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The Evolution and Development of Employer's Vicarious Liability in Tort Law of China

Zhu WANG LLD ., Asso. Prof. of Law School of Sichuan University , China Deputy Director of Institute for Chinese Tort Law of RCCCJ of Renmin University of China Email: wangzhu@scu.edu.cn Website: www.chinesetortlaw.com.

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The Evolution and Development of Employer's Vicarious Liability in Tort Law of China

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  1. Zhu WANG LLD., Asso. Prof. of Law School of Sichuan University , China Deputy Director of Institute for Chinese Tort Law of RCCCJ of Renmin University of China Email: wangzhu@scu.edu.cn Website: www.chinesetortlaw.com The Evolution and Development of Employer's Vicarious Liability in Tort Law of China

  2. I. Introduction II. Vicarious Liability in the Draft Efforts of Civil Code Prior to General Principles of Civil Law (GPCL 1987) III. Vicarious Liability in the Period Between GPCL and Tort Liability Law (TLL 2010) IV. Vicarious Liability After TLL Was Enacted V. Major Problems with the System of Vicarious Liability in Tort Law of China and Proposals for Improvement VI. Points of Interest in the Future Development of Employer’s Liability in Tort Law of China Table of Contents

  3. A. Inconsistency of Stipulations of Employer’s Vicarious Liability under the Framework of the Current Chinese Laws • New system: TLL (2010) - State Compensation Law (“SCL”, Amended in 2012) • Old system still in force: GPCL and the Interpretations of the Supreme People's Court of the Issues Concerning the Application of Law for the Trial of Cases on Compensation for Personal Injury (Judicial Interpretation of Personal Injury “JIPI”, 2003) Introduction

  4. TLL 2010 • Para. 1, Art. 34 “employing entity’s vicarious liability”: If an employee of an employing entity causes harm to another when performing a task, the employing entity shall bear tort liability. I. Introduction

  5. Para. 2, Art. 34 “vicarious liability of labor dispatch”: In the course of labor dispatch, if the dispatched employee causes harm to another while performing a task, the employer entity, which receives labor dispatch, shall bear tort liability. If the labor dispatch entity is at fault, [it] shall bear corresponding secondary liability. I. Introduction

  6. first sentence of Art. 35 “vicarious liability of the individual who receives labor service (“labor service receiver”): For individuals under service relation, if the party, which provides service, causes harm to another for the service, the party, which receives the service, shall bear tort liability. I. Introduction

  7. Chapter 7 “Liability for Medical Malpractice” • Art. 54 : If a patient suffers injury in the course of diagnosis and medical treatment activities, and the medical institution or its medical personnel are at fault, the medical institution shall bear compensatory liability. I. Introduction

  8. SCL (Amended in 2012) • Para.1 of Art.2: Where, in performing its/his functions, any state organ or state functionary commits any infringement upon the legitimate rights and interests of a citizen, a legal person or any other organization as prescribed in this Law, causing any damage, the victim shall be entitled to state compensation in accordance with this Law. I. Introduction

  9. GPCL 1987 • Art. 43 “enterprise legal person liability”: An enterprise as legal person shall bear civil liability for the operational activities of its legal representative. • Art. 121 “tort liability of the state organs”: If a state organ or its personnel, while executing its duties, encroaches upon the lawful rights and interests of a citizen or legal person and causes damage, it shall bear civil liability. I. Introduction

  10. JIPI 2003 • Para. 1 of Art. 8: “vicarious liability of organizations” • Para. 2 of Art. 8: “scope of application of state compensation liability” • Para. 1 of Art. 9: “employer’s vicarious liability” • Art. 13: “vicarious liability of the individual who receives gratuitous labor service” (“gratuitous labor service receiver”) I. Introduction

  11. Table 1: TLL and GPCL & JIPI

  12. B. Types of “employer-employee” relationships in China’s Tort Liability Law • Labor relationship of subordination • Labor service relationship of equal footing I. Introduction

  13. Labor relationship (& Labor dispatch) • Art.2 of Labor Law (1995) • According to Labor Contract Law (amended in 2012): labor can only be dispatched on the basis of labor relationship I. Introduction

  14. Labor service relationship: • 1. “entity-person” labor service relationship • 2. non- gratuitous “person-person” labor service relationship (also called “employment relationship”) • 3. gratuitous “person-person” labor service relationship (also called “gratuitous labor service”) I. Introduction

  15. II. Vicarious Liability in the Draft Efforts of Civil Code Prior to GPCL • A. The First Drafting Effort of Civil Code in 1950s • B. The Third Drafting Effort of Civil Code in 1980s II. Prior to GPCL

  16. A. The First Drafting Effort of Civil Code in 1950s • Article 36 of the 1st Draft of General Principles of Debt (Oct. 24, 1955) • Article 13 of Draft of General Principles of Obligation (Jan.7, 1957) • Article 71 of the 2nd Draft of General Principles of Debt (2nd Edition) (Jan.9, 1957) • Article 6 of Damage Compensation (3rd Draft) (Feb.10, 1957). II. Prior to GPCL

  17. The First Drafting Effort inherits Art. 407 of Soviet Civil Code of 1922 • 1. The concept of “employer” develops from “state organs” to enterprises, schools, groups and other organizations, which consolidates the unified rules for state compensation and vicarious liability of civil employers; • 2. Since emphasis is placed on “while executing their duties”, the scope of application, without the specific scopes of application regulated by law, is much broader; • 3. Right of indemnity is stipulated with the aim of protecting the socialist public property. II. Prior to GPCL

  18. B. The Third Drafting Effort of Civil Code in 1980s • Art.450-452 of Draft of Civil Law (Exposure Draft) (Aug.15, 1980) • Art.347-349 of Draft of Civil Law (2nd Exposure Draft) (Apr. 10, 1981) • Art. 471-473 of Draft of Civil Law (3rd Draft) (Jul. 31, 1981) • Art.428-430 of Draft of Civil Law (4th Draft) (May 1, 1982) II. Prior to GPCL

  19. The Third Drafting Effort apparently has shaken off the influence of Compendium of Civil Law of Soviet Union (1955) and Civil Code of Soviet Union (1964): • 1. Unifying all kinds of the vicarious liable entities with a single “legal person”. • 2. The legislative effort is oriented more to the protection of socialist public properties. II. Prior to GPCL

  20. III. Vicarious Liability in the Period Between GPCL and TLL • A. Evolution of Vicarious Liability in GPCL • B. Structures of Vicarious Liability in JIPI III. GPCL -- TLL

  21. A. Evolution of Vicarious Liability in GPCL • 1. Chap. 3 of GPCL • Four types of legal person: • 1) enterprise; • 2) state organ; • 3) institution; • 4) social organization. III. GPCL -- TLL

  22. 2. Evolution of Vicarious Liability of State Organs • Para.3 of Art.41 of 1982 Constitution • Citizens who have suffered losses as a result of infringement of their civil rights by any state organ or functionary have the right to compensation in accordance with the law. III. GPCL -- TLL

  23. Step 1 Civil Compensation: Art.121 of GPCL • Step 2 Administrative Compensation: Para.1 of Art.68 of the 1989 Administrative Procedure Law • Step 3 State Compensation: Para.1 of Art.2 of the 1994 State Compensation Law III. GPCL -- TLL

  24. Step 1 Civil Compensation: Art.121 of GPCL • If a state organ or its personnel, while executing its duties, encroaches upon the lawful rights and interests of a citizen or legal person and causes damage, it shall bear civil liability. • It= who? III. GPCL -- TLL

  25. Art.152 of the 1988 Opinions of the Supreme People's Court on Several Issues concerning the Implementation of the GPCL (For Trial Implementation) (“1988 Opinions”) • It= state organ III. GPCL -- TLL

  26. Step 2 Administrative Compensation: Para.1 of Art.68 of the 1989 Administrative Procedure Law • If a specific administrative act undertaken by an administrative organ or the personnel of an administrative organ infringes upon the lawful rights and interests of a citizen, a legal person or any other organization and causes damage, the administrative organ or the administrative organ to which the above-mentioned personnel belongs shall be liable for compensation. III. GPCL -- TLL

  27. Step 3 State Compensation: Para.1 of Art.2 of the 1994 State Compensation Law • Where State organs or State functionaries, in violation of the law, abuse their functions and powers infringing upon the lawful rights and interests of the citizens, legal persons and other organizations, thereby causing damage to them, the victims shall have the right to State compensation in accordance with this Law. III. GPCL -- TLL

  28. 3. Evolution of Vicarious Liability of Enterprise • Art.43, GEPL: An enterprise as legal person shall bear civil liability for the operational activities of its legal representatives and other employees. III. GPCL -- TLL

  29. Art.58 of 1988 Opinions: The enterprise with status of legal person whose legal representative and other working personnel engages in business activities in name of the legal person and causes economic loss to other people shall bear the civil liabilities.” • How about Damage caused by activities beyond the scope of business of the enterprise? III. GPCL -- TLL

  30. 4. In Sum • 1. Vicarious liability of the state organs and enterprises have different pathways of development in GPCL and 1988 Opinions. • 2. Vicarious liability of other types of legal person (institution and social organization)and non-legal person organizations in GPCL is not clear. III. GPCL -- TLL

  31. B. Structures of Vicarious Liability in JIPI • Para.1, Art. 8 of JIPI: • Where the legal representative, responsible person or any employee of a legal person or any other organization causes an injury to others in his implementation of duties, the said legal person or organization shall bear the civil liabilities in accordance with Article 121 of the GPCL.” III. GPCL -- TLL

  32. Para. 2, Art. 8 of JIPI: • The causes of compensation governed by the "State Compensation Law" shall be handled in accordance with the "State Compensation Law". III. GPCL -- TLL

  33. Scope of application: • 1) state personnel while they are executing their duties in addition to state compensation; • 2) the legal representative or other working personnel of the entities as legal person; • 3) the person in charge and working personnel of non-legal person organizations. III. GPCL -- TLL

  34. Art. 9 of JIPI: • Para.1 of Art.9: Where an employee causes an injury to others when carrying out an employment activity, the employer shall bear the compensation liabilities; if the employee causes the injury due to his intent or major negligence, he shall bear joint compensation liabilities along with the employer. The employer may, when bearing the joint compensation liabilities, claim compensation from the employee. III. GPCL -- TLL

  35. The first sentence of Art.13 of JIPI • Where a helper provides another person with labor services gratuitously, and causes an injury to others when carrying out the work, the helped party shall bear the compensation liabilities. III. GPCL -- TLL

  36. Table 2: JIPI

  37. IV. Vicarious Liability After TLL Was Enacted • A. The Relation between Para.1 of Art.34 and the First Sentence of Art. 35 of TLL • B. The Relationship between Vicarious Liability in TLL and JIPI IV. TLL

  38. Para.1 of Art.34 • If an employee of an employing entity causes harm to another when performing a task, the employing entity shall bear tort liability. IV. TLL

  39. “Employing entity” includes enterprises, institutions, state organs, social organizations, as well as self-employed economic organizations. “Employee” includes both the regular and non-regular employees of the employer. This stipulation targets to both of the labor relation and the labor service relation between the employer and the employee. IV. TLL

  40. The first sentence of Art.35 • For individuals under service relation, if the party, which provides service, causes harm to another for the service, the party, which receives the service, shall bear tort liability. • “For individuals under service relation”: relation between the employee and “the party which receives the service” (natural persons, individual businesses and partnerships) IV. TLL

  41. Compared with Table 2 • TLL has changed the criteria established by JIPI which focuses on whether it’s labor relationship of subordination or labor service relationship of equal footing, but emphasizes more on whether the employer is an entity or an individual. IV. TLL

  42. Table 3: TLL

  43. Table 4: TLL and JIPI

  44. V. Major Problems with the System of Vicarious Liability in Tort Law of China and Proposals for Improvement • A. The Major Problems with the System of Vicarious Liability in Chinese Tort Law • B. Proposals for the Future Reform of Vicarious Liability in the Legal System of China V. Problems & Reforms

  45. A. The Major Problems with the System of Vicarious Liability in Chinese Tort Law • 1. Lack of unification of judicial application. • 2. The principle of imputation of all kinds of vicarious liability are inappropriately simplified as “non-fault liability”. • 3. The circumstance in which the employer shall take liability is not clearly defined. • 4. Right of indemnity is not explicitly regulated. V. Problems & Reforms

  46. B. Proposals for the Future Reform of Vicarious Liability in the Legal System of China • 1. Redesigning the concept of “employment relationship” to include all types of non-gratuitous “employer-employee” relationships. • 2. Diversifying the principles of imputation by taking into account the degree of control by the employer over its employee. • 3. Distinguishing the scope of “carrying out duties” • 4. Making regulations on the right of indemnity against the personnel in the position for security and specialists in special fields. V. Problems & Reforms

  47. 1. Redesigning the concept of “employment relationship” to include all types of non-gratuitous “employer-employee” relationships. • JIPI: “labor relationship”, “employment relationship by entities” and “employment relationship between individuals” • TLL: “labor relationship”, “labor service relationship of employing entities” and “gratuitous personal labor service relationship”. V. Problems & Reforms

  48. 2. Diversifying the principles of imputation by taking into account the degree of control by the employer over its employee. • Principle of non-fault liability: subordinate labor relationship. • Principle of presumptive fault: equal-footing labor service relationship. V. Problems & Reforms

  49. 3. Distinguishing the scope of “carrying out duties” • The scope of “carrying out duties” under labor relationship should be broader than that under labor service relationship: • 1) overstep one’s authority; • 2) assignment of power without authority; • 3) do something that is explicitly prohibited to do; • 4) do private affairs while carrying out duties. V. Problems & Reforms

  50. Excluded from “carrying out duties”: • 1) behaviors of daily life • 2) criminal behaviors V. Problems & Reforms

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