CHINA Law and Practice Contributed by: Yue Dai, Zhenghao Li and Xiaokun Yuan, King & Wood
gations to Commence Corrective Action , while the measures impose the recall duty on the “medical device manufacturer”, the latest Regulation on the Supervision and Administration of Medical Devices uniformly requires “medical device registrants and fil - ing holders” to bear the ultimate recall duty. In other words, for imported medical devices, the correspond - ing foreign registrant or filing holder is also subject to the recall duty. 1.5 Penalties for Breach of Product Safety Obligations Failure to comply with product safety obligations may give rise to civil, administrative, and criminal liabilities. Civil Liability As further discussed in 2.1 Product Liability Caus- es of Action and Sources of Law , in the case of a breach of product safety obligations, the relevant party, depending on the circumstances of the case, may file a contractual or tort claim, requesting repair or replacement of, or a refund for, the product, or com - pensation for that party’s losses. In addition, according to the PCRI, consumers may further claim punitive damages when (i) the merchant intentionally engages in fraud; and (ii) in cases of prod - uct defects, the manufacturer or seller knowingly con - tinues to manufacture or sell the defective products, or fails to take effective remedial measures, and the defect results in death or serious damage to the health of another person. For cases concerning the quality of food or drugs, as provided by sector-specific regulations, the plaintiffs may also seek punitive damages against the manu - facturers and sellers of the substandard products. The amount of the punitive damages will be determined by courts on a case-by-case basis. Administrative Penalties According to the Product Quality Law, the PCRI and other sector-specific rules, the regulatory authorities may impose administrative sanctions on manufactur - ers and sellers when their product fails to conform to product safety standards, including by requesting rectification of defects, imposing fines, ceasing the operation, and revoking the business licence.
In addition, the manufacturer and seller might also be subject to administrative penalties if they do not perform their product recall obligations. For exam - ple, where an automobile manufacturer breaches the Administrative Regulations on the Recall of Defective Automotive Products by failing to stop manufactur - ing the products, selling or importing defective auto products, withholding information about the defects or refusing to implement a recall as ordered, the reg - ulatory authorities may order it to make correction, impose a fine of 1–10% of the monetary value of the defective products, and confiscate any illegal gains. Criminal Penalties If the products are found to have caused death, seri - ous personal injury, or serious property damage, the responsible manufacturers and sellers may be crimi - nally liable. The Criminal Law of the People’s Republic of China (the “Criminal Law”) (effective as of 1 October 1997, with 12 amendments so far) addresses crimes related to product quality. In particular, Chapter 3, Part 2 of the Criminal Law contains a section titled “Crimes of Manufacturing and Selling Fake and Shoddy Goods”. This section specifically provides strict criminal penal - ties in respect of the manufacturing and selling of fake or defective products, particularly food and drugs, that severely infringe upon consumers’ interests. For example, in one criminal case, the defendant was sentenced to a fixed term of imprisonment of 12 years and ordered to compensate for medical fees, nursing fees, funeral expenses and other costs of the victim’s family for knowingly selling counterfeit medicines, which caused the death of the victim (see Case (2018) Liao 02 Xing Chu No 59, decided by Dalian Intermedi - ate People’s Court, Liaoning Province). 2. Product Liability 2.1 Product Liability Causes of Action and
Sources of Law Causes of Action
Under the Tort Chapter of the Civil Code, “product lia - bility” exclusively refers to tort liability due to damage caused by product defects. However, for the purposes
80 CHAMBERS.COM
Powered by FlippingBook