The problem of indoor air pollution caught the public’s attention because of increasing complaints about air condition in rental houses. It started with a widely spread online accusation. A renter, an employee of Alibaba, accused Ziroom, which is one of the leading leasing companies in China, of providing a rental house that failed to meet the national standard of air quality, which allegedly killed the renter. Accordingly, “Ziroom Formaldehyde Incident” immediately became breaking news. In September 2018, 26 Ziroom renters filed a lawsuit against Ziroom in the Beijing East District Court. On November 29th, the court delivered a judgement holding that Ziroom should refund all rent, service fees and air quality testing fees. This was the first case that was brought to a court in Beijing after the “Ziroom Formaldehyde Incident”.
This case shows us one kind of risk that renters might face. With more and more people becoming renters, questions will rise, like how we can protect them from abusive practices and whether the current legal scheme provides them with adequate legal protections.
This article mainly focuses on the air pollution problem in rental premises. Section 1 discusses the main problems of renting and why indoor pollution has become a more common phenomenon. Section 2 discusses renters’ different approaches to protect themselves. Section 3 conducts a case study of indoor air pollution and discusses the reluctance of courts to set a precedent in this area. In the final part, I will talk about one solution to categorize this kind of case as an environmental pollution case.
II. Surge in rental problems
China’s high price for new apartments has been a nightmare for ordinary people for many years. According to the National Bureau of Statistics of China, residential property prices in China’s top cities keep rising continually.
Without seeing any hope of new apartments’ prices going down, renting has become a refuge for those who do not have the money to buy new homes. However, renting is not a perfect plan b. For example, renters’ rights are limited compared to homeowners due to China’s strict hukou system, namely the household registration system. Moreover, the renting price is still unaffordable for some people. Governments have recognized these problems, and are trying to address them. Twelve major cities, including Shenzhen, Nanjing, and Xiamen, are experimenting with a new policy that gives renters the same access to education and social services as homeowners. Moreover, the government issued official documents asking the state banks to pledge more than 460 billion dollars in rental financing. That means a renter can apply for a collateral free loan for up to 1 million RMB to pay for the rent and they can repay it over a maximum of ten years . However, there is one problem that might be ignored, which is the problem of indoor air pollution.
Searching “formaldehyde and right to health” in the database of the nationwide courts’ decision, you will find 63 results. 10 of them are about rental premises. All of the plaintiffs lost the lawsuit. Why has indoor air pollution become a problem in recent years? Incentivized by the policy of supporting the rental sector, business giants like Alibaba, Tencent and JD.com have all staked out claims in this area, either by acquiring stakes in apartment rental startups or announcing plans for their own rental services.A large amount of money accordingly has been invested in the leasing sector, which nearly brought about a revolution in this industry.Not only does it increase the supply of rental houses, but it also incurs some new issues, such as indoor environmental issues. Many of the leasing companies obtain houses from the landlords and rent them out after furnishing. The problem is, motivated by the thought of earning money as quick as possible, the companies usually rent them out before the air pollution caused by the renovations dissipates. Accordingly, indoor air pollution in rental premises worries the public.
III. Injured renters’ different approaches to protect their rights when facing indoor air pollution in rental premises
Injured renters can seek damages in different ways: negotiation or lawsuit. If they choose the lawsuit option, they can sue under either contract law or tort law.
A. Through negotiation
Take Mr. Wang’s case for example. In response to Mr. Wang’s accusation, Ziroom stopped renting out the apartments that are newly furnished, and have not been rented out yet, until the apartments pass the air quality test. It also promised that for the new renters who moved into Ziroom apartments after June 2018, they could apply for the air quality test for free, if they have any doubt about the air quality. If the result shows that the air quality fails to meet the national standards, renters can choose one of three solutions provided by Ziroom. Renters can 1) unconditionally terminate the leasing agreement and leave the apartment freely, or move to a different Ziroom apartment with Ziroom’s help; 2) accept the free air quality improvement provided by Ziroom; or 3) use brand-name air purifier for free for 90 days subsidized by Ziroom.
However, these measures are quite limited. The budget for free air quality testing is limited, which is only enough to cover one type of common air pollutant. Furthermore, Ziroom left out in the response the compensation for the renters who had already lived in the polluted air for a certain amount of time.Renters often sign a long-term contract which requires them to pay a year in advance, but the Ziroom speaker said they would only refund the part of the rent paid covering future stay. 
Due to the weak bargaining power of renters compared to the leasing companies, it is not hard to imagine that it is difficult for renters to reach a good bargain for themselves. If they are not satisfied by the solution proposed by the leasing companies, they have to go to court.
B. Suing under contract law
If renters decide to sue the company, under current law they have two approaches: i) sue for breach of contract and ask for compensation under Contract Law of the People’s Republic of China (“Contract Law”) Article 107, 111 and 113; ii) terminate the leasing agreement according to Contract Law Article 223 and ask for damages based on Contract Law Article 107, 111 and 113. The difference between these two approaches is whether or not renters terminate the contract. Yet for most renters, these two options are no different because the damages under each approach are the same. The key issue under either approach is whether and how renters can get compensation from the leasing companies.
The leasing agreements provided by the leasing companies usually do not have quality provisions. For instance, the rental agreement drafted by Ziroom says nothing about the quality of the premises. Therefore, they cannot be held liable for breach of explicit warranty of habitability. However, if the legislature enacts legislation about implied warranty of habitability, Ziroom would still be contractually obligated for failing to provide rental houses of minimum standard.
There are some provisions regulating the quality of rental premises. Contract Law Article 223 provides that “[w]here the lease item endangers safety or health of the lessee, the lessee may terminate the contract at any time even if the lessee knows the lease item does not meet the quality requirements when concluding the contract.” It gives renters a right to terminate the contract when the leasing house endangers the health of the renters even if the lessee agreed on the rental house’s quality at the time of concluding the contract.
However, we cannot only rely on this provision, for two reasons. First, it does not clarify what constitutes endangerment of safety and health of the lessee. More specifically, does any violation of the National Standard automatically amount to an endangerment of safety and health of the renters? Second, this Article is also silent about what renters can do after terminating the contract. Do they meet the conditions to ask for compensation? Accordingly, we should look at other laws in tandem with contract law.
Administrative Measures for Commodity House Leasing (“AMCHL”) Article 6 says that “[a] house falling within any of the following circumstances may not be leased: … 2. It fails to conform to the mandatory standards for project construction with respect to safety and disaster prevention.” The mandatory standards refer to the Code for Indoor Environmental Pollution Control of Civil Building Engineering GB50325-2010 (“National Standard”). Article 62 of Contract Law states that “[w]here certain contents agreed upon by the parties in the contract are ambiguous and cannot be determined in accordance with the provisions in Article 61 of this Law,the following provisions shall be applied: (1) if quality requirement is not clear, performance shall be in accordance with the state standard or industry standard; absent any state or industry standard, performance shall be in accordance with the customary standard or any particular standard consistent with the purpose of the contract…” Therefore, the fact that the contract is silent about rental houses’ quality does not mean landlords can provide any kind of houses they want. According to Article 62 of Contract Law, and inferring from Article 6 of AMCHL, rental houses’ quality shall at least meet the National Standard. If the rental house fails to conform to the National Standard, the rental house should not be leased and thus the lesser will be contractually liable.
We can interpret Article 223 of Contract Law and Article 6 of AMCHL as having set up an implied warranty of habitability of rental premises. It imposes a duty on landlords that the rental house should, at a minimum, not endanger the safety and health of the lessee. One condition is that the rental house should meet the National Standard. Even mutual consent beforehand cannot exclude such duty. However, failure to meet the National Standard only does not equal endangering renters’ safety and health. Courts will conduct a case-by-case analysis when deciding such issues.
Terminating or voiding the leasing contract, however, is not the end of the story. The injured lessee still needs to prove damage and causation between the damage and the indoor air pollution to get compensation, which will be analyzed in the following chapters.
C. Suing under tort law
If the injured renter sued under torts, he or she can sue for product liability or environmental pollution liability,or general tort.
Suing under product liability is a viable approach. Article 43 of Tort Law of the People’s Republic of China (“Tort Law”) regulates that “[w]here any harm is caused by a defective product, the victim may require compensation to be made by the manufacturer of the product or the seller of the product…” What is a defective product is defined in Product Quality Law of the People’s Republic of China (“Product Quality Law”). Article 2 of Product Quality Law provides that “[p]roduct referred to in this law means a product which is processed or manufactured for the purpose of sale. This Law shall not apply to construction projects, but the construction materials, structural components and fittings and equipment that fall within the category as provided in the previous paragraph shall be governed by this law.” Article 46 provides that “[d]efects mentioned in the law referred to the unreasonable danger existing in the products that threaten the safety of person or properties or products that do not conform to the standards set by the State or the specific trade if there is any.” To define the term “construction project”, we can resort to Construction Law of the People’s Republic of China (“Construction Law”). Article 2 of Construction Law defines that “construction activities as mentioned in this Law shall refer to the construction of all kinds of houses and buildings and the ancillary facilities thereof and the installation of their supporting lines, pipes and equipment.”  Therefore, even though rental houses themselves are interpreted as construction projects and as such are excluded from the Article 2 definition of what constitutes a construction project, a renter could still argue that the furniture or other construction materials are the product that is covered by Article 43 of the Tort law.
However, there are courts holding that all indoor air pollution cannot be categorized as product liability because the so-called product, namely the construction materials, does not directly injure the renter. Instead it harms the renter through the medium, air, which should be defined as environmental pollution.
Suing under environmental pollution liability is also viable. Article 65 of Tort Law regulates that “[w]here any harm is caused by environmental pollution, the polluter shall assume the tort liability.” “Where any dispute arises over environmental pollution, the polluter shall assume the burden to prove that it should not be liable or its liability could be mitigated under certain circumstances as provided for by law or to prove that there is no causation between its conduct and the harm.”However, some courts held that indoor environment does not fall within the scope of environment under Article 65.Some scholars share the same opinion.Others hold the opposite.The applicability of Article 65 will be analyzed in detail in the following sections.
Lastly, suing under general tort is a safer approach as it provides less uncertainty. Tort law Article 6 regulates that “[o]ne who is at fault for infringement upon a civil right or interest of another person shall be subject to the tort liability.” Interpretation of the Supreme People’s Court of Some Issues concerning the Application of Law for the Trial of Cases on Compensation for Personal Injury Article 1 regulates that “[w]here an obligee to compensation brings a lawsuit due to an injury to his life, health or body, claiming compensation for property losses or psychological injuries against the obligor to compensation, the people’s court shall accept the lawsuit.” It will be the last resort for the renters if the two previous approaches fail. This approach, however, has its disadvantages. For instance, the injured renter has to prove the infringing party’s fault, compared to product liability under which fault is not required. Burden of proof is imposed on the complaining party under general tort, while such burden is shifted to the infringing party under environmental pollution liability. That is why the general tort approach is the last resort.
IV. Case study
Even if the current law provides renters who suffer from the poor quality of rental housing a legal basis to sue for damages, it is still difficult for them to do so. A renter, Ren Yanan, sued Lianjiafor the same cause in 2016. Liu Zhijian, Ren’s husband, entered into a one-year leasing agreement with Lianjia in July 2015. Ren was pregnant before moving into this apartment. She was diagnosed as being leukemic in October 2015, and received the induction of labor in November 2015. Ren died in March 2017. Beijing Trial Court dismissed Ren’s claim, but still held that Lianjia should compensate Ren 101,460 yuan, and release Ren from the obligation incurred by Lianjia’s previous payment for Ren’s medical bills and from the obligation to pay the unpaid rent. Beijing Intermediate Court and Beijing Supreme Court confirmed the decision.
In rejecting Ren’s claim, the court held that plaintiff had the burden to prove that the pollutant in the rental apartment caused her illness, but she failed. It gave three reasons to support the findings. First, the concentration of formaldehyde and total volatile organic compound TVOC are only slightly higher than the national standard.Second, three months is too short for the air pollutant to have caused leukemia. She may have been leukemic before moving into the apartment. Third, other people living in the same apartment have not been found having similar symptoms, which indicates that the air pollutant might not be the cause of the disease. It is noteworthy that when Ren was trying to seek expert testimonies to establish the causation between the pollutant and the disease, both forensic centers that the court delegated the task to refused to provide expert testimonies, claiming it was beyond their capability. Their refusal reflects that it is tricky to prove the existence of the causation.
Scrutinizing the decision closely, it is a strange decision in fact. The court rejected Ren’s claims yet it still imposed pecuniary compensation on Lianjia. What’s more, the court avoided using terms like damages, but referred to it as waiver of a debt—Lianjia paid for Ren’s medical bills before the court’s decision and the court released Ren’s family from the obligation to repay. It seems that the court was reluctant to admit that the leasing company under such circumstances was liable for renter’s damage but it did not want to see Ren and her family leave with nothing, so it gave Ren and her family some equitable compensations. The court here was more like a mediator, rather than a fact finder.
Another renter, for the same reason, also sued Lianjia in 2017.In this case, the air quality of the rental apartment fails to meet the national standard as well. Compared to Ren, however, the court said nothing about the causation issue. It simply required Lianjia to compensate the renter for the air quality testing fees and rejected renter’s other claims for damages.
Although the cases themselves may not be wrongly decided, these lawsuits reflect a gray area of rental market regulation. On the one hand, leasing companies are aggressively expanding their business to gain more market share, which inevitably results in poor premises being provided. Companies want to put the newly furnished apartment into the rental market as soon as possible, leaving no time for air pollutants generated by renovations to dissipate. The number of complaints about the indoor air quality in rental houses has increased recently. On the other hand, renters are powerless to sue against such big companies. It is expensive to file a lawsuit. It is also difficult to win the case because it is hard to prove causation as we can see from Ren case. Moreover, there are no consistent rules yet among courts about this kind of issue.Many courts would rather solve the disputes at the cost of blurring the line between right and wrong than set a precedent, which is riskier——the decision is more likely to be overturned.
V. The solution
As we discussed above, normally renters will have two causes of action when facing indoor air pollution problems: contract and tort. Under either cause of action, the key issue is causation: did the poor air quality cause the damage? It is well known that the issue of causation can be very complicated when it comes to pollution and damage. It needs expert testimony and scientific evidence. This is why the legislature shifts the burden of proof from the injured party to the alleged polluters.If it is an environmental-pollution case, it is the leasing company who should prove there is no causation.
The question, however, is whether the indoor air pollution case is an environmental-pollution case. Moreover, if it is not, should we extend the application of the shifting-burden-of-proof rule to indoor air pollution cases? Neither Tort Law nor Environmental Protection Law have a specific definition of what constitutes an environmental-pollution issue. The Environmental Protection Law defines “environment” as “the entirety of all natural elements and artificially transformed natural elements that affect the survival and development of human beings, including but not limited to air, water, seas, land, minerals, forests, grasslands, wetland, wildlife, natural and cultural relics, nature reserves, scenic spots, historical sites, and urban and rural areas.”This definition does not give us a clear answer.
Moreover, there is neither legislative interpretation nor judicial interpretation on this issue. In reality, different courts held different views towards this question.Some courts held that environment did not include indoor environment;some courts held the opposite.Different scholars have different opinions.
Interpreting the definition literally, there is no indication that the legislature excludes the indoor environment. To the contrary, the indoor environment is part of the “entirety” of the environment. Besides, according to Code for Indoor Environmental Pollution Control of Civil Building Engineering, the administrative departments of the State Council have already viewed the indoor environment as an important part of the whole environment. This suggests that indoor air pollution cases can be categorized as environmental-pollution case.
One plausible counter argument is that a vital characteristic of an “environment” is shareability and because the rental house is not open to everyone, it is not part of the environment. However, this argument cannot stand, because shareability is not stated in the law. Another speculative argument is that, to fall under Article 2 of Environment Protection Law, the environment should be natural because the word “natural” is used in the definition, and indoor environment is too artificial to be included from the scope of Environment Protection Law. But nowadays humans have already significantly transformed the natural environment. It is really hard to draw a line between natural and artificial. For instance, industrial zones has been recognized as part of the environment since the very birth of Environmental Law, but with significant human alteration, does it still remain natural in the sense of what the opposers insist? Claiming space like industrial zone natural regardless of its artificial elements, opposers are actually confusing two concepts, external and natural. They are excluding spaces that are not external under the guise of natural, and the exclusion based on the external standard is baseless under current law and contradicts regular practices.
Even if Article 2 of Environmental Protection Law does not cover the indoor environment, we should extend the application of the shifting-burden-of-proof rule to indoor air pollution cases, out of fairness and justice. The reason why the legislature shifts the burden of proving causation to the polluter is that it is hard for an individual to prove the causation between the pollution and the harm. An individual is vulnerable, powerless and usually lacks necessary information about the pollutant. The same rationale applies to indoor environmental cases. However, this argument is not as strong as the former one, because unlike factory pollution where it is factories that possess all the information about pollutants and have the chance to destroy it, which is an important justification for shifting burden of proof, here it is the renters who occupy the rental house. The concern does not exist here that the injured party has no access to information, or that the evidence will be destroyed. However, this argument is not convincing because protection of evidence is not the only justification for shifting-burden-of-proof rule. The fact that the renters once occupied the apartment does not mean that they have the ability to gather evidence. For example, usually, unaware of the pollution, the renters do not conduct any air quality test when they first move into the apartment,. Not until they feel sick because of the pollution do they start to delegate an institution to test the air quality. However, by that time it is probably too late because part of the air pollutants have dissipated and thus the result cannot accurately reflect the true level of pollution that the renters have suffered. Actually it is in nature an individual vs. a conglomerate case and the victims both in outdoor pollution and indoor pollution share the same dilemma. Therefore, the shifting-burden-of-proof rule should extend to this area.
With the capital flowing into the leasing market, the problem of air pollution in rental premises has become serious because the big companies unfairly take advantage of weak individuals. The problem of air pollution in rental premises can be solved either through negotiation or by lawsuit. The current law scheme already has the specific legislation to deal with this issue. An injured renter can sue under various causes of action: contract, product liability or environmental pollution liability. Under either legal scheme, the issue of causation is central to whether the leasing company should be liable for renter’s damage. For the purpose of protecting powerless individuals, it is more appropriate to categorize indoor air pollution cases as environmental-pollution cases because it will shift the burden of proof from injured renters to the infringing party.
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The concentration of formaldehyde in this case was 0.13mg/m3, while the standard in GB/T18883-2002 is lower than 0.01mg/m3; the concentration of total volatile organic compound TVOC was 0.72mg/m3, while the standard in GB/T18883-2002 is lower than 0.6mg/m3.
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Tort Law of the People’s Republic of ChinaArticle 66 states that “[w]here any dispute arises over an environmental pollution, the polluter shall assume the burden to prove that it should not be liable or its liability could be mitigated under certain circumstances as provided for by law or to prove that there is no causation between its conduct and the harm;”Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures Article 4(3) states that “[i]n a compensation lawsuit for damages caused by environmental pollution, the infringing party shall be responsible for producing evidence to prove the existence of exemptions of liabilities as provided in laws or that there is no causal relationship between the act and the harmful consequences.”
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江苏省南京市玄武区人民法院(2002)玄民初字第1715号; see also福建省福州市鼓楼区人民法院(2013) 鼓民初字第4995号.
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