CHINA Law and Practice Contributed by: Rongliang Wu, Mei Wan, Qirong Huang and Xueqi Huang, Jin Mao Law Firm
China does not yet have an environmental liability insurance system for individual executives. There may be some commercial insurance companies that offer something similar. However, except for the situation of environmental accidents causing damage, the afore- said violations of laws resulting in administrative or criminal liability may be excluded from the insurance coverage.
cial institutions, and proposed that environmental risk assessment and management should be strength- ened. The CBRC also proposed that pre-loan due diligence should be undertaken and customers with non-compliant environmental and social performance should not be granted credit. 9.2 Lender Protection According to the Green Credit Guidelines, banking financial institutions must establish and constantly improve a system of environmental procedures – including social risk management policy – developing the customer’s environmental and social risk assess- ment standards and social risk evaluation and clas- sification. The results should be the basis of rating, credit access, management and exit. If necessary, qualified and independent third parties may also be engaged to evaluate or audit the activi- ties of banking financial institutions, so as to fulfil their environmental and social responsibilities. 10. Civil Liability 10.1 Civil Claims In China, environmental civil claims can be brought in three main circumstances: • Personal/property damage:If an enterprise or individual causes personal injury or property loss to others via environmental pollution or ecological damage, an injured party can file a civil lawsuit for tort liability under the Civil Code and environmental laws. • Public interest/ecological damage: For pollution harming the public interest, procuratorates and qualified environmental NGOs can sue polluters (environmental public interest litigation). Provincial/ municipal governments or their departments may first negotiate for compensation; if negotiations fail, they can sue for ecological and environmental damages. • Breach of contract: If parties agreed on environ- mental obligations in a contract, the party violating these obligations is liable for breach, and the other party can claim remedies via a breach-of-contract lawsuit.
8. Insurance 8.1 Environmental Insurance
China’s environmental insurance (green insurance) is focused on high-risk industries such as petrochemi- cals, hazardous waste treatment and heavy industry, with major insurers offering products and local gov- ernments providing premium subsidies. It mainly cov- ers third-party losses from pollution, pollution reme- diation costs and related legal/assessment fees. There is no national mandatory requirement, but per policies such as the Guiding Opinions on Carrying out the Pilot Work of Compulsory Environmental Pollution Liability Insurance, enterprises in “high-risk, high-pol- lution” fields must purchase environmental insurance; others participate voluntarily. Some risks are uninsurable: • harm from intentional/grossly negligent acts due to breach of insurance good faith; • long-term ecological damage with unquantifiable costs/scales; • losses from legal non-compliance; and • catastrophic risks exceeding insurers’ risk-bearing capacity.
9. Lender Liability 9.1 Financial Institutions/Lenders
The Environmental Protection Law does not directly regulate the environmental protection responsibili- ties of financial institutions and lenders. Accordingly, the China Banking Regulatory Commission (CBRC) issued Green Credit Guidelines to provide guidance for the development of green credit for banking finan-
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