STATE COMPENSATION LAW

CHAPTER I GENERAL PROVISIONS CHAPTER II ADMINISTRATIVE COMPENSATION SECTION 1 SCOPE OF COMPENSATION SECTION 2 CLAIMANTS TO COMPENSATION
AND ORGANS LIABLE FOR COMPENSATION SECTION 3 COMPENSATORY PROCEDURE CHAPTER III CRIMINAL COMPENSATION SECTION 1 SCOPE OF COMPENSATION
SECTION 2 CLAIMANTS TO COMPENSATION AND ORGANS LIABLE FOR COMPENSATION SECTION 3 COMPENSATORY PROCEDURE CHAPTER IV FORMS AND ASSESSMENT
OF COMPENSATION CHAPTER V OTHER PROVISIONS CHAPTER VI SUPPLEMENTARY PROVISIONS

   Article 1 This Law is formulated in accordance with the Constitution with a view to safeguarding the right of citizens, legal persons
and other organizations to State compensation according to law, and promoting the exercise by State organs of their
functions and powers according to law.

   Article 2 Where State organs or State functionaries, in violation of the law, abuse their functions and powers infringing upon the lawful
rights and interests of the citizens, legal persons and other organizations, thereby causing damage to them, the victims
shall have the right to State compensation in accordance with this Law.

Compensation by the State shall be carried out by the organs liable for compensation as stipulated by this Law.

CHAPTER II ADMINISTRATIVE COMPENSATION

   Article 3 The victim shall have the right to compensation if an administrative organ or its functionaries, in exercising
their administrative functions and powers, commit any of the following acts infringing upon the right of the person of a
citizen:

(1) Detaining a citizen in violation of the law or unlawfully taking compulsory administrative measures in restraint of his
personal freedom;

(2) Unlawfully taking a citizen into custody or depriving him of his right of the person by other unlawful means;

(3) Using or instigating violence such as beating one up, thereby causing bodily injury or death to a citizen;

(4) Unlawfully using weapons or police restraint implements, thereby causing bodily injury or death to a citizen; or

(5) Other unlawful acts causing bodily injury or death to a citizen.

   Article 4 The victim shall have the right to compensation if an administrative organ or its functionaries, in exercising their functions
and powers, commit any of the following acts infringing upon property right:

(1) Illegally inflicting administrative sanctions such as imposition of fines, revocation of certificates and licences, ordering
suspension of production and business, or confiscation of property;

(2) Illegally implementing compulsory administrative measures such as sealing up, distraining or freezing property;

(3) Expropriating property or apportioning expenses in violation of the provisions of the State; or

(4) Other illegal acts causing damage to property.

   Article 5 The State shall not be liable for compensation in any of the following circumstances:

(1) Individual acts of a functionary of an administrative organ, which have nothing to do with the exercise of his functions and
powers;

(2) Damage arisen from acts done by citizens, legal persons or other organizations themselves; or

(3) Other circumstances provided by law.

SECTION 2 CLAIMANTS TO COMPENSATION AND ORGANS LIABLE FOR COMPENSATION

   Article 6 Victimized citizens, legal persons or other organizations shall have the right to demand compensation.

In case of death of a victim, his heirs or other relatives in maintenance relationship with him shall have the
right to demand compensation.

In case of termination of a victimized legal person or other organization, the legal person or other organization that
succeeds to the former’s rights shall have the right to demand compensation.

   Article 7 Where an administrative organ and its functionaries, in exercising their administrative powers, infringe upon the lawful
rights and interests of a citizen, a legal person or other organizations, thereby causing damage to them, the administrative
organ shall be the organ liable for compensation.

Where two or more than two administrative organs in jointly exercising their administrative functions and powers infringe
upon the lawful rights and interests of a citizen or a legal person or other organizations, thereby causing damage
to them, the administrative organs jointly exercising their administrative functions and powers shall be the organs jointly
liable for compensation.

Where an organization in exercising the administrative powers conferred on it by law, rules and regulations infringe upon the lawful
rights and interests of a citizen or a legal person or other organizations, thereby causing damage to them, the empowered
organization shall be the organization liable for compensation.

Where an organization or an individual, in exercising the administrative powers entrusted to it or him by an administrative organ,
infringes upon the lawful rights and interests of a citizen or a legal person or other organizations, thereby causing damage
to them, the administrative organ that did the entrustment shall be the organ liable for compensation.

Where an organ liable for compensation has been abolished, the administrative organ that continues to exercise the former’s
functions and powers shall be the organ liable for compensation; if there is no administrative organ that continues to exercise
the former’s functions and powers, the administrative organ that abolished the former organ shall be the organ liable for
compensation.

   Article 8 If reconsideration of a case has been made, the administrative organ that first did the tortious act shall be the organ liable
for compensation; however, if the outcome of the reconsideration aggravates the damage, the organ undertaking the reconsideration
of the case shall carry out its compensatory obligations as regards the increased portion of damages.

   Article 9 An organ liable for compensation shall, after confirmation according to law of its involvement in any of the circumstances
stipulated in Articles 3 and 4 of this Law, make the compensation.

A claimant who demands compensation shall first apply to the organ liable for the compensation, or may make demands for it
simultaneously when applying for administrative reconsideration of the case or when bringing an administrative action.

   Article 10 A claimant to compensation may demand compensation from any of the organs jointly liable for it, and the organ approached by him
for the purpose shall first make the compensation.

   Article 11 A claimant to compensation may, in light of the difference in nature of the damage suffered, make separate claims simultaneously
for compensation of the damages.

   Article 12 For the purpose of claiming damages, an application in writing shall be made, giving the following particulars:

(1) Name, sex, age, work unit and address of the victim; if the victim is a legal person or other organization, its name and address
as well as the name and post of its legal representative or of the person chiefly responsible for the entity;

(2) Concrete statement of the claim, factual grounds and reasons; and

(3) Date, month and year of the application.

If the claimant has true difficulty in writing an application, he may entrust another person with its writing, or may make
the application orally, which shall be transcribed and put into the record by the organ liable for compensation.

   Article 13 The organ liable for compensation shall, within two months from the date of receiving the application, pay the compensation
in accordance with the provisions of Chapter IV of this Law. If payment has not been made within this period, or if the claimant
is not satisfied with the amount of compensation, he may bring a suit in a people’s court within three months from the date
of expiration of the period.

   Article 14 The organ liable for compensation shall, after making the compensation, charge its functionaries, entrusted organizations
or individuals who have been intentional or grossly negligent in the matter, to bear part or the whole of the compensatory
expenses.

Those who are responsible for the matter and have been intentional or grossly negligent shall be given administrative sanctions
by the relevant organ in accordance with law; if a crime has been constituted, they shall, according to law, be
investigated for criminal responsibility.

CHAPTER III CRIMINAL COMPENSATION

   Article 15 The victim shall have the right to compensation if an organ in charge of investigatory, procuratorial, judicial or
prison administration work, or its functionaries, infringe upon his right of the person in the exercise of its functions
and powers in any of the following circumstances:

(1) Wrong detention of a person without incriminating facts or proof substantiating a strong suspicion of the commission of
a crime;

(2) Wrong arrest of a person without incriminating facts;

(3) Innocence is found in a retrial held in accordance with the procedure of trial supervision, but the original sentence
has already been executed;

(4) Extortion of a confession by torture or causing bodily injury or death to a citizen by using or instigating the use of
violence such as beating one up; or

(5) Causing bodily injury or death to a citizen by the unlawful use of weapons or police restraint implements.

   Article 16 The victim shall have the right to compensation if an organ in charge of investigatory, procuratorial, judicial or
prison administration work, or its functionaries, infringe upon property rights in any of the following circumstances:

(1) Unlawfully taking measures such as sealing up, distraining, freezing or recovering a property; or

(2) Innocence is found in a retrial held in accordance with the procedure of trial supervision, but the fine or confiscation
of property in the original sentence has already been executed.

   Article 17 The State shall not be liable for compensation in any of the following circumstances:

(1) The taking into custody or sentencing being due to a citizen’s own intentionally made false statements or fabricated evidence
of guilt;

(2) The person taken into custody being one not liable for criminal responsibility in accordance with Articles 14 and 15
of the Criminal Law;

(3) The person taken into custody being one who shall not be investigated for criminal responsibility in accordance
with Article 11 of the Criminal Procedure Law;

(4) Individual acts of functionaries of organs in charge of investigatory, procuratorial, judicial or prison administration
work of the State, which have nothing to do with the exercise of their functions and powers;

(5) Damage being caused by intentional acts of a citizen such as self- wounding and self-mutilation; or

(6) Other circumstances as stipulated by law.

SECTION 2 CLAIMANTS TO COMPENSATION AND ORGANS LIABLE FOR COMPENSATION

   Article 18 Claimants to compensation shall be determined in accordance with the provisions of Article 6 of this Law.

   Article 19 If an organ in charge of investigatory, procuratorial, judicial or prison administration work, or its functionaries, infringe
upon the rights and interests of a citizen, a legal person, or other organizations, in the exercise of its functions and
powers, thereby causing damage to the victims, that organ shall be the organ liable for compensation.

If a person is wrongly detained without incriminating facts nor proof substantiating a strong suspicion of the commission of
a crime, the organ deciding on the detention shall be the organ liable for compensation.

If a person is wrongly arrested without incriminating facts, the organ deciding on the arrest shall be the organ liable for compensation.

If a person is adjudged not guilty in a retrial, the people’s court passing the originally effective sentence shall be the
organ liable for compensation. If a person is adjudged not guilty by a court of the second instance, the lower court
passing the original sentence and the organ deciding on the arrest shall be the organs jointly liable for compensation.

   Article 20 An organ liable for compensation shall pay the compensation if its involvement in any of the circumstance stipulated in
the provisions of Articles 15 and 16 of this Law has been lawfully confirmed.

If a demand for confirmation of the presence of one of the circumstances stipulated in the provisions of Articles 15 and 16 of this
Law has been made by a claimant to compensation and is not satisfied by the organ to which the demand was made, the claimant
to compensation shall have the right to bring an appeal.

A claimant to compensation shall first apply to the organ liable for compensation in making a demand for it.

The provisions of Articles 10, 11 and 12 of this Law shall be applicable to the compensatory procedure.

   Article 21 An organ liable for compensation shall pay compensation in accordance with the provisions of Chapter IV of this Law within
two months from the date of receiving the application; if payment is not made within the period, or if the claimant
to compensation is not satisfied with the sum of compensation, he may apply for reconsideration to an organ at the next higher
level within thirty days from the date of expiration of the period.

If the organ liable for compensation is a people’s court, the claimant to compensation may, in accordance with the provisions
of the preceding paragraph, apply to the compensation commission of a people’s court at the next higher level for a decision
on compensation.

   Article 22 An organ undertaking the reconsideration shall decide the matter within two months from the date of receiving the application.

A claimant to compensation who refuses to accept the outcome of the reconsideration, may, within thirty days from the date
of receiving the decision, apply for a decision on compensation to the compensation commission of the people’s court at
the same level in the locality where the organ that attended to the reconsideration is situated; if the latter organ
has made no decision within the period prescribed, the claimant to compensation may, within thirty days from the expiration
of the period, apply for a decision to the compensation commission of the people’s court at the same level in the locality
where the organ undertaking the reconsideration is situated.

   Article 23 People’s courts at or above the intermediate level shall establish compensation commission composed of three to seven of
their judges.

In making decisions on compensations, compensation commissions shall implement the principle of the minority subordinating to
the majority.

Decisions made by a compensation commission are legally effective, and must be implemented.

   Article 24 An organ liable for compensation shall, after compensating the damage, recover part, or the whole of the compensation expenses
from its functionaries who are involved in any of the following circumstances:

(1) Circumstances stated in Items 4 and 5 of Article 15 of this Law; or

(2) Embezzlement and bribe-taking, malpractice for personal ends, or twisting the law in the handling of cases. Persons responsible
for their involvement in the circumstances as stated in Items 1 and 2 of the preceding paragraph shall be given administrative
sanctions by the relevant organ according to law; if a crime is constituted, criminal responsibility shall be investigated
according to law.

CHAPTER IV FORMS AND ASSESSMENT OF COMPENSATION

   Article 25 State compensation shall take the form of payment of damages in the main.

If the property is able to be returned or its original condition is able to be restored, the property shall be returned or its original
condition restored.

   Article 26 If freedom of the person of a citizen is infringed, compensatory payment for each day shall be assessed in accordance
with the State average daily pay of staff and workers in the previous year.

   Article 27 If a citizen’s right to life and health is infringed upon, compensatory payment shall be assessed in accordance with the following
provisions:

(1) In the case of bodily injury, medical expenses as well as compensation for loss in income due to missed working
time shall be paid. Daily compensation for the loss in income shall be assessed in accordance with the State average daily
pay of staff and workers in the previous year, the maximum shall be five times the State average yearly pay of staff and workers
in the previous year;

(2) In the case of loss of part or the whole of working capability, medical expenses and disability compensation shall be
paid, the latter to be determined in accordance with the degree of working capability lost. Maximum amount of compensation
for partial loss of working capability shall be ten times the State average yearly pay of staff and workers in the previous
year, and that for total loss, twenty times, in which case living expenses shall too be paid to persons who have no working
capability and have been supported by the disabled; or

(3) If death results, compensation for death and funeral expenses shall be paid, the total amount shall be twenty times the State
average yearly pay of staff and workers in the previous year. Living expenses shall too be paid to those who have no working
capability and have been supported by the deceased in his lifetime.

The standard for payment of living expenses provided in Items 2 and 3 in the preceding paragraph shall be handled by using for reference
relevant provisions for relief of the local departments of civil affairs. If the persons supported by the deceased are minors,
their living expenses shall be paid until they reach the age of 18; as to the others who have no working capability, living
expenses shall be paid until their death.

   Article 28 Infringement of property right of a citizen, a legal person, or other organizations, resulting in damage being caused, shall be
dealt with in accordance with the following provisions:

(1) If fines, recovery or confiscation of property have been ordered, or monies and chattels have been expropriated and expenses
apportioned in violation of the provisions of the State, the properties shall be returned;

(2) If properties have been sealed up, distrained or frozen, the restraints shall be lifted; for properties thus damaged
or missing, compensation shall be paid in accordance with the provisions of Items 3 and 4 of this Article;

(3) If the property to be returned is damaged, it shall be restored to its original condition if such restoration can be
done; if not, corresponding compensation shall be paid in accordance with the extent of damage;

(4) If the property to be returned is missing, corresponding compensation shall be paid;

(5) If the property has been sold by auction, the proceeds of the auction shall be returned;

(6) If the certificate and licence have been revoked and suspension of production and business has been ordered, compensation
shall be paid for necessary overhead expenses for the period of such suspension; and

(7) If other damage is done to property rights, compensation shall be paid for the direct losses.

   Article 29 Compensation expenses shall be entered in the financial budget at various levels, specific measures therefor are to be provided
by the State Council.

   Article 30 If the presence of any one of the circumstances stipulated in Items 1 and 2 of Article 3 and Items 1, 2 and 3 of Article 15 of
this Law has been lawfully confirmed and found injurious to the victim’s reputation and honour, the organ liable for compensation
shall, within the scope of influence of the tortious act, eliminate the evil effects for the victim, rehabilitate his reputation,
and extend an apology.

   Article 31 If a people’s court, in violation of the law, adopts in civil or administrative proceedings compulsory measures or preservative
measures in impairment of the proceedings, or wrongly executes a judgment or a ruling or other effective legal
documents, thereby resulting in damage being done, the criminal compensation procedures of this Law shall be applicable
to the procedure for making claims for compensation by the claimant.

   Article 32 The limitation of action for claims for State compensation shall be two years, to be counted from the day the exercise of
the functions and powers by a State organ and its functionaries is lawfully confirmed to be in violation of law, but the period
of detention of the victim shall not be counted.

The limitation of action for claims for State compensation shall be suspended if during its last six months, the claimant
is unable to exercise his rights due to force majeure or other obstacles. The limitation shall resume from the day
the grounds for suspension are eliminated.

   Article 33 If a foreigner, a foreign enterprise, or a foreign organization within the territory of the People’s Republic of
China demands compensation to be made by the People’s Republic of China, this Law shall apply.

If a State to which a foreigner, a foreign enterprise, or a foreign organization belongs gives no protection to or limits
the right of a citizen, a legal person, or other organizations of the People’s Republic of China to claim compensation by
that State, the People’s Republic of China shall implement the principle of reciprocity with the State to which the foreigner,
the foreign enterprise, or the foreign organization belongs.

CHAPTER VI SUPPLEMENTARY PROVISIONS

   Article 34 No organs liable for compensation or undertaking the reconsideration of a case, or the people’s courts may collect
any expenses from a claimant to State compensation.

No tax shall be levied as regards the compensation a claimant has obtained.