Non-Pecuniary Loss

From Max-EuP 2012

by Wolfgang Wurmnest

1. Object and purpose of the rules on compensation for non-pecuniary loss

All European legal systems differentiate between pecuniary (danno patrimonale, dommage patrimonial, Vermögensschaden) and non-pecuniary (danno morale, dommage moral, immaterieller Schaden) loss in the area of compensation for damage. Damage is pecuniary if it can be measured in money and cannot be attributed to the victim’s personal sphere. The main characteristic of pecuniary loss is therefore the possibility of assessing the compensation by using objective criteria. This is the case when the disadvantage suffered can be determined independent of the subjective feelings, inclinations and views of the injured party. In turn, non-pecuniary loss can only be defined in negative terms as harm which does not constitute a pecuniary loss. More narrowly defined, one could describe it as damage for which there is only a personal value without any objective measure.

Today, it is generally accepted in Europe that compensation cannot be limited to pecuniary loss alone. There are, however, notable differences between the national laws as to which non-pecuniary loss should be recoverable and to what extent it should be compensated. Put very simply, the continental legal systems that have been strongly influenced by the French Code civil grant compensation for non-pecuniary loss rather generously whereas in other countries compensation for non-pecuniary loss is only possible where this is envisaged by special legislation. The rationale for this restrictive stance towards the compensation for non-pecuniary loss is the concern of an overly extensive liability and the difficulties of measuring this type of loss. Such a restrictive view prevails, for example, in Austrian, Dutch, German and Italian law, albeit with differences regarding the conditions that must be satisfied for a plaintiff to succeed. In the English law of damages, which is primarily based on case law (common law), compensation for non-pecuniary loss is predominantly awarded for personal injury cases. However, damages for non-pecuniary loss can also be awarded in relation to other torts and also, in certain circumstances, for breach of contract.

2. Trends of European legal development

The attitude in Europe towards the compensation of non-pecuniary loss has significantly changed in the course of the 19th and 20th centuries. Central lines of development were the extension of the types of recoverable loss, the dilution of the traditional dichotomy by the development of a class of loss on the borderline of pecuniary and non-pecuniary loss and, finally, the tendency for standardization of assessment for recurrent damage-causing events.

The changing attitude towards non-pecuniary loss is particularly apparent in those countries which subject the compensation of such loss to special constraints. The reluctance in countries like Germany in the 19th century to permit the general recoverability of non-pecuniary loss can in part be traced back to Roman law. It also influenced the draftsmen of the Bürgerliches Gesetzbuch (BGB) in their decision to restrict compensation for non-pecuniary loss essentially to tortious bodily injuries as well as false imprisonment. The Roman law of damages was based on the principle that the value of a freeman’s body cannot be valued in pecuniary terms. However, a tortfeasor had to pay a sort of fine for verbal or real injuries interfering with the dignity and honour of the victim, and this compensation was intended also to compensate the non-pecuniary loss suffered by the injured party (actio iniuriarum).

These principles had a significant influence over a long time. Only slowly did the principle of complete compensation, also allowing for the compensation of non-pecuniary loss, come to prevail (natural law, damages). Primarily, this occurred through compensation for pain and suffering in cases of personal injuries, which had to be paid according to Germanic legal tradition. It is therefore not surprising that, even today, non-pecuniary loss in German law is often equated with damages for pain and suffering, whereas in other countries such as France and England, in which the compensation for non-pecuniary loss was always viewed more favourably, courts have adopted a far more differentiated approach towards the various aspects of non-pecuniary loss in personal injury cases.

The narrow approach of German law, which was derived from the fear that a modern actio iniuriarum would lead to abuse, soon lost its persuasiveness. The emergence of mass media in particular revealed gaps in legal protection. As a consequence, the German judiciary significantly enhanced the protection of personality rights upon the foundation of human rights, thereby expressing that immaterial values also deserve extensive legal protection. In Germany, this change of policy finally led to the reform of the law of damages in 2002, which to a certain extent relaxed the constraints imposed by the legislature in 1900. A similar trend to widen the recoverability of non-pecuniary loss can also be witnessed in other legal systems that had already compensated non-pecuniary loss more extensively than Germany.

With the steady increase of actions for damages concerning non-pecuniary loss in the 1960s, the difficulty of maintaining a clear-cut distinction between pecuniary and non-pecuniary loss became apparent. Through the emergence of new markets, the possibility of loss being assessed in monetary terms has been subject to continuous change. Furthermore, the ever-progressing phenomenon of commercialization prevents the definitive attribution of goods to the personal sphere. Over the course of time, a rich case law has developed on forms of loss lying on the borderline between pecuniary and non-pecuniary loss. It is not surprising that in those legal systems which have restricted the compensation of non-material loss, the courts have often attempted to undermine the (overly) restrictive approach by interpreting the ambit of economic loss very widely, or by creating new categories of loss. This tendency is particularly strong in Italian law. According to the Codice civile, the restitution of non-pecuniary losses depends on a violation of criminal law by the wrongdoer (Art 2059 Codice civile; Art 185 Codice penale). Since the protection of criminal law was not considered to be sufficient, the Italian courts developed the instrument of danno biologico or danno alla salute with recourse to constitutional law. According to this jurisprudence, compensation is possible for restrictions on personal self-fulfilment in the social sphere by the unlawful impairment of the health or the bodily well-being of the injured party under the general clause of tort law (Art 2043 Codice civile), irrespective of the violation of a provision of criminal law.

The extension of the availability of damages for non-pecuniary loss in combination with the widespread emergence of particular claims for damages, especially following traffic accidents, has increased the need for a more abstract assessment method. Most legal systems have resolved this problem partly through the award of ‘across the board’ lump sums. Paradigmatic for this development are the use of tables for the assessment of damages, which are widely spread throughout Europe and which serve as an indication to the practitioner on what scale compensation should be awarded.

3. Specific issues concerning non‑pecuniary loss

Even though the European legal systems differ considerably with regard to the question of which types of non-pecuniary loss should be compensated, there is a wide consensus that non-pecuniary loss resulting from personal injuries or violations of values such as human dignity, liberty or privacy should be compensated under the law of tort/delict, general and lex Aquilia. The compensation of a sentimental interest resulting from the destruction or damaging of property is, however, regarded in a far more critical light and is compensated only in exceptional cases. There is also a tendency that damages for non-pecuniary loss is not only to be compensated on the basis of fault-based torts (law of tort/delict, general and lex Aquilia) and strict liability torts; it may also be compensated in the case of a violation of contractual obligations. There are, however, differences as to the method used to assess the extension of liability.

The aforementioned basic principles for the compensation of non-pecuniary loss are also reflected in some form in the various sets of model rules elaborated by academic groups attempting to lay the foundations for a common European liability law. Such model rules have been especially formulated by the European Group on Tort Law (Principles of European Tort Law (PETL)) and by the Study Group on a European Civil Code/European Research Group on Existing EC Private Law (DCFR). According to these model rules, non-pecuniary loss can be recovered under tort law irrespective of whether the claim arises from fault-based or strict liability. Moreover, both sets of model rules put a strong emphasis on the protection of personal injury and injury to human dignity, liberty, or other personality rights (see eg Art 10:301(1) PETL).

Even though the national legal systems agree that non-pecuniary loss should be recoverable in personal injury cases, they differ to what extent this should be possible. For example, if a drunken car driver kills or badly injures another person in an accident, the question arises whether relatives of the victim have a right to recover for their distress. In German law, this is only the case if they suffer from a nervous shock on such a scale that it results in a (medically significant) health impairment. In turn, French law generously recognizes a right of such secondary victims (victims par ricochet) to recover damages for their feeling of distress and sorrow (prejudice d’affection). As a precondition, the claimant must have had a close and stable relationship with the person that was fatally or severely injured in the accident. Such a relationship is not limited to close family members but also includes cohabiting partners of a non-marital or same-sex relationship. Furthermore, if these persons, in addition, suffer from an impairment to their health (medically significant shock), the award of damages is increased.

English law takes a middle position between the German and French solution. First, courts have construed the class of rightful claimants rather narrowly in comparison to French law. A secondary victim can only recover damages for a severe nervous shock suffered from witnessing injury or danger to another person if (i) he has had a close relationship of love and affection with the deceased or injured person, (ii) he is in the vicinity of where the event occurs and (iii) he perceives the event with his own senses (Alcock v Chief Constable of South Yorkshire [1992] 1 AC 310 (HL)). A medically relevant shock, ie a proven impairment to health, however, is not required for an award of damages. Secondly, the English legislature has passed a statute, the Fatal Accidents Act, allowing a very narrow class of claimants in very narrow circumstances, ie parents who lost their unmarried minor child and persons who lost a spouse in a fatal accident, to claim damages for bereavement. This statutory claim is neither conditional upon the witnessing of the fatal accident nor on the condition that the suffering was of a particular severity. To spare the judge the difficult task of quantifying the damages resulting from the bereavement, the amount to be awarded is specified and currently stands at £11,800.

On the European level, both the DCFR and the PETL are in favour of granting secondary victims the right to claim damages for bereavement. Similarly, as in French law, all persons who had an (especially) close relationship with the deceased or injured primary victim at the time of the accident should be able to recover damages for their emotional shock or loss of consortium (Art VI.-2:202(1) DCFR; Art 10:301(1) PETL). The PETL make such a claim conditional on the victim ‘being killed or particularly grievously injured’, whereas the DCFR does not envisage this limitation. Both sets of model rules refrain from fixing a specific sum that may be awarded as compensation, as is done in English statutory law. Moreover, they do not precisely define which group of persons are allowed to recover.

These and other questions concerning the law of non-pecuniary loss would thus have to be considered by the judiciary if these model rules were to become law one day. In order to ensure a degree of uniform interpretation, the PETL attempt to set up concrete and detailed rules for the assessment of damages for non-pecuniary loss. For an assessment of the extent of the award of damages, all circumstances of the case, including the ‘gravity, the duration and the consequences of the grievance have to be taken into account’ (Art 10:301(2) PETL). Furthermore, in assessing damages, the judge is obliged to award similar sums for objectively similar losses (Art 10:301(3) PETL). Thus, the PETL aim at a wide-reaching harmonization of the law of damages to ensure essentially a similar level of compensation ‘from Portugal to Latvia’. This implies that courts, when assessing damages, would be obliged to take into account judgments in similar matters rendered in other Member States. In contrast, such unification is not desired by the DCFR, which leaves the assessment of damages for non-pecuniary loss to the applicable national law (Art VI.-6:203(2) DCFR).

4. Uniform law

Generally speaking, international conventions only touch rather marginally upon the issue of non-pecuniary loss. An exception is the European Convention on Human Rights (ECHR) (human rights and fundamental rights (ChFR and ECHR)). According to Art 41 of the ECHR, the European Court of Human Rights (ECtHR) can grant just compensation to a successful applicant if the violation of his human rights has not been adequately compensated by national law. This also encompasses the compensation of non-pecuniary loss. In addition, the ECHR has also had a significant impact on the national law of damages, mostly in respect to damages claims for a violation of personality rights. Thus, in 2004 the ECtHR forced Germany to alter its case law on the protection of personality rights when it held that it had previously been incompatible with the right to respect for private life (Art 8 ECHR) (von Hannover v Germany (App no 59320/00) (2005) 40 EHRR 1). The ECHR, contrary to the opinion of the German Federal Constitutional Court (BVerfG 15 December 1999, BVerfGE 101, 361 ff—Caroline von Monaco I), found that the taking of photographs of contemporary ‘public figures’ during purely private activities carried out in a public space without their consent was only justified by the freedom of expression if the publication of the picture and the accompanying report made a contribution to a debate of public interest in a democratic society rather than merely to satisfy the voyeurism of a certain readership. This judgment of the ECtHR led to a recalibration of the test for balancing privacy and freedom of expression under German law, with the result that the protection of celebrities against invasive photographers or journalists was widened.

A similar, but in part even more far-reaching, development took place in England. According to the common law, there is no general right to privacy, and for that reason there is no general right of action for breach of a person’s privacy. Under the influence of the ECHR, the courts have, however, gradually revised the tort of breach of confidence in order to widen the protection of privacy from infringements by the mass media (Campbell v MGN [2004] UKHL 22; Mosley v News Group Newspapers [2008] EWHC 1777). In turn, French law is less affected by the case law of the ECtHR as French courts have for a considerable time protected a person’s privacy rather stoutly against intrusions by the media.

European Union law has only harmonized selected issues of the law of non-pecuniary loss. The anti-discrimination directives prohibit unlawful discrimination in contract law on the grounds of race, ethnic origin or gender (discrimination (contract law)). Even further reaching prohibitions of discrimination have been enacted in the area of employment law (discrimination (employment law)). To sanction discrimination prohibited by European Union law, most Member States have introduced a right to recover damages including non-pecuniary loss. Aside from anti-discrimination law, the EU has introduced a right to recover damages for the non-performance of travel contracts. Directive 90/314 on package travel, package holidays and package tours (package travel contracts (package tours)) obliges the Member States to ensure that a consumer is compensated for the damage caused by the non-performance or improper performance of a package travel contract. The damages to be awarded also include, as the ECJ recently clarified, non-pecuniary loss (ECJ Case C-168/00 – Leitner v TUI [2002] ECR I-2631, para 23). Conversely, the Product Liability Directive (Dir 85/347) does not cover non-pecuniary loss. Whether such loss can be compensated in product liability cases is determined according to the applicable national tort law.

Similarly, academic projects seeking to develop a common European private law have dealt with the law of non-pecuniary loss. Partly on the basis of a series of comparative and historical treatises, partly with reference to EU law, the model rules mentioned above have been formulated. Whereas the PETL only cover claims for damages in tort law, the DCFR in addition includes rules on contractual liability. The discussion on these model rules as well as other works dealing with the issue of non-pecuniary loss from a comparative or historical perspective have, at least to some extent, prepared the ground for a common European liability law. Academia is now challenged with the task of further developing the proposed concepts into a coherent body of genuinely European law. In this respect, much work remains to be done.

Literature

Reinhard Zimmermann, The Law of Obligations (1996) 1050 ff; Christian von Bar, The Common European Law of Tort, vol II (2000) 56 ff; Ulrich Magnus (ed), Unification of Tort Law: Damages (2000); WV Horton Rogers (ed), Damages for Non-Pecuniary Loss in a Comparative Perspective (2001); Bernhard A Koch and Helmut Koziol (eds), Compensation for Personal Injury in a Comparative Perspective (2003); Wolfgang Wurmnest, Grundzüge eines europäischen Haftungsrechts (2003) 280 ff; Johannes Ady, Ersatzansprüche wegen immaterieller Einbußen (2004); Gerhard Wagner, ‘Ersatz immaterieller Schäden: Bestandsaufnahme und europäische Perspektiven’ (2004) JZ 319; Helmut Koziol and Alexander Warzilek (eds), The Protection of Personality Rights Against Invasion by Mass Media (2005); Nils Jansen, ‘§§ 249–253, 255. Schadensrecht’ in Mathias Schmoeckel, Joachim Rückert and Reinhard Zimmermann (eds), Historisch-kritischer Kommentar zum BGB, vol II/1 (2007).

Retrieved from Non-Pecuniary Loss – Max-EuP 2012 on 19 May 2022.

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