Quantum of Damages Carlos M. G. de Melo Marinho Judge at the Lisbon Court of Appeal Ljubliana 25 September 2013
Object It is object of this presentation the analysis of questions related to the definition of the quantum of damages emerging from motor vehicle accidents connected with more than one Member State of the European Union.
Problem The visiting victims, that is, the victims of accidents that occur outside of their State of residence don't reach, sometimes, for the single fact of being outside their national borders, the compensation that they could expect if the accident had occurred in their own Country. An insufficient indemnity can generate several lateral costs, namely for the victim's insurance company, for the victim itself, for the national Social or Healthcare System or for some emergency fund.
Method The firs step on the approach to the problem of the quantification of damages in cross-border motor vehicle accidents must be the analysis of the problem of the choice of the applicable law. At this level, the European Union Law rules on non-contractual obligations deserve a special attention. After it, and facing the fact that it is impossible, in this kind of approach, to encompass the study of each national system, it seems reasonable to point out some common ideas or strong notions that could serve as common criteria for the concrete definition of the fair compensation.
Difficulties The main difficulties emerge from the asymmetries between the member State's Systems, especially: In the consideration of the personal profile of the victim age, family, profession, salary, social status; In the consideration of national standards of living; In the exclusion of some types of damages; In the limitation of the damages and legal rights of the indirect victims like family and dependants.
Future The harmonization of substantive laws relating to the quantum of damages don't seem, for the time being, more than a mere possibility and a goal not foreseeable in the short to medium term. The problems, in the field of the definition of the adequate compensation for damages go much further than the mere questions of choice of law and touch the core of the needs of a Common space of Justice under construction that for coherence and credibility reasons and in order to produce the confidence presupposed by the free circulation of goods, capital, services, and people must seek the similarity of solutions thus granting that the application of different national legal rules, imposed by the crossing of a border, don't generate collateral damages, especially to the victim.
The choice of Law A cross border motor vehicle accident occurring within the EU imposes to the legal practitioner the analysis of three main sets of rules: (a) The Rome II Regulation Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II); (b) The Hague Convention on the Law Applicable to Traffic Accidents Concluded 4 May 1971 (HCTA); and (c) The Motor Insurance Directive Directive No 2009/103/EC of the European Parliament and of the Council of 16 September 2009 relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability (MID). In none of these texts we can find direct answer to the difficult questions of the quantification of the damages but only criteria that can solve the first part of the problem, essentially allowing us to adequately choose the applicable law.
1. The Rome II Regulation The Rome II Regulation contains the present European legal system on obligations with non-contractual origin, that introduces an harmonized juridical structure of choice of law rules for two classes of non-contractual obligations: (a) torts; (b) restitutionary obligations unjust enrichment, 'negotiorum gestio', 'culpa in contrahendo' and infringement of an intellectual property right. It is a legal document that tries to grant the 'Restitutio ad integrum', that is, the restoration to original condition. It doesn t contains a definition of 'tort'. Anyway, according with its global structure, this concept should be considered to point: (a) a wrongful act; (b) that originates liability to pay compensation for damage.
1. The Rome II Regulation Rome II contains a set of precepts that: (a) Point out the law applicable to non-contractual obligations; (b) Have incidence in civil and commercial matters; (c) Function in all situations 'involving a conflict of laws' Article 1 (1); (d) Are applicable where those situations have a 'cross-border impact', that is, have a foreign element, a connection with two or more countries recital (1); (e) Are incident on claims governed by private law.
1. The Rome II Regulation Rome II is centred on the notion of damage, that is, it is applicable to all events that give rise to a damage. For its effects, any events that produce such damage are relevant criminal or only civil events. All kind of damage is contained under this set of precepts, i.e., moral and material damages are both included. 'The conflict-of-law rules set out in this Regulation should also cover noncontractual obligations arising out of strict liability' Recital (11) that is, not only intentional or negligent acts which give rise to a legal obligation but also events without fault are included.
1. The Rome II Regulation Not only the existent non-contractual obligations are comprehended in Rome II but also the ones that are likely to arise, that is, the obligations emerging from future events that must be expected to appear in the sequence of some facts or actions Article 2 (2). An event giving rise to damage includes facts that generate damage which are likely to occur and any reference to damage includes losses which are likely to come Article 2 (3) (a) and (b). The Regulation 'apply irrespective of the nature of the court or tribunal seised' see Recital (8). According with Article 3, not only the internal law of a Member State can be pointed out as applicable by Rome I. In deed, any 'law specified ( ) shall be applied whether or not it is the law of a Member State'.
1. The Rome II Regulation The choice of law under Rome II can be made according to some structural connection criteria that indicate the following legal rules applicable: (1)Law chosen by the parties Article 14 (1); (2)Law of the Common Habitual Residence ('Lex Domicilii Comunis Partium') Article 4 (2); (3)Law of the country in which the damage occurs ('Lex Loci Delicti Commissi' or or 'lex damni' ) Article 4 (1); (4)Law of the country to which the tort/delict is manifestly more closely connected (escape clause) Article 4 (3).
1. The Rome II Regulation Overriding mandatory provisions The precepts of Rome II don't represent an obstacle to the application of the internal imperative rules on non-contractual obligations, whatever the choice-oflaw made in the Regulation might be Articles 16 and 14 (2). The provisions of Community law, as implemented in the Member State of the forum which cannot be derogated from by agreement have precedence of the parties agreements on choice-of-law 14 (3). Rules of safety and conduct The 'rules of safety and conduct which were in force at the place and time of the event giving rise to the liability' must be considered 'in the valuation of the conduct of the person claimed to be liable' Article 17. This question must be treated as a matter of fact and not as legal question. The consideration of such rules is not unlimited but, on the contrary, just goes to a level considered appropriate.
2. The HCTA Conventions concluded both by Member States and Third Countries take precedence over the Rome II Regulation. We can find in this situation the Hague Convention on the Law Applicable to Traffic Accidents (1971). The application of the HCTA, allowed by Rome II to the Member States that were parties to it at the time when the Regulation entered into force generates differing choice of law results since it were different the objectives, motivations, times and contexts of production. Through the HTCA, it be will designated the law of the place of the accident or the law of the place of registration of the vehicle, as applicable, while the application of Rome II will likely lead to the application of the law of the place of the accident or the law of shared habitual residence between the parties to the action.
3. The MID The MID comes in a path opened by previous Motor Insurance Directives Directives 72/166/EEC of 24 April 1972, 84/5/EEC of 30 December 1983, 90/232/EEC of 14 May 1990, 2000/26/EC and 2005/14/EC that conducted to the: (a) Abolition of checks on insurance certificates at borders; (b)compulsory insurance against civil liability in respect of the use of vehicles; (c) Protection of injured parties (in their country or abroad) with imposition of minimum amounts for compensation; (d)attribution of relevance to the providing of better information for victims and creation of guarantee funds, information centres, compensation bodies and central bodies.
3. The MID The MID has a great relevance considering the high number of cases emerging from traffic accidents that are met by insurers. This Directive has, in these situations, a fundamental role, namely in the domain of the choice of law. It results from it that insurance coverage and the conditions in which personal injuries are to be regarded as significant should be provided in accordance with the law of the place of the accident or the law of the place where the vehicle is normally based, when the cover is higher. A conflict between the MID and Rome II can emerge if the notion of providing cover has not only relation to the maximum amount that the policy will pay out but also to the type and quantification of damage.
Internal notions Structural notions Who is required to repair a damage has to erase the consequences of the illicit fact, id est, to reconstruct the situation that would exist if the event that requires repair had not occurred. It results from here that, when assessing or quantifying damages or compensation related to a motor vehicle accident, the court must provide the victim the fullest possible compensation by placing him in the same financial position he was in prior to the event that caused the damage. The obligation to compensate only exists in relation to the damages that the victim probably would not have suffered if there was no aggression to his property, health or life. The duty to indemnify should not only be related to injury but also to the benefits that the claimant failed to obtain as a result from such injury.
Internal notions Structural notions When assessing the compensation, the court may consider damages in the future, provided that they are predictable. It seems recommendable that, if the losses are not determinable at the moment of the judgement, it can be assessed later through a mere quantification procedure. It appears fundamental that compensation for provisional damages already proved can also be granted. A money compensation must be given whenever the exact natural reconstitution of the previous situation is not possible, do not fully repair the damage or is too expensive for the debtor.
Internal notions Structural notions If the damages result from the loss of property or right, the responsible for it may demand, at the time of payment or at a later date, that the injured party transfers to him his rights against third parties. When a negligent fact of the injured party has contributed to the production or aggravation of damages, it should be up to the court to determine, based on the dimension of the faults of both parties and its consequences, whether compensation should be fully granted, reduced or even excluded. If the liability is based on a mere presumption of guilt, the guilt of the victim or of its legal representatives, in the absence of a rule in an opposite sense, should exclude the duty to indemnify. Who claims the guilty of the victim should have the burden of proof but the court shall investigate it even if not claimed.
Internal notions Structural notions The pecuniary compensation has, as measure, the difference between the patrimonial situation of the victim at the most recent moment that can be considered by the court and the one that, on that date, would exist if there were no damages. If it cannot be ascertained the exact amount of the damages, the court should judge equitably within the proven limits. Given the continuous nature of a specific damage, the court should, at the request of the victim, give the compensation, in whole or in part, under the form of a lifetime or temporary income, determining the proceedings needed to ensure the payment. Where the circumstances on which stood the definition of such income suffer appreciable change, it must be allowed the change of the judicial decision or parties settlement on compensation of losses.
Quantum of damages In the field of the assessment of the quantum of damages, the usual complexity of the questions of proof are over-passed by the hardness of the strict problem of the choice of the right criteria that can allow the court to reach a pecuniary amount which can be reasonably inferred from the evidence that can place the claimant so far as money can do it in the situation he would have been under normal and predictable circumstances if the accident had not occurred. Here, the difficulties show different levels and depend on the nature of the reality to indemnify. The approaches change according with the fact of being under assessment emerging damages, lost profits or future detrimental effects. The quantification of damages to property, personal injuries, death or non economical damages also show strong differences. Damage to property is, normally, easier to quantify than it is for personal injury since, presently, this one is considered not only in the perspective of the immediate but also of its future impact.
Quantum of damages The compensation for property is not free from difficulties and some of these emerge stronger in the cross-border litigation. It involves the option of whether to replace lost or damaged property with identical property or to apply a criteria that can take into account the specificity of such property like age, obsolescence or mileage of a vehicle. At this point, due to economical differences between States, the values involved can differ substantially. Personal injuries correspond, frequently, to a shifting concept. The determination of non-economic losses places very complex problems. The suffering of close relatives started to be recognized in several Member States as a damage that deserves to be compensated. In this domain, asymmetries can occur since, in some States, such damage is neither recognized nor compensated.
Quantum of damages The correct measure of damages is especially hard to reach if it is necessary to make the assessment of damages for the future since, in this kind of situation, calculation eventually calculation formulas and prognosis are needed. The search for an objective and uniform solution to the hard problems associated to the calculation of future loss can generate a secondary risk under a dangerous appearance of rigour and objectivity when it is exclusively chosen the adoption of legal or jurisprudential formulas standing on mathematical basis or pre-fixed values that can alleviate the judge's task but that also leave him and the parties far from the fair composition of the dispute and from the adequate reparation of the social tissue disrupted by the accident.
Quantum of damages When assessing the due compensation for future damages, one objective is to indemnify the injured party for the loss of some earning capacity, that is, the work limitations that emerged from the accident. In order to define a pecuniary compensation for futures losses, it must be attained a money amount that can correspond to a capital susceptible of producing the income that the victim will not receive by virtue of such incapacity and that will be extinguished at the end of his predictable life period.
Quantum of damages The definition of this capital should be based on two sort of criteria: (a)in first place, objective criteria mathematical formulas, financial calculations, application tables; (b)secondly, correction criteria which means that it is necessary to take into account that such objective tools provide only a static value since it assume that the claimant would no longer improve his professional situation or increase productivity, don t consider the trend (at least in the medium and long term) to the growth of the economic and social conditions of the specific country and society, don't take into account the changes in the dimension of the working life, don't count with the real inflation and don't pay attention to the increase in longevity.
Quantum of damages In order to adequately define the damages foreseeable in the future, equity must perform a decisive correcting role, giving the due value to all the specific factors of the situation under judgement. The assessment of the damages needs to be casuistic, detailed, non artificial and adapted to the specific facts of each case. The individualized definition of the quantum of the damages is the only method that can grant the concrete justice. In all kinds of situations of definition of damages, the sharper and richer insight of the facts and the attention to the broadest amount of elements produces a better justice. Horizontal and unified legal criteria about the quantum of damages that could allow the attainment of uniform results all-over the EU Space could be highly recommendable in order to produce coherence and confidence.