Recovery of Pure Economic Loss in China: Current Situation, Problems and Future Prospects
-
Yu Yan
and
Michael Faure
Abstract
Should pure economic loss be compensated in China? If so, to what extent? Both questions are left unsolved in the established literature. We contribute to the existing literature by showing that the Chinese courts have developed a relatively conservative attitude towards the compensation of pure economic loss and that the arguments adopted by the courts to deny recovery are neither fair nor reasonable. Using the law and economics analysis, we have recourse to four complementary solutions. First, pure economic loss cases involving socially relevant losses should be compensated. Second, when social losses are not involved, pure economic loss should also be compensated if the third parties are willing to pay or have paid for protection against such a loss. Third, to relieve the excessive pressure imposed by the compensation for such loss, the concepts of causation and the duty of the victim to mitigate damage need to be further clarified in Chinese laws. Fourth, when determining the amount of compensation for pure economic loss, we should carefully balance the trade-off among a variety of factors, including the extent to which the damage could have been foreseen, the nature of the loss, the blameworthiness of the tortfeasor, the size of the plaintiff class, the public policy toward professional standards, the victim’s private loss, the social loss, the courts’ capacities to calculate the loss, and the third parties’ willingness to pay for protection against the loss.
Note
Yu Yan acknowledges financial support from the Postdoctoral Research Foundation of China (2020M671931) and the Fundamental Research Funds for the Central Universities (CN) (20720191065).
© 2020 Walter de Gruyter GmbH, Berlin/Boston
Articles in the same Issue
- Frontmatter
- Frontmatter
- Articles
- How does Tort Law deal with Historical Injustice?
- The Foundations of Civil Liability for Industrial Pollution
- Health, Environment and Economic Interests: From Balancing to Ensuring Effective Remedies
- Recovery of Pure Economic Loss in China: Current Situation, Problems and Future Prospects
- Book Review
- Y Sinai/B Shmueli, Maimonides and Contemporary Tort Theory (Cambridge University Press 2020) xiii + 414 pp. ISBN 9781107179295. £ 95 (hardback)
Articles in the same Issue
- Frontmatter
- Frontmatter
- Articles
- How does Tort Law deal with Historical Injustice?
- The Foundations of Civil Liability for Industrial Pollution
- Health, Environment and Economic Interests: From Balancing to Ensuring Effective Remedies
- Recovery of Pure Economic Loss in China: Current Situation, Problems and Future Prospects
- Book Review
- Y Sinai/B Shmueli, Maimonides and Contemporary Tort Theory (Cambridge University Press 2020) xiii + 414 pp. ISBN 9781107179295. £ 95 (hardback)
