Typical Environmental Resources Cases from the People’s Courts in 2019 (Mainland China)

Karl Zhang

On May 8, 2020, the Supreme People’s Court released the Typical Environmental Resources Cases from the People’s Courts, which consist of 40 cases involving criminal, civil, administrative actions, as well as environmental public interest and ecological damages cases.

1. Criminal actions

The 10 criminal cases cover environmental pollution, smuggling of wastes and precious animal products, the illegal acquisition, transport, sale of precious and endangered wildlife, illegal fishing, illegal harvesting of key protected plants, illegal logging, deforestation, illegal mining, and illegal occupation of agricultural lands.  One such illegal occupation of agricultural land case involved co-defendants Fuzhou Yuanshun Stone Ltd., (“Yuanshun”) and Heng-yu Huang as detailed below:

The defendants Yuanshun and Huang occupied 138.51 acres of agricultural land without approval in violation of national forestry administration regulations, which constituted illegal occupation of agricultural land.  In addition to a fine and a term of imprisonment, the People’s Court also ordered Huang to plant and restore 150 special tree seedlings of designated specifications in a judicial ecological protection demonstration site for public interest.

Significance of this case: Agricultural lands such as forest and crop lands are important land resources.  Yuanshun and its legal representative Huang were occupying forest land without approval and undermined the agricultural land use and its surrounding ecological environment by depositing ore residue in the land.  During the trial, the People’s Court focused on the organic combination of punishing the crime and the restoration of the ecological environment by including an obligation to restore the ecological environment in the sentence.  This effectively integrated ecological justice deterrence and education, environmental governance and rule of law, thereby achieving beneficial legal and social effects.

2. Civil actions

The 10 typical civil actions include, disputes over lighting, noise, environmental pollution, soil pollution, ship pollution, rural land contracts and others.  In particular, the ship pollution dispute as a result of a collision involving Shanghai Shengmin Investment Group Co., Ltd. (“Shengmin”), Provence Shipowner 2008-1 Limited (“Provence”), CMA CGM Shipping Co., Ltd. (“CMA”) and Rockwell Shipping Limited (“Rockwell”).  The details of the case are as below:

The CMA CGM Florida, a vessel owned by Provence and bareboat chartered by CMA collided with the Zhoushan, a vessel owned by Rockwell, which causing the CMA CGM Florida to spill 613.28 tons of fuel oil.  The maritime administrative authority of Shanghai organized pollution cleanup units, which included Shengmin.  The first and second instance courts held that since Provence and CMA are respectively the owner and registered bareboat charterer of the oil spilling vessel, they should assume the clean-up costs, while Rockwell’s ship did not spill the oil and thus should not be held jointly liable.  The Supreme People’s Court held in the retrial that Rockwell was a third party at fault and should be liable for its 50% fault, so while Provence and CMA was ordered to pay RMB 15,804,600 in pollution prevention and cleanup costs( including a prepayment of RMB 7,577,200) plus interest, Rockwell was also required to pay RMB 7,902,300 plus interest.

In recent years, oil spills caused by ship collisions have been an important cause of marine pollution with serious consequences.  The traditional viewpoint that the party that spilled the oil should be held liable can no longer guarantee the management and restoration of the marine ecological environment.  The court decision in this case applied international conventions, national laws and judicial interpretations to hold the owners of the vessels involved in the collision as third parties at fault and thus liable for the damage.  This fully reflects principles of no-fault liability and fault liability on third parties, meaning that the polluter should in principle assume full liability, and other parties at fault would bear proportional liabilities.  This case clarified which entities should be held liable for ship pollution damage, their proportionate liabilities, and how the liabilities will be assumed; the case also provided other positive significance by providing support for cleanup entities participating in marine pollution governance.

3. Administrative actions

There are also ten administrative actions, which involved ecological environmental bureaus failing to perform their supervisory and administrative responsibilities the performance of environmental protection and information disclosure statutory responsibilities, administrative penalties concerning environmental protection, marine administrative penalties, grassland administrative registration, mining administrative compensation and others.  Among them, the Yanjin Baishuijiang Wenyun Aquaculture Cooperative (“Wenyun”) v. Yanjin County People’s Government of Yunnan Province case dealt with a dispute over an administrative agreement in the event of major changes to laws and policies:

In June 2014, Wenyun signed a Cooperation Agreement with the People’s Government of Yanjin County regarding Wenyun’s investment in the construction of an aquaculture project in the Baishuijiang Grade 3 power station reservoir.  After the agreement was signed, Wenyun completed the recordation for the environmental impact assessment.  In August 2018, the People’s Government of Yanjin County issued a letter to Wenyun to terminate the Cooperation Agreement on the ground that the aquaculture did not meet the Yanjin C’ounty’s “ecological function” and relevant environmental protection policies.  Wenyun thus brought this administrative lawsuit to demand compensation from the People’s Government of Yanjin County.  The Intermediate People’s Court of Zhaotong City in Yunnan Province rendered the first instance decision finding that the People’s Government of Yanjin County shall pay RMB 6,572,000 as compensation to Wenyun for its investment in equipment for performance of the Cooperation Agreement, as well as an appraisal fee of RMB 50,000 for a total of RMB 7,072,000.

While an administrative agency has the right to unilaterally change or terminate an administrative agreement in the event of public interest causes, administrative needs or a major change in policy in the course of performing the administrative agreement, the administrative agency should be required to provide compensation for damages caused to the counterparty as a result of exercising such right.  In this case, since the People’s Government of Yanjin County unilaterally exercised its right to terminate the Cooperation Agreement, and Wenyun also agreed to terminate the Cooperation Agreement, the termination of the agreement was legally valid and was also consistent the local implementations of the “chief river” system, the adjustments needed for the environmental policy to return fishery to the lake, and the protection of the ecological system at aquaculture sites.  Although this case occurred before the Provisions of the Supreme People’s Court on Issues Concerning Administrative Agreement Cases were released, its determination of the nature of the administrative agreement and the holding were nevertheless consistent with the spirit of such judicial interpretation.  The decision thus has positive demonstration significance for its accurate determination of the nature of an administrative agreement and the protection of the rights and interests of the counterparty in an agreement terminated by the administrative agency.

4. Public interest litigation

For the environmental public interest litigation category, 10 cases are provided involving compensation for ecological and environmental damage.  They involve the China Biodiversity Conservation and Green Development Foundation, the Friends of Nature Environmental Research Institute in the Chaoyang District of Beijing, the people’s procuratorate, the people’s government and other parties as plaintiffs pressing charges against other entities that have caused ecological and environmental damage.  The Friends of Nature Environmental Research Institute of the Chaoyang District of Beijing.  Hyundai Motor Group (China) Ltd. (hereinafter, “Hyundai”) is the first case in China in which charitable trusts are introduced in a dedicated fund system for public interest litigation.  This case is described in detail as follows:

The exhaust emission value of vehicles imported to China and sold in Beijing by Hyundai was found to exceed the Beijing V standard.  As a result, the Beijing Municipal Environmental Protection Bureau rendered an administrative penalty decision.  The Friends of Nature Environmental Research Institute of the Chaoyang District of Beijing (“Friends of Nature”) filed this lawsuit before the Fourth Beijing Intermediate People’s Court, and the parties reached the following settlement: Hyundai will stop selling non-compliant products in Beijing, and repair and maintain the all-new Santa Fe 3.0 models that did not meet the emission standard.  To this end, Hyundai delivered a trust fund of RMB 1.2 million to Chang’an International Trust Co., Ltd. as a trustee for use in protecting and restoring the atmospheric environment and support environmental public interest causes.  Hyundai apologized to the public for the sale of noncompliant vehicles and pledged to support environmental public interest causes, etc.  The above settlement agreement is then publicized and confirmed.

This is the first civil public interest litigation case regarding the environment in China in which a charitable trust mechanism is introduced as dedicated funding in public interest litigation.  The management and use of the public interest litigation compensation fund is directly tied to the realization of the objectives of public interest litigation.  In this case, under the auspices of the people’s court, the parties reached a settlement to set up a special charitable trust with the public interest litigation compensation as trust property.  By leveraging the fund management experience of a trust agency, it was possible to fully utilize the public interest litigation compensation effectively.  The construction of charging stations financed by Hyundai also indirectly achieves air quality protection and further expands the possibility of alternative restoration methods.  At the same time, the People’s Court establishes a decision-making committee for the trust consisting of representatives of public interest organizations, environmental experts and legal experts to supervise the trust and ensure that the trust fund is properly used for “protecting and restoring the atmospheric environment, preventing and controlling air pollution, and supporting the environment.”  This is thus a useful exploration of the management, use and supervision of a dedicated fund system for public interest litigation.