In 2010, the People’s Republic of China (“PRC”) enacted two laws that together will substantially affect all civil litigation in China – and, in particular, product liability litigation regarding foreign entities. The Law of the Application of Law for Foreign-Related Civil Relations of the PRC (“the Choice of Law Statute”) covers almost all aspects of the application of law in foreign-related civil cases. The Tort Law of the PRC (“the Tort Law”) comprehensively governs tort liabilities. This article will focus on the provisions of these laws relevant to product liability disputes, particularly as they affect foreign entities.
The new laws will likely lead to increased litigation and compensation awarded to plaintiffs. Under the Choice of Law Statute, foreign law will be applied more widely, which could frequently be more favorable to plaintiffs. Under the new Tort Law, manufacturers and sellers now have substantive obligations to recall, implement remedial measures, and warn of potentially defective products. Punitive damages may now also be awarded for all kinds of product defects. Because the laws are so new, it is still unclear how Chinese courts will resolve legal issues arising from application of foreign law in actual cases.
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