A general clause of punitive damages should be established in China's future Civil Code

• Author: A general clause of punitive damages should be established in China's future Civil Code
• Pages: 387-437

FRONTIERS OF LAW IN CHINA

VOL. 14 SEPTEMBER 2019 NO. 3

DOI 10.3868/s050-008-019-0019-3

ARTICLE

A GENERAL CLAUSE OF PUNITIVE DAMAGES SHOULD BE

ESTABLISHED IN CHINA’S FUTURE CIVIL CODE

BAI Jiang∗

Abstract Punitive damages have several functions that are worthy of serious research.

For instance, punitive damages could help to compensate victims for moral damages

suffered and offer more sufficient ex-ante compensation in cases of wrongful death or

bodily injury, thus compensating for the losses suffered by victims more completely;

they could punish private wrongs more effectively and provide a means of personal

revenge within the law, incidentally deterring and preventing future wrongs; they could

be used to correct abuses of power or status by the rich, large corporations, or the

government; and they could be used to complement criminal law, etc. In order to fully

realize the advantages of this institution in the Chinese society, we should expand its

application in China’s tort law and carefully design the scope of its application,

including the subjects to which it would be applicable and the amounts that would be

allowable. In the short term, the application of punitive damages could be expanded

through specific individual legislation, increase of the amounts of compensation for

mental damages in individual cases or local legislation. In the long term, a general

clause on punitive damages should be established in tort law in China’s future Civil

Code, stipulating that “punitive damages can be applied to those who have performed

tortious acts that deserve severe moral condemnation, due to the actor’s malicious intent

or indifference or disregard for others’ rights.”

Keywords punitive damages, moral harm, retribution, civil code

INTRODUCTION .................................................................................................................... 388

I. TORT LAW AND PUNITIVE DAMAGES IN CHINA ....................................................... 389

II. REASONS FOR EXPANDING APPLICATION............................................................... 393

A. The Losses Suffered by Victims Can Be Compensated for More Fully.............. 394

1. Punitive Damages Can Compensate Moral Harm Suffered by Victims ........ 394

2. Punitive Damages Can Provide More Adequate Ex-Ante Compensation in

Cases of Severe Body Injury or Loss of Life................................................ 397

B. The Function of Punishment Can Be Achieved More Effectively ......................399

C. The Function of Deterrence Can Be Achieved More Effectively....................... 402

∗ (白江) Dr. iur., Humboldt University of Berlin, Berlin, Germany; Senior Prosecutor, No. 2 Branch of

Shanghai People’s Procuratorate, Shanghai 200070, China. Contact: jbai@fudan.edu.cn

I thank Associate Professor Andrew Verstein for his correction.

388 FRONTIERS OF LAW IN CHINA [Vol. 14: 387

D. Other Various Social Regulating Functions Can Be Achieved .........................403

1. Correcting the Abuse of Status and Power..................................................... 403

2. The Function of Complementing the Criminal Law...................................... 405

3. Promoting the Private Enforcement of the Law.............................................406

III. THE RESPONSES TO THE POSSIBLE COUNTERVIEWS AND DOUBTS........................ 407

A. Excessive Controversies and Doubts about the Institution in the Common Law

System ............................................................................................................... 408

B. The Conflict with Existing Civil Law Theory.................................................... 411

C. The Infringed Party Obtains Unexpected Profit ............................................... 416

D. Using Mental Compensation to Replace Punitive Damages............................ 418

E. Better or More Administrative Regulations and Less Punitive Damages ......... 420

IV. HOW TO EXPAND APPLICATION............................................................................. 422

A. Range of Application......................................................................................... 422

B. Amount .............................................................................................................. 428

C. Subject to Determine......................................................................................... 430

V. THE WAY OUT UNDER THE BACKGROUND OF PRESENT LAW ................................. 431

A. The Path in the Short Term................................................................................ 431

B. The Path in the Long Term ................................................................................ 432

VI. RETHINKING ABOUT THE CODIFICATION OF CIVIL LAW AND THE PATH OF LEGAL

DEVELOPMENT IN CHINA...................................................................................... 434

CONCLUSION........................................................................................................................ 436

INTRODUCTION

In recent years, special attention has been paid to the topic of punitive damages in

academia and in legislation in China. The concept originated in common law countries

such as the United Kingdom and was introduced into the Law on the Protection of Rights

and Interests of Consumers in China for the first time in 1993.1 In the past several years,

1 The stipulation of punitive damages in Art. 49 of the Law on the Protection of Rights and Interests of

Consumers in China established punitive damages in the legal system of the People’s Republic of China for

the first time. It is an important advancement in the development of China’s civil law legislation. However, a

few scholars point out that the legal institution of punitive damages had already existed in ancient China

based on the following reasons: (1) In the Han Dynasty, there was a regulation about increasing liability and

going into the government (Jia Ze Ru Guan Zhi, “加责入官”制), which was recorded in the book 周礼·秋

官·司历 (Zhouli • Qiuguan • Sili). It says that if the weapon, which is used to kill or injure other persons, is

also a stolen one, the liability will be increased. (2) In the Tang and Song Dynasties, there was a rule of

double liability (“Bei Bei” Zhi, “倍备”制). The 唐律 (Tang Code) says, “people who steal property from

others will be double punished.” The interpretation and comment on the Tang Code explains, “criminals

would get double punishment for their greed and they would be punished as per the following example: If

they steal 1 chi, they would be asked to pay back 2 chi.” See YANG Lixin,《消费者权益保护法》规定惩罚性赔

偿责任的成功与不足及完善措施 (The Success and Deficiencies of the Regulation of Punitive Damages in the

Consumers Protection Law and the Perfection Measures), 3 清华法学 (Tsinghua Law Journal), 7–26 (2010).

However, this opinion is open for discussion. According to these ancient codes, it was the government — not

the victim — that received the extra compensation. This is undoubtedly different from punitive damages in

the private law system, where the extra compensation belongs to the victim. Therefore, what was mentioned

above is actually a kind of criminal fine in criminal law. See LIU Zhubin, 中国古代盗窃罪的产生、成立及处罚

(The Occurrence, Establishment and Punishment of Larceny in Ancient China), 6 法学评论 (Law Review),

53–58 (1996).

2019] A GENERAL CLAUSE OF PUNITIVE DAMAGES SHOULD BE ESTABLISHED IN CHINA’S FUTURE CIVIL CODE 389

provisions for punitive damages were incorporated in the Food Safety Law and the Tort

Liability Law in addition to the newly amended Trademark Law and the newly amended

Law on the Protection of Rights and Interests of Consumers. In spite of this, generally

speaking, China’s acceptance of punitive damages was very prudential and limited.

However, a more expansive application of punitive damages is crucial in light of China’s

new legal, economic, and social developments, and a general clause of punitive damages

should be established in tort law in China’s future Civil Code. This paper is an analysis of

this proposition.

I. TORT LAW AND PUNITIVE DAMAGES IN CHINA

The General Principles of the Civil Law (GPCL), enacted in 1986, is the earliest law

that prescribes tort liability by specifically setting up a chapter for civil liability and

stipulating a general clause of tort liability in Paragraphs 2 and 3 of Article 106 in the first

section (“General Stipulations”) of the chapter. There are no specific stipulations about

the general principles of bearing civil liability (including tort liability) in the GPCL, but it

is specially prescribed in Article 134 of Section 4 (“Methods of Bearing Civil Liability”)

of the same chapter that states,

The main methods of bearing civil liability shall be: (1) cessation of infringements; (2)

removal of obstacles; (3) elimination of dangers; (4) return of property; (5) restoration of

original condition; (6) repair, reworking or replacement; (7) compensation for losses; (8)

payment of liquidated damages; (9) elimination of ill effects and rehabilitation of

reputation; and (10) apology.

The above methods of bearing civil liability may be applied exclusively or

concurrently.

From these two paragraphs, it can be seen that the general principle of bearing civil

liability (including tort liability) in the GPCL adopted the doctrine of compensatory

damages that originated in traditional civil law countries. These compensatory remedies

require totaling of the damages that have accrued as a result of a civil wrong and

compensating the victims in order to put them back into the status or position they would

have been in had no injury occurred. However, the above stipulations are not punitive.2

Additionally, this doctrine is also embodied in Article 112 regarding the liability for

breach of contract and Articles 117 to 120 regarding the specific regulations on the

liability for tortious acts in the GPCL. Theoretically, based on the strict method of legal

2 GU Angran, WANG Jiafu & JIANG Ping et al., 中华人民共和国民法通则讲座 (The Lecture of the

General Principles of the Civil Law of the People’s Republic of China), China Legal Publishing House

(Beijing), at 244 (2000).