· Document Number：No.21 [2005] of of the Higher People’s Court of Shanghai Municipality

· Area of Law： Judicial Assistance Legislative Affairs

· Level of Authority： Local Judicial Documents

· Date issued：12-31-2005

· Effective Date：12-31-2005

· Status： Effective

· Issuing Authority： Shanghai Municipality

Notice of the Higher People's Court of Shanghai Municipality on Distributing the “Answers to Some Questions concerning the Trial of Cases Involving the Indemnity for Injuries from Road Traffic Accidents”
(No. 21 [2005])
The No. 1 civil divisions of the No. 1 and No. 2 Intermediate People's Courts, the No. 1 civil divisions of all district or county courts, the No. 4 Civil Divisions of Pudong New Area Court and Huangpu Court, the Rapid Ruling Tribunal of Baoshan Court, all people's tribunals:
Since the “Road Traffic Safety Law of the People's Republic of China ” was promulgated and came into force, many new issues have arisen out the application of laws concerning the cases involving the indemnity for injuries from road traffic accidents. In order to timely regulate the application of laws concerning the cases involving indemnity for injuries from road traffic accidents, we have summed up relevant issues, and put forward some regulatory opinions for reference for the civil judges of each court. In case any question arises out of the application, please timely report them to the No. 1 Civil Division of the Higher Court.
December 31, 2005
Answers to Some Questions concerning the Trial of Cases Involving the Indemnity for Injuries from Road Traffic Accidents
I.In the disputes over road traffic accidents, how to determine the liability nature and litigation status of the insurance companies?
Answer: In terms of the nature of the liability of the insurance companies in the disputes over the indemnity for injuries incurred from traffic accidents, there are divergences in judicial practices on advance payment and direct liability. As for the litigation status, it is not uniformly determined in the current judicial practices (It is either listed as a joint defendant or a third person, or does not participate in the litigation).
We hold that, what the insurance company bears is the liability of paying insurance money, so the third person out of the insurance contract has no right to deem the insurance company as a defendant and to claim against it for the insurance money, and the litigation status of the insurance company shall be a third person. The ground is as follows: Road traffic accident is merely a ground for making indemnities under the insurance contract, thus what the insurance company bears is the liabilities under the insurance contract. Therefore, the litigation status of the insurance company depends on whether the petitioner has the right to request payment of the insurance money. The right to request payment of the insurance money is based on the Insurance Law and the insurance contract, so if neither the legal norms nor the insurance contract prescribes any other beneficiary, the insured shall certainly be the only obligee to request the insurance money. No one else has the right to directly request the insurance company to pay the insurance money, instead, he may only get the insurance money indirectly from the insured; the third party liability insurance is no exception, either. Paragraph 1 of Article 50 of the “Insurance Law” prescribes: “The insurer shall, according to the provisions of law or the contract, directly pay insurance money to the third party if injuries are caused by the insured who is covered by the liability insurance.” Hence, the insurance company may, according to this clause, directly pay the insurance money to the third party, but this clause does not entitle the third party to directly request the insurance company for payment. According to Articles 75 and 76 of the “Road Traffic Safety Law ”, it is only prescribed that the insurance company shall bear indemnity liabilities within the coverage of insurance liabilities, and do not entitle the third party to request payment of the insurance money. Moreover, presently, for the contracts on the third party liability insurance for motor vehicles, there is no provision in China on direct payment of the insurance money to the aggrieved third party; hence, unless otherwise agreed upon in the insurance contract in question, the aggrieved third party has no right to directly request the insurer for payment of the insurance money. In consideration of the nature of the third party liability insurance for motor vehicles, the said insurance is for the insured to transfer his risk of indemnity, thus the insurer's payment of the insurance money shall be based on the proportion of the liability of the insured for the accident and the amount of bearable indemnity. The settlement result of a dispute over indemnity of injuries for a traffic accident has an interest relationship with the insurance company. In order to prevent the third party from maliciously colluding with the insured, and to safeguard the lawful rights and interests of insurance companies, the insurance company may apply for taking part in the litigation as a third person or be notified by the people's court to do so.
If, at the time of bringing a lawsuit, the obligee to indemnity regards the insurance company as one of the defendants or the third person, the insurance company shall be listed as a defendant or a third person; if the obligee to indemnity only brings a lawsuit against the insurance company, the motor vehicle owner shall be added as a defendant to take part in the litigation.
II.In a case involving indemnity for injuries from a traffic accident, how to deal with the expenses for the party concerned which are not dealt with in Article 17 of the “Interpretation of the Supreme People's Court on Some Issues concerning the Application of Law for the Trial of Cases Involving Indemnity for Personal Injury”, such as the expenses for renting a vehicle or crutches or other healing instruments during the repair of the damaged means of transport, the expenses incurred from dealing with the accident (such as traffic expenses, the loss of income due to missed working time, evidence collection expenses, retainers), etc.?
Answer: After the relevant liabilities for indemnity have been determined, how to correctly understand the scope of indemnity is one of the difficult issues on indemnity for tort. We hold that, the losses which may be indemnified shall include direct losses and indirect losses (losses in acquirable interests). In accordance with the existing legal norms, the spirit of the judicial interpretation of the Supreme People's Court and the experiences in judicial practices, the principle of full indemnity shall apply to all personal and property losses incurred from accidents. That is, the scope of indemnity shall be reasonably prescribed on the basis of the scope of losses, and it should be taken into consideration whether the losses alleged by the party concerned have actually taken place, and losses must be reasonable.
Where the party concerned requests indemnity of the expenses for renting the vehicle during repair of the damaged means of transport, the party's losses incurred from the rent of the vehicle may be determined from whether it is necessary and reasonable for the party concerned to use the vehicle (for example, whether he is the actual owner of the vehicle, the purpose of using the vehicle, the use of the vehicle, whether the expenses for renting the vehicle have been paid, and so on) before the traffic accident took place. If the party concerned does need to rent a separate vehicle, and has actually done so, the rate of indemnity of the losses incurred from renting the vehicle shall be determined with reference to the expenses for the lease company to lease an ordinary vehicle, and the period of indemnity shall be equivalent or shorter than the period from the date when the accident took place to the date when the repair is finished and the vehicle ought to be picked up from the repair plant.
Where the party concerned requests indemnity of the expenses incurred from dealing with the accident (such as traffic expenses, the loss of income due to missed working time, evidence collection expenses, retainers), the request may be supported if the expenses have actually taken place, and meanwhile are reasonable.
III.If a party concerned who has working capacity fails to provide the proof on his actually reduced income due to missed working time, shall his assertion for the loss of income due to missed working time be supported?
Answer: In this regard, the request of the party concerned might be rejected in judicial practices due to his inability to provide evidence. We hold that, after lawful explanation, the loss of income due to missed working time may be determined with reference to the currently promulgated minimum wage rate for the employees in this city. The ground is: we may know from the rule of daily experiences that, the work income is a main source of living of a party with working capacity, and a traffic accident can actually reduce his income. In addition, it may always be due to corresponding objective reasons that the party concerned fails to provide the proof on missed working time. For example, the employer is unwilling to issue such proof because of interest concerns. If after explanation, the party concerned still fails to provide corresponding evidence regarding his reduced income due to missed working time, he may be deemed to be unable to provide the evidence, and his request for indemnity of the loss of income due to missed working time shall not be supported. If, however, the party concerned can provide evidence to prove the specific industry which he engages in, his loss of income due to missed working time may be calculated at the industrial rate; if the party concerned can neither provide evidence to prove his income, nor provide evidence to prove the specific industry, his loss of income due to missed working time may be determined in comparison with the laid-off workers and unemployed persons, etc. with reference to the currently promulgated minimum wage rate for the employees in this city.
IV.The prices of the same model of equipment of aid for disability (ordinary model) manufactured by different manufacturers of equipment of aid for disability are largely different, so at what rate shall the indemnity amount be determined?
Answer: In accordance with Article 26 of the “Interpretation of the Supreme People's Court on Some Issues concerning the Application of Law for the Trial of Cases Involving Indemnity for Personal Injury”, the expenses for the equipment of aid for disability shall be calculated at the reasonable rate for ordinary usable equipment. In judicial practices, the equipment of aid for disability which the plaintiff requests to be provided or actually installed is always distinctively different from equipment of aid for disability which is provided by the defendant in respect of manufacturer and price. We hold that, we may know from the meaning of “ordinary usable” in the relevant judicial interpretation that the equipment of aid for disability which is under assertion for indemnity shall be indispensable to the aggrieved party, really plays a supplementary function to the aggrieved party, has the nature of resuming his ability, can maintain his basic living requirements (which helps production, resumption, and regressive public relations), and meet the stability and safety requirements. For the equipment of aid for disability which was installed before the plaintiff brings the lawsuit, the indemnity amount may be determined on the basis of his actually paid expenses; for the uninstalled equipment of aid for disability or such equipment which has been installed but needs to be replaced in future, the court shall lawfully inquire the manufacturer of the equipment of aid for disability about the price, and the price conclusion may be deemed as the basis for determining relevant indemnity amount after lawful cross-examination of the evidence.
V.If the manufacturer of the equipment of aid for disability does not issue the indemnity period of the equipment of aid, how to determine the indemnity period of the equipment of aid?
Answer: If the manufacturer of the equipment of aid for disability does not issue the indemnity period of the equipment of aid, the indemnity may be made in judicial practices with reference to the life expectancy of the population in Shanghai when the case is put on file (77 for male, and 81 for female). We hold that, in accordance with Article 32 of “Interpretation of the Supreme People's Court on Some Issues concerning the Application of Law for the Trial of Cases Involving Indemnity for Personal Injury”, the time limit for indemnity of the equipment of aid for disability shall be determined with reference to that for indemnity of the nursing costs, or in other words, be determined on the basis of the age, health conditions, etc. of the aggrieved party, provided that it shall be no longer than 20 years. If, after expiry of the determined time limit, the obligee to indemnity brings a lawsuit with the people's court for continuing payment of the expenses for equipment of aid for disability, and it is verified by the court from trial that the obligee to indemnity really needs to continue using the equipment of aid, the court shall adjudicate that the obligor to indemnity shall continue paying the expenses for equipment of aid for disability for five to ten years.
VI.If the obligee to indemnity is a foreigner, or a Hong Kong, Macao or Taiwan compatriot, at what rate shall the loss of income due to missed working time, the living expenses of the dependents and the indemnity of disability or indemnity of death be calculated?
Answer: In judicial practices, there is the viewpoint on making indemnity at the rate of the domicile of the court accepting the case, and it is also the practice of making indemnity at the rate of the domicile of the obligee to indemnity. We hold that, the “Interpretation of the Supreme People's Court on Some Issues concerning the Application of Law for the Trial of Cases Involving Indemnity for Personal Injury” aims at making up the losses of the aggrieved party, and prescribes that the obligee to indemnity may, on the premise of having evidence to prove the rate at his domicile or habitual residence is higher than that at the domicile of the court accepting the case, choose the former rate. However, whereas China is currently a developing country, and there is a big gap between developed countries and regions in respect of per capita disposable income, per capita consumption expenditures, etc., if the indemnity is determined according to the principle in interpretation, the judgment of the court will be a mere scrap of paper because Chinese obligors to indemnity have limited compensation capacity, and even if their affordability is taken into account, the interests of foreigner obligees to indemnity or those of the obligees from Hong Kong, Macao or Taiwan might not be actually protected. Therefore, when the rate of indemnity is determined, it is appropriate to use the rate at the domicile of the court accepting the case as reference.