Consumer Public Interest Litigations Struggle to get off the Ground

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Editor’s Note

This is CDB’s translation of an article originally published in Chinese by the Charity Times on the 28th of March (see the original here). It discusses the “public interest litigations” that China’s national and provincial Consumers’ Associations are entitled to initiate by law in order to protect the rights and interests of consumers. The Consumers’ Associations are state-backed bodies that are supposed to protect consumers’ interests. The article argues in favour of allowing other social organizations, especially the ones with experience in conducting public interest litigations in the environmental sphere, to initiate litigations in favour of consumers.

 

Food is a primary need for the people, and its safety should always come first. This year, CCTV’s 15th of March evening show revealed that certain food products popular with consumers, for example spicy sticks (la tiao) and free range eggs, are produced in shockingly bad hygienic conditions and have all kinds of food additives inside, causing internet users to cry out that they would never dare eat them again. Setting aside these products that enter our mouths, many other bad practices have been exposed concerning products and industries familiar to us all, for example exaggerated publicity for electronic cigarettes, the illegal recycling of medical waste and after-sales tricks in retail.

As consumers, if our rights are infringed upon, what should we do to respond? In an online survey by a “Charity Times” reporter, around 20% of respondents stated they might seek help from the Consumers’ Associations; and more than 50% claimed that defending their legal rights through the Consumers’ Associations provided more guarantees than defending them on their own.

As social organisations that exist to protect consumers’ rights and interests, Consumers’ Associations do indeed serve an important purpose for solving consumer disputes and helping consumers defend their legal rights. Especially since 2014, when the revised “Consumer Rights Protection Law” gave national and provincial-level Consumer Associations the right to initiate “consumer public interest litigations”, many breakthroughs have been achieved in this field.

On the other hand, from the first implementation of the new consumer law in 2014 until today all of the Consumer Associations only instigated a total of less than twenty public litigation cases. What’s more, out of the litigations already instigated some did not receive support from the courts, some were accepted years ago but there has still been no settlement, and some cases ended with an apology, rectification or a negotiated settlement. Very few cases have involved any kind of punitive reparation. This result is far from enough to respond to the problems that keep appearing in the field of consumer products.

Due to this, during this year’s Two Congresses, some charitable organisations proposed to loosen the rules on who is allowed to act as the complainant in consumer public interest litigations, in order to allow more social organisations to take part in litigations relating to the safety of food and medical products, and protect the social and public interests of consumers. This decision also gained the support of the National Chinese People’s Political Consultative Conference Committee members, and as a result a draft bill was handed to the National People’s Congress.

 

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(photo credit: Charity Times)

 

Since 2014 there have been less than twenty consumer public interest litigations

 

As published on the China Consumers’ Association website, by September 2016 31 Consumer Associations had been established at the provincial level, 351 in the prefecture-level cities and 2852 at the county level. This huge system of Consumer Associations serves an important purpose in defending consumers’ rights, especially since the revised “Consumer Rights Protection Law” in 2014 further encouraged Consumers’ Associations to use the law as a method for expanding consumer rights in the form of public interest litigations.

Clause 37 of section 7 of the new Consumer Rights Law mentions that if there is behaviour that damages consumers’ rights and interests under the law, the Consumers’ Associations should support consumers who have suffered damage in starting a lawsuit, or start a lawsuit themselves in accordance with this law. Clause 47 of section 7 provides that if there is behaviour that breaches the rights of multiple consumers, the China Consumers’ Association and the Consumers’ Associations set up in the provinces, autonomous regions and municipalities can bring a lawsuit to the People’s Courts.

This provision has led to many breakthroughs for China’s consumer public interest litigations. The series of public interest litigations regarding the Guangdong Fake Salt case was particularly significant.

In April 2017, the Guangzhou city prosecutor’s office issued four proposals to prosecute to the Consumers’ Committee of Guangdong province, in which they suggested the committee should start consumer public interest lawsuits in the People’s Courts for four cases of food product safety violations. In October that year, the Guangdong province Consumers’ Committee filed four public interest litigation cases in the Guangzhou Intermediate Court on the production and sale of counterfeit salt by a person surnamed Peng and others.

In May 2018, the Guangzhou Intermediate Court adjudicated on three of the cases in the first instance, and a total of eight defendants in the three cases were ordered to pay compensation of 167,480 RMB, with the court turning the money over to the state treasury. The defendants were required within ten days of the judgment taking effect to publish a statement of apology approved by the court to Guangdong’s provincial-level media, and they also had to undertake to pay the majority of the costs of the case.

At the end of September 2018, the last of the Guangdong Fake Salt cases was decided in the first instance, with Peng and the other seven defendants sentenced to pay compensation totalling 1,146,463.3 RMB, and publish an apology in the provincial-level media. So far, the Guangdong Fake Salt series of cases has resulted in payments of compensation totalling 1,314,000 RMB, and the fifteen defendants, including both those who offered the manufacturing sites and the employed workers, have had to pay a heavy price.

The reason why this case is frequently mentioned is that it represented the first case of a public interest litigation in China in which punitive reparations were imposed. In previous consumer public interest litigations, the consumer associations’ demands were for the most part restricted within the scope of judicial explanations and clear-cut guidelines, and when the result was finally reached it usually yielded an apology or some form of rectification or compromise. This means that the punitive and deterrent power and the actual effect of the litigations was very limited.

Furthermore, media reports reveal that Consumers’ Associations around the country have only initiated less than twenty public litigation cases up to this point, and the public litigation system’s ability to offer actual protection has not been reflected very well. On the other hand, the public’s own enthusiasm for defending its legal rights through the Consumers’ Associations does not seem to be too high.

The “Charity Times” conducted an online survey on this issue, and it was found that out of the more than 1000 people who participated, less than 20% stated that when they suffered a breach of their consumer rights they would go to a Consumers’ Association to seek help; around 28% stated that they had previously contacted a Consumers’ Association, but the results were not ideal. It is worth considering that more than 40% of the participants suggested that if more social organisations that meet the criteria were given the right to instigate public interest litigations, “this would allow more social organisations to take part, and they would be able to defend consumers’ legal rights to a greater degree”.

When all is said and done, what are the factors restricting the enthusiasm of Consumers’ Associations for instigating public interest litigations? What practical difficulties are they facing?

 

Multiple problems make it difficult for consumer public interest litigations to progress

 

Two years after the new consumer law was implemented, in 2016 the Supreme People’s Court released the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Law in the Trial of Environmental Civil Public Interest Litigation Cases”. This further clarified certain issues, such as the qualifications to act as a plaintiff in consumer public interest litigations, the scope of application, and the relationship between public interest litigations and private litigations. Many people believe that this has created a stable foundation for the implementation of public interest litigations.

However, the actual practice of public interest litigations would not seem to give much cause for optimism. According to media reports from within the sector, from 2014 to 2018, the first four years after the new consumer law was passed, local Consumers’ Associations filed 14 public interest litigation cases. From the public records it transpires that some provincial level Consumers’ Associations’ attitudes towards public interest litigations are not particularly positive.

In May 2015, in Hubei Province’s Yunxi Country, the Salt Administration discovered fake iodized salt in shops and residents’ homes during an inspection. On February 5th 2016 the main suspect in the case, surnamed Zhou, was sentenced to one year in prison with a two-year reprieve. Since Yunxi County is an area of Hubei that suffers from iodine deficiency, the Shiyan City Procuratorate recommended that the Hubei Consumer Committee raise a public interest litigation against Zhou, but the Committee did not provide a written response to the recommendation and did not pursue the litigation. After going through the pre-litigation procedures, the Shiyan city Procuratorate began the litigation itself.

Legal experts believe that the reason behind this situation is that the current law does not have mechanisms to impose conditions on Consumers’ Associations. Zhang Na, a lawyer with many years of experience working on environmental public interest litigations, told the author that the distinguishing feature of public interest litigations is that they protect the public interest, meaning that consumer public interest litigations do not directly affect the interests of Consumers’ Associations: “with regards to the thirty plus provincial Consumers’ Associations, if they don’t file consumer litigations the law has no way of providing any kind of control mechanism. That means that if the provincial Consumers’ Associations act lazily, there is no legal supervision upon their powers of litigation.”

In reality, the biggest reason there are so few consumer public interest lawsuits filed is because there are too few actors that are able to file them, and the requirements for becoming one of those actors are too strict. It is easy to imagine the pressure that just thirty Consumers’ Associations face when dealing with a nation-wide demand for consumer public interest litigations.

As Zhang Na commented, “consumer disputes are spread across the country, and they have an obvious regional basis. If the qualifications for actors could be expanded to include city and county-level Consumers’ Associations, then more social organizations could participate. This would greatly reduce the costs of litigation, speed up the collection of evidence, improve efficiency, and facilitate the rapid resolution of conflicts.”

Just like other kinds of social organizations, when filing public interest litigations, Consumers’ Associations are greatly restricted by a lack of funds. Most of their funding comes from budgetary allocations and support from industry and commerce departments. The costs of litigation include case hearing fees, lawyers’ fees, evidence and investigation fees, travel expenses, and appraisal and evaluation fees. This undoubtedly is a real problem for Consumers’ Associations.

In addition, consumer public interest litigations also involve specialized issues such as determining the right to claim compensation, the acquisition of evidence, the calculation of the compensation amount, and the handling of compensation funds. Many Consumers’ Associations undoubtedly lack this sort of legal and litigation knowledge. What also should not be ignored is that as “public rights” organizations, Consumers’ Associations have to face the government or industrial and commerce departments when they pursue litigations. This “impediment” also limits the number of public interest litigations that can be filed, dampens the enthusiasm of Consumers’ Associations for pushing litigations, and makes it difficult to completely guarantee the fairness and justness of the cases.

 

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An activity held by the Consumers’ Association of Linfen in occasion of the 2019 Consumer Rights’ Day. (photo credit: Charity Times)

 

It is urgent to relax the qualifications for filing consumer public interest litigations

 

“China’s Consumer Rights Protection Act’ states that only national and provincial level Consumers’ Associations are qualified and have the right to act as the plaintiffs in consumer public interest litigations. This provision is too strict. Since 2014, the China Consumer Association and provincial-level Consumers’ Associations have filed less than 20 public interest litigation cases, demonstrating that the scope for consumer public interest litigations in China has not really opened up. Although the supervision of the government and the relevant departments is gradually growing stricter and more meticulous, the administrative penalties in such cases are still quite mild and the cost of breaking the law is still too low. It remains difficult to deter offenders and to create an environment for the public where consumers can feel safe.”

In view of this situation Wen Xiangcai, a CPPCC National Committee member and Director of the Physics laboratory of the China National Environmental Monitoring Center, submitted the “Proposal on Expanding Social Organizations’ Qualifications to act as Plaintiffs in Consumer Public Interest Litigations” to this year’s Two Sessions: “consumer public interest litigations should open up the qualifications to act as a plaintiff, and give social organizations that meet the criteria and are pursuing environmental public interest litigations the eligibility to participate.”

Zhang Na analysis on this was as follows: “cases of consumer rights’ violations and environmental pollution are the same in that the victims are always the disadvantaged. It is difficult for private litigation to provide relief to individual citizens, but the public interest litigation can on a certain level strike out against bad enterprises, provide a check on the abuses of consumers’ legal rights, and warn both producers and distributors. It has the same aim as the environmental public interest litigation, which work to curb polluters, protect the life and health of the unspecified majority, and protect the environment.”

The China Biodiversity Conservation and Green Development Foundation deputy secretary general Ma Yong expresses a similar view: “there is a strong correlation between environmental public interest litigations and consumer public interest litigations, especially lawsuits that arise when environmental pollution leads to food safety or other consumer safety issues. Therefore, I feel that if a plaintiff can file environmental public interest litigations then they can also file litigations regarding cases of consumer problems that involve the public interest.”

On March 15, the China Biodiversity Conservation and Green Development Foundation released an article on their WeChat public account entitled “CBCGDF’s position receives recognition from Two Sessions’ s representative committee member: it’s time to relax qualifications for consumer public interest litigation plaintiffs | Consumers Rights Day”. The organization maintains the position that giving social organizations that meet the qualifications but are not consumer associations the eligibility to file consumer public interest litigations is imperative.

“The necessity lies in the fact that presently there are many risks to consumer safety caused by environmental problems, particularly risks linked to food safety, cars and home renovation. As these issues affect and harm people’s physical wellbeing and create personal loss, effective judicial protections are urgently needed. Due to the exclusionary provisions determining who can be the plaintiff in consumer public interest litigations, other social organizations can do little to help solve this problem, and therefore this rather unreasonable rule needs to be addressed”, wrote Ma Yong.

This author’s survey found that more than 40% of those surveyed think that social organizations that meet the requirements should be given the eligibility to file consumer public interest litigations, especially if they already meet the criteria to file environmental public interest litigations. Compared to the limiting conditions that the Procuratorate and provincial level consumer associations face, these kinds of social organizations can respond quickly, aren’t limited by financial expenses or the government, and also have staff with a lot of experience in public interest litigation.

17.22% of those surveyed agreed that this relaxation of qualification requirements could first be tested in a controlled area. For example, some non-profits that already have experience in environmental public interest litigations could be authorized to begin work in the consumer rights field. However, from a legal standpoint, other social organizations that want to become eligible to file consumer public interest litigations are still facing a lot of problems. For this reason, Wen Xiangcai offered a few suggestions of his own within the proposal:

 

  • The Supreme People’s Court should add additional regulations to the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Environmental Civil Public Interest Litigation Cases”. The scope for plaintiffs filing consumer public interest litigations should be expanded to the food and drug sector, and more social organizations that meet the conditions to file environmental public interest litigations should be allowed to do so.

 

  • As a pilot project, the Standing Committee of the National People’s Congress should issue relevant authorizations to allow for some non-profit organizations that already have experience filing environmental public interest litigations to file litigations in the consumer rights sector.

 

  • The Standing Committee of the National People’s Congress should revise the Consumer Rights Protection Act to expand the right to act as a plaintiff in consumption public interest litigations from consumer associations to social organizations that meet the criteria to file environmental public interest litigations.

In Brief

China’s Consumers Associations are now allowed to initiate public interest litigations to defend consumer rights. In practice however this has proved to be less than ideal as an instrument to protect consumers. This translated article analyses the situation and argues in favour of allowing a wider range of non-profits to start such litigations.
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