The past few years have seen a significant increase in the number of tort-related cases, with the courts reportedly hearing 980,000 new tort cases in 2007 and more than a million in 2008.

It’s increasing tort-related litigations and the government’s desire to dispel negative perceptions undoubtedly spurred the Standing Committee of the National People’s Congress to move to effect passage of the new Tort Liability Law in December 2009.

The new law, effective on 1 July 2010, consists of 12 chapters and 92 separate provisions, covering a wide range of subject matters including product liability, environmental pollution, automobile accidents and medical malpractice.

Will the country’s notoriety for shoddy products be tamed by the Code? Lawyers are optimistic, particularly in the product liability area.

“Product liability is one of the most important parts of the new Tort Law. There has been debate whether China really needs to establish a code for Tort, and after the Sanlu incident, the answer to that question had to be yes,” said John Grobowski, partner at Faegre & Benson.

Law firms expect product liability related cases will generate more work for a number of practice groups. “The new law will certainly affect our compliance and litigation work positively,” said David Dai, partner at MWE China. “MNCs pay a lot of attention to their product and environmental liability. There are already requests for us to review initial compliance strategies now,” he added.

Product liability aside, most have attributed that punitive damages is the “most prominent clause” of the Code. The notion could potentially be the fuel for China becoming one of the world’s most litigious countries.

“Local companies and individuals are now very willing to sue. That somehow, is proof that the legal enforcements pertaining to private actions are working. People are starting to realise that it is worthwhile bringing a case to court since many have gotten respectable compensation out of their claims,” says Jun He’s Zou Weining.

The clauses of the Tort Law aim to empower individuals and with more motivating remedies available, the country will in all likelihood become an even more contentious jurisdiction. ALB

For the full feature on China Tort Liability, please keep an eye out for ALB China issue 7.6