Ⅰ．Nature of Punitive Damages
On May 1, 2012, the plaintiff Sun Yinshan purchased 15 packs of “Yutu Brand”sausages at the defendant Nanjing Auchan Hypermarket Co., Ltd．Jiangning Store．The quality assurance period of 14 packs of those sausages, priced at RMB 558.6, had already expired．Immediately after paying for the sausages at the cashier, SUN Yinshan went directly to the service desk to claim compensation．After the negotiation failed, Sun Yinshan brought suit in court, demanding that Auchan Hypermarket Jiangning Store pay damages in the amount of RMB 5,586, ten times the price of the 14 packs of sausages．The court supported the plaintiff's claim.
The adjudication for “Sun Yinshan Case”is based on Paragraph 2 of Article 96 of the Food Safety Law, “In the case of violations of this Law cause human injuries, property losses or other losses, the offender concerned shall be held liable for compensation according to law．As regards the production of food products which fail to meet the food-safety standards and deliberate selling of such food-products, consumers affected may demand reparation worth ten times higher than the price (of the said food products), in addition to the compensation for the losses, financial or otherwise, arising there from”．The so-called “tenfold compensation”is a punitive norm, over which there is no disagreement among scholars．However, in terms of the nature of the norm, no agreement has been reached over the logical relations between Paragraph 1 and Paragraph 2 of Article 96, which is still an open question.
Some scholars hold that “tenfold compensation”stipulated in Paragraph 2 of Article 96 of the Food Safety Law is a special tort norm, which is mainly based on two reasons．Firstly, liability for punitive damages stipulated in the Food Safety Law is product liability, which is derived from tort liability．Secondly, suppose the food producer is demanded to bear liability for punitive damages on the basis of contractual liability, but consumers are not entitled to have the contract creditor's rights, therefore, the claim for “tenfold compensation”lacks a legal basis.[1]There are scholars who make a further detailed analysis of the normative nature of “tenfold compensation”, who suggests that liability stipulated in Paragraph 2 of Paragraph 2 of Article 96 of the Food Safety Law is a tort liability for unsafe food, which is different from the punitive damages stipulated in Article 47 of the Tort Liability Law in terms of the subject elements, product types, elements of damage results, and the sum of punitive damages, etc.[2]The above two views have one thing in common: both of them regard Paragraph 2 of Article 96 of the Food Safety Law as a special norm of tort liability.
In the author's opinion, legal interpretation can neither go beyond the literal meaning of rules or norms, nor ignore the logic between terms．According to literal interpretation and systematic interpretation, Paragraph 2 of Article 96 of the Food Safety Law is not a special norm of tort, but an accumulation of claims, which establishes statutory aggravated damages．The so-called accumulation of claims refers to a situation when one and the same act is capable of cumulatively giving rise to several claims, the claimants are entitled to several claims instead of one.[3]As far as Paragraph 2 of Article 96 of the Food Safety Law is concerned, it entitles the claimants two claims: liability for punitive damages and liability for compensatory damages, both of which can be implemented simultaneously.[4]The reasons are as follows.
A．Paragraph 1 of Article 96 of the Food Safety Law Is an Incomplete Rule, Which Establishes the Liability for Compensatory Damages
Paragraph 1 of Article 96 of the Food Safety Law states, “In the case of violations of this Law cause human injuries, property losses or other losses, the offender concerned shall be held liable for compensation according to law.”It is believed that this provision is “too general with no detailed specification of subjects of liability or the scope of damages.”[5]This criticism does not realize that laws are not some “instamatic camera”．It is contrary to the modern legislation if only pursing the so-called “specified”“redundant”statute．Within the legal system, different legal norms is characterized by a different nature．“To find out the relationship between certain norms, and between the norm and the domineering principles”[6]is the focus of jurisprudence.
As far as Paragraph 1 of Article 96 of the Food Safety Law is concerned, “the offender concerned shall be held liable for compensation according to law”implies that the stipulation is incomplete in its nature, an indicative term or a switch-over clause．An entity that produces or sells food is a civil entity．The compensation liability is a civil liability in nature．“As for the problems concerning the subjects of liability or the scope of damages, Tort Liability Law or Contract Law shall be applied.[7]Paragraph 1 does not clearly define the nature of liability, among which “concerned shall be held liable for compensation according to law”can be interpreted as either tort liability according to the Tort Liability Law, or contractual liability according to the Contract Law．But to both, the civil liability can be applied with the aim of compensating damages.
B．Paragraph 2 of Article 96 of the Food Safety Law Is a Complete Rule Which Establishes Liability for Punitive Damages
Paragraph 2 of Article 96 of the Food safety Law is “As regards the production of food products which fail to meet the food-safety standards and deliberate selling of such food-products, consumers affected may demand reparation worth ten times higher than the price (of the said food products), in addition to the compensation for the losses, financial or otherwise, arising there from”, Different from Paragraph 1, an indicative term, Paragraph 2 is a complete rule．A complete rule (vollständiger Rechtssatz) usually refers to “a statute including constitutive elements and the legal effect, instead of those in dispute may function independently without referring to other clauses.”[8]The constitutive element of “tenfold compensation”norm is “the production of food products which fail to meet the food-safety standards and deliberate selling of such food-products”, the legal effect of that is “consumers affected may demand reparation worth ten times higher than the price (of the said food products), in addition to the compensation for the losses, financial or otherwise, arising there from”.
It needs to be clarified that the “tenfold compensation”cannot be narrowly defined as a tort liability in．On the one hand, as a pre-existing norm, Paragraph 1 and Paragraph 2 of Article 96 of the Food Safety Law stipulated civil liabilities including tort liability and contractual liability．Punitive damages might be generated based on tort liability or contractual liability, which is completely based on the basis of the claims chosen by the claimant．On the other hand, the subjects of liability stipulated in Paragraph 2 of Article 96 include the producer and the seller．Regardless of the type of legal relationship between the consumer and the producer, the contractual relationship exists between the consumer and the seller．Faced with the producer producing foods that do not conform to food safety standards or the seller selling foods that do not conform to food safety standards, the consumer faces the concurrence of the bases of claims．One cannot exclude arbitrarily the possibility that the basis of claim is contractual liability．The previously mentioned assertion of viewing punitive damages as a special tort norm cannot be established.
It was a widespread misconception that punitive damage was tort liability．The root of this misconception lies on the mechanical application, which neglects Chinese law's context．The European civil law countries generally remain impervious to punitive damages; therefore it is meaningless to view punitive damages either as tort liability or contractual liability in civil law systems．In common law systems, liability for punitive damages is viewed as tort liability.[9]The current trend is that liability for punitive damage is also regarded as liability for breach of contract, which has been widely accepted by Canadian and British judicial precedents and jurisprudence.[10]In the context of Chinese law, the initial positioning of the punitive damage institution is very special which is mainly to deter contract fraud between the parties with contractual relations, that is different from the purpose of punishing malicious infringements which are “quasi-criminal in nature”in common law systems.[11]The damages were awarded to the consumers and the commodity house buyers．Punitive damages in the context of Chinese law are richly colored with contractual liability．With the promulgation of Tort Liability Law and Food Safety Law, punitive damages, based on tort liability, are well established in China, which gives more channels for the parties to seek remedies (the bases of claims)．Regarding punitive damages as tort liability is putting cart before the horse.
C．The Inclusive Nature Between Paragraph 1 and 2 of Article 96 and Paragraph 2 of the Food Safety Law
To better understand the logical relation between Paragraph 1 and 2 of Article 96 and Paragraph 2, it is necessary to focus on the key word “还(meaning also)”．According to the Dictionary of Modern Chinese, “还”means “再(meaning again)”and “又(meaning still)”．“还”implies that the consumers are entitled to two claims at the same time, not only one exclusively．The basis of the claim for compensation is either tort liability or contractual liability referred by Paragraph 1 and 2 of Article 96．The basis of the claim for “tenfold compensation”is the aggravation of damages established by Paragraph 2 of Article 96．In other words, the food producer and seller are subject to punitive damages based on the following two situations: one is liable for punitive damages on top of compensatory damages because of the tortious conduct; the other is liable for punitive damages on top of compensatory damages because of breach of contract．Paragraph 2 of Article 96 of the Food Safety Law entitles consumers two independent claims, which generate two parallel norms of claims, hence accumulation of claims exists.
In conclusion, Paragraph 2 of Article 96 of the Food Safety Law is an accumulation of claims, which means the producer and the seller are subject to compensatory damages．They are also liable for punitive damages if a certain element is met．In the end of 2013, the Supreme People's Court issued Provisions of the Supreme People's Court on Certain Issues concerning the Application of Law in the Hearing of Cases Involving Food and Drug Disputes (hereinafter Provisions)．Article 15 of these Provisions stipulates, “where a manufacturer produces food that fails to meet safety standards or where a seller knowingly sells food that fails to meet safety standards, the competent people's court shall uphold the claim by a consumer requesting that the manufacturer or the seller shall pay compensation at ten times the price of the food or pay compensation according to other standards prescribed by law, in addition to the consumer's claim for compensation for losses”．It is obvious that these provisions rationalize the nature of accumulation of claims in Paragraph 2 of Article 96 of the Food Safety Law, which clearly entitles the consumer two claims, a claim for compensatory damages and a claim for punitive damages, eliminating the ambiguity in the judicial application.
[1] See Ai Erken, Zhang Yu, A Study of Punitive Compensation System in the Law of Food Safety—An Evaluation of Article 96 of the Law of Food Safety, Journal of Liaoning Normal University (Social Science Edition), Vol.4, 2011.
[2] See Zhou Jianghong, Concurrence of Liability for Punitive Damages and Their Applications—Focusing on Article 46 of the Tort Liability Law and Article 96 Paragraph 2 of the Food Safety Law, Legal Science, Vol.4, 2010.
[3] See Christian von Bar ＆ Ulrich Drobnig, The Interaction of Contract Law and Tort and Property Law in Europe: A Comparative Study, Sellier European Law Publishers, 2004, p.198.
[4] Medicus call it “Anspruchskumulation”, which means that buyer is entitled to claim the delivery of the subject matter and transfer of ownership, so as to distinguish it from that the creditor is only entitled to claim the delivery of subject.
[5] Zeng Xianghua, Introduction to Food Safety Law, Law Press·China, 2013, p.331.
[6] Larenz, Karl, Methodenlehre der Rechtswissenschaft, trans．by Chen Ai-e, The Commercial Press, 2003, p.16.
[7] See Gao Shengping, On the Purpose and Planning of the Legislation of the Institution of Punitive Damages in the Field of Food Safety, The Jurist, Vol.6, 2013.
[8] Huang Maorong, Legal Method and Modern Civil Law, China University of Political Science and Law Press, 2007, p.137.
[9] See Guenter Treitel, The Law of Contract (11th edition), Sweet ＆ Maxwell, 2003, pp.935-936.
[10] See Christian von Bar ＆ Ulrich Drobnig, The Interaction of Contract Law and Tort and Property Law in Europe: A Comparative Study, Sellier European Law Publishers, 2004, p.110.
[11] See Victor E．Schwartz, Kathryn Kelly, David F．Partlett, Torts: Casesand Materials (12th edition), Foundation Press, 2010, p.568.