Zhu Xiao: the compensation mechanism of environmental lawsuit to be perfected


Source: Caixin 财新网, January 20th 2015

The Jiangsu province Taizhou Environmental Protection Federation sued six chemical companies for their wrongful disposal of chemical waste. In December 2014, the Jiangsu Province High Court ruled that the the companies were to pay a restoration fee of 160 million RMB. This ruling is unprecedented in China, this is the first environmental lawsuit to receive such a high compensation. Thus, this case is groundbreaking in the environmental lawsuit field, and has been elected as on of the ten most influential cases of 2014.

Zhu Xiao, associate professor at Renmin University of China, has commented on this case during the annual conference of the most significant cases of the year. He pointed out that the 2015 «Environmental Protection Law» followed up on the 2012 «Civil Litigation Law», and gave social organizations a major roles to play in public environmental lawsuits in the future. Moreover, the law introduced the concepts of preventative responsibility, restorative responsibility, and compensation for damages with regards to the environment.

This case was groundbreaking because the Jiangsu Province High Court actually applied such concept. In fact, the court established that 60% of the compensation fees were to be paid up-front to the defendants; while the remaining 40% would be deducted if the companies developed programs, or technologies beneficial to the environment.

Zhu Xiao greatly praised this judgement, and firmly believes that the law should be amended to support even more this kind of reasoning. However, he also pointed out that although the reasoning was inspiring, there were some flaws in the way compensation fees were calculated.

Translated by Francesca Torlai Triglia