Jiangsu Provincial People's Government v. Anhui * Chemical Co., Ltd. over Ecological and Environmental Damage Compensation

Case Brief

On 28 April 2014, the defendant’s marketing manager, Yang *, transferred 29.1 tons of the company’s waste lye from the defendant’s production process to Sheng *, an individual who had no qualifications for hazardous waste disposal. Sheng and others transferred the waste lye to Sun *, who also had no qualifications for hazardous waste disposal. On 30 April 2014, Sun * and others dumped the waste lye into the Yangtze River, causing major environmental pollution. On 7 May 2014, Yang * transferred a further 20 tons of the defendant’s waste lye to Sheng * and others for disposal, who then passed it again to Sun * for disposal. On 7 May and 17 June 2014, Sun * and others dumped waste lye into the Yangtze River, interrupting the centralized drinking water supply in Jingjiang, Jiangsu Province for over 40 hours from 9–11 May.

From 8–9 May 2014, Yang * transferred a further 53.34 tons of waste lye to Sheng * and others for disposal; Sheng * and others passed this to Ding * for disposal. Ding * and others dumped the waste lye into the New Tongyang Canal on 14 May 2014, which interrupted water intake for the centralized drinking water supply in Xinghua, Jiangsu Province, for more than 14 hours.

After the pollution occurred, the Jingjiang Municipal Environmental Protection Bureau and the Jingjiang Municipal People’s Procuratorate jointly commissioned the Jiangsu Society for Environmental Sciences (JSES) to conduct an assessment of pollution damage. Following investigations and evaluations, JSES reported its findings in June 2015. The Jiangsu Provincial People’s Government filed a lawsuit in the Taizhou Intermediate People’s Court of Jiangsu Province, requesting that the defendant be ordered to pay CNY 36,379,000 in damages for ecological restoration costs; CNY 18,189,500 for the loss of ecological service functions; and CNY 260,000 for evaluation and litigation costs.

Judgment

On 16 August 2018, the Taizhou Intermediate People’s Court of Jiangsu Province delivered the [2017, Jiangsu, 12, Civil First Trial, No. 51] Civil Judgment:

1. The defendant, Anhui * Chemical Co., Ltd., shall pay (i) CNY 36,379,000 in damages for environmental restoration costs; (ii) CNY 18,189,500 for the loss of ecological service functions; and (iii) CNY 260,000 for the evaluation costs.

The defendant appealed, and the Jiangsu High People’s Court issued the (2018) [Jiangsu, Civil, Final] No. 1316 Civil Judgment on 4 December 2018:

1. Affirming the trial court’s judgment, the appellant was ordered to pay compensation of CNY 54,828,500 into the bank account for Taizhou environmental public interest litigations within 60 days from the date of this judgment’s execution.

2. The appellant was ordered to pay 20% (CNY 10,965,700) of the total amount within 60 days of this judgment’s execution, after providing effective security to the trial court; annual installments of 20% of the total (CNY 10,965,700) were to be paid on 4 December of each successive year until 2022. If any installment was not made on time, the Jiangsu Provincial People’s Government could apply to the court for mandatory enforcement of all unpaid damages. If the appellant failed to perform its payment obligations on time, it would be required to pay double the amount of the debt interest during the delayed performance period, in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China.

Reasoning

The court held that the defendant, as a chemical enterprise, had the obligation to prevent environmental pollution from the hazardous waste lye generated during its production and business operation. The defendant allowed Yang *, head of its marketing department, to transfer the waste lye to individuals who were not qualified for hazardous waste disposal, resulting in the waste being dumped into the Yangtze River and the New Tongyang Canal, substantially polluting the environment.

According to Article 64 of the Environmental Protection Law of the People’s Republic of China, those who cause damages due to environmental pollution and ecological destruction shall bear tort liability in accordance with Article 65 of the Tort Law of the People’s Republic of China: where any harm is caused by environmental pollution, the polluter shall assume the tort liability. Further, according to Article 15, the methods of assuming tort liabilities shall include restoration of the environment to its original status, and compensation for losses. Compensation for environmental restoration costs, loss of ecological service functions, and assessment fees are all specific means of assuming such tort liabilities.

In accordance with Article 15(1), item 6, and Article 65 of the Tort Law of the People’s Republic of China, as well as Article 1(1) and Article 13 of the Interpretation of the Supreme People's Court of Several Issues on the Application of Law in the Trial of Disputes over Liability for Environmental Torts, it was appropriate to order the defendant to pay damages for its tort liability.

The defendant applied for leave to pay compensation in installments on the grounds it was experiencing financial hardship and would face bankruptcy if all the damages had to be paid by lump sum.

To strike an effective balance between ecological protection and economic growth, the Jiangsu Provincial People’s Government stated, after the hearing that if the defendant could provide evidence to prove its business was aligned with the direction of national economic restructuring and could transition to green production, the defendant would be allowed to pay damages in five installments, in accordance with Article 231 of the Civil Procedure Law of the People’s Republic of China—on the condition that the defendant could provide effective security.