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	REPLY REGARDING THE ISSUE AS WHETHER THE NEW STANDARD FOR THE TRIAL OF PERSONAL INJURY COMPENSATION CASES SHALL APPLY TO UNEXPIRED MOTOR VEHICLE THIRD PARTY LIABILITY INSURANCE CONTRACTS

	(promulgated on June 17, 2004)


SUBJECT : INTERPRETATION; MOTOR VEHICLE THIRD PARTY LIABILITY INSURANCE CONTRACTS; UNEXPIRED; STANDARDS FOR TRIAL OF PERSONAL INJURY COMPENSATION
ISSUING DEPARTMENT : THE SUPREME PEOPLE'S COURT OF THE PEOPLE'S REPUBLIC OF CHINA
ISSUE DATE : 06/17/2004
IMPLEMENT DATE : 06/17/2004
LENGTH : 346 words
TEXT :

Since the 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 (hereinafter referred to the "Interpretation") came into force on May 1, 2004, the provisions concerning the items, standard and calculating method in respect of compensation for personal injury have changed considerably compared with the former Measures for Handling Road Traffic Accidents. China Insurance Regulatory Commission has consulted the Supreme People's Court on whether the new standard for the trial of personal injury compensation cases shall apply to unexpired motor vehicle third party liability insurance contracts, to which, the Supreme People's Court has given a reply. The opinions of the Supreme People's Court are as follows:

It is provided in Article 4 of the Contract Law that "the parties shall lawfully enjoy the right to enter into a contract of their own free will, with which no entity or individual may unlawfully interfere." The principle of voluntariness established in that article is a basic principle of the Contract Law and shall apply to the conclusion of any insurance contract. It is also provided in Article 4 of the Insurance Law that insurance activities shall be conducted in accordance with the principle of voluntariness. Therefore the agreement made by the insured and insurer in their insurance contract, which reads that "the insurer shall assume the indemnity liability in accordance with the scope, items and standard of compensation for personal injury provided for in the Measures for Handling Road Traffic Accidents, and in accordance with the agreement in the insurance contract within the limit of liability indicated in the insurance polity", is only a calculating method for determining the indemnity liability of the insurer, but not an enforceable standard, it shall not become invalid due to the annulment of the Measures for Handling Road Traffic Accidents. After the implementation of the Interpretation, the parties to an motor vehicle third party liability insurance contract concluded before May 1, 2004 may either keep implementing the contract or modify the same according to law through consultation.