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Overview on Key Issues of the Tort Liability Part of China’s First Civil Code

13/08/2020

The People’s Republic of China’s (“PRC”) first combined codification of the civil law ever, i.e. the PRC Civil Code (“PRC Civil Code”) which was adopted on 28 May 2020 and which will enter into effect on 1 January 2021, consists of 7 Parts and supplementary provisions. The Part on Tort Liability constitutes Part VII of the PRC Civil Code and consists of 10 chapters and 95 clauses in total.

1. Introduction

The Part on Tort Liability is mainly based on the current PRC Tort Law first effective as of 1 July 2010 and includes only a few new provisions (i.e. 95 provisions in the PRC Civil Code compared to 92 provisions in the current PRC Tort Law). Concurrently with the entering into effect of the PRC Civil Code, the PRC Tort Law will cease to be effective on 1 January 2021.

Part VII of the PRC Civil Code consists of the following 10 chapters:

(1) Chapter I General Provisions

(2) Chapter II Compensation for Damage

(3) Chapter III Special Provisions on Liable Parties

(4) Chapter IV Product Liability

(5) Chapter V Automobile Traffic Accident Liability

(6) Chapter VI Medical Malpractice Liability

(7) Chapter VII Environmental Pollution and Ecological Destruction Liability

(8) Chapter VIII High-Risk Operation Liability

(9) Chapter IX Liability for Damage Caused by Domesticated Animals

(10) Chapter X Liability for Damage Caused by Buildings and Objects

Please find below a comparison of some key provisions of the PRC Civil Code and the relevant, currently-effective laws, i.e. mainly the PRC Tort Law, as well as regulations and judicial interpretations of the PRC Supreme People’s Court (“SPC”).

2. Key Aspects in Changes of Tort Liabilities

a) Contribution to the Damage by the Infringed Party

According to Article 26 of the current PRC Tort Law, the liability of an infringing party may be mitigated to the extent that the party whose rights are infringed upon is also at fault for the damage sustained. Article 1173 of the PRC Civil Code basically follows such principle and stipulates that where the party whose rights are infringed upon is at fault in the occurrence or expansion of the damage, the liability of the infringing party may be reduced.

b) Introduction of “Self-risk” Rule

Article 1176 of the PRC Civil Code newly introduces a “self-risk” rule. The “self-risk” rule clarifies that if a person voluntarily participates in cultural and sports activities with a certain level of risk and is damaged by the behavior of any other participant, such person shall not request the other participant to bear tort liability, unless the damage is caused by such other participant's intentional misconduct or gross negligence. Liabilities of the activity organizers, however, are not subject to and affected by this provision.

c) Introduction of “Self-help” Rule

Article 1177 of the PRC Civil Code newly introduces a “self-help” rule. According to this principle, if a person whose legitimate rights and interests are infringed upon cannot be protected by state organs in time as the situation is urgent and will have his or her legitimate rights and interests irreparably damaged if no measures are taken immediately, such person may take reasonable measures such as withholding the property of the infringing party to the extent necessary to protect his or her legitimate rights and interests, provided, however, that he/she shall immediately request the relevant state organ to handle the matter. However, if the victim takes improper measures causing damages to any other person, he/she shall bear tort liability.

d) Expenses for Nutrition Costs and Meal Subsidies

Very similar to Article 16 of the current PRC Tort Law, Article 1179 of the PRC Civil Code stipulates that whoever harms another person and causes bodily injury shall compensate for all reasonable expenses incurred for treatment and recovery, such as medical expenses, nursing expenses and transportation expenses as well as the incomes lost due to absence from work. In addition to the stipulation of Article 16 of the current PRC Tort Law, Article 1179 of the PRC Civil Code now also states that the compensation shall cover all reasonable expenses incurred for nutrition costs and meal subsidies in hospital.

e) Changes in the Compensation Amount

According to Article 20 of the current PRC Tort Law, whoever infringes upon the personal rights and interests of another party and thereby causes property losses shall pay compensation for the losses suffered by the party whose rights are infringed upon. Article 1182 of the PRC Civil Code changes the compensation amount from “the losses suffered by the party whose rights are infringed upon” to “the losses suffered by the party whose rights are infringed upon or the gains obtained by the infringing party from the infringing acts”.

f) Compensation for Mental Distress

Section 1 of Article 1183 of the PRC Civil Code is basically identical to Article 22 of the PRC Tort Law and stipulates that where the infringements upon a natural person’s personal rights and interests cause the person to suffer from serious mental distress, such person has the right to claim compensation for mental distress. Section 2 of Article 1183 of the PRC Tort Law newly adds that where the infringements upon a natural person's specific objects of personal significance due to intentional or gross negligence cause the person to suffer from serious mental distress, such person also has the right to claim compensation for mental distress. Such addition in Section 2 of Article 1183 of the PRC Tort Law reflects the current stipulation in Article 4 of the Interpretations of the Supreme People's Court on Several Issues Concerning the Ascertainment of Compensation Liability for Emotional Damages in Civil Torts.

g) Punitive Damages for Intellectual Property Infringements

Article 1185 of the PRC Civil Code newly stipulates that a person whose intellectual property rights are intentionally infringed upon under serious circumstances shall have the right to request corresponding punitive damages.

In the current intellectual property related legislations, punitive damages are only stipulated for the malicious infringement of trademarks in Article 63 of the PRC Trademark Law and for the malicious infringement of trade secrets in Article 17 of the PRC Anti-Unfair Competition Law. According to published new draft versions of the PRC Patent Law and the PRC Copyright Law, which both are in the process of being revised, punitive damages shall in the future also apply to malicious infringements of patents and copyrights.

Article 1185 of the PRC Civil Code has now formally established a general legal rule on punitive damages for the infringement of intellectual property rights. This may foster the harmonization of the rules on punitive damages in all PRC intellectual property legislations and provide a basis for the application of punitive damages in future new types of intellectual property rights infringements. It is noteworthy that the PRC Civil Code does not provide for any details on the amount of the punitive damages, etc. However, there are specific stipulations in this regard in the current PRC Trademark Law and Anti-Unfair Competition Law as well as in the new draft versions of the PRC Patent Law and the PRC Copyright Law, which are in the process of being revised.

h) Guardian’s Liabilities

According to Article 1189 of the PRC Civil Code, where a person who lacks or has limited civil capacity causes damages to another person and his/her guardian has entrusted the guardianship duties to another person, his/her guardian shall bear tort liability. However, if the entrusted person is at fault, he/she shall bear the corresponding liability. Such stipulation basically follows the existing stipulation in Article 22 of the Opinions of the Supreme People's Court on Several Issues concerning the Implementation of the General Principles of the Civil Law of the People's Republic of China (Trial Implementation).

i) Employer’s Right of Recourse

Under the current Chinese laws and regulations, employers shall bear tortious liability for any injury or damage caused to other people by their employees in the course of their work. Article 1191 of the PRC Civil Code now adds that after the employers have assumed tort liability, they may claim the same from their employees having acted with intentional misconduct or gross negligence.

Similarly, Article 1192 of the PRC Civil Code stipulates that where a labor relationship exists between individuals, and the employee causes an injury or damage to another person as a result of his/her work, the employer shall bear tortious liability. After the employer bore the tort liability, it may claim the same from the employee who committed intentional misconduct or gross negligence. Further, during the period of provision of work, if the employee suffers damages from a third party's act, he/she is entitled to request the third party or the employer to make compensation. After the employer made the compensation, it may claim the same from the third party.

j) Tortious Liabilities in the Internet

Largely in line with Articles 5 and 8 of the Provisions of the Supreme People's Court on Several Issues concerning the Application of Law to Trial of Civil Dispute Cases of Infringement of Personal Rights via Information Networks and Article 36 of the PRC Tort Law, Article 1195 of the PRC Civil Code deals with tortious liabilities in the internet. Article 1195 of the PRC Civil Code stipulates that where an internet user engages in tortious conduct through internet services, the affected right holder shall have the right to notify the internet service provider that it shall take necessary action such as by deleting content, screening, disabling links, etc. Article 1195 of the PRC Civil Code newly adds that the notice shall include preliminary evidence of the infringement and the true identity information of the right holder. After receiving the notice, the network service provider shall promptly forward the notice to the relevant network user and take necessary measures in light of the preliminary evidence of infringement and the type of services. Further, if the network user or network service provider is damaged due to a wrong notice, the right holder shall bear tort liability, unless otherwise provided for by law.

Further, similar to Article 43 of the PRC E-commerce Law, Article 1196 of the PRC Civil Code stipulates certain rights of the network user. After receiving the forwarded notice, the network user may submit a statement of no infringement to the network service provider. The statement shall include preliminary evidence of no infringement and the identity information of the network user. After receiving the statement, the network service provider shall forward the statement to the right holder who gave the notice and inform it that it can file a complaint with the relevant department or file a lawsuit with the competent People's Court. If the network service provider is not notified by the right holder that the latter has filed a complaint or lawsuit within a reasonable period of time after the forwarded statement reaches the right holder it shall promptly terminate the measures taken.

k) Recall Liabilities of Defective Products by Producers and Distributors

Largely in line with Article 46 of the PRC Tort Law, Section 1 of Article 1206 of the PRC Civil Code stipulates that where a product is found to be defective after it has been put into circulation, the producer and the seller shall timely cease sales, give warnings, recall the defective product, or take other remedial measures. If any damage is expanded due to the untimeliness or ineffectiveness of remedial measures, the producer and the seller shall bear tortious liability for the expanded damage. In comparison to Article 46 of the current PRC Tort Law, Section 2 of Article 1206 of the PRC Civil Code now newly adds that where recall measures are taken in accordance with Section 1 of Article 1206 of the PRC Civil Code, the producer and the seller shall bear the necessary expenses so incurred by the party whose rights are infringed upon.

Further, while Article 47 of the PRC Tort Law provides that where any producer or seller knowingly produces or sells defective products that cause death or serious damage to the health of others, the injured party may claim appropriate punitive damages, Article 1207 of the PRC Civil Code now states that, in addition, appropriate punitive damages may also be claimed if any producer or seller fails to take effective remedial measures as prescribed in Article 1206 of the PRC Civil Code, thus causing death or serious damage to the health of others.

l) Compulsory Motor Vehicle Third-Party Liability Insurance

Largely following the Interpretations of the Supreme People's Court on Several Issues on the Application of Law in Hearing the Cases of Compensation for Road Traffic Accident Damages, Article 1213 of the PRC Civil Code newly stipulates that where a person driving a motor vehicle is liable for damages caused by the vehicle in a traffic accident, the insurer underwriting the compulsory motor vehicle third-party liability insurance shall first compensate for the damages within its liability limit. The part of damages not covered by the compulsory motor vehicle third-party liability insurance shall be compensated by the insurer underwriting the commercial third-party liability insurance according to the insurance contract. If the entire damages are not fully covered by both of the compulsory motor vehicle third-party liability insurance and the commercial third-party liability insurance, or if the vehicle is not insured under a commercial third-party liability insurance, the damages shall be compensated by the infringing party.

m) Damages to Passengers Taking a Ride Gratuitously

Article 1217 of the PRC Civil Code newly stipulates that where a non-commercial motor vehicle is involved in a traffic accident causing harm to a passenger taking the ride gratuitously, for which the liability is attributed to the motor vehicle, the compensatory liability of the motor vehicle user, unless with intent or gross negligence, shall be mitigated.

n) Protection of Patients’ Personal Information

Same as Article 62 of the current PRC Tort Law, Article 1226 of the PRC Civil Code stipulates that medical institutions and their medical professionals shall maintain the privacy and confidentiality of their patients and of the patients’ personal information. According to Article 1034 of the PRC Civil Code, personal information refers to various kinds of information that is electronically or otherwise recorded and can identify a specific natural person separately or in combination with other information, including name, date of birth, ID card number, biometric information, address, mobile phone number, email address, health information and whereabouts information of a natural person.

Article 62 of the current PRC Tort Law further states that any person who causes damage to a patient through unauthorized disclosure of the patient's private or medical records shall bear tortious liability. Article 1226 of the PRC Civil Code changes this provision and now states that whoever leaks the privacy or personal information of a patient or discloses, without authorization, a patient's medical records shall bear tortious liability.

o) Repair of and Compensation for Damages to the Ecological Environment

Compared to the current provisions on environmental liability stipulated in the PRC Tort Law, the PRC Civil Code adds provisions on the repair of damages to the ecological environment and the compensation that shall be paid by the infringing party. The relevant Articles 1234 and 1235 of the PRC Civil Code are based on Articles 12 to 14 of the Several Provisions of the Supreme People's Court on the Trial of Cases Involving Claims for Compensation for Damage to the Ecological Environment (for Trial Implementation) and focus on the protection of the ecological environment.

According to Article 1234 of the PRC Civil Code, where damage is caused to the ecological environment due to the violation of the relevant provisions of the State and the ecological environment can be restored, the competent governmental organ or the competent organization shall have the right to request the infringing party to bear restoration liability within a reasonable period of time. If the infringing party fails to restore the ecological environment within such period, the competent governmental organ or the competent organization may restore or entrust others to restore the ecological environment, at the cost of the infringing party.

Article 1235 of the PRC Civil Code in detail lists the potential losses and expenses that the infringing party may be requested to bear where damage is caused to the ecological environment due to violation of relevant provisions, i.e.:

(1) losses caused by the loss of service functions during the period of completing the restoration of the ecological environment after the damage has been caused;

(2) losses caused by permanent damages to ecological environment functions;

(3) costs of investigating and appraising the damage to the ecological environment;

(4) costs of removing pollution or restoring the ecological environment; and

(5) reasonable costs incurred to prevent the occurrence and expansion of the damage.

Further, Article 1232 of the PRC Civil Code, for the first time, provides for a punitive damages provision with regard to environmental liability. Where an infringing party intentionally pollutes the environment or destroys the ecology in violation of laws which causes serious consequences, the injured party shall have the right to seek corresponding punitive damages. Again, further details on the amount of the punitive damages, etc., are not regulated in the PRC Civil Code, and it remains to be seen whether the interpretation of the PRC Civil Code by the SPC which is announced to be issued this year or other relevant laws and regulations will provide for further clarification.

p) Liabilities for Damages Caused by Domesticated Animals

According to Article 78 of the current PRC Tort Law and Article 1245 of the PRC Civil Code, where any damage is caused by a domesticated animal, the keeper or manager thereof shall bear tortious liability unless he/she can prove that the victim deliberately or negligently incurred the damage, in which case his/her liability may be mitigated or exempted.

Article 79 of the current PRC Tort Law and Article 1246 of the PRC Civil Code further state that where any damage is caused by a failure to take security measures for an animal in violation of regulations, the keeper or manager of said animal shall bear tortious liability. Article 1246 of the PRC Civil Code now further adds that the liability of a keeper or manager of a domesticated animal applies in such case, “unless he or she can prove that the victim deliberately incurred the damage, in which case his or her liability may be mitigated”.

q) Liabilities in Throwing Objects from Buildings

Article 87 of the PRC Tort Law merely states that where any damage is caused by an object thrown or falling from a building, if it is difficult to identify the infringing party, the user of the building who is the potential infringing party shall pay compensation unless he can prove that he was not the infringing party.

Article 1254 of the PRC Civil Code now provides further details in this regard. It expressly states that it is forbidden to throw objects from buildings (which is in line with the Opinions of the Supreme People's Court on the Proper Trial of Cases Involving Objects Thrown and Dropped from High Buildings According to the Law). Where any damage is caused by an object thrown or which falls from a building, the infringing party shall bear tortious liability in accordance with the law. It is further stated that if it is difficult to identify the infringing party after investigation, the user of the building who is the potential infringing party shall pay compensation unless he can prove that he was not the infringing party.

After paying compensation, the user of the building who is the potential infringing party has the right to claim the same from the actual infringing party.

The property management service enterprise and other managers of a building shall take necessary safety safeguard measures to prevent the circumstance specified in the preceding sections; if they fail to do so, they shall bear tortious liability for failure to perform their safeguard obligations according to the law.

In the event of the circumstance stated in Section 1 of Article 1254 of the PRC Civil Code, the public security organs and other relevant organs shall promptly investigate to find out the liable person in accordance with the law.

3. Conclusion

Part VII of the PRC Civil Code, generally, maintains the structure and the main concepts of the current PRC Tort Law, while adding only a few clarifications and more detailed stipulations. Same as for the other Parts of the PRC Civil Code, it still remains to be seen how Part VII of the PRC Civil Code will be implemented and enforced in practice. Only this will show the real impact of the new law. Further, and as mentioned above, the SPC intends to publish an interpretation of the PRC Civil Code within this year. It is to be expected that this will provide for additional guidance and clarification.

Authors

Picture of Ulrike Glueck
Dr. Ulrike Glueck
Managing Partner
Shanghai
Michael Munzinger
Michael Munzinger, LL.M.
Counsel
Shanghai
Lei Shi
Junior Associate
Shanghai