AuthorCostabel, Attilio

    In the last decade, there has been an explosion of interest for comparative studies on punitive damages. Books and scholarly articles are found, as well as a great number of Internet blogs, touching upon the laws of distant countries, such as Argentina, South Africa, Korea, Thailand, Japan, and China. The materials are interesting, not so much for their critical review of "American" punitive damages, but for signaling possible trends of change in the way punitive damages are seen and reappraised at an international level.

    While checking if a fresh, positive approach to the often-misunderstood punitive damages is at all possible, it appears that compensatory damages also need a deeper review. As this Article tries to show, the major criticism of punitive damages is that they are "excessive" and beyond the normal function of tort remedies, said to belong to compensatory damages only. A deeper attention shows that compensatory damages are also not free of the same criticism currently used for punitive damages.

    This Article concludes that the purpose and the scale of the American punitive damages and compensatory damages alike should not be disparaged as excesses of a society spoiled by exaggerated wealth; instead, they should be seen as a model for valuing the universal integrity of human life, while not depending on technicalities of international forum shopping.


    Both the general public and the business sector see punitive damages through the lenses of two stereotypes: (1) that punitive damages are outrageous and unpredictable (thus damaging both the general public and business), and (2) that they "happen" only in the United States.

    Both stereotypes need to be revisited in the wider context of comparative law and transnational litigation. The result may surprise many and would reshape the two undeserved stereotypes, making us look at our own policy of punitive damages with more respect, and even pride.

    These stereotypes flow from the broad generalization that there are two "laws" in the world: (1) the systems of "civil law," where punitive damages cannot even ideally exist, and (2) the laws of the United States, where punitive damages are rampant and outrageous.

    Assuming that the legal systems of the world may be grossly divided into "civil" and "common" law, the stereotypes forget that the "common law" world is wider than the U.S. (1)

    In 2012, a multi-author book gave an extensive comparative study of punitive damages in common law and in civil law countries, as well as an analysis of the function of punitive damages in specific areas of the law, such as contracts, family law, patents, insurance bad faith claims, cartels, human rights, and so on. (2)

    Another good compendium is found in the Columbia Journal of Transnational Law (the "Journal"), outlining the status of punitive damages in the jurisdictions of common law, (3) showing that the United States is in the good company of the United Kingdom, Australia, New Zealand, and the provinces and territories of Canada that have adopted the common law system.

    The same Journal then published yet another compendium by the same author outlining punitive damages in "civil law" countries, listing France, Germany, Spain, and the European Union at large. (4)

    The author, Professor Gotanda, reports developments outside the United States, (5) concluding that "[t]hese developments may signal a change in the way other countries view American awards of punitive damages and may ultimately lead to greater enforcement of these damages." (6) The prophecy of Professor Gotanda turned out to be true.



      In the same writing, Professor Gotanda explains how the civil law system is clearly different and at the antipodes of the common law system because "[c]ivil law legal systems generally limit recovery of damages in private actions to an amount that restores a party to its pre-injury condition. (7) Accordingly, punitive relief is not available.

      In France, Germany, and Switzerland, for example, damages for tort and contract claims are limited to restoring the parties to the position they would have been in had the damaging event not occurred, or placing the parties into the position they would have been in had the contract been properly performed.

      These countries allow recovery for non-pecuniary loss, which includes damages for pain and suffering, emotional distress, and moral harm, as well as reimbursement for legal fees. Such non-pecuniary damages, however, are not considered to be punitive in nature, because these damages are not imposed to deter or punish the wrongdoer, but rather to fully compensate the victim.

      In most civil law countries, sanctions that are penal in nature may be awarded only in criminal proceedings.

      How then could "American punitive damages" migrate into legal territories so inimical to them, and why? There are two possible answers: (1) civil law jurisdictions adopting "American-like" punitive damages, and awarding them in their domestic litigations; or (2) recognizing into jurisdictions of civil law awards given by courts of the U.S. The migration started both ways, but most visibly and famously with attempted recognitions of American verdicts containing punitive damages.

      i. If at First You Don't Succeed...

      The long road to recognition started with famous failures. In the 1992 John Doe case, the Supreme Court of Germany, Bundesgerichtshof (the "BGH"), denied recognition of a judgment of a California court against a sex offender, who moved to Germany after the fact.

      The judgment contained one for compensatory damages and one for punitive damages. The BGH granted recognition of the part of the judgment that awarded compensatory damages but denied recognition of the punitive damages. (8) The court held that punitive damages were contrary to the constitutional principle of reasonable compensation of damages and "contrary to the 'penal monopoly of the State' to impose punitive sanctions." (9)

      The second famous case comes from Italy. In the 2002 case Parrott v. Fimez, (10) the Court of Appeal of Venice denied recognition of a judgment of an Alabama court that awarded punitive damages for a product liability/wrongful death caused by a defective motorcycle helmet manufactured by the Italian company Fimez.

      The Venice court could not understand if the Alabama award was for compensatory or punitive damages, (11) but found punitive damages more likely, and thus contrary to the public policy of Italian law. The court explained: "punitive damages, because of their criminal law connotation, are to be considered as private exercise of public authority, and therefore are clearly at odds with public policy." (12) The Italian Supreme Court affirmed.

      ii.... Try, Try Again

      Before and after Professor Gotanda wrote his second article, more developments transpired.

      Among the most significant were three decisions of the Supreme Courts of Spain, France, and Italy in connection with recognition of United States judgments containing awards of punitive damages.

      In 2001, the Spanish Supreme Court (Tribunal Supremo) enforced a U.S. judgment for punitive damages in a case of infringement of intellectual property rights (falsified labels of trademarks registered in Spain).

      While repeating the basic civil law rule that compensation is the standard remedy for injuries as international public policy under Spanish law, the court held that sanctions are not uncommon in Spanish substantive law, such as contract law and procedure.

      Punitive mechanisms in private law serve to compensate the shortcomings of criminal law, which is held to a principle of minimum intervention. (13)

      The Spanish Supreme Court added that the safeguard of intellectual property rights is not just a local matter but "is shared universally by nations with similar underlying judicial, social, and economic values. The common desire to protect the interests at stake justified awarding twice the amount of compensatory damages on top of the compensation granted." (14)

      In the 2010 Fountaine Pajot case, the French Supreme Court (Cour de Cassation) denied enforcement of an American award of punitive damages for misrepresentation of prior accident in the sale transaction of a catamaran. (15) However, the reasons for denial were revolutionary. Reversing itself, (16) the French Supreme Court affirmed the decision of the French Court of Appeal to deny recognition, writing:

      But whereas the principle of a punitive damages award is not, in itself, contrary to public policy, it is otherwise where the amount awarded is disproportionate in the light of the damage suffered and the shortcomings in contractual obligations of the debtor; in the present case, the judgment states that the foreign decision granted to the purchaser, in addition to the reimbursement of the price of the boat and the amount of the repairs, an indemnity which greatly exceeds this sum; that the Court of Appeal was able to deduce that the amount of the damages was manifestly disproportionate with regard to the prejudice suffered and the breach of the contractual obligations so that the foreign judgment could not be recognized in France. (17) Therefore, the current position of punitive damages in French law is that punitive damages are not contrary to public policy per se, but violate public policy when they are awarded in a measure disproportionate to the award of compensatory damages. (18)

      Finally, the Italian Supreme Court (Cassazione) followed suit in 2017, granting recognition of a judgment rendered by a Florida court in a litigation for personal injuries caused by a defective motorcycle helmet, manufactured by the Italian company Axo, distributed by Helmet House, and resold by the Florida company NOSA. (19)

      This case is curious. In fact, the Florida judgment did not contain any explicit reference to a specific item of punitive damages.

      In the three-way...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT