China: Trends in class action-type public interest litigation in China

Last Updated: 1 June 2015
Article by Richard Wigley

The framework for variants of class action-type litigation in the People's Republic of China has been in place since the initial promulgation of the Civil Procedure Law of the P.R.C. ("CPL") in 1991. The recently amended CPL provides requirements for filing a "joint litigation" for suits where "the object of the action is of the same category and a party consists of numerous persons" and where the parties may choose to elect a representative.1 Further to whether standing is afforded the plaintiff and the filing requirements for such litigation, the CPL provides that "[t]he plaintiff must be a citizen, legal person, or an organization having a direct interest with the case ... there must be a specific defendant ... [and] there must be a specific claim and a specific factual basis and grounds ...."2 Though with certain differences, the CPL provides a framework which allows for joint litigation which has similarities to what is commonly referred to as a "class action lawsuit".

In addition to a typical "joint litigation", the recent amendment to the CPL added provisions for certain joint litigation in areas of public interest related to "pollution to the environment" and "damage[ to the]legitimate rights and interests of consumers at large".3 In these cases of public interest joint litigation, however, only certain "designated institutions may institute proceedings".4 Guidance in regards to the requirements for case acceptance in such cases was provided in the recently promulgated Interpretations of the Supreme People's Court on the Application of the "Civil Procedure Law of the People's Republic of China" ("ICPL") in Article 284 therein which stipulates that:

"[f]or behaviors that harm the public interests such as polluting the environment or violating the legitimate rights and interests of consumers by the organs or related organizations provided in the Environmental Protection Law and Consumer Protection Law, if Public Interest Litigation is brought before court according to Article 55 of the Civil Procedure Law subject to the following conditions, the People's Court shall admit it:

  1. There is an identifiable defendant;
  2. There is a specific claim;
  3. There is preliminary evidence that the public interests are damaged; and
  4. The cases are within the scope of civil litigation and the People's Court has jurisdiction on the cases."5

Specific to environmental public interest suits, the Interpretations of the Supreme People's Court on Issues Pertaining to Application of Laws in the Trial of Civil Cases Regarding Environmental Public Interest Litigation ("ITEPIL") in Articles 1 and 18 provide that suit may be brought where there have been "behaviors of polluting the environment and damaging the Ecology that have already damaged public interests or have severe risks of damaging public interests."6 As it is, there appears to be a conflict between the ICPL and the ITEPIL in regards to whether the plaintiff must offer preliminary evidence to prove that that public interests are damaged or whether, alternatively (under the ITEPIL), it may offer evidence to prove that there are "severe risks of damaging public interests".7 Some may argue the more recent ICPL rules, while it may also be argued that the more subject matter-specific ITEPIL rules, though such conflict may ultimately require the Supreme People's Court to weigh in on this issue.

In regards to which specific entities have standing to bring such suits, Article 58 of the recently promulgated amended Environmental Protection Law ("EPL") provides that such litigation may be brought by certain "social organizations" in those cases where there is environmental pollution or ecological damage which damages the public interest and where: "(1) the social organization is registered in the civil administrative departments of the People's government at the city (divided into districts) level or above in accordance with the law; and (2) the social organization specifically [has] engage[d] in public environmental protection activities over five consecutive years without records of violations."8 Typically, that "social organization" is the All-China Environmental Federation ("ACEF").

Prior to having the recent guidance provided by the promulgation of ICPL, ITEPIL, and the amended EPL, courts may have been reluctant to take on such cases of public interest joint litigation where it was unclear as to whether the plaintiff had standing and that the evidence offered met the threshold for case acceptance. Possibly in anticipation of the promulgation of the relevant guidance on these issues and possibly based on draft language previously released, the year 2014 saw an increase in accepted cases of public interest litigation related to environmental protection and that trend has continued into 2015.

In terms of consumer rights issues, it should be noted that China now has the world's largest e-commerce marketplace, with the largest volume of online retail transactions. For public interest litigation, the recently amended Consumer Rights Protection Law of the P.R.C. ("CRPL") stipulates that "for acts which harm the legitimate interests of many consumers, the China Consumers' Association ["CCA"] and consumer associations" as either established on the provincial level or "centrally-administered municipalities" shall be able to bring suit before a People's Court.9

Given the challenges which China faces in consumer rights protection both online and, also, for "bricks and mortar" store transactions, some may have expected that the CCA would by now have become a plaintiff in numerous class action-type litigations in China after the recent amendment to the CRPL. However, there has been only a limited number of public interest joint litigation cases brought under the CRPL in relation to the protection of consumer's rights since its amendment in 2013. Such a limited number of case filings may, however, just be the "calm before the storm", as it were, but the requirement of meeting the threshold for preliminary evidence to prove the requisite harm, as well as the need to manage the overall case, may be proving costly and problematic to the CCA.

Specifically, the requirement under the ICPL requiring that "there is preliminary evidence that the public interests are damaged"10 may pose a significant obstacle for the CCA to bring such cases. Given the huge number of potential consumer product claims and the many consumers impacted, evidence collection in such consumer rights-related cases involving many consumers may be proving to be prohibitively costly for the CCA in certain instances. Furthermore, while in many cases the ACEF may be the only viable means of bringing a claim in certain cases involving damage to the environment, single plaintiffs have already begun to bring claims under the CRPL and such may provide a more attractive way to recover an individual consumer's damages than in a joint litigation.

So, what may these trends say to companies doing business in China? In regards to environmental public interest joint litigation, the ACEF has already brought suit in a number of jurisdictions against various companies for a variety of environmental-related claims, so companies operating in violation of China's EPL, in certain instances, may soon face costly joint litigation. Given the environmental challenges facing China and increasing public awareness, it may be expected that growth in such environmental public interest joint litigation will continue upward.

In terms of consumer product-related litigation, in general, there are growing numbers of cases being brought against consumer products companies/retailers under the CRPL by individual plaintiffs. As such, it may simply be a matter of time before the CCA – possibly with the support and expertise of the "class-action" litigation bar in China – increases its filing of joint litigation for those cases which it deems viable. In short, with the additional guidance, as noted, as well as growing demands for protection of the environment and for the interests of consumers, it appears likely that we will see a rise in public interest class action-type joint litigations in China in 2015 and in the years following.

Footnotes

1 National People's Congress of the People's Republic of China, Civil Procedure Law of the P.R.C., adopted April 9 1991, last amended August 31, 2012, effective January 1, 2013, Articles 53-56.

2 Id, at Art. 119.

3 Id. at Art. 55.

4 Id.

5 National People's Congress of the People's Republic of China, Interpretations of the Supreme People's Court on the Application of the "Civil Procedure Law of the People's Republic of China", as promulgated on January 30, 2015, effective February 4, Art. 284.

6 National People's Congress of the People's Republic of China, Interpretations of the Supreme People' s Court on Issues Pertaining to Application of Laws in the Trial of Civil Cases Regarding Environmental Public Interest Litigation, promulgated on January 6, 2015, effective January 7, 2015, Articles 1 and 18.

7 Id.

8 National People's Congress of the People's Republic of China, Environmental Protection Law of the People's Republic of China, last amended on April 24, 2014, effective January 1, 2015, Art. 58.

9 National People's Congress of the People's Republic of China, Decision of the Standing Committee of the National People's Congress on Revision of the Consumer Rights Protection Law of the People's Republic of China, last amended on October 25, 2013, effective March 15, 2014, Art. 47.

10 Supra 5.

Note: This publication is for informational purposes only and it does not in any way constitute a legal opinion.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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