Product Liability 2009 - Arnold & Porter LLP

Lovells LLP China
6.2 What types of damage are recoverable e.g. damage to the
product itself, bodily injury, mental damage, damage to
property?
Under the law of tort, a tortfeasor is liable to the injured party for
bodily injury, mental damage, and damage to property. In the case
of death, the tortfeasor is also liable for the annuity of those persons
to whom the injured party owed a duty of maintenance.
Under the strict liability regime, the damages recoverable are the
same as under the law of tort.
Under the law of contract, damage to the product itself and damage
to property are recoverable, but bodily injury and mental damages
are not. The injured party’s lost profits may also be recoverable.
Under the Consumer Protection Law, damage to the product itself,
bodily injury, and damage to property are all recoverable.
6.3 Can damages be recovered in respect of the cost of
medical monitoring (e.g. covering the cost of investigations
or tests) in circumstances where the product has not yet
malfunctioned and caused injury, but it may do so in
future?
Not under the strict liability regime or the law of tort because actual
damages are required.
6.4 Are punitive damages recoverable? If so, are there any
restrictions?
Punitive damages are generally not available except in narrow
circumstances. One such circumstance is where a business operator
practises fraud in providing a commodity or service to a consumer.
The newly-enacted Food Safety Law also provides for punitive
damages in certain circumstances, although the punitive damages
consist of only ten times the value of the food product.
6.5 Is there a maximum limit on the damages recoverable
from one manufacturer e.g. for a series of claims arising
from one incident or accident?
No, there is no maximum limit on the damages recoverable.
6.6 Do special rules apply to the settlement of
claims/proceedings e.g. is court approval required for the
settlement of group/class actions, or claims by infants, or
otherwise?
No special rules apply.
6.7 Can Government authorities concerned with health and
social security matters claim from any damages awarded
or settlements paid to the Claimant without admission of
liability reimbursement of treatment costs, unemployment
benefits or other costs paid by the authorities to the
Claimant in respect of the injury allegedly caused by the
product. If so, who has responsibility for the repayment of
such sums?
No. Government authorities responsible for the provision of social
benefits cannot claim from any damages awarded or settlement
sums paid to claimants. In the case of private insurance, the
insurance company may not recover from the claimant. The law is
silent as to whether the insurance company may separately seek
recovery directly from the defendants.
7 Costs / Funding
ICLG TO: PRODUCT LIABILITY 2009
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7.1 Can the successful party recover: (a) court fees or other
incidental expenses; (b) their own legal costs of bringing
the proceedings, from the losing party?
The judgment issued by the court will order the losing party to pay
for court fees. The successful party will be able to recover
reasonable expenses and legal costs from the losing party. The
court has discretion as to how much expenses or cost is reasonable.
7.2 Is public funding e.g. legal aid, available?
Public funding in the form of free legal service is available in
narrow circumstances; for instance, when seeking compensation
from the state or when seeking annuity from a tortfeasor in a death
resulting from product liability. Judicial aid is also available to
claimants who cannot afford court fees to claim damages for
personal injuries, whereby the claimant may file an application to
the court requesting it to waive or reduce the court fees. (Article
107 of the Civil Procedure Law.)
7.3 If so, are there any restrictions on the availability of public
funding?
Not applicable.
7.4 Is funding allowed through conditional or contingency fees
and, if so, on what conditions?
Yes, contingency fees are allowed in China as long as the parties
agree to it. The Measure for the Administration of Lawyers’ Fees,
issued by the Ministry of Justice, requires that as of 1 December
2006, contingency fees should not exceed 30 per cent of the value
of the claim, and prohibits contingency fees for collective actions.
7.5 Is third party funding of claims permitted and, if so, on
what basis may funding be provided?
Third party funding is not a concept recognised in China, nor is it
expressly prohibited by law.
8 Updates
8.1 Please provide, in no more than 300 words, a summary of
any new cases, trends and developments in Product
Liability Law in China.
In the face of several international food safety crises, China’s
Standing Committee of the National People’s Congress
promulgated a new Food Safety Law on 28 February 2009,
scheduled to come into effect on 1 June 2009.
The new Food Safety Law is notable for several key provisions.
First, the new law specifies that the Ministry of Health (“MOH”)
will take primary responsibility for regulation of food safety. The
Ministry of Agriculture (“MOA”), State Food and Drug
Administration (“SFDA”), GAQSIQ, and other administrative
agencies that previously had concurrent (and often conflicting)
jurisdiction will generally have a subordinate role to MOH.
Under the new law, consumers will also be able to claim punitive
damages for food product liability. The Food Safety Law Article 96
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