W Tort and Insurance Law 25 Vol. Edited by the Institute for European Tort Law of the Austrian Academy of Sciences Helmut Koziol Vanessa Wilcox (eds.) Punitive Damages: Common Law and Civil Law Perspectives With Contributions by Bjarte Askeland Attila Menyhárd Jean-Sébastien Borghetti Johann Neethling Henry Brooke Pedro del Olmo Ina Ebert Lukas Rademacher Marta Requejo Isidro Alessandro P. Scaso Nils Jansen Anthony J. Sebok Bernhard A. Koch Louis T. Visscher Helmut Koziol Vanessa Wilcox SpringerWienNewYork Austrian Academy of Sciences Institute for European Tort Law Reichsratsstraße 17/2 1010 Vienna, Austria Tel.: +43 1 4277 29651 Fax: +43 1 4277 29670 E-Mail: [email protected] This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically those of translation, reprinting, re-use of illustrations, broadcasting, reproduction by photocopying machines or similar means, and storage in data banks. Product Liability: The publisher can give no guarantee for all the information contained in this book. This also refers to information about drug dosage and application thereof. In every individual case the respective user must check its accuracy by consulting other pharmaceutical literature. © 2009 Springer-Verlag / Wien Printed in Germany Springer-Verlag Wien New York is part of Springer Science + Business Media springer.at Typesetting: Composition & Design Services, Minsk, Belarus Printing: Strauss GmbH, 69509 Mörlenbach, Germany Printed on acid-free and chlorine-free bleached paper SPIN: 12578559 Library of Congress Control Number: 2009928375 ISSN 1616-8623 ISBN 978-3-211-92210-1 SpringerWienNewYork This book is dedicated to Ulrich Magnus on the occasion of his 65th birthday Preface Punitive damages remain one of the most controversial areas in the history of tort law. With the growing literature on the subject, the consensus is that it seems worthwhile and even necessary to discuss, thoroughly and on a com- parative basis, the nature, role and suitability of such damages in tort law and private law in general. This is especially so in light of the attempts to reform and unify continental European legal systems and the recent seminal judg- ments and consultations in this field of law. The Institute for European Tort Law thus decided to embark on a compre- hensive study on punitive damages. The study, which began in 2007, covers jurisdictions that explicitly allow the award of punitive damages, in particular, England, South Africa and the United States as well as those jurisdictions which purport (sometimes emphatically) to deny their existence (although some of them covertly incorporate punitive damages into the framework of their tort systems). The position in France, Germany, Hungary, Italy, the Scandinavian countries, Spain as well as EU law is thus considered. This book also includes reports on punitive damages from an insurance, law and economics and pri- vate international law perspective. A report on aggravated damages precedes a comparative report and conclusions. This book follows a conference held in November 2008 that was chaired by Sir Henry Brooke, whose chairmanship of the Law Commission for England and Wales coincided with the start of the Commission’s consultation on punitive damages, and Prof. Ken Oliphant, the newly appointed Director of the Institute for Tort and Insurance Law. We would like to thank the Institute staff, in particular, Mag. Lisa Zeiler and Thomas Thiede LL.B, LL.M for their help in making the Conference a success. We would also like to thank Mag. Christian Jöllinger, Mag. Kathrin Karner-Strobach and JUDr. Petra Pipkova for their valuable and varied assis- tance in producing this publication. Helmut Koziol and Vanessa Wilcox Vienna/Strasbourg, April 2009 Table of Contents A Brief Introduction: The Origins of Punitive Damages (Sir Henry Brooke) ...........................................................................................1 COUNTRY REPORTS ............................................................................................5 Punitive Damages in England (Vanessa Wilcox) ..............................................................................................7 I. Introduction ........................................................................................7 II. The Three Categories: The Categories Test .......................................8 III. The Cause of Action Test Abolished ................................................19 IV. Factors Relevant to an Assessment of Punitive Damages ...............25 V. The Case against Punitive Damages ................................................32 VI. Alternative Remedies – Gain Based Damages ................................51 VII. Other ................................................................................................53 VIII. Conclusions ......................................................................................53 Punitive Damages in France (Jean-Sébastien Borghetti) .............................................................................55 I. Introduction ......................................................................................55 II. A Hidden Presence of Punitive Damages? ......................................56 III. Towards the Official Introduction of Punitive Damages? ...............67 Punitive Damages in Germany (Nils Jansen and Lukas Rademacher) ............................................................75 I. Introduction ......................................................................................75 II. The Debate on Punitive Damages ....................................................76 III. Conclusions ......................................................................................85 Punitive Damages in Hungary (Attila Menyhárd) ...........................................................................................87 I. Introduction ......................................................................................87 II. Definition of Punitive Damages ......................................................88 III. Function and Rationality of Punitive Damages ...............................89 IV. Regulatory and Policy Context ........................................................89 V. No Punitive Damages in Hungarian Tort Law .................................91 VI. Punitive Elements in Hungarian Private Law ..................................92 VII. Policy Aspects of Punitive Damages in Hungarian Tort Law..........98 VIII. Conclusions ....................................................................................102 X Table of Contents Punitive Damages in Italy (Alessandro P. Scarso) .................................................................................103 I. Introduction ....................................................................................103 II. Compensation for Damage in Personal Injury Cases ....................104 III. Punitive Damages under the Italian Legal System ........................106 IV. Statutory Provisions and the Punitive Purpose of Tort Law ..........109 V. Compensation for Damage and the Standard of the Wrongdoer’s Conduct .....................................................................111 VI. Conclusions ....................................................................................113 Punitive Damages in Scandinavia (Bjarte Askeland) .........................................................................................115 I. Introduction ....................................................................................115 II. Elements of Punitive Damages under Norwegian Tort Law .........116 III. Elements of Punitive Damages under Swedish Tort Law ..............120 IV. Elements of Punitive Damages under Danish Tort Law ................121 V. Conclusions ....................................................................................122 Punitive Damages in South Africa (Johann Neethling) .......................................................................................123 I. Introduction ....................................................................................123 II. Law of Delict .................................................................................123 III. The Law of Contract ......................................................................135 IV. Copyright Law ...............................................................................136 Punitive Damages in Spain (Pedro del Olmo) .........................................................................................137 I. Introduction ....................................................................................137 II. Specific Legally Based Arguments ................................................140 III. Other Arguments ............................................................................151 IV. Difficulties and Plays on Words.....................................................152 V. Conclusions ....................................................................................153 Punitive Damages in the United States (Anthony J. Sebok) .......................................................................................155 I. Introduction ....................................................................................155 II. The Three Eras of American Punitive Damages ............................159 III. The Purposes of Punitive Damages in American Tort Law ...........169 IV. Rules for Juries (Or Other Factfinders) .........................................180 V. Constitutional Constraints .............................................................189 Punitive Damages in European Law (Bernhard A. Koch) ......................................................................................197 I. Introduction ....................................................................................197 II. Conflicts of Concepts in Legislative Drafts ...................................197 III. “Effective, Proportionate and Dissuasive” ....................................200 IV. Equal Treatment of Damages Awards ............................................202 V. Punitive Damages by Way of Import .............................................205 VI. Competing for a New Standard .....................................................207 VII. Conclusions ....................................................................................208 Table of Contents XI SPECIAL REPORTS ..........................................................................................211 Punitive Damages and Liability Insurance (Ina Ebert) ....................................................................................................213 I. Introduction ....................................................................................213 II. The Insurability of Punitive Damages ...........................................214 III. Conclusions ....................................................................................217 Economic Analysis of Punitive Damages (Louis T. Visscher) ........................................................................................219 I. Introduction ....................................................................................219 II. Economic Reasons for Punitive Damages: Deterrence .................222 III. Economic Reasons for Punitive Damages: Punishment ................229 IV. Tension between the Goals of Deterrence and Punishment ...........232 V. Conclusions ....................................................................................236 Punitive Damages From a Private International Law Perspective (Marta Requejo Isidro) ................................................................................237 I. Introduction ....................................................................................237 II. Service of Claim Seeking Punitive Damages ................................239 III. Recognition and Enforcement of Punitive Damages Awards ........245 IV. Punitive Damages as Part of the Applicable Law ..........................252 V. Conclusions ....................................................................................254 Aggravated Damages (Anthony J. Sebok/Vanessa Wilcox) .............................................................257 I. Introduction ....................................................................................257 II. Aggravated Damages under English Law ....................................258 III. Aggravated Damages in Other Jurisdictions .................................266 IV. Aggravated Damages under American Law ..................................269 Punitive Damages: Admission into the Seventh Legal Heaven or Eternal Damnation? Comparative Report and Conclusions (Helmut Koziol) ............................................................................................275 I. Introduction ....................................................................................275 II. The Common Law .........................................................................276 III. Continental European Legal Systems ............................................282 IV. The European Union ......................................................................288 V. Shifting From Punitive to Preventative Damages .........................289 VI. Arguments in Favour of Punitive Damages and Counterarguments ..........................................................................293 VII. Further Arguments against Punitive Damages ...............................296 VIII. Additional Observations ................................................................303 IX. Conclusions ....................................................................................305 ANNEX ...........................................................................................................309 Index ............................................................................................................323 Publications ................................................................................................331