(BY You Yunting) Chinese food safety problems have always puzzled consumers in China. The Food Safety Law that came into force in 2009 strengthens the legal liability of food enterprises that produce inferior foods. Earlier in 2013, China’s Supreme People’s Court published a guidance case regarding the judgment handed down by Jiangning District Lower People’s Court, in Jiangsu Province. In this case, the Auchan Store that sold expired foods was ordered to offer tenfold damages to consumers. For overseas companies that intend to invest in the industry of food production and sales in China, such legal risks should be noted. In judicial practice, however, some local courts have made judgments deciding that products for personal use should not be compensated. Another point of this case is that the Supreme People’s Court has overruled the verdicts issued by some local courts.
Introduction to the Case:
Plaintiff: Sun Yinshan
1st Defendant: Nanjing Auchan Store, Jiangning Branch
2nd Defendant: Beijing Silk Street Market Real Estate Development Co., Ltd
Court of first instance: Jiangning District Lower People’s Court No.: 江宁开民初字第646号
In May 2012, Sun Yinshan purchased 15 packets of sausage in Nanjing Auchan Store, Jiangning Branch (the “Jiangning Auchan Store”) with 14 packets of sausages, worth 558.4 yuan, past their expiration dates. Sun Yinshan filed a lawsuit to the court, claiming that the Jiangning Auchan Store should offer ten times the compensation of what he paid, i.e., 5586 yuan, to him for the 14 packets of sausages. Jiangning Auchan Store argued that Sun Yinshan knew the foods were expired and still purchased the expired food for the sole use of seeking benefits. Therefore, they argued, he should not be offered ten time compensation. The court heard the case and held the following.
I. Is the plaintiff a qualified consumer in accordance with the Law on the Protection of Consumer Rights and Interests?
Those who purchase and use commodities or receive services for daily consumption and personal use, not for commercial operation and professional use shall be determined a “consumer”. On one hand, Sun Yinshan had not yet provided the 14 packets of sausage for commercial use; on the other hand, the Jiangning Auchan Store offered inadequate proof that his purchase for production and operating activities. Sun Yinshan claiming for compensation by virtue of purchasing expired foods is merely an exercise of his legal rights.
The court then ruled on the defense of the Jiangning Auchan Store: that a plaintiff who knew the foods were past their expiration date and still purchased such goods for the sole purpose of seeking benefits, should not be offered ten times compensation. However, according to the laws and regulations, consumers have the right to claim ten times the amount they paid for the expired goods as compensation, thus such claims of compensation are protected by law. Furthermore, the law has not yet stipulated a restrictive provision for consumers’ subjective intentions. Therefore, such a defense was not sustained by the court.
II. Should the Jiangning Auchan Store be regarded as having “knowingly selling food that does not meet food safety standards”?
Food sellers have an obligation to ensure food safety and should themselves remove foods that do not meet the requirement of food safety in time. As a food seller, the Jiangning Auchan Store should store foods in accordance with the requirement of food safety; mainly that it should check all of the food for sale and remove any expired foods in time. However, it did not fulfil these duties, and is thus regarded as “knowingly selling food that does not meet food safety standards”.
In conclusion, the court decided that the defendant, Jiangning Auchan Store, must pay the plaintiff 5576 Yuan in compensation, due ten days after the said judgment becomes legally effective. After the court handed down the judgment, neither party appealed. Therefore the aforementioned judgment has become legally effective.
Lawyers’ Comment:
Article 49 of the Law on the Protection of Consumer Rights and Interests stipulates that business operators who engage in fraudulent activities when supplying commodities or services shall, on the demand of affected consumers, offer increased compensations for their losses. The aforementioned compensation should be two times the cost that the consumers paid for the commodities purchased or services received. In judicial practice, Article 49 remains a controversial issue. Fake goods are rampant in China, and even some larger commercial enterprises and companies will inevitably purchase fake goods sometimes. There are concerns that some consumers might utilize this article to claim for high compensation.
Against this background, some courts in developed places of China would consider this article to be unfair for commercial enterprises. They are more inclined to protect the interests of the operators. For example, some courts in Shanghai regarded that those who purchase goods in a manner beyond reasonable personal use shall not be deemed a “consumer”, thus these courts are likely to order operators to pay compensation afforded by virtue of Article 49 in a reasonable range. Those courts created a principle of reasonable personal use, which holds that a consumer who purchases 50 goods can be compensated two times the cost of for only 1 good and can receive the return of goods, of the other 49 items, without compensation.
However, the fact that the Supreme People’s Court published such a judgment indicates that its attitudes towards similar issues is that operators should be ordered to compensate all unqualified goods purchased by consumers until proven otherwise. I also support this judgment. It is only high compensation that drives operators to invest efforts to stamp out fake or unqualified goods. A requirement to provide small amounts of compensation could encourage the proliferation of fake or unqualified goods.
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You Yunting：86-21-52134918 youyunting@debund.com/yytbest@gmail.com
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