Resolving Product Liability Disputes in China

Date: Thursday, September 20th, 2018 by Michaela Hickson.

Jim Sherwood and Michael Harvey of BLM give an overview of last week’s seminar on product liability disputes in China – co-hosted by Buren and BLM.

Accessing pragmatic expert advice about product liability claims in China is a major challenge for insurers and businesses.  The Global Insurance Law Connect presentation at BLM’s London offices by Chinese member firm Buren on 13 September confirmed that while the court system may be unpredictable at times, using local expertise with experience of using the court process for the benefit of western clients, can provide realistic advice and a potential path to successful recovery from manufacturers and suppliers based in China.

Jan Holthuis and Li Jiao updated an audience of insurers and corporate clients and provided a comprehensive overview of potential causes of action, limitation periods applicable to each, and procedure when bringing claims in China and/or relying on Chinese law.  It became clear that while there may be similarities with western jurisdictions and law as to the legal tests, such as burden of proof, and measures of losses to be applied, the key to success is understanding how the courts operate and how judges will approach disputes.

Interestingly, claims in tort provide an avenue for claiming pure economic loss, whereas of course this is not available under English law save in extremely limited circumstances.  However, a key issue is being able to provide sufficient evidence to satisfy a Chinese court, including being able to prove how a payment by an insurer in the UK can be evidenced in China, and justified as necessary and/or reasonable in English law, before it can be recovered in Chinese proceedings; and understanding the rules as to use of expert evidence which will be accepted by local courts.

Similarly, access to the judiciary is very different.  Judges express opinions at an early stage, often through personal phone calls to a party’s lawyer without the other party’s lawyer being present (or even knowing), and indicate whether the judge considers the evidence is satisfactory or not.  There is general distrust of lawyers by the Chinese courts, and the evidence presented is scrutinised with scepticism, particularly where not supported by original documentary evidence.

Specific local factors can also have an effect on the outcome of a claim.  Knowing how to use a local process is critical and Jan and Li provided examples of successful claims through the Chinese courts on behalf of insurers.

The presentation was very well received and provoked interesting questions and discussion.  It also highlighted the strength and capability of the network and its member firms to handle and advise on cross-jurisdictional claims involving China and Chinese law.