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On 26 December 2009, the National People¡¯s Congress passed the PRC Tort Law, which will take effect on 1 July 2010. Chapters eight and nine of the Tort Law specifically address liability for environmentally related torts.

Strict liability for pollution

Articles 65 and 68 of the Tort Law provide that for any damage caused by environmental pollution, a polluter bears strict liability. Subjective fault of the polluter is not required in order for such liability to arise. Thus, environmental tortious liability can be triggered if all of the following three elements exist: (i) environmental pollution occurs, (ii) persons or entities other than the polluter suffer an injury, and (iii) a causal link exists between the pollution and the injury.

Polluter bears burden of proof

Article 66 of the Tort Law states that in a dispute arising from environmental pollution, the polluter bears the burden of proof regarding any exemption or mitigation of its liability, as well as in relation to any lack of causal linkage between the polluter¡¯s behaviour and the damage. The provisions in Article 66, which constitute a reversal of the usual burden of proof, echo evidence guidelines issued by the Supreme People¡¯s Court several years ago.

Article 66 indicates that an injured plaintiff needs only to provide prima facie evidence about the likelihood that the polluter¡¯s action caused the damage. The alleged polluter is then required to provide evidence to refute that causal linkage, and can do so by proving either that PRC laws exempt or mitigate liability, or that there is no causal linkage between its action and the damage.

Exemption or mitigated liability

Article 26 of the Tort Law offers insights into what types of situations give rise to a polluter either being exempt from tortious liability or being able to mitigate such liability. Those situations include contributory fault of the injured party, the intentional causing of the pollution by the injured party, third-party cause of the pollution and force majeure.

Under article 26, if a polluter proves the following, it might be able to mitigate or be exempted from its tortious liabilities:

(1) the injured party has contributory fault that also caused the damage, and therefore the polluter can mitigate its liability;

(2) the injured party intentionally caused the damage, and therefore the polluter can be exempted from liability;

(3) a third party caused the damage, and therefore that third party should bear the tortious liability. (In this scenario, as described below, the injured party can claim damages from the polluter first, and the polluter can then claim compensation from the third party at fault); or

(4) a force majeure event caused the damage, and therefore the polluter can be exempted from its liability unless applicable laws and regulations provide otherwise.

Joint liability of polluters

In circumstances where there is more than one polluter, the Tort Law provides for joint liability. For instance, Article 67 of the Tort Law provides that ¡°where there are two or more polluters, the liability proportion shall be determined based on the type of the pollutants, the amount of the emission and other factors¡±.

Article 67 also addresses the apportionment of liability among joint polluters if none of them meets the burden under Article 66 to disprove a causal link between its actions and the environmental damage in question. In such a case, the polluters will be held jointly liable, and the apportionment of liability will largely depend on what type and amount of pollutants were emitted by each polluter.

Although Article 67 establishes that the apportionment of joint liability depends on factors including the type and amount of pollutants emitted, the Tort Law does not provide detailed standards or specifications on how to use these factors when apportioning joint liability in practice. The issue may be further confused because the listed factors are not exhaustive; thus, there is potential for other unknown factors to be considered in an apportionment scenario. Accordingly, it seems difficult for a polluter to know with any certainty what proportion of damages it will be responsible for in a joint pollution scenario.

Joint and several liability

Article 68 of the Tort Law introduces the concept that for damages caused by pollution, a polluter bears joint and several liability with a third party, even if those damages are due to the fault of such third party. Article 68 also increases the capacity for victims to achieve compensation for damages which they have suffered, by providing that in situations where that damage is caused by environmental pollution attributable to a third party, the injured party may seek compensation either from the polluter or from that third party.

Article 68 increases protection for a victim of environmental pollution because the victim will not need to identify the precise cause of the pollution. The provision also increases liability for a polluter because the polluter could be liable for compensating victims even though it is not at fault. Article 68 leaves it to the polluter and the third party to handle and resolve the issue of compensation between them. If the injured party chooses to seek compensation from the polluter, then such polluter, after compensating the victim, may then claim compensation for that from the third party.

It is, as yet, unclear how the Tort Law will be implemented in practice. However, its provisions concerning environmental torts suggest that those at risk of producing pollution and/or discharging wastes should increase their awareness ¨C not only about the actual and potential impact of that pollution, but also about the possible roles and impact of third parties in relation to such pollution.

Beatrice Schaffrath regularly advises on China-related environmental law and compliance matters, including projects involving renewable energy, climate change and the clean development mechanism under the Kyoto Protocol.

Zhang Danian is the chief representative of the Shanghai office of Baker & McKenzie. His practice focuses on environmental compliance, regulatory affairs, foreign direct investment, joint ventures and merger and acquisition projects in the PRC.

Beatrice Schaffrath

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