On March 13, as the 44^th World Consumer Rights Day approached, the Shanghai No. 3 Intermediate People¡¯s Court (Shanghai Intellectual Property Court, Shanghai Railway Transport Intermediate Court) (hereinafter collectively referred to as the ¡°Shanghai No. 3 Court¡±) and the Shanghai Railway Transport Court (hereinafter referred to as the ¡°SRTC¡±) jointly held a press conference on judicial practice and typical cases concerning punitive damages in food and pharmaceutical cases.

Zhong Ming, Vice President of the Shanghai No. 3 Court, reported on the application of the judicial interpretation on punitive damages in food and pharmaceutical cases. Yue Qimu, Chief Judge of the Civil Division of the Shanghai No. 3 Court, and Liu Chen, Chief Judge of the Civil Division of the SRTC, introduced five typical cases. The press conference was hosted by Wu Yingzhe, Chief Judge of the Petition Review and Adjudication Supervision Division (Research Office, Adjudication Management Office) and Spokesperson of the Shanghai No. 3 Court. Journalists from central and Shanghai media outlets attended the press conference.

Food-related civil cases show distinct characteristics, with notable effectiveness in implementing the Interpretation

According to Mr. Zhong, since the Interpretation of the Supreme People¡¯s Court on Issues Concerning the Application of Law in Adjudicating Cases Involving Punitive Damages in Food and Pharmaceutical Matters (hereinafter referred to as the ¡°Interpretation¡±) took effect on August 22, 2024, food-related civil cases heard by the Shanghai No. 3 Court and the SRTC have demonstrated the following characteristics:

In terms of adjudication efficiency, thanks to the extensive application of small claims procedures, these cases are primarily concentrated at the first instance, with an appeal rate of 1.4%¡ªfar lower than that of other civil and commercial cases. The average adjudication period has shortened by 15% compared to the period before the Interpretation took effect, while the rate of disputes resolved through mediation and withdrawal has reached 53.73%, reflecting strong efficiency and a high rate of acceptance of judgments.

In terms of case types, disputes over information network sales contracts remain the predominant category (accounting for 78.2%), along with those over product liability, sales contracts, and right to health¡ªlargely consistent with the situation before the Interpretation came into force. Additionally, small and medium-sized operators remain the primary litigation subjects, with 62.1% of cases where individual businesses and small food operators serve as defendants.

Among cases resolved by judgment, around 50% result in rulings in favor of the plaintiffs, either because the quantity of goods purchased by the plaintiff falls within the scope of reasonable daily consumption, or because the plaintiff voluntarily adjusts their claims downward to a reasonable range after being guided by the court. In the remaining 50% of cases where the plaintiffs¡¯ claims are not upheld, the key reasons include: the plaintiff¡¯s purchases exceeding reasonable daily consumption needs, insufficient evidence to prove any violation of food safety standards, minor labeling defects only, and sellers having fulfilled their duty of inspection upon purchase.

Statistics show that lawsuits initiated by ¡°knowing buyers seeking compensation¡± account for 32.46% of the total. This represents a significant decline compared to the period before the Interpretation, when such cases accounted for over 95%. Mr. Zhong noted that the Interpretation has effectively curbed the traditional profit-driven behavior of the buyers who would knowingly purchase large quantities of problematic products to maximize their compensation base. However, new trends have emerged, characterized by more covert, diverse, and sophisticated practices, such as spreading purchases across multiple sellers to accumulate quantities beyond reasonable limits, targeting high-value products with repeated purchases for compensation claims, and deliberately inducing merchants to violate regulations to create grounds for claims. These evolving tactics not only reflect how ¡°knowing buyers seeking compensation¡± are adapting to circumvent the Interpretation, but also impose higher judicial demands on courts to accurately understand and apply the Interpretation¡¯s principles in distinguishing legitimate rights protection from such claims.

Three targeted measures to precisely regulate and protect both parties in transactions equally in accordance with the law

In response to these new developments and challenges, the Shanghai No. 3 Court and the SRTC have consistently upheld the bottom line of food and pharmaceutical safety and accurately applied the Interpretation, thereby protecting the legitimate rights and interests of both consumers and producers/operators, and using judicial rulings to guide high-quality development of the food and pharmaceutical market. These efforts are primarily reflected in three aspects:

First, upholding the bottom line of food and pharmaceutical safety to safeguard the well-being of the people. The courts support consumers in exercising their rights in accordance with the law, use judicial rulings to curb illegal practices in the food sector, regulate production and operations at the source, encourage high-quality and efficient food supply, and enable honest and trustworthy market entities to stand out through competition.

Second, protecting both parties in transactions equally in accordance with the law, adhering to the core adjudicative principle of ¡°reasonable daily consumption needs.¡± While regulating the activities of producers and operators, the courts prevent abuse of rights by ¡°knowing buyers seeking compensation.¡± At the same time, they apply differentiated adjudicative standards to different types of market entities. For small businesses, small merchants, and small workshops, the courts do not mechanically apply the national mandatory standards applicable to industrialized mass-produced products, thereby achieving alignment between the rights, responsibilities, and interests of market entities at different levels.

Third, accurately applying the Interpretation by treating different types of litigants differently based on their circumstances. The courts distinguish between ordinary consumers exercising their rights and ¡°knowing buyers seeking compensation.¡± For conduct constituting fraudulent litigation or extortion, they will promptly refer relevant leads to public security authorities for criminal liability to be pursued in accordance with the law. The courts also distinguish between different scenarios of ¡°purchasing on behalf of others¡±: for professional agents who purchase on behalf of others as a business, they hold them to the standards applicable to business operators in reviewing their duty of inspection upon purchase. Additionally, the courts differentiate the impact of labeling or instruction defects: if such defects do not affect food safety and do not mislead consumers, claims for tenfold punitive damages are no longer supported.

Five typical cases released to clarify the application of the Interpretation

At the press conference, the Shanghai No. 3 Court and the SRTC released and analyzed five typical cases involving the application of the Interpretation, fully demonstrating the judicial wisdom of the people¡¯s courts in actively responding to the public¡¯s new expectations for food and pharmaceutical safety in the new era and in serving to ensure high-quality economic and social development.

For example, in a case where a claim for compensation was brought against agricultural products based on prepackaged food standards, the tea in question was produced and sold by tea farmers themselves. To prevent the finished product from breaking, it was packaged in simple small packaging. The buyer then claimed a refund and tenfold compensation, arguing that the tea constituted prepackaged food and did not comply with the ¡°GB/T18745¡± standard printed on the outer packaging. The Shanghai No. 3 Court conducted a substantive review of the tea¡¯s production and processing conditions, accurately determined its nature as an agricultural product, and distinguished between the different food safety standards applicable to products from small family workshops and those from standardized industrial production. It did not mechanically apply the national mandatory standard for similar products. Having determined that the tea met substantive safety requirements in accordance with the law, the court did not impose the heavy liability of tenfold punitive damages, thereby equally protecting the legitimate rights and interests of both consumers and producers/operators at both ends of the consumption chain.

In a compensation case involving the purchase of a large quantity of ¡°food products with no label, no date, and no manufacturer,¡± the buyer placed an initial order for 20 units of kidney-tonifying tablets from an online store, each priced at 180 yuan and sufficient for about half a month of use. Since the outer packaging bore no information such as the manufacturer¡¯s name, address, or contact details, the buyer claimed a refund and tenfold compensation from the seller, arguing that the product did not meet China¡¯s food safety standards. The SRTC found that the product fell into the category of ¡°food products with no label, no date, and no manufacturer.¡± Accurately grasping that reasonable daily consumption needs constitute a statutory element for the application of punitive damages in food-related cases, and considering factors such as the quantity purchased, shelf life, and usual consumption habits of ordinary consumers, the court upheld punitive damages corresponding to two units of the product¡ªamounting to 3,600 yuan¡ªwithin the scope of reasonable daily consumption needs. This case serves as an example of how the Interpretation should be applied to ¡°food products with no label, no date, and no manufacturer.¡±

¡°The Shanghai No. 3 Court and the SRTC will continue to ensure the safety of what people consume through precise judicial rulings, balance the protection of the legitimate rights and interests of both consumers and producers/operators, and deeply implement the fundamental principles of the Interpretation, which are ¡®safety first, balanced protection, and precise regulation,¡¯ thereby providing stronger judicial guarantees for the high-quality development of Shanghai¡¯s food and pharmaceutical market and the development of a rule-of-law business environment,¡± said Mr. Zhong.

Selected Typical Cases Concerning Consumer Rights Protection