CHINA Law and Practice Contributed by: Yue Dai, Zhenghao Li and Xiaokun Yuan, King & Wood Mallesons
when a product quality dispute affects multiple individuals (see 2.2 Standing to Bring Product Liability Claims ). In practice, many public interest litigations in China are filed by procuratorates. As an exam - ple, a procuratorate in Guangdong province commenced litigation against two individu - als for selling pork that did not meet the food safety regulatory requirements and impairing public health. The People’s Court supported all the claims of the procuratorate and ordered the two defendants to remedy the damage caused by their products (by making payments to the State Treasury) and apologise to the public in the newspaper (see Case (2019) Yue Min Zhong No 379 decided by the Higher People’s Court of Guangdong Province). More recently, China is also exploring ways to encourage consumer associations to initiate public interest litigation, with local procuratorates providing the neces - sary support during the proceedings (see 2.17 Summary of Significant Recent Product Liabil - ity Claims ). 2.17 Summary of Significant Recent Product Liability Claims There have been many published decisions con - cerning product liability in China recently. The cases discussed below – about public interest litigation, punitive damages, food safety and product defects – are significant to judicial prac - tice in interpreting key concepts and supporting new trends in public interest litigation. Product Liability After Lapse of Warranty Term On 29 September 2024, the SPC released a batch of typical cases relating to product qual - ity. One of these model cases concerns product liability for defects after the lapse of the warranty term.
In (2023) Ji 05 Min Zhong No 4841 (decided by Xingtai Intermediate People’s Court, Hebei), the plaintiff purchased a harvester from the respond - ent, which was covered by a 12-month warranty. After 16 months of use, an electrical line failure of the machine led to a fire accident, causing property losses. The plaintiff then claimed com - pensation against the respondent for the prod - uct defect. The court found that the electrical line failure constituted an unreasonable danger to physical and property safety, and held that the business operator shall not be exempt from its product liability for product defects even after the lapse of the warranty term. Therefore, the court supported the plaintiff’s compensation claim. Punitive Damages Imposed on Shareholder Deregistering Company in Bad Faith The SPC published “Typical Cases of Punitive Damages Related to Food Safety” on 21 August 2024, one of which involves a shareholder who intended to evade the punitive damages by deregistering his company. According to the case brief, the plaintiff pur - chased 20 batches of liquor from the online store of respondent’s company. However, it was later discovered that the information on manufacturer and production license was all fabricated. The plaintiff claimed punitive damages against the company, and held another respondent, the sole shareholder to the company, jointly liable for the compensation. During the proceedings, the shareholder deregistered his company, with an intent to evade the potential liability. The court determined that the fabrication of false product labels amounted to production of food not compliant with food safety standards, and that in accordance with the Food Safety Law and the Company Law of the People’s Republic of China, the respondent being the sole share -
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