What’s the lender liability risk for soil pollution in the People’s Republic of China? An evaluation of China’s new Soil Pollution and Control Law in the light of the USA and UK regimes

Abstract

On 1 January 2019, following a presidential order confirming its adoption by the Fifth Session of the Standing Committee of the 13th National People’s Congress of the People’s Republic of China (PRC), the Law of the People’s Republic of China on Soil Pollution and Control 2019 (SPC) was introduced into law. Succinctly, the SPC was enacted to deal with the vast amount of soil pollution that currently exists in China. This article’s central thesis is that, following a comparative analysis of the regulatory regimes in the USA and UK, the law creates environment-related risks for lenders. In particular, the article is concerned with the risk of lender liability, that is, where the lender itself is made directly liable for the costs of soil pollution remediation. In light of the USA and UK regimes, risk management advice is provided for obviating any prospective lender liability that may be forthcoming from the SPC. As with the regulations in other countries, it appears that the degree of ‘control’ that lenders exercise over their clients must be limited to mitigate the possible transference of any direct liability under the PRC’s principles of property rights law.