China’s new Civil Code - Part 7: Liability for Tort

published on 16 September 2020 | reading time approx 6,5 minutes

The new Civil Code (CC) of China, which will enter into force on January 1, 2021, consists of 7 parts. With this series of articles we inform about the essential legal provisions and new regulations in the new Civil Code. This article is focused on some aspects of the seventh part of the Civil Code – Liability for Tort.

Background and Structure

Essential parts of the Tort Law were previously regulated in the Tort Liability Law, first effective as of 1 July 2010. The provisions of these laws have been largely incorporated into the new Civil Code and summarized in Part 7, with additional provisions being added. The current Tort Liability Law, which will cease to have effect when the Civil Code enters into force, consists of twelve chapters (including supplementary provisions) with in total 92 articles.

Part 7 of the new Civil Code is structured in ten chapters plus supplementary provisions with in total 97 articles, namely general provisions, damages, special provisions on subjects of liability, product liability, liability for motor vehicle traffic accidents, liability for medical malpractice, liability for environmental pollution and ecological damage, liability for ultrahazardous activities, liability for harm caused by domesticated animals and liability for harm caused by buildings or objects.

As a comparison, in the German Civil Code liability for tort is regulated in Book 2 Division 8 Title 27 German Civil Code (Sections 823 – 853 German Civil Code) with in total 31 provisions. The main reasons why this title in the German Civil Code is much shorter than in China is the different structure of the two Civil Codes and the fact that the Chinese Civil Code is in general more descriptive. For instance, the self-help rule in the German Civil Code is not mentioned in the title for torts, but in the General Part in Book 1 (Section 229 German Civil Code), which applies to all other books in the German Civil Code. Moreover, product liability is regulated in a separate Act on Liability for Defective Products, but not within the German Civil Code.

Introduction of Personal Risk Rule

In its Art. 1176 the new Civil Code introduces a “personal risk rule”, which states that if a person voluntarily participates in recreational or sports activities, which entail a certain risk, and is damaged by the behavior of any other participant, such person shall not request the other participant to bear tort liability, except the damage is caused by the other participant's intentional misconduct or gross negligence. However, the liability of event organizers is not included therein.

Introduction of Self-help Rule

Art. 1177 Civil Code clarifies that where a person's lawful rights and interests are infringed upon in an urgent situation and cannot be protected by a state organ in time, and failure to take immediate measures will cause irreparable damage to his/her legitimate rights and interests, such person may take reasonable measures. This includes, for example, detaining the property of the infringer, provided, however, that he/she shall immediately request the relevant state organ to handle the matter. A victim that adopts improper measures and causes damage to others shall bear tort liability.

Punitive Damages for Intellectual Property Infringements

It is newly stated in Art. 1185 Civil Code that if the intellectual property rights of others are intentionally infringed upon and the circumstances are serious, the infringed shall have the right to claim corresponding punitive damages.

Up to now, punitive damages for intellectual property infringements have only been separately mentioned in various intellectual property related legislation, such as in Article 63 of the PRC Trademark Law for the malicious infringement of trademarks. With the new Civil Code, punitive damages can be determined uniformly for all intellectual property rights` infringements.

However, the Civil Code does not contain a calculation method or any other stipulation based on which such punitive damages can be calculated. It may be that the interpretation of the Civil Code, which the Supreme People’s Court intends to publish within this year, will provide more detailed information in this respect. The general provisions of the Civil Code do not contain any provision in this regard either. Thus, the specific calculation and limits regarding punitive damages might depend again on the stipulations in the separate intellectual property legislation.

Right of Recourse

Various articles in the Civil Code newly contain provisions on the right of recourse. Based on Art. 1198 paragraph 3 Civil Code, business operators, managers or organizers who have failed to perform safety protection obligations may, after bearing the liability, claim compensation from a third party, if the third party actually caused the damage to others.

Pursuant to Art. 1201 Civil Code, kindergartens, schools or any other educational institution may claim the same from a third party, if a third party caused damage to a person with no capacity for civil conduct or a person with limited capacity for civil conduct during such person`s learning or living in the kindergarten, school or educational institution.

Under the current Chinese laws and regulations, employers shall bear tort liability for any injury or damage caused to other people by their employees in the course of their work. The new Civil Code now regulates that upon bearing tortious liability, the employer may seek recourse from the employee who has acted with intentional misconduct or gross negligence.

Repair of and Compensation for Damages to the Ecological Environment

Compared to Chapter 8 of the Tort Liability Law, the Civil Code adds three new articles concerning the repair of and the compensation for damages to the ecological environment.

The Civil Code for the first time states punitive damages, if the infringer, in violation of the provisions of the law, intentionally pollutes or destroys the environment, causing serious consequences. However, again, the method of calculating such punitive damages is not specified in the Civil Code.

Based on Art. 1234 Civil Code, where the violation of state regulations causes damage to the ecological environment, and it can be restored, the organ prescribed by the State or the organization prescribed by law shall have the right to request the infringer to bear the liability for restoration within a reasonable time limit. If the infringer fails to make the repair within the set time limit, the organ prescribed by the State or by law may make the repair by itself or entrust others, and the expenses incurred shall be borne by the infringer.

According to Art. 1235 Civil Code, the losses and expenses, which the infringer might have to bear on the basis of Art. 1234 are as follows:

losses caused by the loss of service functions during the period of restoration of the ecological environment after the damage has been caused;
losses caused by permanent damages to ecological environment functions;
costs of investigating and appraising the damage to the ecological environment;
costs of removing pollution or restoring the ecological environment; and
reasonable costs incurred to prevent the occurrence and expansion of the damage.

In this context it is also interesting to mention that Shenzhen is set to enact a local environmental regulation on 1 October 2020 that will empower public prosecutors, government departments and non-governmental organizations to file public interest lawsuits against illegal polluters. Although this is a step into the right direction, it will probably be difficult in practice to file such lawsuits, not only because of exorbitant costs, but also because of potential difficulties in collecting evidence.

In any case, it shows the will of the Chinese legislator to address this issue in future legislation.

Liabilities in Throwing Objects from Buildings

Even though the stipulation on damages for throwing objects from buildings is not new, the Civil Code provides more details on the possible liable parties. The Tort Liability Law merely regulates that if damage to others is caused by objects thrown from buildings or by objects falling from buildings and the infringer cannot be determined, the user of the building shall make compensation. Claims for compensation can only be rejected if the user of the building can prove that he is not the infringer. In addition to the user of the building, the new Civil Code now adds that the property management service enterprise and other managers of a building shall bear tortious liability for failure to perform their safeguard obligations. In practice, this new paragraph is of great importance, as it will normally be difficult to identify the actual infringer or user of the building.

Legal implications

In general, Part 7 of the new Civil Code is rather similar to the Tort Liability Law. A few articles are entirely new, while others already existed before, but have been taken over from other laws, opinions or interpretations and summarized in the Civil Code.

It is also worth mentioning that some articles have been optimized, i.e. contain more details, with the aim of filling certain gaps in the law or ensuring greater legal certainty. For instance, the new Civil Code in addition to the stipulation of the current Tort Liability Law, newly adds nutrition expenses and hospitalization food subsidies as compensation for personal injury. Another example is adding airports and sport stadiums into the list of business premises. Thereunder, the business operators or managers of business premises and public places or organizers of mass activities who fail to perform safety assurance obligations and cause damage to others shall bear tort liability.

It is so far still not conclusively clarified to what extent the existing interpretations and opinions of the PRC Supreme People’s Court will remain in effect or will be changed in order to be consistent with the Civil Code. This relates, for instance, to the interpretation of the Supreme People’s Court on several issues concerning the application of law in the hearing of cases involving compensation for damages in road traffic accidents. The PRC Supreme People’s Court intends to publish an interpretation and/or implementing provisions for the Civil Code later this year, which will hopefully provide further clarity.