The Challenge of Litigation Costs and Damage Assessment Fees in Environmental Public Interest Litigation in China

By Yu Zhuang.

From January 2015 when the new Environmental Protection Law (EPL) took effect to the end of 2016, courts in China have accepted 112 environmental public interest litigation (EPIL) cases filed by non-governmental organizations (NGOs). But, as of November 2016, only six NGOs have brought EPIL cases, down from eleven in 2015. In light of China’s mounting environmental crisis and the fact that over 700 NGOs are eligible to file EPIL cases under the EPL, the number of EPIL cases filed and the NGOs filing these cases are surprisingly low. One reason is the high upfront costs and risks borne by NGOs, which includes litigation costs paid to courts and damage assessment fees. These costs and fees constitute a formidable barrier to environmental NGOs because many of them operate on constrained budgets. As a result, very few NGOs can afford to pursue legal action.

  1. Case Acceptance Fees

In China, courts are responsible for conducting investigations and collecting evidence when necessary. Article 64 of the Civil Procedure Law of China states that if parties or their litigation representatives are unable to gather evidence due to some objective difficulties, or if the court deems certain evidence necessary for the case, the court shall investigate and collect evidence. Chinese courts have been using litigation fees to cover these costs since the early 1980s. On the other hand, in the U.S., attorneys or the unrepresented parties, rather than courts, bear the responsibility of conducting a reasonable investigation. As such, the litigation fee submitted to U.S. courts is comparatively low. For example, the cost of filing a civil action suit, or proceeding in the U.S. District Court of New Jersey is $400 ($350 filing fee plus $50 administrative fee). Further, the fee for filing a civil complaint at the New Jersey Superior Court is $250.

The “Measures on the Payment of Litigation Costs” [诉讼费用交纳办法] (Measures) issued by China’s State Council in 2006 regulates the litigation costs paid to courts. Litigation costs include case acceptance fees, application fees, and miscellaneous expenses for witnesses and other relevant personnel engaged in trial. Article 13 of the Measures provides that case acceptance fees are calculated as a proportion of the total amount of remedies sought in the litigation claim. It ranges from .5% to 2.5% of the compensation requested of the court. Article 20 states that the case acceptance fee shall be prepaid by the plaintiff. Moreover, Article 29 provides that the litigation costs shall be borne by the party that loses the lawsuit.

Environmental pollution and ecological damage cases often involve extensive public interest damages that require expensive restoration and remediation work. Consequently, the amount of claimed damages is usually huge. As such, cash-strapped NGO plaintiffs will have to pay in advance a large amount of litigation costs to the court. If they lose, they also bear the risk of paying prevailing defendants’ litigation costs and attorney fees.

Considering the difficulties of NGO plaintiffs to pay for high litigation costs, Article 33 of the “Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law in the Conduct of Environmental Civil Public Interest Litigations” (the Civil EPIL Interpretation) provides that courts may grant a plaintiff’s request to postpone the payment. Moreover, courts may grant a losing plaintiff’s request for the reduction or exemption from payment of prevailing defendants’ litigation costs in accordance with the provisions of the “Measures,” in light of the plaintiff’s economic status and the trial of the case. While plaintiffs may petition to reduce, waive, or postpone payment of the litigation costs, it is subject to the court’s discretion to grant such a petition. The litigation costs requirement, therefore, creates a deterrent effect and imposes tremendous burdens and risks on NGOs.

In the case of All-China Environment Federation (ACEF) v. Jinghua Group Zhenhua Decoration Glass, Ltd. Co.( (2015)德中环公民初字第1号), the plaintiff paid 182,000 yuan ($26,432) in case acceptance fees upfront to the courts based on its claim of damages of nearly 27 million yuan ($4 million). In the court’s decision of the more recent case Friends of Nature (FON) and China Biodiversity Conservation and Green Development Foundation (GDF) v. Jiangsu Changlong Chemical Ltd. Co., etc.( (2016)苏04民初214号), the court ordered the two losing plaintiff NGOs  pay the case acceptance fee of 1,891,800 yuan ($274,755) based on its  nearly 370 million yuan ($53.7 million) damage claim.

  1. Damage Assessment Fees

Under the Civil Procedure Law of China and relevant judicial interpretations, plaintiffs bear the burden of proving environmental damages, including costs of ecological restoration and compensation for the interim losses of ecological function that the defendants are required to pay under the Civil EPIL Interpretation. In June 2015, the Supreme People’s Court issued “Interpretation of the Supreme People’s Court of Several Issues on the Application of Law in the Trial of Disputes over Liability for Environmental Torts” (the Environmental Torts Interpretation). Article 8 provides that “[f]or clarification of specialized issues in the facts of environmental pollution cases, forensic evaluation organizations with relevant credentials may be retained to submit appraisal opinions, or organizations recommended by the competent department of environmental protection under the State Council may submit examination reports, test reports, or monitoring data.”

Environmental damage assessment usually demands a substantial amount of time and high technical skills and are therefore cost prohibitive. Due to exorbitant damage assessment fees, many NGOs have to abandon EPILs or repeatedly delay filing their cases. In the case of All-China Environment Federation (ACEF) v. Jinghua Group Zhenhua Decoration Glass, Ltd. Co., in addition to the case acceptance fee, ACEF also paid 100,000 yuan ($14,485) for damage assessment fees, which involves hiring an expensive third party consultancy to carry out sophisticated modeling.

Potential Solution: Bifurcated Trial

Bifurcated trial can be an effective and strategic device in environmental disputes, in which the liability phases is typically separated from the damages phase of the trial. If the defendant is found legally liable for pollutions at the liability phase, then courts can proceed into the damage phase to decide remedies. Because the determination of legal liability for pollutions with no monetary claim of damages normally entails a relatively small scope of investigation and evidence collection, courts may order the plaintiff to pay for the minimum case acceptance fees.[1]

If a court determines that the defendant is legally liable, the court shall order the defendant to pay for environmental damage assessment and fund the draft of restoration plan by experts jointly selected by both parties and approved by the court. Based on the assessment and the restoration plan, the court can then determine proper remedy and order the defendant to pay for the required litigation costs calculated based on the damage assessment.

In the U.S., Federal Rule of Civil Procedure 42(b) permits a trial court, “[f]or convenience, to avoid prejudice, or to expedite and economize,” “to order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims.” Under Rule 42(b), bifurcated trials have been frequently used in environmental litigation.

In Maine People’s Alliance And Natural Resources Defense Council v. Mallinckrodt, Inc., 471 F.3d 277 (C.A.1 (Me.),2006), the Appellate Court upheld the District Court’s decision that the defendant was liable because its disposal of mercury in the river was the legal cause of the environmental injuries. In addition, the court ordered the defendant to fund scientific study of mercury contamination, as well as any feasible remediation measures. Based on the study report, the court then decided on the appropriate remedies at the remedy phase.

The advantages of bifurcation are three-fold:

  • Judicial efficiency – Courts can focus first on the legal issue of establishing liability, which usually is a quicker decision than deciding damages. This can relieve the court from the burden of hearing evidences on damage calculation at the first stage of trial.
  • Save parties valuable resources – Bifurcation may narrow the scope of discovery and reduce overall litigation costs. Often the remedy part of the case is very expensive. Experts are required for assessing damages. If the defendant is found not liable, neither party needs to spend valuable resources on proving or repudiating damages.
  • Promote settlement – A favorable determination on liability would provide a plaintiff with significant’ negotiating leverage to seek favorable settlement with defendants, which will save resources and time for both parties and the court by averting the more difficult issue of damages.

In short, bifurcated trials on environmental public interest litigation can shift the burden of litigation costs and damage assessment costs from plaintiff to defendant. Consequently, it can relieve EPIL plaintiffs from financial burden and risks in filing EPIL cases. Moreover, it can increase judicial efficiency and promote settlement, which in turn can serve public interest effectively by spending parties’ valuable resources on restoring damaged environment rather than on costly court proceedings.

[1] Article 13 of the “Measures on the Payment of Litigation Costs” provides that for other types of non-property case, the case acceptance fee ranges from 50 to 100 yuan. Alternatively, the Measures may add a provision to specify case acceptance fees for liability proceeding in environmental public interest litigation.

*The featured image is from China encourages environmental groups to sue polluters, THE GUARDIAN,


Yu Zhuang is the Assistant Director of U.S.-Asia Partnerships for Environmental Law at Vermont Law School. She has been working with China’s Supreme People’s Court, law schools, and NGOs on capacity building in environmental public interest litigation. She graduated summa cum laude from Vermont Law School with J.D. degree. Upon graduation, she clerked for the Assignment Judges at the Superior Court of New Jersey.  She also worked as summer law clerk at EPA and in Natural Resources Defense Fund. She received her B.S. and M.S. degrees in Computer Science and Engineering from the Royal Institute of Technology in Stockholm, Sweden and pursued B.S. degree in Applied Chemistry at Fudan University. Her interest and specialties are comparative research on environmental law enforcement and legal advocacy work in China.

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