Keywords: Extraordinary Event Report, Insurer’s Right of Subrogation, Public Liability Insurance, Liability Insurance

Counseling Attorney: Wang Zhanping, Liu Kai

Basic Facts of the Case: At 4:00 a.m. on June 3, 2017, a water leakage incident occurred at the Shenyang Mixc Mall, owned by China Resources (Shenyang) Real Estate Co., Ltd. The incident caused damage to specialty stores of Givenchy, Moncler, and Jiebai Trading. Moncler and Jiebai reached settlements with China Resources (Shenyang) Real Estate Co., Ltd. The losses sustained by the Givenchy brand were compensated by AXA XXXX Insurance Co., Ltd., the insurer under the property all-risks insurance policy. Subsequently, AXA XXXX Insurance Co., Ltd. filed a subrogation claim against the lessor, China Resources (Shenyang) Real Estate Co., Ltd., and the Heping District People's Court issued Civil Judgment No. (2018) Liao 0102 Min Chu 8656. China Resources (Shenyang) Real Estate Co., Ltd. had purchased public liability insurance from the plaintiff, Sunshine Property & Casualty Insurance Co., Ltd., Shenyang Central Branch. China Resources (Shenyang) Real Estate Co., Ltd. then sued Sunshine Property & Casualty Insurance Co., Ltd., Shenyang Central Branch, seeking to hold it liable for the insurance coverage. The Heping District Court rendered a final judgment in case No. (2019) Liao 0102 Min Chu 92. The plaintiff, Sunshine Property & Casualty Insurance Co., Ltd., Shenyang Central Branch, argued that the accident-related losses were caused by the withdrawal of construction work undertaken by Century XX (Xiamen) Industrial Co., Ltd. and Shenyang XX Decoration Engineering Co., Ltd. Since Century XX (Xiamen) Industrial Co., Ltd. had insured its construction project with comprehensive building insurance through the Shenyang Central Branch of China Pacific Property & Casualty Insurance Co., Ltd., the plaintiff filed lawsuits against all relevant parties to assert its rights.

In this case, the original first-instance judgment (2020) Liao 0102 Min Chu 3867—the Civil Judgment—fully upheld the claims of Sunshine Property & Casualty Insurance Co., Ltd. Shenyang Central Branch, assigning full liability to China Pacific Property & Casualty Insurance Co., Ltd. Shenyang Central Branch. Subsequently, China Pacific Property & Casualty Insurance Co., Ltd. Shenyang Central Branch filed an appeal, and the Shenyang Intermediate People's Court issued Civil Ruling (2020) Liao 01 Min Zhong 11909, ordering the case to be remanded for retrial. After the case was remanded for retrial, the People's Court of Heping District issued Civil Judgment (2021) Liao 0102 Min Chu 116, dismissing the claims of the plaintiff, Sunshine Property & Casualty Insurance Co., Ltd. Shenyang Central Branch.

Case Highlights: The legal relationship in this case is complex, involving three insurance companies, two related lawsuits, and three instances of subrogation claims by insurers. The types of insurance coverage involved are diverse (all-risks property insurance, public liability insurance, and construction all-risks insurance). The source of the rights is obscure and unclear. Although the litigation involves six parties, the accident at issue has actually involved more than ten parties.

Typical significance: The facts of this case are complex. Before proceeding with the specific handling of the case, the attorney representing the client carefully sorted out the insurance legal relationships among all parties involved and the numerous third-party stakeholders outside the case. This enabled a thorough analysis and justification of the litigation strategy and the applicable law. After confirming the litigation strategy, the attorney gained a comprehensive understanding of the case’s evidence, making full use of common sense and available evidence, and pointed out loopholes in the plaintiff’s evidence presentation. Given the complexity of the legal relationships in this case, the attorney submitted two diagrams illustrating the legal relationships and a map showing the location of the accident to the panel of judges, providing clear explanations of the factual circumstances and legal relationships at issue.

During the course of case representation, the representing attorney fully expressed opinions on the cause of the water leakage incident, whether the location of the incident fell within the scope of insurance coverage, whether the facts confirmed by the effective judgment—recognized by all parties—could be applied in other cases, and whether the liability insurance was subject to the insurer’s right of subrogation. In doing so, the attorney safeguarded the legitimate rights and interests of the client.

The second-instance trial in this case has already commenced. During the trial, with the exception of the appellant (the original plaintiff), all parties reached a unanimous agreement and acknowledged the findings of fact and legal application set forth in Civil Judgment No. 116 of 2021, Liaoning 0102 Min Chu. Meanwhile, the attorney representing the client, together with the judges of the second-instance court, provided a thorough explanation of the legal system and regulatory principles governing subrogation claims under insurance law, which received full recognition from the panel of judges. The attorney representing the client believes that the outcome of the second-instance proceedings will be relatively favorable.