CHINA Law and Practice Contributed by: Yue Dai, Zhenghao Li and Xiaokun Yuan, King & Wood
2.13 The Impact of Regulatory Compliance on Product Liability Claims Regulatory requirements, especially national stand - ards, play an important role in deciding product liabil - ity cases. As stated in 2.1 Product Liability Causes of Action and Sources of Law , “defect” is one of the three elements necessary for the establishment of tort. Compliance with national standards is one of the criteria for courts to determine whether a product is defective. Under the Product Quality Law, where a product is covered by national or industry standards for the pro - tection of health, personal safety or the safety of prop - erty, the term “defect” includes non-compliance with those standards. Similarly, sector-specific regulations also refer to non-compliance with national standards as one of the criteria for defects. For example, the Administrative Regulations on the Recall of Defective Automotive Products provide that products that do not meet the national or industry standards on per - sonal and property safety are considered defective. That said, regulatory compliance is only a bottom line in product liability disputes. Products that meet the national or industry standards or other administrative requirements are not automatically considered “free from defects”. They also have to meet a reasonable person’s expectations regarding safety (see 2.1 Prod- uct Liability Causes of Action and Sources of Law and 2.17 Summary of Significant Recent Product Liability Claims for further details). 2.14 Rules for Payment of Costs in Product Liability Claims In China, a court fee is calculated in proportion to the amount of the claim and must be paid before the hear - ing by the plaintiff to the court in all cases (including product liability cases), unless the plaintiff applies for a postponement, reduction or exemption of the court fee and the court permits this. The court will decide the allocation of the court fee between the parties in the final judgment, as well as other fees such as expert costs and inspection fees. Such fees are usually allocated to the losing party. As for attorneys’ fees, the court usually considers wheth - er the losing party should bear such costs based on
the specific facts of the case, taking into account whether the parties had already reached an agree - ment on this matter in their contract and whether the attorneys’ fees could be classified as a reasonable expense. 2.15 Available Funding in Product Liability Claims Litigation Funding No statutory litigation funding system is currently established in China. It is also difficult to receive legal aid in product liability cases. In practice, how - ever, specific state-supported funding is available for public interest litigation (see 2.16 Existence of Class Actions, Representative Proceedings or Co-ordinat- ed Proceedings in Product Liability Claims ) for par - ties who cannot afford the cost of litigation. By law, a court can, after investigating the situation, decide to exempt, reduce or postpone the court fee upon application if it finds that a party is financially disadvantaged and has genuine difficulties in pay - ing court fees. Eligible applicants include disabled persons without a steady source of income, persons on minimal welfare benefits, and persons affected by natural disasters or other types of force majeure. In particular, victims of product quality accidents are allowed to apply for postponement of court fees. Contingency Fees In civil cases involving property, which covers most product liability disputes, a contingency fee can be agreed upon between attorneys and clients. 2.16 Existence of Class Actions, Representative Proceedings or Co-Ordinated Proceedings in Product Liability Claims To date, China’s legal system has not provided for class actions as they exist, for example, in the USA. However, China does allow public interest litigation and representative litigation when a product quality dispute affects multiple individuals (see 2.2 Standing to Bring Product Liability Claims ). In practice, much public interest litigation in China is filed by procuratorates. As an example, a procura - torate in Guangdong province commenced litigation against two individuals for selling pork that did not
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