Autonomous vehicles law and regulation in China

Explanatory note: so far the People's Republic of China (PRC) has not officially released any standards or adopted international standards such as those issued by the Society of Automotive Engineers (“SAE Levels”) to define the classification of automated driving. On 9 March 2020, however, the PRC Ministry of Industry and Information Technology released draft National Standards on Taxonomy of Driving Automation for Vehicles, which classifies automated driving, the content of which is similar to SAE Levels. These draft National Standards are scheduled to be enacted on 1 January 2021. Currently, the only PRC law (apart from certain high-level political plans and guidelines) that has been effectively promulgated regarding automated driving and autonomous vehicles is the Circular of the PRC Ministry of Industry and Information Technology, the Ministry of Public Security and the Ministry of Transportation on Issuing the Norms on the Administration of Road Testing of Intelligent Connected Vehicles (for Trial Implementation), promulgated on 3 April 2020 and effective since 1 May 2018 (“ICV Road Test Norms”). The ICV Road Test Norms classify automated driving of ICVs into three categories: conditionally automated driving, highly automated driving and fully automated driving. For these categories all statutory requirements on ICV road testing apply equally.

To the actual question: yes, the testing of AVs (also known as intelligent connected vehicles or ICVs) under currently applicable PRC law is permitted on public roads in China. However, ICV road tests are limited to sections of typical public roads selected and announced by the responsible departments. Furthermore, ICV road tests are subject to strict requirements such as the following (without limitation):

• the test applicant shall be an independent legal person registered in the PRC capable of manufacturing, R&D and testing of ICV-related vehicles and components, having sufficient financial capability to make civil compensation for likely personal or property damages caused by ICV tests, and capable of conducting distance-monitoring, recording, analysis and reproduction of the tested ICVs;
• Personal qualification requirements on the test driver;
• Technical requirements on the ICV to be tested;

A formal application for road testing, which requires detailed documentation including evidence of insurance coverage over RMB 5 million per tested ICV.

No consumers are yet permitted to use ICVs on public roads in the PRC, according to currently applicable PRC laws and regulations and information that are publicly available.

PRC law, at this stage, does not yet specifically regulate any liability for damages caused by a car in automated driving mode.

For information, according to the ICV Road Test Norms, in case of any traffic violation during the test, the test driver shall be liable according to existing laws and regulations on road traffic safety. In case of any traffic accident, which has happened during the test, the liability of the concerned parties for damage compensation shall be determined according to the existing laws and regulations on road traffic safety.

For general information under the current PRC road traffic safety laws, allocation of liability for traffic accidents follows the following principles:

• where a traffic accident occurs between two motor vehicles, the party at fault shall bear liability. Where both parties are at fault, the liabilities shall be borne on the basis of the proportion of each party's fault;
• where a traffic accident occurs between the driver of a motor vehicle and the driver of a non-motor vehicle or a pedestrian, the driver of the motor vehicle shall bear liability for compensation, if the driver of the non-motor vehicle or the pedestrian is not at fault. Where there is evidence to prove that the driver of the non-motor vehicle or the pedestrian is at fault, the compensation liabilities to be borne by the motor vehicle driver shall be appropriately allocated on the basis of the degree of fault. Where the driver of the motor vehicle is not at fault, the compensation liabilities to be borne by him shall not exceed 10%.
• where the losses in a traffic accident are caused by the driver of a non-motor vehicle or a pedestrian who deliberately runs into a motor vehicle, the driver of the motor vehicle shall not bear any liability for compensation.

We assume that the current legal provisions as above will serve as basic principles to determine automated driving related liability. However, since automated driving is a special situation where it is unclear whether and how “fault” of the driver will be relevant and can be established, and whether and to which extent ICV developers, manufacturers, sellers and/or other related parties shall be held liable, automated driving related liability will need to be regulated in detail by legislators. The exact content will  also strongly depend on the overall legislative development concerning ICVs and artificial intelligence.

PRC law, at this stage, only imposes mandatory insurance requirements in the ICV Road Test Norms. For example, an application for ICV road test shall include, inter alia, a certificate of compulsory traffic accident liability insurance, and the evidence of traffic accident liability insurance or a letter of guarantee on compensation for road testing of automated driving with coverage of at least RMB 5 million.

For general information under the currently applicable PRC laws, China applies a compulsory third-party liability insurance system to motor vehicles, which is usually taken out by the owner or the actual user of the motor vehicle. Incompliance shall be punished by means of detention of vehicles and by a fine of twice the insurance premium payable for the minimum liability limit.

PRC law, at this stage, does not yet specifically regulate such liability against ICV manufacturers.

For general information under currently applicable PRC law, warranty claims against automobile manufacturers may arise on the basis of the following:

Contract: an effectively concluded sales contract with the manufacturer with a contractually agreed quality warranty  claim.

By law:

• Manufacturers are generally responsible for the quality of their products under the PRC Product Quality Law.
• According to the Provisions on the Liability for Repair, Replacement and Return of Household Automotive Products (“Automobile Guarantee Provisions” promulgated by the former PRC State Quality Supervision, Inspection and Quarantine Bureau on 29 December 2012), sellers who sell household automobiles (i.e. automobiles used by consumers) to consumers shall assume the statutory “Three Guarantees” liability towards consumers (i.e. guarantee liability for repair, replacement and return). Once the sellers have assumed this Three Guarantees liability towards the consumers, the sellers are entitled to seek compensation from the manufacturers or other dealers if the liability is attributable to the manufacturers or other dealers. Contracts stipulating the assumption of Three Guarantees liability may be entered into between dealers (including manufacturers and sellers) of household automotive products with the prerequisites that these agreements shall not infringe upon the legitimate rights and interests of consumers and shall not exempt the Three Guarantees liability and quality obligations stipulated in the Automobile Guarantee Provisions.

The warranty period for repair of household automobiles by sellers towards consumers shall not be less than three years or 60,000 km, whichever is reached earlier, and the validity term of the Three Guarantees shall not be less than two years or 50,000 km, whichever is reached earlier. The warranty period for repair and the validity term of the Three Guarantee Period commence from the date of issuance of the purchase invoice by the seller to the consumer.

• According to the Administrative Measures on Automotive Sales (promulgated by the PRC Ministry of Commerce on 5 April 2017), automobile suppliers (including automobile manufacturers) shall guarantee the supply of components and related after-sales service for automotive parts for at least ten years after they have announced to the public that they have stopped production or sale the relevant vehicle models.
• Automobile manufacturers are generally obliged to recall sold automobiles once they have confirmed certain defects in them as defined by law. However, this is not a liability based on contractual warranty claims, but a statutory obligation of automobile manufacturers according to  mandatory law.