Punitive Damages and European Law: Quo Vademus?

Abstract

The availability of punitive damages has long been recognized in common law jurisdictions including the United States, New Zealand, Canada and Australia. They are not intended to compensate for harm done but are awarded in excess of any compensatory or nominal damages. Compensatory damages on the other hand provide reparation both for economic (e.g. medical costs) and for non-economic losses (e.g. pain and suffering). Punitive damages essentially serve four purposes: to punish the offender for uncivilized conduct, to deter the offender and others from similar conduct, to reward the plaintiff for enforcing the law and to supplement inadequate compensatory damages. Although punitive damages are not intended to compensate the plaintiff, the plaintiff will in fact receive all or some portion of the punitive damages award. Punitive damages are typically limited to tort actions where the defendant has engaged in exceptionally objectionable conduct and are consequently rarely awarded for breach of contract. In the European Union only the common law countries England, Wales, Ireland, Northern Ireland and the mixed system of Cyprus provide for this specific kind of damages in their respective legal systems. The availability of punitive damages however is by no means without constraints. England for example restricts exemplary damages (as they are called there) to three specific circumstances. In continental Europe and in other civil law countries across the globe the concept of punitive damages is scarcely recognized in law. Generally, punitive damages are considered to be a penal sanction.The indemnification obligation of civil law systems primarily has a compensatory purpose, i.e. restoring the injured party’s former situation. The laws of the Continental European countries do not aim to punish the tortfeasor through damages but rather serve to compensate the victim for the damage sustained. As Europe consists of both civil and common law orientated countries, it is interesting to examine the position which European law takes on punitive damages. This article will try to establish that punitive damages do not – perhaps yet – play a significant role in European law. The author shares Koziol’s view that Community law is inconsistent in reflecting the contrast between common law and continental civil law in Europe.