Going East: Product Liability in China
General Introduction
Professor Eleonora Rajneri, Università del Piemonte Orientale
sponsored by:
Going East: Product Liability in China
Chair
Professor Geraint Howells, University of Manchester
Overview of the Chinese Legal System
Professor Gianmaria Ajani, University of Torino
Chinese Product Liability: A Civil Law Perspective
Professor Lihong Zhang, East China University of Political Science and Law
Chinese Product Liability: A Criminal Law Perspective
Dr Shenkuo Wu, Associate Researcher, University of Verona
sponsored by:
TORT LIABILITIES IN
CHINA
Gianmaria Ajani
Dean, Department of Law, University of Torino
gianmaria.ajani@unito.it
A long march towards the
Law of Torts
• Marxist Ideology and the Law of Torts
• The Soviet pattern and the “hostility”
towards strict liability
• A loose legal regime (PCL, 1986, 17 Arts.)
Instead of a Civil Code
• Like the 1999 Uniform Contract Law and the 2007
Property Law, the 2010 Torts Law is an important step in
regulating private law issues
• The “prudent” attitude of Chinese judges and the role of
the Supreme Court
The importance of definitions
• The Torts Law is not abundant in definitions
• Neither Fault, nor Negligence, are defined
• “Force majeure” is not defined (is there a different concept
of what force majeure is under a State controlled
economy ?)
• “Public interest defense”
• “Close relatives” ? (Art. 18)
• Determination of punitive damages ?
Which model ?
• PRC Torts Law is often introduced as a combination of the
civil law and the common law traditions.
• Some provisions are actually a hybrid of civil law and
common law.
• As far as damages are concerned, the Law provides for
restitution, in addition to monetary compensation, and
imposes punitive damages.
• In fact, US tort doctrines and practices were looked at
while drafting the Law, particularly in the areas of special
torts.
A Chinese characteristic:
‘‘hexie shehui”
• Art. 1:
• “In order to protect the legitimate rights and interests of
parties in civil law relationships, clarify the tort liability,
prevent and punish tortious conduct, and promote the
social harmony and stability, this Law is formulated”.
Definition of tort liability
• Under Article 2 those who infringe upon civil rights and
interests shall be subject to tort liability.
• A tort liability is not based on the unlawfulness of the
conduct.
• According to Article 2, the Law grants protection to not
only one’s civil rights but also one’s civil interests. The
implication is that a tort is a conduct that injures or
damages another person’s civil rights and interests.
Right of claim
• Article 3 provides that the victim of a tort shall be entitled
to request the tortfeasor to assume tort liability.
• Together with Art. 4, it provides for:
• Independence of Tortious Liability
• Superiority
Art. 2: a German model ?
• “Civil rights and interests” shall include right to:
• life, health, name, reputation, honor, self image, privacy,
marital autonomy, guardianship, ownership, usufruct,
security interest, copyright, patent right, use a trademark,
discovery, equities, succession, and other personal and
property rights and interests.
Fairness principles
• Art. 24 and its ideological origin:
• “Where neither the victim nor the actor is at fault for the occurrence
of a damage, both of them may share the damage based on the
actual situations”
The problems of case law and
predictability:
• The law of torts is the result of judicial framing, both under
the civil law and the common law tradition
• Chinese judicial phrasing is concise
• SC opinion 1988: “157. Where neither party is at fault
with respect to the occurrence of a loss, but one party
suffered the loss while engaging in activities for the
benefit of the other party or of both parties, the party
receiving the benefit may be ordered to provide some
monetary compensation”.
Part II: Special torts and liabilities
• product liability
• liability for motor vehicle traffic accident
• liability for medical malpractice
• liability for environmental pollution
• liability for ultra- hazardous activity
• liability for harm caused by domestic animals
• liability for injury caused by an object.
Product liability – Ch. 5
• Art. 42: “Where a product with any defect caused by the
fault of the seller causes any harm to another person, the
seller shall assume the tort liability”.
• “Defect” ?  art. 46, Product Quality Law (1993)
Exemptions ?
• Reference to Art. 41 of the PQL:
• A manufacturer is not liable if it is proven that:
• the product is not placed into commerce;
• the defect causing the damage did not exist at the time when the
product was placed into commerce or
• the science and technology at the time when the product was
placed into commerce was at a level incapable of detecting the
defect
Conclusion
•
• Challenges:
• Conflict of laws
• Judicial attitudes
• Civil procedure rules disturbing access to justice (ex.
mass litigation, class actions)
Going East: Product Liability in China
Chair
Professor Geraint Howells, University of Manchester
Overview of the Chinese Legal System
Professor Gianmaria Ajani, University of Torino
Chinese Product Liability: A Civil Law Perspective
Professor Lihong Zhang, East China University of Political Science and Law
Chinese Product Liability: A Criminal Law Perspective
Dr Shenkuo Wu, Associate Researcher, University of Verona
sponsored by:
Product Liability: a Civil
Prosperctive
Lihong ZHANG, Professor of Law
East China University of Political Science
and Law
London, 21 May 2013
19
I. Framework of Civil Liability of
Product in China
• 1. Concept of Civil Liability of Product
Contractual liability: civil liability on product
under a purchase and sale contract =>
inconformity in terms of quantity and quality
1999 Contract Law, its 3 related judicial
interpretations (1999, 2009, 2012), numerous
administrative regulations, Law of Quality of
Product
1982 CISG
20
2. Tort liability (real sense of product liability):
The defective products cause any damages to
a. personal life or
b.property other than the defective product
itself (another person’s property)
Case: Car burning in parking
Laws: 2009 Tort liability Law, 2001 judicial
interpretation concerning the determination of
moral damages; 2003 judicial interpretation
concerning the trial on personal jury.
Administrative laws: Law of product quality
21
3. Special civil liability of product(liability on
protection of consumer=>punitive liability)
1993 Law of Protection of Consumer’s rights
Double compensation
2009 Law on the Protection of Food Safety
10 times compensation
22
Art. 47 of 1999 Tort Liability Law
Article 47 Where a manufacturer or seller
knowing any defect of a product continues to
manufacture or sell the product and the
defect causes a death or any serious damage
to the health of another person, the victim
shall be entitled to require the corresponding
punitive compensation.
23
II. Requirements on assumption of
product tort liability
1. Falling into ranges of the products causing
tort liability
Art. 2 of Law of Product Quality
1) Product processed and manufactured by
human being
Primary products of agriculture, fishery, animal
husbandry, can not be included
2) For the purpose of sale
3) Only chattel (real estates excluded)
24
• However, “products” shall include
construction materials, components, parts
and equipment for use in construction
projects, provided that they are processed and
manufactured for sale.
25
• Questions:
Eletricity (more than 1000 voltage, yes)
Gas, Water
Blood product;
Intellectual product;
Financial product;
Answer is NO!
26
• 2. Existence of causality between tort and
damages
• How to prove the damages?
Appraisal of expert ( experts shall be appointed
by the court), double or triple appraisal!!
Mushubishi Glass broken case (Fujian,2009)
Yokohama tire case (shanxi, 2005)
General knowledge of life
Egg case (Anhui, 2012)
27
3. The damages shall be caused by a defective
product .
Debates: Double criteria of determination of
defective product
28
• Article 46 of 2000 Law of Quality of Product)
"Defect" referred to in this Law means the
unreasonable danger (academic criteria)
existing in a product that endangers the safety
of human life or other person’s
property. Where there are national or industry
standards safeguarding the health
29
• Design defect, production defect and warning
defect
• Knife Case in Carrefour supermarket (2009,
Shanghai)
• Tea Case (in Fujian 2010)
30
•
Disclaimer subject (Article 41 of Law of Product Quality) :
• A manufacturer shall not be liable for compensation if it can prove
the existence of any of the following circumstances:
1) The product has not been put in circulation;
2) The defect causing the damage did not exist when the product
was put in circulation;
3) The science and technology at the time the product was put in
circulation was at a level incapable of detecting the defect.
•
31
5. Attribution principle
Producer: strict liability
Fault offset shall be applied in any case!
Seller: fault liability
Yes for Right of recourse
No for not several liability
liability between producer and seller is an unreal
several liability!!
32
IV. Compensation to damages
• Real damages proven by the plaintiff, including
emotional damage in case of serious damages
to personal life
• Punitive damages
Controversy in legal practice: is it necessary to
prove the damages?
Two different cases:
Emotional damages can be added, besides
punitive damages
33
V. Conclusion
• Chinese judges hold very strong power of
discretion in civil decision, sometimes
difficultly to be confined.
• A correct legal reasoning, but the codification
of law, is the ground on the basis of which the
rule of law can work actually.
• In China, Law in Action is quite different from
Law in Books
• Case-based approach for the study of
comparative law
34
Contact information
Email Address:
lihong111@gmail.com
Mobile Phone:
+86 13818939489
35
Going East: Product Liability in China
Chair
Professor Geraint Howells, University of Manchester
Overview of the Chinese Legal System
Professor Gianmaria Ajani, University of Torino
Chinese Product Liability: A Civil Law Perspective
Professor Lihong Zhang, East China University of Political Science and Law
Chinese Product Liability: A Criminal Law Perspective
Dr Shenkuo Wu, Associate Researcher, University of Verona
sponsored by:
Going East: Product Liability in China
Chair
Dr Duncan Fairgrieve, British Institute of International and Comparative Law
Professor Eleonora Rajneri, Università del Piemonte Orientale
Chinese Product Liability: a Lawyer Perspective
Dr Paolo Beconcini, CBM International LLP, Beijing
A Macro-governance perspective on Consumer Protection Law
Professor Ignazio Castellucci, Universities of Trento and Macau
sponsored by:
Litigating Product Liability
Claims in China
Dr. Paolo Beconcini
Carroll, Burdick & McDonough – Beijing Office
www.cbmlaw.com
Consumer Rights Protection in China
–
Claim Base and remedies
www.cbmlaw.com
Legal Frame
Consumer Rights Protection
Civil Law
Administrative
Protection
Other
Claim Base
- Tort Law
- Contract Law
- Product
Quality Law
- Product
Quality Law
All applicable
laws
Remedies/
Authorities
Judicial
Protection by
civil courts
AQSIQ, TSB
www.cbmlaw.com
CCA
Media
How are consumer rights really
protected in China?
www.cbmlaw.com
Facts & Figures
PL cases accepted by the China courts from 2009 to 2011
vs.
General Tort Law Litigation
Sourced from “Annual Report of China People’s Courts” issued by SPC, see the link:
http://www.court.gov.cn/qwfb/sfsj/201105/t20110525_100996.htm
www.cbmlaw.com
Facts & Figures
Complaints handled by China Consumer Association (CCA)
vs.
PL Lawsuits handled by CCA
(sourced from “Annual Analysis of Consumers’ Complaints” issued by
CCA in 2012, see the link: http://www.cca.org.cn/web/xfts/xfts.jsp)
www.cbmlaw.com
Facts & Figures
Product Liability Cases
since Mar 2012 by type
www.cbmlaw.com
Facts & Figures
Product Liability
Cases since Mar 2012 by Authority/Media involvement
www.cbmlaw.com
Analysis
• Marginal Impact of Tort Law!
• Exposure to Unpredictable Risks.
• Consumers will
search and attract
attention of media
and authorities.
Consumer
rights
Associations
Public
Authorities
Media
www.cbmlaw.com
• Media and
authorities are
keen to collect
input from the
public
Example
Consumer Rights Day
www.cbmlaw.com
WHY CONSUMERS CHOOSE NOT TO FILE CIVIL
LAWSUITS?
- Consumer rights are perceived as public law rights;
- Little familiarity of Chinese attorneys with tort law;
- Timing: justice is too slow and damages too low;
- Foreign manufacturers are hypersensitive to media exposure;
- New Laws and regulations encourage recourse to media and
administrative actions.
www.cbmlaw.com
Tort Law
Disadvantages for consumers
www.cbmlaw.com
Tort Law
Bad for Consumers, Good for Manufactures
-
Burden of Proof is on the Claimant
Case law of higher courts on burden of proof is solid
Plaintiff must pay for court appointed technical valuations
Low damage compensation awards
Cases may last long time, while interim remedies are not
available.
www.cbmlaw.com
Tort Law – Undiscovered Weapon
Disadvantages for Manufacturers and Sellers
www.cbmlaw.com
Tort Law
Definition of Defect
Defective products are products which contain unreasonable risks
endangering the safety of persons or property. This is the same as in the
older product Quality Law.
There are three major types of defects: design defects, manufacturing
defects, and failure to provide adequate warning or instruction.
Products that fail to meet national or industrial standards for health and
safety can also be deemed as defective products under PRC law.
www.cbmlaw.com
Tort Law
Continuous duty to warn
Manufacturers and sellers have a continuous duty to warn of defects, even after the
product has been put into circulation. Liability exemption, if the manufacturer could
prove that the defect could not be found at the time the product was firstly put into
circulation, is no longer available.
Pain & Suffering
A claimant may seek compensation for mental damages where there is infringement
on personal rights and interests which results in serious mental damages.
Punitive damages
Provided that the plaintiff can prove that they knew of the defect and
that the product caused death or severe injuries.
Instigation of a recall
Right of the Plaintiff to call, via the court, for the recall of defective products
which endanger personal or property safety, without needing to prove the existence
of any actual injuries.
www.cbmlaw.com
Tort Law
Risks posed by the Litigation System
Jurisdiction:
In many cases grassroots courts are competent:
- Influenced by local factors
- Consumer friendly
- Judges often without strong legal background
- Corruption
Civil Procedure:
- Lack of transparency;
- Discretion of judges;
- Lack of sound experts;
www.cbmlaw.com
Other Recent Laws and Regulations
Automotive Recall Law as trendsetter
www.cbmlaw.com
Automotive Recall Law
Definition of Manufacturers
• Chinese auto manufacturers and importers of foreign automotive products into China.
• Importers will not be able to shift the recall responsibility back on to foreign
manufacturers.
Definition of Defect
• Includes the design, manufacture, marks or other reasons where auto products of the
same batch, model or category have universally unreasonable hazards which endanger
personal or property safety.
• Unlike provisions of 2004 provisions, auto products meeting relevant national and
industrial standards can still be considered as “defective”.
Broadening the Pool of Complainants
• Any organization or individual could complain about possible defects in auto products
to AQSIQ (State Administration of Quality Supervision, Inspection and Quarantine).
• There is no requirement for the complainant to prove that he or she is the vehicle
owner, as under the current provisions.
www.cbmlaw.com
Other Recent Laws and Regulations
Choice of Law Statute
www.cbmlaw.com
Choice of Law Statute
•
New provisions regulating the choice of substantive law in foreign-related product liability
cases. Choice excludes “conflict of laws”.
•
Before, plaintiffs could only choose to apply the law of the place where the tort had occurred.
•
According to the new statute, a plaintiff – Chinese or foreign – can now choose to have the
Chinese People’s Court apply to his case the substantial law of the place where he has his
habitual residence (aside from place of domicile of the defendant).
•
Pre-condition: Defendant has relevant business operation at the habitual residence of the
plaintiff.
!! Plaintiff may thus increase the liabilities of the
manufacturer and sellers, and their exposure to higher
damage compensation !!
www.cbmlaw.com
Special Case
Recovery against Chinese Manufacturers
Execution of Foreign
Judgments
File Lawsuit in China
• China is not party to
Hague Convention
• Depends on bilateral
agreements
• Reciprocity
• Court of place of
Domicile of Plaintiff
• Chinese judges have
jurisdiction over the
defendant if he is
domiciled in China
• Chinese judge can apply
the substantive law of
the foreign country
www.cbmlaw.com
THANK YOU
Q&A
Carroll, Burdick & McDonough LLP
Room 05, Floor 9, Tower D, Vantone Center
No. 6 Jia Chaowai Street, Chaoyang District
100020 Beijing, P.R.China
www.cbmlaw.com
www.cbmlaw.com
Going East: Product Liability in China
Chair
Dr Duncan Fairgrieve, British Institute of International and Comparative Law
Professor Eleonora Rajneri, Università del Piemonte Orientale
Chinese Product Liability: a Lawyer Perspective
Dr Paolo Beconcini, CBM International LLP, Beijing
A Macro-governance perspective on Consumer Protection Law
Professor Ignazio Castellucci, Universities of Trento and Macau
sponsored by:
Going East: Product Liability in China
Conclusion
Dr Duncan Fairgrieve, British Institute of International and
Comparative Law
sponsored by: