Pure Economic Loss in China

Abstract

Pure economic loss is patrimonial loss not caused by an infringement of an absolute right. A crucial question in tort law is whether negligently-inflicted pure economic loss is recoverable.German law and French law represent a restrictive model and a liberal model, respectively. The general clause in Chinese tort law, §6(1) of the Tortious Liability Act 2009, resembles the wording of its counterpart in French Civil Code, and the literal interpretation is also supported by the drafting institution's opinion.However, if statutes on contractual liability and specific types of tortious liability for pure economic loss are considered, a systematic interpretation leads toward a conclusion excluding remedy for negligently-caused pure economic loss under this provision. More importantly, when all types of pure economic loss are carefully examined, public policy tends to deny recoverability of most types.Of the three ways to treat pure economic loss in tort law, the so-called “addition” pattern is better able to achieve a restrictive result than the so-called “subtraction” pattern or even a pragmatic pattern as a middle way. The addition pattern is clearer, more feasible, predictable and compatible with the current situation of China's legislation and judiciary. Therefore, a teleological reduction should be used when interpreting TLA §6(1), resulting in inclusion of three specific types of torts within this provision, and under which negligently-caused pure economic loss is not recoverable unless a protective statute is violated, or the conduct is intentional and against good morals.