China's Revised Tort Law Significantly Increases Environmental Liability Risks
Guangzhou, Guangdong Province, China
November 2010
On July 1, 2010, the revised Tort Liability Law ("Tort Law") of the People's Republic of China came into effect, bringing with it major changes in liability standards for the clean-up of hazardous substances. Those changes include the imposition of strict liability for disposal of such substances, shifting the burden of proof in pollution cases, and the enunciation of standards by which liability for contamination is allocated among those responsible for pollution.
The Tort Law does not create any new environmental tort outside of existing Chinese law and practice. However, reflecting the legislature's changing sentiment towards the environment, it does reinforce liability for polluters and shifts the burden of proof in certain cases. In doing so, it borrows heavily from liability concepts found in U.S. law, particularly the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund.
Rules on Administrative Punishments for Environmental Violations came into effect on March 1, 2010. According to the new rules, the environmental protection authorities may use online monitoring and other monitoring techniques as a means to collect evidence on illegal activities. Data that is confirmed valid by the environmental protection authorities can be used as legal evidence of violations. In January 2010, the Ministry of Environmental Protection announced the list of enterprises to be the state focus of monitoring in 2010. This list includes over 9,000 companies, including Beijing Steel, Bao Steel (branch), Yili and FAW. Based on ministry regulations, state-controlled enterprises must install online monitoring systems.
In addition, China's Ministry of Environmental Protection recently announced plans to roll out a mandatory environmental insurance program. Dubbed the "Green Insurance System," this program aims to take full effect by 2015. Environmental insurance in China is currently voluntary. In the past, when an entity contaminated the environment, the business closed its doors, leaving victims without recourse and the government with the responsibility for any remediation costs. The Ministry plans to implement the program in four phases. The first is to statutorily provide for the sale of environmental insurance across the country; second to define the industries at most risk to pollution accidents. Third, the Ministry proposes to bring together several agencies to help standardize rules and product regulations for this new industry. Finally, the Ministry will develop standards to identify procedures for assigning liability and providing compensation.
For more information, please contact Allan Zhang at azhang@esdchina.com