By King & Wood Mallesons’ Compliance Team
On January 9, 2014, the Supreme People’s Court promulgated the Judicial Interpretation on Issues concerning the Application of Laws relating to Food and Drug Disputes (the “Interpretation”). The Interpretation strengthens food and drug safety, and aligns the different approaches towards certain statutory provisions in relevant cases. It focuses on issues such as intentionally purchasing counterfeit products and online shopping. It will become effective on March 15, 2014.
Liability for promotional gifts
The Interpretation stipulates that producers and sellers are liable for the safety of food and drugs even when such products are offered as promotional gifts.
Liability of online stores for food and drug safety
The Interpretation clarifies that, if food or drugs purchased online cause damage and the online store platform provider had knowledge of the producer’s or seller’s infringement and failed to take action, then the platform provider bears joint and several liability. If the platform provider had no knowledge of the infringement, it will still bear liability if it does not provide the name or contact details of the infringing producer or seller.
And organization or individual who endorses food or drugs that are promoted with false claims will bear joint and several liabilities along with the producers and sellers of such products. This article enhances the Law of the People’s Republic of China on the Protection of Consumer Rights and Interests and expands personal liabilities of false endorsement.
Intentionally purchasing counterfeit products may still be protected
For the first time, the Interpretation protects consumers who purchase counterfeit products with full knowledge of the products’ quality problems. The court will not support a producer’s of seller’s defense that the consumers purchased the counterfeit product intentionally. However, the legal approach towards people “professionally purchasing counterfeit products for profit” still remains unclear.
The validity of exemption clauses
The Interpretation stipulates that producers or sellers of food or drugs may not, through contract, notification, or other declaration, waive their obligations, restrict consumer rights, expand consumer obligations, or attempt to impose other unreasonable conditions on consumers.
If food or drugs do not meet safety standard, consumers are entitled to claim punitive damages or other indemnification provided by relevant laws in the amount of 10 times the compensatory damages. The Interpretation clarifies that personal injury is not a prerequisite for the imposition of such punitive damages.