SPC Issues Interpretation on Consumer Public Interest Litigation

On 24 April 2016, the Supreme People’s Court issued the Interpretation concerning Several Issues on the Application of Law in Hearing Consumer Related Civil Public Interest Lawsuits, which took effect on 1 May 2016. The interpretation addresses a type of public interest lawsuit where designated organisations that have not been harmed have a statutory right to bring a lawsuit on behalf of an uncertain number of consumers that have been or could be harmed by a product or service. The interpretation aims to provide clarity to and reflects the SPC’s efforts to establish a framework for consumer public interest lawsuits.

The interpretation mainly focuses on the following issues:

  • which organisations are permitted to file consumer public interest lawsuits and under which conditions (Arts. 1 and 2);
  • which courts have jurisdiction over these lawsuits (Art. 3);
  • what requests for relief a court may support (Arts. 13, 17 & 18); and
  • the relationship between public interest lawsuits and private interest lawsuits (Arts. 9, 10 & 16).

Market Reaction

Jianwei (Jerry) Fang, Partner, Global Law Office, Shanghai

“The fact that the interpretation provides legal standing to bring consumer public interest lawsuits will have a huge impact on the consumer rights litigation landscape in China. Previously, consumer public interest organisations did not have a statutory right to bring lawsuits on behalf of consumers, and therefore their role in protecting consumers was limited. We are likely to see these organisations becoming much more active, especially where consumers are not well positioned to litigate against large business operators. Furthermore, these lawsuits will also help consumers to bring their own lawsuits more easily since certain facts (such as product defects) found by a court in a public interest case may be recognised by courts in later cases brought by consumers.”

Action Items

General Counsel for companies engaged in the manufacture, distribution or retail of consumer goods or services should prepare for a potential rush of public interest litigation in China, as well as follow-on direct claims by consumers, in part by studying the types of permitted plaintiffs, the conditions for filing suit, court jurisdiction and available relief under the interpretation.