European Tort Law 2005 (Tort and Insurance Law Tort and Insurance Law - Yearbooks)

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Tort and Insurance Law Yearbook European Tort Law 2005 Edited by the

European Centre of Tort and Insurance Law together with the

Research Unit for European Tort Law of the Austrian Academy of Sciences

Helmut Koziol Barbara C. Steininger (eds.) European Tort Law 2005 With Contributions by Håkan Andersson Irene Kull Bjarte Askeland Rok Lampe . Ewa Bagi´nska Milda Lauc`´iene Elena Bargelli Peter Loser Søren Bergenser Attila Menyhárd Agris Bita-ns Olivier Moréteau Willem H. van Boom Ken Oliphant Matthias Cornils André G. Dias Pereira Eugenia Dacoronia Andrea Pinna Anton Dulak Eoin Quill Isabelle C. Durant Robert Rebhahn Michael Faure Jordi Ribot Jörg Fedtke Albert Ruda Herkus Gabartas Alessandro P. Scarso Michael D. Green Barbara C. Steininger Suvianna Hakalehto-Wainio Christian Takoff Ton Hartlief Vibe Ulfbeck Jir`´í Hrádek Gerhard Wagner Bernhard A. Koch

SpringerWienNewYork

European Centre of Tort and Insurance Law Landesgerichtsstraße 11 1080 Vienna, Austria Tel.: +43 1 40127 1688 Fax: +43 1 40127 1685 E-Mail: [email protected] Austrian Academy of Sciences Research Unit for European Tort Law Landesgerichtsstraße 11 1080 Vienna, Austria Tel.: +43 1 40127 1687 Fax: +43 1 40127 1685 E-Mail: [email protected] This work is published with the financial support of the Austrian Ministry of Education, Science and Culture, Munich Re and Freshfields Bruckhaus Deringer. Gedruckt mit Unterstützung des Bundesministeriums für Bildung, Wissenschaft und Kultur in Wien.

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. © 2006 Springer-Verlag/Wien Printed in Austria Springer-Verlag Wien New York is part of Springer Science + Business Media springeronline.com Product Liability: The publisher can give no guarantee for the information contained in this book. This also refers to that on drug dosage and application thereof. In each individual case the respective user must check the accuracy of the information given by consulting other pharmaceutical literature. Typesetting: Composition & Design Services, Minsk, Belarus Printing and binding: Ferdinand Berger & Söhne Gesellschaft m.b.H., 3580 Horn, Austria Printed on acid-free and chlorine-free bleached paper SPIN: 11608899

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ISBN-10 3-211-31135-1 SpringerWienNewYork ISBN-13 978-3-211-31135-6 SpringerWienNewYork

Preface A harmonisation of European law presupposes sound mutual knowledge of the jurisdictions involved in the harmonisation process. However, partly due to language problems it is not always easy to obtain information about all these jurisdictions, especially as far as new developments are concerned. Against this background, the European Centre of Tort and Insurance Law and the Research Unit for European Tort Law decided to publish a Yearbook on European Tort Law containing reports on the most interesting new developments in the field of tort law in different European countries. The fifth Yearbook on European Tort law includes reports on most EU Member States, including the new Member States the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. Contributions from Switzerland and Norway, an overview of the developments in the field of EC law as well as a report on Bulgarian tort law are also included. Furthermore, the Yearbook includes a comparative overview and several essays on key issues of tort law, five of which focus on questions of public liability. These essays, as well as the most important results of the country reports and the comparative overview, were presented and discussed at the 5th Annual Conference on European Tort Law in Vienna from 20 to 22 April 2006. The opening lecture of the Conference on “The Impact of the Jury on American Tort Law” as well as a contribution on the topic of “Harmonizing European Tort Law” are also published in the present Yearbook. The 6th Annual Conference on European Tort Law will again take place in Vienna from 12 to 14 April 2007. In publishing the Yearbook we pursue the idea of providing a comprehensive overview of the latest developments in the law of torts of many European countries thereby enabling scholars as well as practitioners from different national backgrounds to keep abreast of questions concerning tort law. Furthermore, we hope that the Yearbook will enhance and promote a greater understanding of the respective national legal and judicial systems which is essential for a successful harmonisation of European tort law. At this point, we would like to express our gratitude for the support of this project by the Austrian Ministry of Education, Science and Culture; the Austrian Ministry of Justice; Freshfields Bruckhaus Deringer; the Kulturabteilung der Stadt Wien, Wissenschafts- und Forschungsförderung and Munich Re. Without their support this project could never have been realised. Moreover, we would like to thank the staff of the Research Unit for European Tort Law

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Preface

and the European Centre of Tort and Insurance Law. Special thanks go to Mag. Lisa Zeiler for making the Conference such a success and Donna Stockenhuber M.A. for once again taking on the delicate and time-consuming task of proof-reading the entire manuscript. Moreover, we would like to thank Simone Sartor for preparing the Index, Mag. Kathrin Karner-Strobach for unifying the style of the footnotes and Dr. Nora Wallner for her help with the final manuscript. Helmut Koziol and Barbara C. Steininger Vienna, September 2006

Table of Contents Essays .............................................................................................................. 1 I. Liability for Failure to Regulate Health and Safety Risks (Willem H. van Boom and Andrea Pinna) ....................................................... 2 II. Foreseeing Liability for Breach of EC Law. Reflections on the ECJ’s Differing Notions of Illegality (Matthias Cornils).......................................................................................... 23 III. State Liability in Times of Budgetary Crisis (Jörg Fedtke).................................................................................................. 42 IV. The Impact of the Jury on American Tort Law (Michael D. Green)........................................................................................ 55 V. Public Liability in Comparison – England, France, Germany (Robert Rebhahn)........................................................................................... 68 A. Introduction ........................................................................................ 68 B. Overview of the National Systems ...................................................... 71 C. The Liability for Unlawful Behaviour in Detail ................................. 74 D. Conclusion .......................................................................................... 91 VI. Tortious Liability of Regulatory Authorities (Alessandro P. Scarso) .................................................................................. 94 A. Introduction ........................................................................................ 94 B. Liability of Regulatory Authorities Under Italian Law ...................... 95 C. Comparative Material ...................................................................... 107 D. Liability of Regulatory Authorities Under “European Law”........... 111 E. Conclusion ........................................................................................ 114

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Reports ........................................................................................................ 117 I. Austria (Barbara C. Steininger) ............................................................................... 118 A. Legislation ........................................................................................ 118 B. Cases................................................................................................. 128 C. Literature .......................................................................................... 140 Appendix: Working Group Draft ........................................................... 142 II. Belgium (Isabelle C. Durant) ..................................................................................... 156 A. Legislation ........................................................................................ 156 B. Cases................................................................................................. 162 C. Literature .......................................................................................... 180 III. Czech Republic (Jiří Hrádek) ................................................................................................ 186 A. Legislation ........................................................................................ 186 B. Cases................................................................................................. 193 C. Literature .......................................................................................... 208 IV. Denmark (Vibe Ulfbeck and Søren Bergenser) ........................................................... 211 A. Legislation ........................................................................................ 211 B. Cases................................................................................................. 211 C. Literature .......................................................................................... 218 V. England and Wales (Ken Oliphant) ............................................................................................. 221 A. Legislation ........................................................................................ 221 B. Cases................................................................................................. 225 C. Literature .......................................................................................... 246 VI. Estonia (Irene Kull) .................................................................................................. 251 A. Legislation ........................................................................................ 251 B. Cases................................................................................................. 254 C. Literature .......................................................................................... 258 VII. Finland (Suvianna Hakalehto-Wainio) ..................................................................... 262 A. Legislation ........................................................................................ 262 B. Cases................................................................................................. 262 C. Literature .......................................................................................... 266

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VIII. France (Olivier Moréteau) ....................................................................................... 270 A. Legislation ........................................................................................ 270 B. Cases................................................................................................. 274 IX. Germany (Jörg Fedtke)................................................................................................ 281 A. Legislation ........................................................................................ 281 B. Cases................................................................................................. 283 C. Literature .......................................................................................... 298 X. Greece (Eugenia Dacoronia) ................................................................................... 306 A. Legislation ........................................................................................ 306 B. Cases................................................................................................. 306 C. Literature .......................................................................................... 329 XI. Hungary (Attila Menyhárd) ........................................................................................ 332 A. Legislation ........................................................................................ 332 B. Cases................................................................................................. 332 C. Literature .......................................................................................... 346 XII. Ireland (Eoin Quill) .................................................................................................. 348 A. Legislation and Official Reports....................................................... 348 B. Cases................................................................................................. 352 C. Literature .......................................................................................... 365 XIII. Italy (Elena Bargelli) ........................................................................................... 368 A. Legislation ........................................................................................ 368 B. Cases................................................................................................. 370 C. Literature .......................................................................................... 379 XIV. Latvia (Agris Bit2ns)............................................................................................... 380 A. Legislation ........................................................................................ 380 B. Cases................................................................................................. 392 C. Literature .......................................................................................... 396

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XV. Lithuania (Herkus Gabartas and Milda Laučienė) ...................................................... 399 A. Legislation ........................................................................................ 399 B. Cases................................................................................................. 402 C. Literature .......................................................................................... 411 XVI. The Netherlands (Michael Faure and Ton Hartlief) ............................................................... 414 A. Introduction ...................................................................................... 414 B. Legislation and Evolutions at Policy Level ...................................... 415 C. Case Law .......................................................................................... 417 D. Doctrine ............................................................................................ 437 E. Concluding Remarks......................................................................... 442 XVII. Norway (Bjarte Askeland) ......................................................................................... 444 A. Legislation ........................................................................................ 444 B. Cases................................................................................................. 444 C. Literature .......................................................................................... 453 XVIII. Poland (Ewa Bagińska)............................................................................................ 457 A. Legislation ........................................................................................ 457 B. Cases................................................................................................. 458 C. Literature .......................................................................................... 478 XIX. Portugal (André G. Dias Pereira) .............................................................................. 483 A. Legislation ........................................................................................ 483 B. Cases................................................................................................. 486 C. Literature .......................................................................................... 504 XX. Slovakia (Anton Dulak) .............................................................................................. 508 A. Legislation ........................................................................................ 508 B. Case Law .......................................................................................... 509 C. Literature .......................................................................................... 515 XXI. Slovenia (Rok Lampe)................................................................................................. 516 A. Legislation ........................................................................................ 516 B. Cases................................................................................................. 519 C. Literature .......................................................................................... 526

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XXII. Spain (Jordi Ribot and Albert Ruda) ..................................................................... 528 A. Legislation ........................................................................................ 528 B. Cases................................................................................................. 534 C. Literature .......................................................................................... 552 XXIII. Sweden (Håkan Andersson) ...................................................................................... 557 A. Introduction ...................................................................................... 557 B. Legislation ........................................................................................ 557 C. Cases................................................................................................. 557 D. Literature .......................................................................................... 577 XXIV. Switzerland (Peter Loser) ................................................................................................ 578 A. Legislation ........................................................................................ 578 B. Cases................................................................................................. 580 C. Literature .......................................................................................... 588 XXV. European Union (Bernhard A. Koch)...................................................................................... 593 A. Legislation and Legislative Projects ................................................ 593 B. Selected Cases .................................................................................. 597 XXVI. Comparative Overview (Bernhard A. Koch)...................................................................................... 602 Other Contributions .................................................................................. 613 I. Bulgaria (Christian Takoff) ........................................................................................ 614 A. General Review of the Doctrine ....................................................... 614 B. Legislation ........................................................................................ 638 C. Case Law Developments................................................................... 640 D. Bibliography ..................................................................................... 646 II. The Project of Harmonizing European Tort Law (Gerhard Wagner) ....................................................................................... 650 A. Introduction: The Janus-Faced Project of Harmonization .............. 650 B. The Need for Harmonization ............................................................ 651 C. The Feasibility of Harmonization ..................................................... 656 D. The Method and Depth of Harmonization ........................................ 662 E. Soft Harmonization: Veritas, Non Auctoritas................................... 670 F. Hard Harmonization: A European Civil Code ................................. 672

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G. The Political Question: Principles as a Blueprint for Full Harmonization?................................................................... 678 H. Conclusion ........................................................................................ 682 Contributors ............................................................................................... 683 Index............................................................................................................ 701 Publications ................................................................................................ 708

Essays

I. Liability for Failure to Regulate Health and Safety Risks SECOND-GUESSING POLICY CHOICE OR SHOWING JUDICIAL RESTRAINT? Willem H. van Boom and Andrea Pinna* 1. Introducing Policy Choice and Tortious Liability

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Can the State be held liable in tort for failure to enact protective legislation preventing the spread of a contagious disease? Can a regulatory agency responsible for occupational health and safety be held liable for not safeguarding employees from being exposed to a specific noxious substance? Are civil courts the appropriate forum to evaluate legislative policy in this respect? Or should they abstain from second-guessing public policy and leave these issues to politics?

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These are difficult questions on the intersection between tort law, regulatory law, constitutional law and administrative law, to which there are no clear cut answers. Besides, national preferences may dictate diverging approaches to this matter, rendering a comprehensive comparative analysis virtually impossible. However, it should be possible to identify some of the arguments used in favour and against judicial activism concerning liability for failure to regulate. Therefore, in the following we aim at giving an overview of liability for regulatory failure concerning health and safety risks and the arguments used to dismiss and allow claims for tortious liability.

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The structure of this paper is as follows. In Part 2 we will present three examples of liability issues concerning health and safety risks. There we will distinguish between failure to regulate and failure to enforce existing regulatory law. In Part 3 we will briefly sketch the position of the European legal systems with regard to both forms of failure. By means of contrast, in Part 4 we will elaborate on the French approach to State liability for failure to regulate. In * This paper was concluded in May 2006. Subsequent developments were not included.

Liability for Failure to Regulate Health and Safety Risks

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Part 5 we will present two alternative perspectives to the subject of this paper: the conditions set by the European Convention on Human Rights on the one hand, and the paradigm of compensation for excessive public burdens on the other. In Part 6 we will try to balance the arguments. What will we not deal with in this paper? First, we will not concern ourselves too much with constitutional obstacles to tortious liability of the State and its institutions. For instance, in some countries, tortious liability for legislative inaction is structurally hindered by some form of State immunity. This is what we would call a national preference and, important as such obstacles may be, we will not be able to deal with them extensively. Second, we will not address the issue of State liability for breach of EU law.1 Furthermore, we will not deal with the practical point of identifying the right entity for the purpose of liability.2 Failure to regulate by definition implies the use or omission to use public powers to regulate the behaviour of citizens. Therefore, this type of liability can involve both the central government, regional and local authorities, and decentralized regulatory agencies. We will not discuss the inherent problems of legislative competence and enforcement structure within the State’s institutions. Instead, we will refer to abstract notions such as ‘regulator’ (in the sense of any institution or governmental body with some legislative powers) and ‘enforcement agency’. Finally, it should be noted that this paper does not deal with the formidable hurdle of causation that claimants would need to overcome. If for instance a court were willing to decide that a road authority acted negligently by not reducing the speed limit on a certain section of a highway and thus negligently allowing an unacceptably high accident rate to subsist,3 the claimant would still have to prove on the balance of probabilities that he would not have been injured if the speed limit had been lowered. This aspect of regulators’ liability will not be dealt with in this paper.4

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Finally, before turning to three examples of regulatory failure, we should first introduce the concepts ‘regulation’ and ‘failure’. Admittedly, the concept of ‘regulatory failure’ in itself is somewhat biased: The word ‘failure’ implies that liability is based on the notion that the defendant regulator has done something wrong in the process of balancing the interests of society at large and the interests of specific persons or groups within society in specific. Moreover, by using such a word – which fits well into the vocabulary of tort law but seems less apt to express the essence of democratic accountability – we have already set the scene for a primarily tort-centred view on regulation of health and safety risk. As we shall see, however, it is very much open for debate whether tort

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We refer to the excellent contribution by Cornils to this volume. On the point of identifying the right debtor in this respect, see, e.g., the recent decision by the German Bundesgerichtshof (BGH) 2 February 2006, III ZR 131/05, Versicherungsrecht 2006, 698. Note that a similar claim was dismissed in Gorringe v Calderdale Metropolitan Borough Council, [2004] 1 Weekly Law Reports (WLR) 1057. On causation with respect to State liability, see, e.g., D. Fairgrieve, State Liability in Tort (2003) 165 ff.

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Willem H. van Boom and Andrea Pinna

law can and should be used as a means of evaluating policy choice. As can be concluded from this paper and from the other papers in this volume, there is an ongoing debate within all of the major legal families on the role of tort law concerning the State and its institutions. In particular with respect to the issues involved here, the key question seems to be: Should the court be second-guessing policy choice or should it show judicial restraint?5

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Next, what exactly is ‘regulation’? It has been argued by one author that the term ‘regulation’ is vague and imprecise and that it encompasses various instruments of control and constraint.6 It has been loosely defined by another author as “any system of rules intended to govern the behaviour of its subjects”.7 In a narrower sense, it is said to be “a distinctive set of techniques used by States to control the operations of markets”.8 In this narrower sense, regulation is traditionally associated with public law and is considered to be the domain of government agencies vested with public law powers.9 So, evaluating liability for failure to regulate health and safety risks is in fact the evaluation of the use or non-use of public powers (non-feasance) to enact legislative measures aimed at mitigating or reducing a certain health or safety risk. The mitigation or reduction of these risks may vary from a compulsory warning measure (e.g., compulsory health warnings on tobacco products) to the implementation of comprehensive protective precautionary measures (e.g., occupational health standards). 2. Three Examples

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In The Netherlands, some 15 pedestrians and bicyclists used to get killed every year in collisions with heavy semi-trailer trucks making a right turn. In all of these cases, the truck driver had impaired vision from the driver’s cabin which caused him to be totally unaware of the pedestrian’s or bicyclist’s presence alongside the truck or trailer.10 Until 2003, there was no statutory duty to have some sort of a device such as a special mirror fitted to the truck which could prevent such accidents. The dangers of trucks to pedestrians and bicyclists, however, were long known to policy makers at the Department of Transport. Prior to enactment, calculations showed that if all Dutch trucks were to be equipped with a special mirror at a total cost of approx. € 27 million, to be discounted over ten years, effectively some 5 casualties and 20 seriously injured would be prevented. This would amount to an investment of ap5 6 7 8 9

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Cf. P. Cane, Tort Law as Regulation, Common Law World Review (C.L.W.R.) 2002a, 326 ff. P. Cane, Using Tort Law to Enforce Environmental Regulations? Washburn L.J. 2002, 450 f. H. Collins, Regulating Contracts (1999) 7. Ibid. Cane, C.L.W.R. 2002a, 305. Note that in a broader sense, tort law in itself can also be thought of as a system of regulation, provided that we accept that tort law sets standards of behaviour, monitors the behaviour and enforces the standards against non-compliers. For this definition of regulation, see Cane, C.L.W.R. 2002a, 309. L.T.B. van Kampen/C.C. Schoon, De veiligheid van vrachtauto’s (1999). The example is drawn from W.H. van Boom, Structurele fouten in het aansprakelijkheidsrecht (oratie Tilburg) (2003) 1 ff.


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prox. € 110,000 per prevented victim.11 Surely a sound investment for a wealthy country such as The Netherlands. Decisions regarding such investments, however, are deemed to be the central government’s prerogative. In a recent Dutch employers’ liability case, the facts were as follows.12 An employee of a nursing home for the elderly was walking down a narrow hallway in the nursing home. Alongside the hallway, there are a number of doors which open into the hallway. These doors were quite wide and opened into the narrow hallway (1.97 metre wide hallway, 1.17 metre wide doors). If opened, the doors would virtually block the hallway. And indeed, an employee was struck in the face by an opening door. Although the building complied with all relevant public law occupational health and safety standards and the building code, this was not considered to be a valid defence for the employer to escape liability. Now, assuming that there was no solvent employer to claim compensation from, could the injured nurse instigate a tort claim against the regulatory agency responsible for setting the safety rules at too low a level, provided that the agency had the statutory capacity to implement more stringent standards? Another issue is also to determine whether the employer, after having compensated the employee, has a recourse claim against the State for the failure to properly regulate this matter.

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In 2000, the Dutch town of Enschede was partially destroyed by a disastrous fireworks depot blast.13 177 tons of fireworks exploded, leaving a crater 13 metres wide and 2 metres deep. 22 people died, hundreds were injured and left in shock. Hundreds of houses and businesses were lost; entire streets were wiped out. Material loss was estimated at half a billion Euro. Although the fireworks depot owners were in violation of the permit that the local enforcement agency had granted them – violations included using the wrong storage containers, not keeping the containers closed at all times, having too many fireworks on the premises – they were not found guilty of manslaughter. Instead, they were convicted for not complying with the appropriate environmental regulatory standards. In the aftermath of the disaster, it turned out that the local authority had for a long time tolerated the non-compliance of the owners with these standards. It had applied a well-known policy of persuasion by ‘speaking softly’14 but it failed to use the ‘big stick’ when it was necessary. In retrospect, the local enforcement agency was publicly blamed for lack of firm enforcement activity.15 In a subsequent tort procedure instigated by in-

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Van Kampen/Schoon (fn. 10) table at appendix 10. Hoge Raad der Nederlanden (HR) 5 November 2004, Nederlandse Jurisprudentie (NJ) 2005, no. 215 (Lozerhof). On the legal implications of this disaster, see, e.g., W.H. van Boom/I. Giesen, Civielrechtelijke overheidsaansprakelijkheid voor het niet voorkomen van gezondheidsschade door rampen, Nederlands Juristenblad 2001, 1675 ff. On this technique of securing compliance, see, e.g., I. Ayres/J. Braithwaite, Responsive Regulation – Transcending the Deregulation Debate (1992) 19 ff. For an account of the Enschede Fireworks disaster, see, e.g., A.E. Dek, De vuurwerkramp in Enschede, in: A.J. Akkermans/E.H.P. Brans (eds.), Aansprakelijkheid en schadeverhaal bij rampen (2002) 55 ff.

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jured inhabitants of the afflicted city, both the local authority and the State were blamed for the disaster. The claim against the local authority was dismissed by the court of first instance because no specific tortious failure to enforce was proved. The claim against the State for failure to regulate this branch of industry more heavily was dismissed, in part because the State was held to have a broad discretionary power to decide what to regulate and what not, and, in part for constitutional reasons, the court held itself incompetent to judge legislative inaction.16

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The three examples present different problems and can be subject to a different framework for deciding tortious liability. The first example presents us with a clear case in which there is no regulation and there was no superior legal rule (e.g., a statutory rule or an EC rule) compelling the regulator to devise such a rule. So, effectively, tortious liability would have to be based on wrongful omission leading to infringement of physical inviolability or the wrongful omission contrary to unwritten standards of care for regulators to enact protective legislation.

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The second example is slightly different. There, the agency has the statutory power to implement more stringent health and safety standards, but it chose not to do so. Here, tortious liability can shift between the basis of wrongful omission contrary to unwritten standards of care to enact protective regulation on the one hand and the basis of wrongful administrative acts or omission subject to judicial review – be it in an administrative procedure or before the ordinary courts – on the other hand. Moreover, in some jurisdictions eliciting the promulgation of more stringent standards can only be achieved through a specific administrative procedure, leaving no room for courts to second-guess the health and safety policy.

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The third example presents us with the problems of (alleged) failure to enforce regulatory standards and (alleged) failure to introduce more stringent regulatory standards. In legal terms, as far as failure to regulate is concerned, the evaluation of this case may be subject to different rules altogether. First, there are jurisdictions that rigorously distinguish between regulatory failure and failure to enforce by flatly denying any claim on the former basis. Second, the evaluation of failure to enforce may strongly depend on the system of enforcement: The omission of annual inspections by a local authority may be evaluated by different standards from the omission of the police to respond to a call for enforcement.

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In the following, we will focus primarily on the problems presented by the failure to regulate, although necessarily some reference to failure to enforce is made. 16

Rechtbank ‘s-Gravenhage 23 December 2003, Case 01-2529, NJ Feitenrechtspraak 2004, no. 185. On discretionary powers and State liability according to Dutch law, see I. Giesen, Toezicht en aansprakelijkheid (2005) 86 ff.


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3. The General Picture Is One of Restraint If we reflect on how European legal systems deal with regulators’ liability, the overall picture is one of utmost restraint. Courts generally do not seem to feel the urge to second-guess regulator’s decisions. Furthermore, there is little case law on regulatory failure. Most case law deals with failure to enforce, i.e. failure to employ existing and readily available command and control instruments. Indeed, in some legal systems the lack of enforcement effort can amount to tortious omission.17 Most jurisdictions, however, seem reticent in allowing claims for compensation against government and its institutions. Clearly, courts and legislatures showing restraint with regard to liability of the administration for negligent enforcement abstain from intervening in order to leave the administration sufficient space to prioritise policy objectives.18

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The legal method by which courts show this restraint is usually by applying a high threshold for liability.19 Sometimes, a threshold of qualified negligent omission has to be passed before a claim succeeds.20 Under French law, a similar stance is taken with regard to specific services. Taxing and policing for instance are only subject to liability in case of faute lourde.21 Indeed the no-fault liability regime grounded on the principle of rupture de l’égalité devant les charges publiques, and particularly the liability of the State regarding legislative acts and regulatory decisions is not applicable. First of all, it only concerns positive decisions of the State not to act.22 Secondly, when the statute’s purpose is to satisfy very general interests of society such as public health, protection of the environment or even national economy, no-fault liability is excluded and compensation can be claimed only in the presence of a fault of the public administration.23

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In other jurisdictions, the claim for compensation in case of failure to enforce may fail for lack of a protective purpose of the statute at hand. The position under English law with regard to failure to enforce seems to be that the claimant would first have to show that he or she was part of a specific class for

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See the contributions of Attila Menyhárd (Hungary), Alberto Monti and Andrea Chiaves (Italy) and Philippe Billet and Francois Lichère (France) to the book: Tort and Regulatory Law (W.H. van Boom/C. Kissling/M. Lukas, eds.), Springer Publishers, forthcoming 2006. Fairgrieve (fn. 4) 59 ff. Cf. P. del Olmo, Spain, in: W.H. van Boom et al. (eds.), Tort and Regulatory Law (forthcoming). Polish law seems to allow claims against the agency only in case there was a positive statutory duty to act. See M. Jagielska/G. Żmij, Poland, in: W.H. van Boom et al. (eds.), Tort and Regulatory Law (forthcoming). B. Askeland, Norway, in: W.H. van Boom et al. (eds.), Tort and Regulatory Law (forthcoming) no. 51; Del Olmo (fn. 18) no. 129 ff. B.S. Markesinis et al., Tortious Liability of Statutory Bodies (1999) 17; Fairgrieve (fn. 4) 106 ff.; M. Paillet, La responsabilité administrative (1996) 116 ff. See Conseil d’Etat (CE) 30 Novembre 1923, Couitéas, Lebon, 789; Dalloz 1923, 3, 59, conclusions Revel, Revue de droit public (RDP) 1924, 208, note G. Jèze; Sirey 1923, 3, 57, note M. Hauriou, refusal to enforce by the administrative authority of a judicial decision. R. Chapus, Droit administratif general (2001) no. 1308 and the case law quoted.

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whose benefit the statutory regime was designed.24 A seemingly comparable test is used with the German concept of drittbezogene Amtspflicht.25 This concept of Drittbezug, which bears some resemblance with the common tort law concept of proximity,26 obviously gives the courts some leeway in autonomously ascertaining the protective purpose of the statute, because in most cases the phrasing of the statute itself and the relevant parliamentary proceedings tend to be vague if not silent on the class of protected persons.27

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In a Dutch case concerning a negligently executed overhaul of a Rhine barge by a government agency, a concept was used similar to the German Drittbezogenheit. The agency was admittedly negligent and as a result a third party suffered property damage when the barge sank and damaged the claimant’s property. The Hoge Raad der Nederlanden decided against State liability nonetheless. The regulatory standards obliging the agency to perform inspections according to a specific standard were held to aim at transport safety in general and not at protecting specific particular interests.28 Hence, the damage that the barge caused to another vessel as a consequence of its unsafe condition could not be claimed from the State.29 Similar tools for restricting the protective ambit of regulatory standards are used in other legal systems as well.30

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From the above we can conclude that liability for failure to regulate is exceptional. Most jurisdictions seem to take the position that legislative acts are owed to the public in general and not to individuals. Hence, tortious liability vis-à-vis citizens for regulatory failure seems difficult to construe.31 In contrast, the French legal system seems much more accommodating to victims of personal injury. Indeed, recent developments under French law seem to make 24

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30

31

K. Morrow, United Kingdom, in: W.H. van Boom et al. (eds.), Tort and Regulatory Law (forthcoming) no. 60. F. Ossenbühl, Staatshaftungsrecht (1998) 105. Note that the subsidiary nature of German State liability would be a further obstacle for directly claiming compensation from the administration, unless gross negligence of the civil servant was involved. See U. Magnus/K. Bitterich, Germany, in: W.H. van Boom et al. (eds.), Tort and Regulatory Law (forthcoming). On proximity, see Ch. Booth/D. Squires, The Negligence Liability of Public Authorities (2006) 99 ff. Cf. Ossenbühl (fn. 25) 105 f. Hoge Raad (HR) 7 May 2004, case C02/310HR, NJ 2006, no. 281 (duwbak Linda). The Hoge Raad also argued that admitting liability in this case would allow protection to an unlimited group of third party interests for potentially unforeseeable damage. Hence, effectively the marine limitation of liability of the shipowner was upheld. Note that if the negligent inspection had led to personal injury, the decision might have been different (the Court’s reasoning is unclear whether the decision would also apply to personal injury). On the differentiation between personal injury, property damage and pure economic loss, cf. R. Rebhahn, Staatshaftung wegen mangelnder Gefahrenabwehr (1997) 482. Cf. M.S. Shapo, Tort and Regulation in the United States, in: W.H. van Boom et al. (eds.), Tort and Regulatory Law (forthcoming) no. 9 and 19, referring to Restatement (Second) of Torts § 288 (1965). See also Morrow (fn. 24) no. 36, referring to Stovin v Wise, [1996] Appeal Cases (A.C.) 923. Cf. the concepts of general and specific reliance (on enforcement by the public authorities), used in, e.g., Pyrenees Shire Council v Day; Eskimo Amber Pty Ltd v Pyrenees Shire Council, [1998] High Court of Australia (HCA) 3. Cf. Markesinis et al. (fn. 21) 27 fn. 61.


9

France ‘the odd one out’. In France, the 2004 Conseil d’Etat decisions32 concerning the scandale de l’amiante have tightened State liability by holding that the State is under the obligation to adopt regulation in the face of scientific knowledge of the serious health risks concerning asbestos. Moreover, not adapting existing regulation to new insights can also amount to administrative liability.33 The question arises what the consequences of this line of reasoning are with regard to tobacco litigation against the State. All in all, French law seems worthy of further attention for our purposes. Hence, in the next part we will give an outline of these developments under French law. 4. The French Seem to Prefer Second-Guessing Until recently claiming compensation under tort law from the French State for health and safety risks was not common. The reason for this probably is the quasi-systematic creation of ad hoc compensation funds (AIDS contracted as a result of contaminated blood transfusion, asbestosis, injuries sustained from medical accidents, etc.). As a consequence, damage caused to health by hazards that cannot be prevented or that are too late to prevent is compensated through a solidarity system and does not require a claim in tort but merely an administrative request for compensation.34 Of course, sometimes compensation through the system of solidarity is capped and a claim in tort can be necessary to ensure full compensation of the damage suffered by the victim. Usually, the eyes of the victim seeking full compensation were then turned to the primary responsible persons.

19

The fact that in the past no one claimed compensation from the State arguing a failure to regulate health and safety risks is probably also explained by the theory of risque-profit. According to this theory, the party that is liable for the manifestation of such a risk is the one that has an economic advantage of the risky activity. For example, the employer has a general obligation to ensure the security and the protection of his employees and is liable in case of physical injury.35

20

32

33

34

35

CE 3 March 2004, Min. de l’emploi et de la solidarité v Xueref, Thomas, Botella, Bourdignon, Juris-Classeur Périodique (JCP) 2004.II.10098 with note G. Trébulle; Droit Administratif 2004, no. 87, with note G. Delaloy; Responsabilité civile et assurance (Resp. civ. ass.) 2004, no. 234, with note G. Guettier. See P. Billet/F. Lichère, France, in: W.H. van Boom et al. (eds.), Tort and Regulatory Law (forthcoming) no. 28. On this system of compensation, see, e.g., M. Mekki, Les fonctions de la responsabilité civile à l’épreuve des fonds d’indemnisation des dommages corporels, Petites Affiches 12 January 2005, 3. Art. L. 230-2 Labour Code, and especially the concept of “faute inexcusable de l’employeur” which allows the employee to receive a complementary compensation to the one awarded by social security. For asbestos, Cour de Cassation, Social Chamber (Cass. Soc.) 28 February 2002 (5 cases), JCP G 2002, II, 10053, concl. A. Benmakhlouf: “en vertu du contrat de travail le liant à son salarié, l’employeur est tenu envers celui-ci d’une obligation de sécurité de résultat, notamment en ce qui concerne les maladies professionnelles contractées par ce salarié du fait des produits fabriqués ou utilisés par l’entreprise; que le manquement à cette obligation a le caractère d’une faute inexcusable, au sens de l’article L. 452-1 du Code de la sécurité sociale, lorsque l’employeur avait ou aurait dû avoir conscience du danger auquel était exposé le salarié, et qu’il n’a pas pris les mesures nécessaires pour l’en préserver”.

10


There is, in principle, no reason to sue the State for professional liability issues when the employer is already liable.

21

The first case that made the public think that the State could be liable for not having regulated health and safety risks concerned injuries and death caused by the use of tobacco. Initially, lawyers sought the liability of tobacco manufacturers for the deaths of smokers who were not informed of the dangers involved. In the famous Gourlain case, French case law has recently ruled that the manufacturer cannot be liable. The Court of Appeal of Orléans did not justify this solution because the risks of tobacco are very well known, but because it was of the competence of the State to regulate the commerce of tobacco.36 The Supreme Court rejected the appeal against this case.37 The solution was based on the fact that cigarette manufacturers were never under an obligation to inform of the dangers involved. The ruling gives the impression that the debtor of such an obligation was the government. It is, in a certain way, an obligation of the State. Such is the case even when manufacturers are subsidiaries of the State, because their activity consisted in maximising the tax income generated by the marketing of tobacco. The Court added that during the 1960s within the government there was a discussion regarding the necessity to inform the population about the danger of smoking. If the Ministry of Health was in favour of providing such information, the Ministry of Finance was against and considered that the risks involved were limited. This led people to think that victims of tobacco, instead of seeking the liability of the manufacturers, could bring claims against the State because during the 1960s it failed to protect the health of smokers, for example by informing them of the dangers involved.38

22

To some extent this feeling has recently been confirmed by the administrative courts ruling on the issue of liability of the State for workers developing asbestosis. Four recent cases of the same day ruled by the French Conseil d’État held the State liable.39 The motivation of the case is particularly interesting. The Supreme administrative court considered that, if the employer has the duty to guarantee the safety of the employees under his authority, the State is competent to prevent professional risks, to know of the dangers that the manipulation of particular products could involve for the employees and even to enact the necessary measures to eliminate such danger in compliance with scientific knowledge.

36

37

38 39

CA Orléans 10 September 2001, JCP 2002.II.10133 with note B. Daille-Duclos; Resp. civ. ass. 2001, no. 23. Cour de Cassation 2nd Civil Chamber (Cass. Civ. 2) 20 November 2003, Gourlain v SA Seita, Bull. no. 355; Dalloz 2003, 2909 with conclusions R. Kessous and with note L. Grynbaum; JCP 2003.II.10004 with note B. Daille-Duclos; JCP 2004.I.163 with note G. Viney. G. Viney, JCP 2004.I.163 observations quoted above. Conseil d’État (CE) 3 March 2004, Min. de l’emploi et de la solidarité v Xueref, Thomas, Botella, Bourdignon, JCP 2004.II.10098 with note G. Trébulle; Droit Administratif 2004, no. 87, with note G. Delaloy; Resp. civ. ass. 2004, no. 234, with note G. Guettier.


11

These cases are of an essential importance for the eventual liability also regarding products other than asbestos. If there is nowadays space in French law for liability of the State for failure to regulate health and safety risks, the conditions and the regime of such a liability are still unknown and difficult to determine. In part, this is caused by the fact that State liability is part of French administrative law and is not governed by private law rules on liability that can be found in art. 1382 and ff. of the French Civil Code. This is the consequence of the very famous Blanco case law of the French Tribunal des conflits.40 Administrative liability is generally case law based and most of the conditions of the liability are set by the cases of 3 March 2004.

23

In ruling on claims for compensation by workers who were victims of asbestos-related diseases, the Conseil d’État “discovered” a general obligation of the State to regulate health and safety risks. It held that “it is up to the public authority in charge of the protection of professional risks to keep itself informed of the dangers that workers could face during the exercise of their professional activity, as regards notably the products and substances that they make use or are in contact with, and to decide, according to scientific knowledge, if necessary after complementary studies or research, for the most appropriate measures in order to limit and, if possible, eliminate such dangers”.41

24

From this general statement one can draw several conclusions. First of all, the liability of the State is based on fault and is not a case of strict liability. The State is not systematically liable for damage occurring to workers due to heath and security risks. The State is liable only for those kinds of risks that were known or that could have been known at the time they arose and that could be prevented or at least alleviated. According to a common expression used in contractual liability, the State is not under an obligation of results, but only under an obligation of means. The diligence that the State is supposed to show is twofold. First of all, it is under a duty of supervision and vigilance and secondly under a duty of reaction.

25

In the cases of 3 March 2004 the Conseil d’État noticed a breach of the duty to react. It stressed indeed the fact that health risks of asbestos were known since the beginning of the 20th century and that its carcinogenic features had been known since the mid 1950s, whereas the State only reacted, insufficiently, in 1977. Such a delay characterises negligence and leads to the liability of the State towards the victims. The case of asbestos does not require the reference to a duty of vigilance because such risks were apparently well-known.

26

40

41

TC 8 February 1873, Grands arrêts de la jurisprudence administrative (GAJA), Dalloz 15th ed. 2005. Our translation of the French: “il incombe aux autorités publiques chargées de la prévention des risques professionnels de se tenir informées des dangers que peuvent courir les travailleurs dans le cadre de leur activité professionnelle, compte tenu notamment des produits et substances qu’ils manipulent ou avec lesquels ils sont en contact, et d’arrêter, en l’état des connaissances scientifiques, au besoin à l’aide d’études ou d’enquêtes complémentaires, les mesures les plus appropriées pour limiter et si possible éliminer ces dangers”.

12


27

On the other hand, the duty of vigilance could be an important reference to justify liability in case of uncertainty of the dangers of a product or an activity. In such a case the State could be obliged to impose precautionary measures. By reference to “the dangers that workers could face in the framework of their professional activity”, the Conseil d’État gives the impression that not only risks that are certain, but also potential risks could oblige the State to react and, in absence of such reaction, its liability if they turn out to be dangerous for health and safety. The duty of vigilance will oblige the State to conduct experiments and research in order to precisely assess the nature and the consequences of a potential danger to determine whether precautionary measures and, if any, of what nature will be required. One can easily imagine how burdensome such a duty is and how important is the freedom given to administrative courts to determine whether the State lived up to its duties or not. Such a duty of vigilance seems to go even further than the definition of the precautionary principle given by the European Commission.42 If the precautionary principles should, according to the Commission, be triggered once potential negative effects are identified in scientific research, the obligation imposed by the French Conseil d’État could also have as purpose to determine whether such potential negative effects exist at all, which implies an obligation to stimulate and, if necessary, finance scientific research when a sufficiently in-depth analysis is not available.

28

The incertitude also lies in the content of the State’s obligation to react. The Conseil d’État considers that this duty consists in taking the most adequate measures to limit or eliminate the risks in question. This gives large powers of assessment to courts. It must be stressed that this analysis could only be carried out with ex ante data, i.e. according to the information available at the date of the reaction or on the date when the State should have reacted. In any case, it is not allowed to include ex post data in the assessment of the adequacy of the reaction.

29

Probably the most intriguing question concerns the determination of the precise scope of the obligation of the State to prevent and regulate health and safety risks. Although through the case of asbestos the Conseil d’État enacted a very general principle, it limited its discussion to professional risks. The question that immediately arises is to know whether the rule is only limited to professional risks and whether it could be extended to any kind of health and safety risks. Of course, this bears relevance to the question whether smokers who suffered injury due to tobacco could claim compensation from the State arguing that the State omitted to take sufficient precautionary measures in the past. Furthermore, one may ask whether the State should take measures today in order to reduce the dangers of tobacco (should it forbid the sale of cigarettes on French territory?). Being limited to professional risks, the duties of the State enacted by the decisions of 2004 could only force the public authorities to prohibit smoking in public places, such as bars and restaurant, protecting 42

COM (2000) 1 final.


13

therefore people who carry out their professional activity in these places (waiters). Beyond the particular question of tobacco liability, the question concerns a large number of products whose use could endanger the health of people although the products are not related to their profession. Even in absence of a line of case law on the issue, it seems that there is no obvious reason why the duty of the State with regard to the prevention of health and safety risks should be limited to professional risks and why it would exclude risks that could arise from a person in the framework of a non-professional activity. Certainly the situation is often different because a professional often faces constantly the risk while the non-professional may be exposed sporadically. Such is however not necessarily true as the tobacco example shows. The difference can probably be found in the fact that, first of all, the worker does not choose to run a risk, because he is obliged to do so because of the hierarchical power of the employer and, secondly, because of the necessity for most of us to work to earn a living. On the other hand, non-professional risks are often risks that people explicitly accept to take. However, to accept to take a risk, one has to be sufficiently informed of the dangers involved in carrying out a particular activity or in the use of a particular product. So the liability issue can turn to whether the State sufficiently informed the public of the inherent risks of a specific activity. According to French law, the duty of the State to inform the public can be an adequate reaction to some risks. Once people are informed of the risks, they can decide to take them or not or to take particular precautionary measures.43

30

One notices that the obligation invented for professional risks perfectly fits non-professional ones. Sometimes the existence of a risk would imply the prohibition of a substance or an activity. In such a case, the State is in an uncomfortable position because it is obliged to strike the correct balance and it is liable if it does too much or too little. If the failure to regulate could lead to liability following the conditions of the regime of 3 March 2004 cases, a too stringent regulation or the prohibition of an activity that is not justified by the public interest lead to the liability of the State vis-à-vis the party that is prevented from carrying on its professional activity.44 More often the adequate reaction could be the provision of information by the persons concerned or simply imposing a duty to inform on the party that has an economic advantage from marketing a product or carrying out an activity (cf. risque-profit). In the tobacco cases the line of reasoning was that it was up to the State to impose

31

43

44

Case law traditionally excludes liability on the basis of non-fulfilment of a duty to inform when the risk is so well-known that it does not require to be disclosed. See, e.g., Cour de Cassation, 3rd Civil Chamber (Cass. Civ. 3) 20 November 1991, Bull. Civ. III, no. 284, “l’obligation de conseil ne s’applique pas aux faits qui sont de la connaissance de tous”. On this hypothesis of liability of the State for enactment of a statute, see Conseil d’Etat (CE) 14 January 1938, Soc. des produits laitiers La Fleurette, Lebon, 25; Dalloz 1938, 3, 41, conclusions Roujou, annotation L. Rolland; RDP 1938, 87, annotation G. Jèze; Sirey 1938, 3, 25, annotation P. Laroque, regarding a statute aiming at protecting the milk market and prohibiting the activity of companies manufacturing alternative products.

14


such duties to inform and not to the private manufacturer to do so by itself. In effect, the only person that could be under a duty to inform the public of the dangers of tobacco, before the State imposed such a duty on manufacturers in 1976, was the State itself.

32

There may also be a rather “down-to-earth” reason why the French courts may be inclined to extend the 2004 decisions to non-professional risks. As regards professional risks, there is nearly always a liable party, the employer, that is under an obligation of result and that is necessarily insured.45 This is not the case with injuries sustained outside the workplace. On the contrary, it is not so easy for victims of non-professional risks to find a tortfeasor. French courts may find themselves faced with the question why, with regard to State liability for omitting to warn or mitigate health and safety dangers, similar risks should be treated differently depending on whether they arise in the course of a professional or a non-professional activity. 5. Possible Future Developments a) The European Convention on Human Rights

33

The French approach to regulatory failure is special. However, we feel that the duty to react with regulatory action cannot be considered to be a strictly French deviation from the common pattern in European tort law. Admittedly, the French position seems eccentric, but a duty to react may be part of the other legal systems as well. Leaving aside national constitutional safeguards for life and limb, and merely considering the European Convention on Human Rights, then the overall picture may become ‘more French’ than it may seem at first glance.

34

In fact, the Convention may demand a duty to react to known health and safety risks.46 In this respect, the Convention in principle does not distinguish between enforcement and regulatory failure.47 With regard to either there can be ‘positive obligations’ under the Convention. These obligations are, however, the product of careful balancing. On the one hand the case law of the European Court of Justice reflects the wide margin of appreciation granted to States.48 On the other, breach of the Convention – notably art. 2 (life), 5 (security), 8 (family and home life) – may occur if a known health or safety risk of some proportion is ignored and the public authorities do not actively pursue a policy of protection.49 In Osman this duty was phrased as follows: 45

46 47 48 49

Provided that the exposure to the risk amounts to “faute inexcusable”; as we explained supra no. 20, the obligation of result renders virtually all industrial disease into the employer’s “faute inexcusable”. See C. Harlow, State Liability – Tort Law and Beyond (2004) 125 f. See Ossenbühl (fn. 25) 536 f. Cf. Booth/Squires (fn. 26) 328. Seminal on failure to enforce: European Court of Human Rights (ECHR) 9 December 1994, case 16798/90 (López Ostra v Spain). See also ECHR 16 November 2004, case 4143/02 (Moreno Gómez v Spain) and ECHR 30 November 2004, case 48939/99 (Öneryildiz v Turkey II). Cf. Giesen (fn. 16) 72.


15

(par. 116) For the Court, and bearing in mind the difficulties involved in policing modern societies, the unpredictability of human conduct and the operational choices which must be made in terms of priorities and resources, such an obligation must be interpreted in a way which does not impose an impossible or disproportionate burden on the authorities. Accordingly, not every claimed risk to life can entail for the authorities a Convention requirement to take operational measures to prevent that risk from materialising. Another relevant consideration is the need to ensure that the police exercise their powers to control and prevent crime in a manner which fully respects the due process and other guarantees which legitimately place restraints on the scope of their action to investigate crime and bring offenders to justice, including the guarantees contained in Art. 5 and 8 of the Convention. In the opinion of the Court where there is an allegation that the authorities have violated their positive obligation to protect the right to life in the context of their above-mentioned duty to prevent and suppress offences against the person (see paragraph 115 above), it must be established to its satisfaction that the authorities knew or ought to have known at the time of the existence of a real and immediate risk to the life of an identified individual or individuals from the criminal acts of a third party and that they failed to take measures within the scope of their powers which, judged reasonably, might have been expected to avoid that risk. The Court does not accept the Government’s view that the failure to perceive the risk to life in the circumstances known at the time or to take preventive measures to avoid that risk must be tantamount to gross negligence or wilful disregard of the duty to protect life (see paragraph 107 above). Such a rigid standard must be considered to be incompatible with the requirements of Art. 1 of the Convention and the obligations of Contracting States under that Article to secure the practical and effective protection of the rights and freedoms laid down therein, including Art. 2 (see, mutatis mutandis, the above-mentioned McCann and Others judgment, p. 45, § 146). For the Court, and having regard to the nature of the right protected by Art. 2, a right fundamental in the scheme of the Convention, it is sufficient for an applicant to show that the authorities did not do all that could be reasonably expected of them to avoid a real and immediate risk to life of which they have or ought to have knowledge. This is a question which can only be answered in the light of all the circumstances of any particular case.50 In principle, the positive obligation under the Convention is not restricted to a duty to actively enforce existing regulation but may also include a duty to implement additional legislative measures.51 For instance, in a recent case concerning night flights at London Heathrow airport, the question was whether 50 51

ECHR 28 October 1998, case 87/1997/871/1083 (Osman v United Kingdom). On positive obligations under the European Human Rights Convention in general, see, e.g., J. Wright, Tort Law & Human Rights (2001) 117 ff.

35

16


the United Kingdom had struck the right balance between economic interests and the interests of local residents wanting to enjoy a peaceful night rest.52 First, the court sketched the framework for deciding: 98. Art. 8 may apply in environmental cases whether the pollution is directly caused by the State or whether State responsibility arises from the failure to regulate private industry properly. Whether the case is analysed in terms of a positive duty on the State to take reasonable and appropriate measures to secure the applicants’ rights under paragraph 1 of Art. 8 or in terms of an interference by a public authority to be justified in accordance with paragraph 2, the applicable principles are broadly similar. In both contexts regard must be had to the fair balance that has to be struck between the competing interests of the individual and of the community as a whole; and in both contexts the State enjoys a certain margin of appreciation in determining the steps to be taken to ensure compliance with the Convention. Furthermore, even in relation to the positive obligations flowing from the first paragraph of Art. 8, in striking the required balance the aims mentioned in the second paragraph may be of a certain relevance (see Powell and Rayner, p. 18, § 41, and López Ostra pp. 54–55, § 51, both cited above). 99. The Court considers that in a case such as the present one, involving State decisions affecting environmental issues, there are two aspects to the inquiry which may be carried out by the Court. First, the Court may assess the substantive merits of the government’s decision to ensure that it is compatible with Art. 8. Secondly, it may scrutinise the decisionmaking process to ensure that due weight has been accorded to the interests of the individual.

36

Then, the court continued to evaluate the regulatory policy at hand by looking at, e.g., whether there was some form of scrutinizing the public policy before a national court and whether some safeguards for public accountability of government policy were available. The outcome of this balancing test was that there was no violation of art. 8 of the Convention.53 In contrast, failure to reduce environmental pollution caused by a steel-plant in a densely populated town in Russia did amount to a violation because the State did not react to the pollution problem with due diligence and give balanced consideration to all competing interests.54

37

The duty to react under the Convention was also considered in the Dutch legal battles following the Enschede Fireworks Depot disaster. In one of the tort cases, a beer brewery claimed compensation from the State on the basis that the State had not enacted protective legislation. The court of first instance decided that the State was under the obligation to react to clear indications of 52 53 54

ECHR 8 July 2003, case 36022/97 (Hatton and others v United Kingdom). Cf. Booth/Squires (fn. 26) 356 f. ECHR 9 June 2005, Case 55723/00 (Fadeyeva v Russia).


17

pending danger for life and limb, but that the protective purpose of this obligation to react – which the court held to be based on art. 2 of the Convention – only covered personal injury. Hence, whereas the brewery only suffered property damage and consequential loss, the obligation to react was held not to protect the brewery’s interests.55 A final observation on the relevance of the Convention for tortious liability for regulatory failure may be the following. If we transpose the case law of the ECHR to tortious liability for regulatory failure, then it seems that a number of factors need to be taken into account when judging the regulator’s behaviour. First and foremost, there is a wide margin of appreciation. This does not, however, render the regulator immune to liability.56 Whether the regulator did in fact act tortiously, depends, inter alia, on the nature of the risk, whether the risk was known or should have been known to the regulator, what actions it had actually taken to prevent the risk, and what – in balancing all the relevant interests at hand – it could have been expected to do to mitigate or reduce the risk. Although we have to be cautious in drawing too firm a conclusion on the basis of the meandering case law of the ECHR, there seem to be clear parallels with a number of jurisdictions regarding tortious liability for dangerous activities and situations.57

38

b) The Deliberate and Lawful Omission as an Excessive Burden for the Few

Another possible future development is the extension of the liability for lawfully caused losses. In some jurisdictions, the administrative law concept of rupture de l’egalité devant les charges publiques – or similar concepts such as Aufopferungsanspruch and enteignender Eingriff – render it possible to shift the burden of regulatory action from particular groups within society to the public purse.58 The conditions under which this is thought to be possible vary, but in general the meritorious cases include regulatory action justified by the public good, burdening specific persons or well-defined groups of persons in society with an excessive burden – usually a financial burden. The egalité-paradigm holds the regulator liable to compensate. Compensation does not neces55

56

57

58

Rechtbank ‘s-Gravenhage 9 November 2005, Case 02-2319, NJ Feitenrechtspraak 2006, no. 47 (Grolsch insurers). We infer this from the Osman decision (ECHR 28 October 1998, Case 87/1997/871/1083), where it was decided that immunity is not allowed if “the limitations applied (…) restrict or reduce the access left to the individual in such a way or to such an extent that the very essence of the right is impaired.” and “if it does not pursue a legitimate aim and if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be achieved”. Admittedly, this was not a case of regulatory failure. There is some resemblance between these factors and the balancing test from the well-known case of United States v Carroll Towing Co., [1947] 159 F. 169. See, e.g., R. Cooter/T. Ulen, Law & Economics (2004) 313 ff.; W.M. Landes/R.A. Posner, The Economic Structure of Tort Law (1987) 85 ff. Most European legal systems use similar factors in deciding negligence cases. Cf. Fairgrieve (fn. 4) 136 ff. Note that the Aufopferungsanspruch does not include property damage; this is considered to be part of the enteignende Eingriffe (lawful interference with property).

39

18


sarily equal full compensation in the private law sense, but may be restricted to pecuniary loss exceeding the “normal risk of life as a citizen of the State”.59 Cases vary widely and may include factual action of the State as well as regulatory action.60 Examples include damage caused to innocent victims of stray police bullets,61 and damage suffered by the few as a result of the inherent small risks of compulsory inoculation programmes.62

40

However, as always the devil is in the details. In some jurisdictions, the emphasis is put on statutory frameworks for compensating the excessively burdened, whereas in others the emphasis seems to be on court-designed grounds for compensation. Moreover, the application of the egalité-paradigm may vary considerably in the respective national legal practices: Even in France, the use of the instrument in case of burdens caused by legislation is very much restricted.63

41

On a more abstract level, however, the question can arise what the relevance of the egalité-paradigm may be for regulatory inaction (which is not necessarily the same as failure). Admittedly, as we already noted supra no. 15, liability for lawfully caused losses in principle usually concerns some form of State intervention, i.e., an activity rather than an omission.64 Naturally, there are good policy reasons to restrict compensation to cases of wilful and deliberate State intervention, because inaction is virtually boundless. Extending the egalitéparadigm to include all cases in which there was inaction is nonsensical. In some cases, however, the analogy with compensation on the basis of egalité is less absurd. Imagine, for instance, a case where the regulator contemplates enacting preventive legislation for the benefit of a small group of unidentified persons who will be struck by a particular disease – compare, e.g., preventive health screening of women for diagnosing breast cancer or some other disease that can be detected at an early stage and treatment can then be given at an early stage, greatly improving chances of survival. In such a case, the regulator will balance the costs and benefits of such a general investment in preventive medicine. The outcome of such a balancing test may be either that the preventive screening is introduced or is not introduced. If screening is introduced, all potential victims profit from the policy and the taxpayer pays. If it is not, then the taxpayer saves money and the few victims suffer the consequences of rational risk policy. The instrument of compensating these few victims may then be a logical choice under the egalité-paradigm.65 Admittedly, as the famous 59 60

61 62 63 64

65

German law, e.g., excludes non-pecuniary loss; see Ossenbühl (fn. 25) 131 and 139 f. Note that under French law, the question would then be whether the legislative intent was indeed aimed at compensating the excessively burdened. See Fairgrieve (fn. 4) 145. Cf. Fairgrieve (fn. 4) 138 f.; Markesinis et al. (fn. 21) 19, referring to CE 24 June 1949. Cf. BGH 19 February 1953, BGHZ 13, 88 (Impfschäden). Paillet (fn. 21) 157 f. For the distinction between action and omission in respect of State liability, see Booth/Squires (fn. 26) 147 ff. See also recently BGH 10 February 2005, Case III ZR 330/04, deciding that the mere omission of a public authority cannot amount to Enteignungseingriff unless the omission can be considered as targetting a specific group or person, which presupposes clarity on the required action by the authority. Cf. supra no. 15.


19

quote of Oliver Wendell Holmes goes, the life of the law has not always been logic, but rather experience. Experience here indeed shows that – to our knowledge – deliberate inaction has not yet been subject of egalité-compensation. In essence, the example given here is the mirror image of the German inoculation case, in which it was decided that the State can be held liable if it enacts a preventive national inoculation scheme to the benefit of society which foreseeably and excessively burdens small groups (e.g., if it is foreseeable beforehand that 1 out of 100,000 inoculated persons will have an extreme and lethal allergic reaction to the inoculation).66 The mirror image is the decision of the State in such a case not to implement such protective legislation because it is thought that the health benefits to society do not outweigh the cost – in the sense of medical cost and the foreseeable lethal allergic reactions. That may imply that the deliberate inaction excessively burdens a limited group of persons, and if it does, the argument in favour of applying the egalité-paradigm is significant.

42

All this does not mean that we necessarily favour the idea of stretching the egalité-paradigm to cover deliberate non-feasance. The only point we would like to make here is that from a logical point of view there do not seem to be convincing reasons to distinguish between deliberate feasance and deliberate non-feasance in this respect.

43

6. Balancing the Arguments When dealing with State liability for regulatory failure ultimately the question arises what are the functions liability would have to perform? From a law and economics perspective, the focus would be on the need for efficient deterrence of administrative negligence.67 Others emphasize the importance of tortious liability as a means of compensating victims, a means of holding the State publicly accountable for its inaction,68 an instrument for fact finding in (mass) injury cases and generally an instrument for scrutinizing government policy. Such arguments seem to suggest greater trust in courts than in government.

44

Again others may argue that liability of the State cannot further optimise the pressures that democratic institutions and the political process already exert on the State and that consequently there is no need for liability in this respect.69 Such arguments display great confidence in the self-cleansing properties of politics and civil service. The argument that alternative instruments for evaluating regulators’ behaviour are available and which pre-empt tort law, resembles an argument sometimes used as a defence against liability of tortfea-

45

66

67

68 69

We note that the position under German law for unforeseeable damage caused by lawful State measures may be slightly more complicated. Cf. the introduction to the law and economics analysis of State liability in Markesinis et al. (fn. 21) 4 ff. Harlow (fn. 46) 49. Cf. Paillet (fn. 21) 29. On these arguments, see, e.g., Markesinis et al. (fn. 21) 45 ff.

20


sors that have a permit to engage in the allegedly tortious activity: the ‘regulatory permit’ or ‘regulatory compliance’ defence.70 This defence is rejected in virtually all European legal systems. The fact that a tortfeasor complies with all relevant public regulatory standards does not bar a claim in tort. Hence, if a factory is permitted by environmental protection legislation to emit X-amount of a certain substance, this permit does not preclude neighbouring farmers to claim in tort from the factory if the emission causes damage to their crop. Hence, courts are effectively allowed to second-guess the regulator’s choices. By setting their own standards, courts in fact embark on scientific evaluation and policy choices (for which they are possibly ill-equipped). So, if the fact that another regulatory instrument has been applied in principle does not bar a claim in tort, similar reasoning could be applied to State liability: the fact that parliamentary consent was given to regulatory feasance (or non-feasance) should not pre-empt the possibility of evaluating the outcome with the ‘tort yardstick’.

46

Cane argues that there can only be one justification for allowing tort standards to go beyond standards in public regulation, namely providing a mechanism for the judicial input into the regulatory standard-setting process.71 From a democratic point of view, it seems strange at first sight to allow courts to give democratically elected bodies and institutions feedback on their policy. This, however, does in fact seem to be one of the roles of modern judiciary in Western society. So, perhaps to some extent a bit of second-guessing is part of a balanced legal system anyway.

47

Moreover, in law and economics, there is some experience with evaluating the concurrency of tort law and regulatory law with regard to their respective efficacy in accident reduction. Although some argue that regulatory law – with administrative enforcement and criminal sanctions – is superior to tort law, the arguments in favour of having both systems in operation are well expressed.72 These arguments, which need not be repeated at length,73 include the following considerations: public enforcement agencies lack full information, have limited resources, need to prioritise and therefore cannot enforce all rules with similar efficacy;74 agencies may or may not maximize enforcement efforts (we cannot really know as a result of the principal/agent phenomenon),75 therefore additional efforts should be welcomed; agencies are in danger of suffering 70

71 72

73

74 75

On the interplay between tort law and regulatory law in this respect, see, e.g., P. Cane, Atiyah’s Accidents, Compensation and the Law (1999) 78 ff.; R.L. Rabin, Reassessing Regulatory Compliance, Geo L.J. 2000, 2049 ff. Cane, Washburn L.J. 2002, 464 f. See, e.g., the contributions of A. Ogus and M.G. Faure to: Tort and Regulatory Law (W.H. van Boom/C. Kissling/M. Lukas, eds.), forthcoming. Seminal S. Shavell, A model of the optimal use of liability and safety regulation, Rand J. of Economics 1984a, 271 ff. Cf. S. Rose-Ackerman, Tort Law in the Regulatory State, in: P.H. Schuck (ed.), Tort Law and the Public Interest – Competition, Innovation, and Consumer Welfare (1991) 80 ff. Cf. Ayres/Braithwaite (fn. 14) 103. On that topic, e.g., J.E. Stiglitz, Economics of the Public Sector (2000) 202 ff. Cf. K. Hawkins, Law as a Last Resort (2002) 16 ff., 415 ff.


21

from ‘agency capture’,76 which could be corrected with the ancillary instrument of private enforcement; private entities can finish off what agencies started.77 This reasoning may to some extent also apply to the relationship between State liability and public instruments of giving regulators incentives to reduce the number of accidents. In other words, where parliament does not discover negligent non-feasance of the State and its institutions, courts may fill this gap and indeed help democratic checks and balances by second-guessing. Naturally, drawing this analogy is somewhat frivolous. The regulator is not equal to a ‘normal citizen’. The State has specific powers and a special position and therefore the regulator is allowed more leeway. We feel, however, that this does not preclude liability. Instead, at face value the arguments in favour of State liability seem valid. Especially if a claim in tort draws media attention, it could add to the democratic checks and balances concerning government action. For instance, media attention on a court decision on State liability may stimulate political pressure to commence some institutional preventive or compensatory scheme.78 On the other hand, however, tort law is a blunt instrument when compared to alternatives such as independent boards of investigation (disaster investigation boards, transport boards, health and safety inspections). The powers that these boards enjoy usually go far beyond the powers that courts have in investigating. So, in practice, the appearance of all kinds of investigative boards has pushed tort law more and more into a residual role concerning mass injury. Moreover, in those jurisdictions that have a strong tradition of solidarity, some instances of State liability will be virtually pre-empted by specific ad hoc compensation schemes.

48

Serious arguments of a financial nature have been voiced against liability as well.79 For instance, it has been said that imposing liability on regulators – and government institutions in general – would stifle government action or rather induce regulators to start ‘defensive legislating’.80 Furthermore, liability would divert resources from the budgets where they are most needed.81 This budgetary argument is considered in more detail in the excellent contribution by Fedtke to this volume. We especially endorse Fedtke’s argument that we need empirical evidence to either support or falsify these rhetorical assertions.82 Note,

49

76

77

78 79

80 81 82

See, e.g., M. Faure/R. van den Bergh, Objectieve Aansprakelijkheid, Verplichte Verzekering en Veiligheidsregulering (1989) 148; S.S. Simpson, Corporate Crime, Law, and Social Control (2002) 86 ff.; see also C. Albiston, The Rule of Law and the Litigation Process – The Paradox of Losing by Winning, in: H.M. Kritzer/S.S. Silbey (eds.), In Litigation – Do the “Haves” Still Come Out Ahead? (2003) 174. This is the so-called “follow-on private enforcement” as it is usually referred to in competition law. Paillet (fn. 21) 11 f. For an overview of these arguments, see, e.g., Fairgrieve (fn. 4) 64 ff., Markesinis et al. (fn. 21) 39 ff. On these arguments, see, e.g., Booth/Squires (fn. 26) 180 ff. and 671 ff. On this argument, see Booth/Squires (fn. 26) 175 ff. On the call for more empirical evidence in this respect, see also Markesinis et al. (fn. 21) 40 and 61.

22


however, that the lack of evidence works both ways: There is no evidence available either for the law and economics assertion that liability may give regulators incentives for an efficient level of care.83 7. Conclusion

50

As one can notice, the discussion on liability of the State for failure to regulate health and safety risks is at a very early stage. Judicially, many jurisdictions have not yet been confronted with the question. Others have generally ruled on the issue only rarely and recently. Theoretically, an important doctrinal effort seems necessary to conceptualise, understand and delimit precisely the scope and the conditions of this specific case for liability. This paper was a first attempt to draw some conclusions from the viewpoint of positive law and to sketch some of the possible future scenarios. Our impression is that there is in our legal systems more space for this type of State liability than one would initially expect. Empirical data are necessary to precisely assess whether the court second-guessing could in fact achieve the objectives of the legal system. Our feeling is that the control by courts of State’s action or inaction to regulate health and safety risks is beneficial, at least in some circumstances. The delimitation of the scope of the control and the precise conditions for compensation needs to be further elaborated upon.

83

Cf. Markesinis et al. (fn. 21) 79 f. Note that the empirical evidence that these authors refer to stems either from the U.S.A. and Canada or relates to first party insurance schemes for traffic injuries (which does not seem very similar to State liability for failure to enforce or regulate).

II. Foreseeing Liability for Breach of EC Law. Reflections on the ECJ’s Differing Notions of Illegality Matthias Cornils 1. Introduction “It is appropriate to point out also that Community law confers a right to reparation where three conditions are met: The rule of law infringed must be intended to confer rights on individuals; the breach must be sufficiently serious; and there must be a direct causal link between the breach of the obligation resting on the author of the act and the damage sustained by the injured parties (see the judgments cited above Brasserie du pêcheur and Factortame, par. 51, and Bergaderm and Goupil v Commission, par. 41 and 42)”.1 This sentence, which originates from the appeal decision of the Court of Justice in the Camar and Tico case of 2002, marks the three main legal conditions of a claim according to European public liability law. Hence, it might be considered as an obviously appropriate entrance into a discussion of our subject. However, at this point, I am not yet ready to plunge into the substantial questions we are supposed to deal with later on. Rather, I have quoted the sentence because it shows us a really important message both in its wording and in its attached references to the earlier judicature of the Court of Justice. The Court holds that Community law, under the thereafter named conditions, confers a right to reparation. This formulation is remarkably far-reaching. It refers neither to a tortfeasor nor to certain sorts or categories of acts or omissions causing damage. Through this abstraction a striking development of the judicature of the Community’s courts within recent years is expressed: It is now ten years since a process of parallelisation of the two principles of public liability originating in Community law took off. Since then, both the non-contractual liability of the Community, as it is governed by art. 288 par. 2 EC, and Member State liability, according to the Francovich-doctrine2 of the ECJ, have been 1

2

European Court of Justice (ECJ), Case C-312/00 P [2002] European Court Reports (ECR) I-11355 no. 53. ECJ, Cases C-6 & 9/90 [1991] ECR I-5357.

1

24

Matthias Cornils

joined together and finally transformed to a uniform, common formula of liability.3

2

So, from the year 2000 onwards, no more differences between the liability of Member States and the Community’s non-contractual liability should exist, at least according to the theoretical concept of coherence which has been established since then. This coherence is manifestly expressed by the fact that the Court of Justice referred at the end of the above-mentioned sentence to its judgment in the Brasserie du pêcheur case4 and to the Bergaderm case.5 The famous Brasserie judgment from 5 March 1996, from which the process of convergence took off, and whose importance can therefore hardly be overrated, is a decision from the judicature on state liability, whereas the Bergaderm ruling from 4 July 2000 dealt with a company’s claim that the Commission had, during the preparation and the adoption of a directive, committed wrongful acts and through that caused damage which had impelled the company into bankruptcy.

3

It is really not only to enjoy the build up of as much as possible generalised and therefore theoretical concepts or the straightening of normative structures from a scientific point of view that the importance of the described process of convergence within the judicature of the Court is emphasized. Rather it is at least a side-effect of this process of convergence that astonishing substantial modifications of the legal conditions of both liabilities have occurred, in particular, however, regarding the Community’s own liability. I am going to try to show that the energy of reform, which was released by these modifications within the judicature, was substantially generated by the already mentioned process of convergence initiated by the Brasserie du pêcheur judgment. It seems particularly fascinating that in particular the judicature on state liability, which is from a historical view rather young, has already exercised a considerable influence on the well-established non-contractual liability of the Community. This influence has thereby effectuated that some problematic peculiarities of the Court’s doctrine on the Community’s liability could have been overruled until now. This is also remarkable, because the Court had interpreted the legal conditions of the non-contractual liability of the Community over decades in a manner that must be regarded as both unpredictable and at the same time very restrictive. Thus, damages actions had been successful only in a very few cases and legal writers therefore called the liability according to art. 288 par. 2 EC an almost symbolic liability.6 Also, scientific attempts to

3

4 5 6

P. Gilsdorf/M. Niejahr, in: H. v. d. Groeben/J. Schwarze (eds.), Vertrag über die EU und Vertrag zur Gründung der EG, Kommentar (6th ed. 2004) Art. 288 EG no. 8, 49, 59; A. v. Bogdandy, in: E. Grabitz/M. Hilf (eds.), EU-Kommentar, Art. 288 no. 5, 123; U. Säuberlich, Die außervertragliche Haftung im Gemeinschaftsrecht (2005) 16 ff. ECJ, Case C-46/93 [1996] ECR I-1029. ECJ, Case C-352/98 P [2000] ECR I-5291. M. Cornils, Der gemeinschaftsrechtliche Staatshaftungsanspruch (1995) 196; see also F. Ossenbühl, Staatshaftungsrecht (5th ed. 1998) 602.

Foreseeing Liability for Breach of EC Law

25

analyse and describe the conditions for liability7 and to bring them into a systematic order to make the liability more predictable were despaired of this judicature, which could always find a reason to deny the appellants compensation for the damage they had suffered from a Community’s organ’s illegal act. It is perhaps not too much in anticipation when I already give a first assessment at this point: Not surprisingly, the recent decisions of the Community’s courts have not answered all open questions yet and they have even raised new questions which we still must deal with. But in some main features we can recognize a clearer and, in my opinion, also more convincing concept already. Thus, I guess there are quite good reasons to expect a further development of the judicature that is going to strengthen legitimacy and predictability of the liabilities ruled by European Community law in a significant way. As the most important requirement of both state liability and the Community’s liability is the breach of Community law, and as the change in the judicature has particularly concerned this precondition of illegality, I would like to focus on that only. Please, let me give a brief overview on what I am going to deal with. I will begin with a short look at the development of the judicature of the Court of Justice on the Community’s and Member State liability up to the beginning of the nineties, that is to cover the period before the Court had given its Brasserie judgment. Then I will show the most important steps and aspects of the development of convergence initiated by Brasserie. Using this basis, I want to try to come to some concluding results concerning how I find the new judicature should be understood. Finally, I would like to take the opportunity to make a few critical reflections which could perhaps contribute to a more profound evaluation of the modified and harmonized concept of liability – this remains indeed a task to solve.

4

2. The Non-Contractual Liability of the Community and the Liability of the Member States for Breach of Community Law According to EC Law: On the Development of the Notion of Illegality in the Judicature of the Court of Justice up to Mulder II (1992) a) The Court’s Distinction Between Simple and Serious Breaches of Community Law as Different Conditions of the Community’s Own Liability for Tortious Acts

To begin with the Community’s non-contractual liability: As prescribed by art. 288 par. 2 of the EC Treaty, the Community “shall […] in the case of non-contractual liability […], in accordance with the general principles common to the laws of the Member States, make good any damage caused by its institutions or by its servants in the performance of their duties.”

7

See F. Ossenbühl, in: H.-W. Rengeling (ed.), Handbuch zum europäischen und deutschen Umweltrecht, vol. 1 (2nd ed. 2003) § 42 no. 50 ff.

5

26

Matthias Cornils

6

This rule does not mention a condition of illegality explicitly. However the Court of Justice has always considered the breach of Community law as a necessary precondition besides the other requirements of causation and damage. The non-contractual liability of the Community is a liability for illegal, wrongful acts or omissions.8 Considerations, whether there could in certain cases of exceptional harm also be a liability for lawfully caused loss have occasionally been made and brought to the Court, which, however, never has acknowledged such a claim until now.9

7

But what does illegality mean? Is there a certain quality of unjustness to be proved in order to get compensation for damage? The Court of Justice has always required that the violated rule must be a rule just in favour of the individual who suffered damage: “The Community does not incur liability […] unless […] a breach of a superior rule of law for the protection of the individual has occurred”.10 However it is well known that the Court of Justice did not consider this requirement restrictively.11 So, rules for the protection of individuals originating directly from the EC Treaty have been acknowledged, inter alia: the principles of equal treatment and proportionality and of protection of confidence.12 The Court also met a second condition, which I have already quoted above and which has been subject to different interpretations by legal writers, namely that the violated rule must be a superior rule of law. With regard to this condition, it seems to be at first not quite clear whether it should apply only to the liability for legislative and non-legislative discretionary acts or to non-contractual liability in general. Furthermore, there have been disputes on the question whether the notion of a (breached) superior rule means something else than the matter of course, that the rule, whose violation should give reason for a damage claim, must be of a higher rank than the violating act. If I see rightly, most legal writers nowadays prefer the point of view that this notion should indeed not be regarded as a requirement of a specific significance of the violated rule of law,13 but in fact only as an actually redundant expression for the breach of binding and therefore necessarily superior law, that of course has to be proved in each case of tortious liability.14

8

However, another distinction, made by the European courts, has been of greatest importance over decades. Of course I mean the distinction between differ8 9

10 11

12

13

14

Gilsdorf/Niejahr (fn. 3) no. 34 ff. See judgments of the Court of First Instance (CFI) and the ECJ in the Dorsh Consult Case, Case T-184/95 [1998] ECR II-667; C-237/98 [2000] ECR I-4549. ECJ, Case 5/71, Schöppenstedt v Council [1971] ECR 975 no. 11. ECJ, Case 152/88, Sofrimport v Commission [1990] ECR 2477 no. 26; M. Ruffert, in: C. Calliess/M. Ruffert (eds.), Kommentar zu EU- und EG-Vertrag (2nd ed. 2002) Art. 88 no. 13. See for a list of the rules protecting individuals acknowledged by the Court Ossenbühl (fn. 6) 591. In this sense however Advocate General Tesauro in the Case C-46/93, Brasserie du Pêcheur [1996] ECR 1066 no. 76; F. Fines, Étude de la responsabilité extracontractuelle de la Communauté Economique Européenne (1990) 331. Ossenbühl (fn. 6) 591; A. Czaja, Die außervertragliche Haftung der EG für ihre Organe (1996) 79 f.


27

ent standards of illegality as regards different sorts of breaches of Community law, namely such caused by legislative acts on the one hand and others arising from administrative acts committed by an institution that does not possess any discretion with regard to this act on the other hand. In the Schöppenstedt judgment from 1971, by which the Court of Justice had recognized the possibility of a liability for legislative acts, the following formula was established which must be regarded as the crucial proposition for the Community’s liability: “Where legislative action involving measures of economic policy is concerned, the Community does not incur non-contractual liability for damage suffered by individuals as a consequence of that action, by virtue of the provisions contained in art. 215 [now: 288], second par. of the Treaty, unless a sufficiently flagrant violation of a superior rule of law for the protection of the individuals has occurred.”15 Whereas in cases where the institution, whose action or omission was in question, did not possess any legislatory discretion, the mere violation of the law could be sufficient to find liability of the Community, in cases of legislative actions involving political decisions, the violation had to be of a specific quality, it had to be considered as sufficiently flagrant or serious. This characteristic has always been the crucial factor within the set of conditions of liability and – in the hand of the Court – an instrument to restrict the range and effectiveness of the liability. In this context, it is very important to be reminded of the fact that both the legislative action as well as the measure of economic policy had been given a very broad sense by the Court, so that the stricter criterion of liability due to legislative actions has been applied more predominantly.16 As a result, nearly all claims for damage compensation were dismissed in the past, mostly because they failed the test of sufficiently serious breach of Community law.

9

Yet what do these words mean, what is sufficiently serious and for what reasons has the Court met this additional condition which has confined the liability of the Community in fact to a rather unlikely thing? Today, nearly 35 years after Schöppenstedt we can overview the historical development of the judicature and we can see that the Court of Justice was not in a hurry to build up a framework of verifiable and generalized criteria in order to make the notion of serious breach clearer and better predictable. Only in the HNL case in 1978 did the Court make an effort to give such criteria and furthermore an explanation why it could be reasonable to restrict liability for legislative actions. Under the terms of this decision a breach cannot be regarded as sufficiently serious “unless the institution concerned has manifestly and gravely disregarded the limits on the exercise of its powers.”17 Relevant criteria to assess evidence

10

15

16 17

ECJ, Case 5/71, Schöppenstedt v Council [1971] ECR 975 no. 11; C. Vesting, Die vertragliche und außervertragliche Haftung der EG nach Art. 288 EGV (2003) 90 f. Ossenbühl (fn. 6) 594; Gilsdorf/Niejahr (fn. 3) no. 54. ECJ, Cases 83, 94/76, 4, 15, 40/77, Bayerische HNL Vermehrungsbetriebe v Council and Commission [1978] ECR 1209 no. 5.

28

Matthias Cornils

and gravity of illegality are, according to this judicature, both the importance of the effects of the unlawful action on the side of the injured persons and the degree of unjustness on the side of the wrongdoing institution. The first sort of criteria include, of course, not only the extent of the damage suffered, but also the possibility to clearly define the injured persons as a specifically burdened group; further, in the judgments since HNL the Court has set as an obligatory requirement that the number of injured persons had to be small or at least “not big”.18 The second kind of criteria had been developed in the so-called Isoglucose cases even to the point that liability only could be claimed if the manner of the breach was arbitrary.19 So the Court had implemented a term that must be regarded as being located at least very near to the notion of fault.

11

One can, as a result, describe the whole pool of criteria as follows: The Court introduced in HNL both elements that refer to the quality of the behaviour of the institution causing the damage and elements that incur liability depending on whether specific burdensome effects had been felt by a defined group of not too many injured persons.20 Reconstructed in dogmatic categories that means first elements could be associated with fault – of course not necessarily in a very subjective specification – or at least with a concept of illegality as wrongdoing (the German term for this being Handlungsunrecht). The second elements could be summarised to a notion of a specific sacrifice (Sonderopfer) of the injured person that has to be proved in addition to the mere illegality of the act.

12

So, in the period after HNL there were judgments which dismissed claims though losses suffered by only a couple of companies had been exorbitant because the Court had assessed the failure of the claimed institutions to be not purely arbitrary: Indeed the institutions had made a mistake in the particular way of acting but they could nevertheless show legitimate aims they wanted to pursue (Amylum Case).21 Other claims, like HNL, were rejected, because the appellants had not been sufficiently seriously encumbered with losses or risks that significantly exceeded usual and common economic risks all companies in similar situations had to reckon with. It might be obvious that a system that is that flexible, involving a couple of criteria which can be referred to in a quite unpredictable way, could be able to affect justice and clarity of the Community’s liability seriously. The ambiguity of this judicature affected, furthermore, even the basic principles of the responsibility according to art. 288 par. 2 EC. The mixture of criteria to assess a sufficiently serious breach could not be explained as a manifestation either of a concept of liability for fault (or 18 19

20

21

ECJ, Case 238/78, Ireks-Arkady v Council and Commission [1979] ECR 2955. ECJ, Cases 116 & 124/77, Amylum and Tunnel Refineries v Council and Commission [1979] ECR 3497. AG van Gerven, Case 37/90, Mulder v Council and Commission [1992] ECR I-3061; M. Gellermann, in: H.-W. Rengeling/A. Middeke/M. Gellermann (eds.), Handbuch des Rechtsschutzes in der Europäischen Union (2nd ed. 2003) 197. ECJ, Cases 116 & 124/77, Amylum and Tunnel Refineries v Council and Commission [1979] ECR 3497.


29

Handlungsunrecht) or of a concept of a liability due to “préjudice special et grave” (Sonderopfer: Aufopferungshaftung). To this extent the liability of the Community remained undecided. However the Court had already outlined very clearly in HNL what should be the reasons for restricting non-contractual liability of the Community at least in cases of legislative actions: “This restrictive view is explained by the consideration that the legislative authority, even where the validity of its measures is subject to judicial reviews, cannot always be hindered in making its decisions by the prospect of applications for damages whenever it has occasion to adopt legislative measures in the public interest which may adversely affect the interests of individuals.”22

13

b) The Principle of State Liability for Breach of EC Law (Francovich Doctrine)

I am now going to spend a short moment on state liability for breach of EC law.

14

Without any doubt, one of the most spectacular decisions of the European Court of Justice was the Francovich judgment from 19 November 1991 by which the Court created the principle of Member State liability as a general principle of EC law.23 Whereas Francovich dealt with the specific settlement of the non-implementation of directives within the prescribed period of time, the principle of state liability was from the beginning, nevertheless, set up to apply to all sorts of violations of Community Law by a Member State, as well as to administrative, legislative and even judicial wrongdoings. Later judgments up to the present time have confirmed this general approach.24

15

In Francovich the Court did not refer to art. 215 par. 2 of the Treaty (which is now art. 288 par. 2), nor did it mention a condition of sufficiently flagrant breach that could have exculpated Member States in many cases as it did in favour of the Community in the context of art. 288 par. 2 EC. Therefore, substantial criticism of the Francovich judgment had been addressed because the Court’s strict formulation of the conditions under which Member States are obliged to pay compensation could give rise to the allegation that the Court of Justice intended to establish through Francovich a legal instrument to discipline Member States in an unequally stricter way compared to the Community’s liability.25 But then

16

22

23 24

25

ECJ, Cases 83, 94/76, 4, 15, 40/77, Bayerische HNL Vermehrungsbetriebe v Council and Commission [1978] ECR 1209 no. 4. ECJ, Cases C-6 & 9/90 [1991] ECR I-5357; see Cornils (fn. 6). ECJ, Case C-392/93, R. v HM Treasury, ex parte British Telecommunications [1996] ECR I-1631; Case C-5/94, R. v Ministery of Agriculture, ex parte Hedley Lomas [1996] ECR I-2553; Cases C-178-179 & 188-190/94, Dillenkofer & others v Germany [1996] ECR I-4845; Case C-127/95, Norbrook Laboratories v Ministry of Agriculture, Fishery & Food [1998] ECR I-1531; Case C-302/97, Konle v Austria [1999] ECR I-3099; Case C-140/97, Rechberger v Austria [1999] I-3499; Case C-424/97, Haim v Kassenzahnärztliche Vereinigung [2000] ECR I-5123; Case C-118/00, Larsy v Inasti [2001] I-5063; Case C-224/01, Köbler v Austria [2003] I-10239. See Cornils (fn. 6) 192 ff.

30

Matthias Cornils

in its Brasserie du Pêcheur judgment from 5 March 1996, the Court of Justice took up this objection and rejected it by implementing the condition of the sufficiently serious breach of Community law into the Francovich doctrine too. Since then we have a uniform formula of liability applicable to both liabilities. This formula sets, just as a reminder, three conditions: “The rule of law infringed must be intended to confer rights on individuals; the breach must be sufficiently serious; and there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties”.26

17

It is therefore this Brasserie judgment, concerning the German legal purity requirements for beer, which is essentially associated with the convergence and finally coherence of both liabilities. The Court expressed that itself in very clear words: “The conditions under which the State may incur liability for damage caused to individuals by a breach of Community law cannot, in the absence of particular justification, differ from those governing the liability of the Community in like circumstances. The protection of the rights which individuals derive from Community law cannot vary depending on whether a national authority or a Community authority is responsible for the damage.”27 3. The Impact of Convergence: The Adjustment of the Non-Contractual Liability of the Community (Bergaderm, Fresh Marine Cases)

18

Actually, the coherence of both liabilities had already been completely determined in Brasserie. It was then displayed in later judgments which we can therefore consider as logical aftermaths of Brasserie. These decisions have also demonstrated the impact of convergence on the non-contractual liability which had not, of course, been the subject of Brasserie. Convergence thus means indeed change on both sides; it had not just been completed by introducing the restrictive notion of illegality in the judicature on state liability. In my view, it is quite fascinating to see how the Court’s invention of state liability has given rise to a substantial change of the much older Communities liability also following the idea of coherence which has become irresistible since Brasserie. The Brasserie formula was, so to speak, firstly an unavoidable concession to the Member States, which could not be discriminated against compared to the Community itself. But once established, however, it evolved its own dynamics and by that compelled the Court to modify its judicature on art. 288 par. 2 EC. a) The Withdrawal of the Distinction Between Measures of a General or Individual Nature

19

The Court finally did so in its Bergaderm judgment from 4 July 2000, concerning a commission directive, by which a maximum level of a chemical substance, which was suspected of as being potentially carcinogenic, in sun oils 26 27

ECJ, Cases C-46 & 48/93, Brasserie du Pêcheur v Germany [1996] ECR I-1029 no. 51. ECJ, Cases C-46 & 48/93, Brasserie du Pêcheur v Germany [1996] ECR I-1029 no. 42.


31

had been set. Even though the Court’s ruling must be regarded as nothing but consequent in following the idea of coherence already outlined in Brasserie, it is nevertheless amazing to find those decades-old verbalisations, which had dominated the judicature on art. 288 par. 2 EC, now all abandoned at once. The Court explicitly withdrew in Bergaderm the long-established categorical distinction between two classes of wrongful acts and accordingly of two different standards of illegality as to the character of the action causing the damage: The Court found, “that the general or individual nature of a measure taken by an institution is not a decisive criterion for identifying the limits of the discretion enjoyed by the institution in question”.28 The margin of discretion is now said to be the most relevant fact for evaluation of the necessary quality of illegality as we will more closely examine later on.29 Beyond this, the old formulation derived from Schöppenstedt, that the unlawful act must concern a “superior rule of law for the protection of the individual” is no longer mentioned. Instead, the Court comes now from the Brasserie-formula with its notion of the infringed rule of law to be “intended to confer rights on individuals”. Thus, discussions about possible differences between both liabilities regarding the character of the individual’s subjective right or interest which had been held among legal writers30 have lost their subject. So, in Bergaderm the crucial elements of the state liability as they had been shaped in Brasserie before have been definitely adopted into the non-contractual liability of the Community. Perhaps you could let me demonstrate this remarkable outcome of convergence by talking of a further judgment on Community’s liability, that is, to depict quite clearly the new approach. For this purpose, I have chosen the judgment in the case of Fresh Marine Company from 10 July 2003.31

20

Fresh Marine was a Norwegian enterprise, which exported rather large numbers of farmed Atlantic salmon into the European Union. In 1997 it entered into a commitment to the Commission to comply with defined minimum average prices as a condition to escape from the application of anti-dumping tariffs. Although Fresh Marine had assured in a report on all exports of the third quarter of 1997 given to the Commission to have abode by the commitment, the Commission adopted thereafter a regulation imposing provisional antidumping and countervailing duties on imports of farmed Atlantic salmon produced by Fresh Marine. It stated that examination of the data disclosed in the report had shown that Fresh Marine had not observed the commitment. In fact the Commission could not have come to this conclusion if it had not manipulated some information given in the report by Fresh Marine. After Fresh Marine had handed in an amended version of the report the Commission admitted that the Company had complied with the minimum export price fixed in its un-

21

28

29 30 31

Case C-352/98 P, Laboratoires Bergaderm and Goupil v Commission [2000] ECR I-5291 no. 46. P. Craig/G. de Búrca, EU Law (3rd ed. 2003) 555 ff. Ruffert (fn. 11) Art. 288 no. 36; B. Grzeszick, Europarecht (EuR) 1998, 417 (427 ff.). Case C-472/00 P, Commission v Fresh Marine Company [2003] ECR I-7541.

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dertaking in respect to salmon, and that, accordingly, there was no longer any reason to believe that the obligation had been broken. However, it repealed the antidumping tariffs not earlier than two months after that. The Court of First Instance held the Commission to be liable for the main part of the losses Fresh Marine had suffered because of being compelled to give up all exports into the EU as a consequence of the imposed tariffs.

22

The Court of Justice confirmed this judgment as to its results, even if it did not follow the Court of First Instance in its assessment that the relevant cause for the damage had already been set by manipulating the report, so by a non-legislative and non-discretionary action of the Commission. Yet in the view of the Court, following in that respect general advocate Stix-Hackl, Fresh Marine had not been forced to give up its exports until the Commission’s regulation, that is a legislative act, had entered into force. However the Court held that even if that finding was vitiated by an error of law, such an error would remain irrelevant provided the Court of First Instance had “correctly assessed the conditions under which the Community may incur non-contractual liability”. And then the Court repeated the sentence already established in Bergaderm that the general or individual nature of a measure is not the determining factor in deciding whether there has been a sufficiently serious infringement of Community law to make the Community liable. Instead, the discretion available to the institution concerned should be the most relevant factor. Hence the Court held, that “the limits to which the Commission’s discretion was subject in this case, must be determined”. As I see it, it seems to be quite important at this point to read the words of the Court closely and to carefully examine its further argumentation: The Court did not make an abstract assessment of the scope of discretion as to define then the appropriate measurement of illegality, thus either a stricter standard of “serious breach” or a less strict standard of “simple breach” of the rule of law in question. Instead the Court concentrated solely on the limits of a possible discretion. By proceeding this way, it identified in casu two such limits derived from the relevant Council’s regulation that determines the matter. Firstly, the Commission was not to impose antidumping tariffs unless there were facts which gave reason to assume that the exporter had not complied with its obligations with regard to minimum prices. Secondly, anti-dumping tariffs were only to be imposed on the basis of the best information available due to the circumstances of the case. The Court held both requirements as not having been observed by the Commission which had imposed tariffs, though from the report mentioned above could not have been found any verdict on Fresh Marine to have broken its duties from the commitment. The conduct of the Commission therefore was regarded by the Court as a “sufficiently serious breach of Community law satisfying one of the conditions for the incurring of non-contractual liability by the Community”.

23

I guess the Fresh Marine judgment seems to show us rather clearly that the withdrawal of the distinction between different classes of unlawful measures linked to different standards of illegality as the main condition of liability results directly from the incorporation of the Brasserie formula into the legal


33

setting of non-contractual liability. The Francovich doctrine, clarified in the Brasserie judgment, simply no longer recognizes the older, so to say, analytical approach which was established in the past judicature on Community’s liability. Instead, there is now one formula and one standard of illegality applicable to all failures of Member States and Community institutions. Nevertheless, this standard is, by its criterion of sufficiently serious breach, flexible enough to deal adequately with very different situations. But this leads us to the next and perhaps most important question: b) The Substantial Re-evaluation of the Notion of Serious Breach of Community Law

How can the notion of serious breach of Community law according to the new judicature after Brasserie be understood? I guess insofar we are able to identify interesting alterations resulting at least as a side-effect from the harmonization of the two liabilities. Thus, our study of convergence is not yet finished. Rather, since the Brasserie judgment the notion of sufficiently serious or flagrant breach has been clarified in a certain and remarkable way. So, the new judicature is no longer affected by the ambivalence of justification that stood behind the attempt to restrict Community’s liability by demanding a special quality of illegality. The above-mentioned ambiguity regarding whether Community’s liability is to be founded and also restricted according either to the concept of fault and Handlungsunrecht or to the concept of unusual and individualised sacrifice seems to be overboard now. In my view, the question has been clearly decided by the Court.

24

However, this conclusion is perhaps not that easy to draw from the judgments since Bergaderm and, if I am right, most legal writers and commentators have not taken this view yet.32 Why is that so? Well, the Court postulated in its Brasserie judgment, that the national court concerned with a damages claim should, for the purpose of assessing a sufficiently serious breach, take into consideration not only one but various factors including amongst others: “the clarity and precision of the rule breached, the measure of discretion left by that rule to the national or Community authorities, whether the infringement and the damage caused was intentional or involuntary, whether any error of law was excusable or inexcusable”.33 Further, a measure is at least regarded to be a serious violation if it obviously disregards the relevant judicature of the Court of Justice. This pool of criteria has also been introduced into the judicature on non-contractual liability of the Community – not by transferring to it exactly the same formulation but with regard to its substance, and, of course, nothing else could have been the case when we remember the idea of coherence.

25

32

33

See e.g. Gellermann (fn. 20) 197; Ruffert (fn. 11) Art. 288 no. 15; Säuberlich (fn. 3) 26; W. Weiß, EuR 2005, 277 (292); accurate assessment of the new jurisdiction by Craig/de Búrca (fn. 29) 557 ff. ECJ, Cases C-46 & 48/93, Brasserie du Pêcheur v Germany [1996] ECR I-1029 no. 56.

34

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Matthias Cornils

So the Court held in Fresh Marine: “The system of rules which the Court of Justice has worked out in relation to the non-contractual liability of the Community takes into account, inter alia, the complexity of the situations to be regulated, difficulties in the application or interpretation of the legislation and, more particularly, the margin of discretion available to the author of the act in question”.34 And then it cited again Brasserie as if to underline the close link between both liabilities also in this point. The variety of these “factors”, all relevant in determining the question of a sufficient quality of illegality, could at first sight indeed give rise to the assumption that the traditional approach of the HNL and Mulder judicature, which made the sufficiently serious breach dependant on at least four criteria35 as reported above, had been maintained. However, if one regards the factors as set out in Brasserie or Fresh Marine only a bit more closely, it should not be difficult to see that all these factors exclusively concern aspects of the illegal conduct in question. None of these criteria deal with the effects of the unlawful act on the injured parties, or with the importance of losses or with the discriminating character of the outcome of the measure. I believe it could be even possible to reduce all those above cited criteria in fact to only one requirement, at least insofar as they deal with the question of excusability of an error of law. This requirement could be named a condition of negligence or carelessness. Anyhow, beyond terminological questions it seems to be undoubtedly clear now that the Court has voted for an unambiguous concept of Handlungsunrecht or even fault; this, of course not, to say that again, in an archaic meaning of personal responsibility according to personal abilities. Yet criteria of unusual and particularly serious sacrifices have been put out of the game so as to draw the conclusion from the fact that they never had been introduced into the context of state liability – convergence again!36 Thus, the reformed liability according to EC law is a liability linked to particularly serious misconduct but nothing else. 4. Evaluation and Some Critical Remarks

27

As announced, I would like to come now to some critical remarks which, of course, have to be concentrated on only a few aspects. a) On the Process and Results of Convergence

28

At first: What is to be thought of the process and the results of convergence in general? Was the Court right to harmonize both liabilities, as I have tried to demonstrate above?

34 35

36

ECJ, Case C-472/00 P, Commission v Fresh Marine Company [2003] ECR I-7541 no. 24. AG van Gerven, Case 37/90, Mulder v Council and Commission [1992] ECR I-3061; Ruffert (fn. 11) Art. 288 no. 15. Similarly: Craig/de Búrca (fn. 29) 557 f.


35

(i) Superior legitimacy by the establishment of a uniform standard of liability This question can be of course dealt with under the aspect of legitimacy. To this extent it seems hardly possible to doubt that this harmonization has maintained or even strengthened legitimacy of both the Community’s and the state’s liability.37 Even more, one could suggest that this coherence had been an inescapable and compulsory outcome of the legal principles building the common foundation of both liabilities, that is particularly the principle of legal protection of individual rights but also – at least regarding state liability – the principle of full effectiveness of Community rules (effet utile).38 Anyhow, the Court of Justice had to give up its earlier rigid, categorical distinction between different classes of measures respectively linked to different standards of illegality in its judicature on non-contractual liability of the Community after it had established a uniform, but flexible formula of liability in its judgments on state liability if it did not want to run the risk of being blamed of promoting the interests of the Community in an unjustified way. Furthermore, the court could hardly found only the state liability on both the principle of legal protection of individual rights and additionally on the idea of disciplining Member States to comply with EC law and work out the state liability for this purpose to a stricter shape compared to the Community’s own liability. There was not even a way out to transfer the analytic approach of the judicature on non-contractual liability of the Community, namely the distinction between legislative and other unlawful acts into the set of preconditions of state liability, apart from substantial objections against such a solution. This way had already been barred by the fact that the Member States should be responsible at any rate for a certain kind of legislative failure, that is to say for the non-implementation of directives within the prescribed period of time as already the Francovich judgment had pointed out.39 And with regard to Community acts, the discussions about their very nature as to finding the correct standard of illegality which took place in so many judicial procedures in Community courts had long since been discovered to be both exhausting and fruitless. Whether the Community institutions, while adopting more or less detailed or general directives or regulations and deserving in so far a more or less far reaching margin of discretion, stand in either a legislative or administrative function is not perhaps to be convincingly decided at all.40

29

(ii) Strengthening predictability by clearing requirements of qualified illegality I consider it also an improvement that, by the convergence of both liabilities, the set of criteria which has to be taken into consideration to assess a Commu37 38 39

40

v. Bogdandy (fn. 3) Art. 288 no. 89. ECJ, Cases C-6 & 9/90, Francovich and Bonifaci v Italy [1991] ECR I-5357 no. 32 ff. ECJ, Cases C-6 & 9/90, Francovich and Bonifaci v Italy [1991] ECR I-5357 no. 39 ff.; Cases C-178-179 & 188-190/94, Dillenkofer & others v Germany [1996] ECR I-4845 no. 21 ff. See ECJ, Case C-390/95 P, Antillean Rice Mills v Commission [1999] ECR I-769 no. 60; Ossenbühl (fn. 6) 596 f.

30

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Matthias Cornils

nity’s institution’s breach of Community law serious enough to entail liability has been tightened and settled, namely by concentrating exclusively on such criteria, which characterize an action being obviously unjustifiable. Even if it is at all possible to think differently of the substantial meaning of this confinement of criteria – I will come back to that question soon – it can nevertheless hardly be denied that a more rational handling of the cases could result from this confinement, as it should be clearer now what is crucial and decisive in proving the essential reason for liability and therefore to get compensation. This is, in fact, the strongly unjustifiable failure of the institution in question, and nothing else in addition to that as was the case until a couple of years ago. Correct me if I am wrong, but, some recent decisions of the Community Courts concerning the condition of qualified illegality indeed seem to be more persuasive,41 even if the results, as for instance in the famous Köbler judgment,42 could, of course, be argued about. b) A Closer Look

31

Concerning the substantial meaning of the new common formula of liability, I would like to deal with two questions: On the one hand with the basic question whether a restriction of the Member State and/or Community’s liability to only a part of all unlawful acts causing damages as introduced by the requirement of sufficiently serious breach is convincing at all; on the other hand, we should examine a bit more closely the plausibility of the now established concept of fault or Handlungsunrecht and – this is only the other side of the coin – of the Court’s renouncement of the criteria regarding an unusual sacrifice of the injured parties. (i) Should public authorities’ liability in general be restricted?

32

With regard to the first item, that is the question of limitation of liability in general, I guess that there are indeed convincing legal reasons to maintain such a limitation, which means that the Community and the Member States are not to be held liable for all breaches of legal obligations resting on them. Firstly limitation of liability – of course in various forms – can be identified as a common element of all or at least most national regulations of state liability within the Member States, and, as a result, it must be denoted as a general principle common to the laws of the Member States, which art. 288 par. 2 EC refers to.43 Even from a legal view, which considers a right to full compensation of illegally caused damage based upon the fundamental rights (of national or Community law),44 such a right is only a prima-facie right or, in other 41

42

43

44

E.g.: ECJ, Case C-198/03 P, Commission v CEVA Santé Animale [2005] no. 72 ff.; CFI, Case T-364/03, Medici Grimm [2006]. Case C-224/01, Köbler v Austria [2003] I-10239; annotations by M. Breuer, European Law Review (E.L.Rev.) 29, 2004, 243; T. von Danwitz, Juristenzeitung (JZ) 2004, 301; W. Kluth, Deutsches Verwaltungsblatt (DVBl) 2004, 393; B. Wegener, EuR 2004, 84. ECJ, Cases 83, 94/76, 4, 15, 40/77, Bayerische HNL v Council and Commission [1978] ECR 1209 no. 3; Cornils (fn. 6) 202. See B. Grzeszick, Rechte und Ansprüche (2002) 334 ff.


37

words, a right in principle45 that could be confined like each other individual right derived from fundamental rights for legitimate reasons and according to the principle of proportionality. So, the principle of protection of individual rights and the fundamental rights indeed guarantee, for all intents and purposes, a right to compensation for damage suffered from an unjustified measure of public authorities, but they do not definitely guarantee compensation for all losses and for losses in all cases. The reasons for such a limitation of liability, which thus does not cover all illegal acting of public authorities, can be different; they depend on which sort of action cause the damage or which public functions are involved. So, it can be the concern of fiscal overstraining of public budgets as a consequence of obligations to pay very high sums of compensation. Or a too strict liability of public authorities could entail undesirable but necessary constraints of liberty of the individuals for the State (or the Community) being forced then to keep people’s behaviour under control more closely to avoid damages it is responsible to pay for.46 Finally, we must be reminded of the consideration which the Court had already outlined in its HNL judgment and later on again in Brasserie: According to that, “legislative authorities cannot always be hindered in making its decisions by the prospect of applications for damages”.47 Indeed this consideration does not suit only (parliamentary) legislation in a narrow sense, but also other situations of namely administrative measures. It has, as a result, ever since, given the justification to apply the restrictive notion of illegality so predominantly to most acts claimed unlawful in the judicature of the Court. Regarding violations of Community law by national courts, it is rather the aspect of stability of judiciary decisions which gives reason to confine state liability as the Court of Justice pointed out carefully in Köbler.48 However, these different reasons justifying a limitation of liability do not necessarily affect the possibility of finding a uniform criterion to which the function to confine liability is attributed; in the context of the EC Law it is now the notion of qualified illegality. So, whereas liability for legislative actions in HNL had been restricted as to be provoked “only exceptionally and in special circumstances”,49 the Köbler judgment held that a Member State’s liability for “an infringement of Community law by a decision of a national court adjudicating at last instance can be incurred only in the exceptional case where the court has manifestly infringed the applicable law”.50 The evidence of Handlungsunrecht as the decisive condition for liability obviously fits both cases irregardless of the different motives to restrict liability.

45 46 47

48 49

50

R. Alexy, Theorie der Grundrechte (1985) 71 ff. R. Rebhahn, Staatshaftung wegen mangelnder Gefahrenabwehr (1997) 117 ff. ECJ, Cases 83, 94/76, 4, 15, 40/77, Bayerische HNL v Council and Commission [1978] ECR 1209 no. 4. ECJ, Case C-224/01, Köbler v Österreich [2003] ECR I-10239 no 30 ff. ECJ, Cases 83, 94/76, 4, 15, 40/77, Bayerische HNL v Council and Commission [1978] ECR 1209 no. 3. ECJ, Case C-224/01, Köbler v Österreich [2003] ECR I-10239 no. 53.

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Matthias Cornils

(ii) From Sonderopfer to Handlungsunrecht

34

What should we think of the shift from the ambiguous old concept including elements of Sonderopfer as well as fault or Handlungsunrecht to the new approach that is purely focused on the latter? In this point, I would also like to take a position in favour of the Court. The better arguments seem to militate in favour of this solution, although some legal writers have, to the contrary, given the criteria concerning the effects of the unlawful act in question on the injured party priority.51 In my opinion, to orientate the extent of compensation by the gravity of damage or by the particular narrowness of the group of injured persons was never convincing. Regarding the criterion of a sufficiently high intensity of damage, this could even be considered contradictory to the main justification to restrict liability because of the alleged necessity to protect budgets from excessive compensation payments. If the main concern is to preserve the treasury, why then should lower losses be excluded from liability whereas very high and extraordinary damage gives rise to compensation? But there are still other objections to make against the concept of unusual sacrifice in the context of a liability for infringement of the law. For instance, as the Court’s dismissals of claims had occasionally been based upon the reasoning that the burden of the plaintiff had not exceeded “the bounds of economic risks inherent in the activities of the sector”52 in question, and so was to be regarded as quite normal was indeed a really questionable consideration. How should the borderline between normal risks which are to be calculated with and extraordinary risks be drawn if not by the law itself so that losses which are caused by illegal acts of the State or the Community just cannot be regarded “usual” or even “normal”? And, finally, concerning the criterion of the sufficiently confined or even small group, from the view of an injured person it would seem to be perfectly arbitrary and coincidental whether beside this person there were only a couple or a lot of others who suffered damage too. Admittedly, each state liability, and nothing else can be said of the Community’s liability, which must be financed by tax revenues, is a sort of insurance mechanism. However, it does not immediately follow from this that the Member State or Community as agencies of the general public and the commonalty of taxpayers must be exempted from liability only because of the fact that there is damage of more than only a few persons to compensate. So, in its Mulder II judgment from 1992,53 and that was already before the process of convergence was initiated, the Court of Justice had, probably for reasons as mentioned here, already set the older requirement of a small group of injured persons aside. In Mulder II, therefore, the right to compensation of about 16,000 milk farmers was acknowledged.

35

It could be argued against the concept of Handlungsunrecht that it linked liability in a too strong and partial way to the illegal conduct of the wrongdoer, and that it was therefore too much orientated by the idea of sanction whereby 51 52

53

Gilsdorf/Niejahr (fn. 3) Art. 288 no. 62 ff. ECJ, Cases 83, 94/76, 4, 15, 40/77, Bayerische HNL Vermehrungsbetriebe v Council and Commission [1978] ECR 1209 no. 6. ECJ, Cases C-104/89 & 37/90, Mulder v Council and Commission [1992] ECR I-3061.


39

it neglected the protection of individual rights. From the view of the injured person the better or worse motives behind the wrongdoing or the possible excuses in favour of the wrongdoing institution seem possibly to be insignificant. I do not share this view. At first, a concept of qualified wrongdoing, even if it is associated with a certain term of fault, should indeed not be mixed with requirements as to the individual motives or qualities of the real persons acting on behalf of either the State or the Community. Such a concept of personal fault would, in fact, provoke irresolvable problems in particular concerning legislative acts and is, apart from that, highly questionable in any modern legal system that ultimately assigns responsibility to the state or organisations as such. Obviously, the Court of Justice, pointing out the above-mentioned criteria to assess a sufficiently serious breach, is not really timid of using terms originating from the vocabulary of fault. But this should not be understood wrongly. Every judgment demonstrates, however, that the decisive requirement of inexcusableness does not refer to the real individuals committing the breach of Community law. Rather it seems to be a more objective test seeking to find out whether there are objective reasons for the failure to be found that could exculpate any doer in the circumstances of the situation. The Court of First Instance pointed out this quite clearly when it held: “The finding of an irregularity which in comparable circumstances would not have been committed by a normally prudent and diligent administration permits the conclusion that the conduct of the institution constituted an illegality of such a kind as to give rise to the liability of the Community under art. 288 EC”.54 And the Court of Justice itself had already in Brasserie ruled out the possibility of complementary stricter national requirements of fault that go beyond the notion of serious breach as stated in its own judicature.55 The now established norm of negligence to determine the cases in which the Community incurs liability furthermore seems to be compatible not only with the idea of sanction but also with the principle of protection of individual rights. Supposedly a person who had suffered high losses from a Community’s action could halfway put up with that even without compensation if it had been a complicated legal issue to deal with and if there were rather good reasons to decide as the institution in question had done. Rather more problematic may be situations where compensation is refused because of losses being quite sustainable but the result of a totally arbitrary conduct. This consideration might show us that also the degree of need for legal relief, e.g. for compensation payments does not depend only on the gravity of the damage but also on the sort of breach of obligation of the institution causing the damage. Both fundamentals of the liability – the thought of sanction but also the principle of protection of individual rights – can be mentioned in favour of the concept of Handlungsunrecht through this fact. By the way, the new concept could be even seen as more generous as it gives the plaintiffs compensation under less intricate conditions to prove a sufficiently serious breach of Com54 55

CFI, Case T-364/03, Medici Grimm [2006] no. 79. ECJ, Cases C-46 & 48/93, Brasserie du Pêcheur v Germany [1996] ECR I-1029 no. 79.

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munity law compared to the earlier judicature. It should not be forgotten that the requirement of an inexcusable or even arbitrary conduct was also implemented within the traditional set of conditions. So it might be regarded as an improvement for the sake of individual right’s protection that this is now the only remaining legal hurdle, which is of course not easy to take yet but nevertheless perhaps better to calculate with. c) Questions Still Open

37

If you give me the chance I would finally like to spend a moment on only very few issues that still remain unclear or questionable even from my standpoint, which is in general in favour of the new judicature of the Court.

38

One probably quite important aspect concerns the link between discretion and (qualified) illegality. As already mentioned above the Court holds “that the decisive test for finding that a breach of Community law is sufficiently serious is whether the Member State or the Community institution concerned manifestly and gravely disregarded the limits on its discretion.”56 And further on: “Where the Member State or the institution in question has only considerably reduced, or even no, discretion, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach”.57

39

It is not however clear what the correct and full impact of this statement might be. Are there now two different classes of measures, the ones embedded in a margin of discretion, the others strictly bound by the rule of law, respectively with different standards of illegality quite similar to the former distinction between legislative and other Community acts? This view would obviously lead to a preliminary test by which the character of the measure in question as discretionary or not had to be assessed to apply thereafter the correct standard of a serious breach or on the other hand of a mere breach of Community law.58 Indeed, General Advocate Stix-Hackl in her opinion concerning the Fresh Marine case59 and possibly even the Court of First instance60 took such a view, that is to say they at first distinguished cases according to the criterion of discretion and then came to one of the two different standards of illegality.

40

I guess the wording of the Court of Justice’s judgment, if closely examined, shows us rather significantly that this interpretation goes far beyond what the Court has really set out. The key criterion is in fact not the margin of discretion but the evident exceeding of the limits on a possible discretion. The existence of discretion as such should not be regarded as a solely crucial indicator 56

57

58 59

60

ECJ, Case C-352/98 P, Laboratoires Bergaderm and Goupil v Commission [2000] ECR I-5291 no. 43. ECJ, Case C-352/98 P, Laboratoires Bergaderm and Goupil v Commission [2000] ECR I-5291 no. 44; CFI, Case T-283/02, EnBW Kernkraft v Commission [2005] no. 87. Craig/de Búrca (fn. 29) 547 (“the general test”) 558 ff. AG Stix-Hackl, opinion to case C-472/00 P, Commission v Fresh Marine [2003] ECR I-7541 no. 74 ff. CFI, cases T-198/95 & others, Comafrica, Dole v Commission [2001] ECR II-1975 no. 134.


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for finding out the appropriate degree of negligence getting the Community liable for damage. There occurs, as the case Fresh Marine clearly shows, inexcusable disregarding of legal requirements or confinements to a given margin of discretion that are serious enough to give rise to liability. And there could be on the other hand good reasons to explain the error of the institution in interpreting and applying a rule of law even if this was strictly binding and conceding no discretion at all. An example for this can be found in the Medici Grimm case of the Court of First Instance from the beginning of this year.61 It should be therefore taken quite seriously that the Court has postulated a sufficiently serious breach of Community law to be proved in all cases. There is in fact only one common standard of sufficiently qualified illegality, which is however not accomplished in all cases irrespective of the failure in question being a disregard of limits of discretion or a breach of strict binding rules. Of course our question is closely connected with the problem of what discretion in the judicature of the Court means. I do not want to go further in this discussion at this point. But the more extensively this term is used, namely also embracing margins of interpretation deriving from the indefiniteness or vagueness of some legal rules (Beurteilungsspielräume), the more important could be discretion for the assessment of negligence. So it might be that in cases where it is difficult to find the correct answer to interpret a rule a failure by taking a possible but wrong one is excusable rather than in cases where there is no such difficulty or where the interpretation taken had already clearly been ruled out by a judgment of the Court.62 But this has, when carefully looked at, in fact nothing to do with real margins to decide legally in the one or other way. Anyway, the Court is still supposed to work out more clearly in future judgments which kind of errors and failures have to be regarded sufficiently serious. As the judicature until now could have given rise to the assumption that errors in understanding the correct legal meaning of the Community law determining the case in question rather than failures in acquiring the necessary facts and information (as in Fresh Marine) could exculpate the wrongdoer, the Court however is bearing great responsibility. Which margin of error should be accepted then, where is the borderline between an acceptable mistake in understanding the law and an intolerable negligence? Anyhow, the Court should not make it too easy for the Community institutions and the Member States to invoke successfully an error of law. To avoid corruption of the liability, which is an important instrument in the protection of individual rights, the possibility of exculpation concerning errors of law for instance should not be conceded already if the illegal measure was only implemented to pursue a legitimate aim.63 Certainty and predictability in this point, that is to define the acceptable margin of error, can probably only be supposed to grow within a further development and continuity of the judicature of the Community Courts.

61 62 63

CFI, Case T-364/03, Medici Grimm [2006] no. 87 ff. ECJ, Case C-118/00, Larsy v Inasti [2001] ECR I-5063 no. 44. Craig/de Búrca (fn. 29) 558.

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III. State Liability in Times of Budgetary Crisis Jörg Fedtke 1. Introduction

1

Discussions about questions of state liability at this year’s Annual Conference on European Tort Law have shown that this area is developing quite rapidly in most systems across the Continent. The emerging picture is thereby colourful. The various contributions have, to my mind, confirmed the decision of the European Group on Tort Law to avoid this issue in its quest to identify the common core of European tort law; state liability, it seems, is too much under the influence of national public law (both administrative and constitutional) as to be amenable to straightforward common solutions.1 A few common threads, however, have become visible. This contribution will try to explore briefly an underlying theme which may to some extent represent the canvas on which most national legislators and courts (despite the many variations) have applied their local paint – the financial implications of state liability for the budgets of public authorities. Here at last we seem to encounter a transnational denominator of our topic: money – or, far more often, the lack of it.

2

Budget proposals recently presented by the Federal Ministry of Finance in Germany and Her Majesty’s Treasury in the United Kingdom show how strained many public budgets are these days. Ongoing discussions about how resources should be spent in a society, ranging from education and health care to employment programmes and defense, must thereby have an affect on the law regulating these areas. In this scenario, legal rules, however, are only a tool – an instrument deployed in order to cut down some expenditure here, and to allocate a little more elsewhere. This seems to be different when we enter into the realm of state liability. As we move away from purely administrative rules, the legislator is not using the law to direct public funds to certain predetermined public purposes; rather than providing the citizen with services such as social security, health care, libraries or schooling, rules of state liability per1

See European Group on Tort Law, Principles of European Tort Law, Text and Commentary (2005) 113: “Corporate liability and state liability have been discussed. General guidance is to be found in the Principles and the commentary but more specific incorporation may cause too much interference with company law and administrative law”.

State Liability in Times of Budgetary Crisis

43

form a more ‘conservative’ function. Their aim is to compensate for individual losses suffered at the hands of public authorities, and their impact on public budgets is far less visible – and politically exploitable – than the recruitment of more doctors and nurses, a better system of public transport, or a new kindergarten around the corner. At the same time, these rules can create quite immediate financial burdens for the budgets of public authorities in case things go wrong. And they usually do tend to go wrong at some point or other. How then have rules on state liability fared in an economically difficult climate – have budgetary constraints had a tangible impact on this area of the law? This paper will try to give some tentative answers to this question with the help of a brief comparative analysis of developments regarding the tortious liability of public authorities in Germany and England. 2. Paucity of Empirical Data and the Nature of State Liability Before we take a closer look at these systems, it is perhaps helpful to emphasise two further general characteristics of state liability.

3

First, it seems as if the budgetary implications of different legal approaches to the liability of public bodies are rather difficult to assess. While this may be similar in other cost intensive areas such as pensions, education, or health care, the prediction seems to be a particularly difficult one to make when it comes to state liability, and empirical studies on the matter are hard to come by.2 This is due to a number of interrelated factors. In some areas, situations potentially attracting the liability of public authorities might never materialise, or can suddenly arise quite unexpectedly, as was the case with the development of state liability for breach of Community law;3 the potential tortfeasors in this area are as varied as the functions performed by the state in modern societies, and detailed information concerning the costs of wrongful state activities is often not systematically recorded despite (or perhaps because of) the sometimes excessive amounts of paperwork compiled by public authorities; financial risks can increase as and when the public sector takes on additional regulatory responsibilities – or decrease as a consequence of new developments such as the trend to privatise many public functions including transpor-

4

2

3

See comments to this effect in B.S. Markesinis/J.-B. Auby/D. Coester-Waltjen/S. Deakin, Tortious Liability of Statutory Bodies: A Comparative and Economic Analysis of Five English Cases (1999) 117 (“expensive and rarely done”); C. Booth/D. Squires, The Negligence Liability of Public Authorities (2006) 227 note a “general lack of evidence available on the consequences [of imposing a duty of care on public authorities]”. See the decisions of the European Court of Justice in Francovich European Court Reports (ECR) [1991] I-5357 and EuGH Neue Juristische Wochenschrift (NJW) 1992, 165 ff.; Brasserie du Pêcheur ECR [1996] I-1029 and EuGH NJW 1996, 1267 ff.; British Telecommunications ECR [1996] I-1631 and EuGH Europäische Zeitschrift für Wirtschaftsrecht (EuZW) 1996, 274 ff.; Lomas ECR [1996] I-2553 and EuGH EuZW 1996, 435 ff.; Dillenkofer ECR [1996] I-4845 and EuGH NJW 1996, 3141 ff.; and Denkavit ECR [1996] I-5063 and EuGH NJW 1997, 119 ff. For German views on this development see F. Ossenbühl, Der gemeinschaftsrechtliche Staatshaftungsanspruch, DVBl 1992, 994 ff. and M. Huff, Eine erste Bewertung des EuGH-Urteils Dillenkofer, NJW 1996, 3190 ff.

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Jörg Fedtke

tation, hospitals, utilities, and postal services;4 novel administrative techniques such as e-government and the increasing reliance on modern information technology in general are likely to create new potentials for mistakes, particularly in the first years following their introduction, and it is often difficult to foresee the effect of these developments on the volume of delictual claims brought against public authorities each year; state liability can, furthermore, arise on different levels of an administrative system, depending on where certain functions are performed or public services delivered, and the ability to assess the financial impact of particular rules diminishes as the number of involved authorities increases. Germany is a particularly difficult candidate in this respect since different public authorities interact with the citizen on the federal, regional, and municipal tiers of government. The enormous diversity of public authorities and the variety of ways in which they perform their functions will, however, cause some difficulty in the assessment of liability rules in most systems. Finally, state liability – situated on the borderline between public and private law – brings together both notions of tortious liability and administrative law, making it more difficult to predict, in many cases, the likely outcome of court decisions.

5

A second feature of state liability, and this distinguishes it from other areas of tort law, is the fact that the potential tortfeasor himself determines to a large extent the rules according to which conflicts involving a compensation by public authorities are to be decided; while all other rules of tort law regulate the relationship of citizens or private legal entities amongst each other, the legislator when dealing with state liability is in many ways determining his own fate in future disputes between public authorities and individual citizens. This may be the underlying reason why some systems have chosen to constitutionalise the basic principles of state liability. The idea behind this approach can to some extent be compared to the logic inherent to a constitutional protection of human rights. In both areas, the state is itself party to legal conflicts with the citizen, and there seems to be some merit in insulating the basic rules of the game as far as possible from the influence of day-to-day politics. At the same time, disputes between the state and its citizens put courts in a rather precarious position. Concerns regarding the division of powers come to mind when judges influence the allocation of public resources – and are again more likely to be raised in financially difficult times. Who should determine whether money is spent, on the one hand, on more doctors, safer roads, and more bobbies on the beat, or, on the other hand, on the compensation of single victims of unlawful state activities, the legal costs incurred by public authorities when fighting claims in court, and additional (and often costly) internal safeguards in order to prevent things from going wrong in the first place? 4

Hospitals, a constant source of state liability in Germany, are being privatised at a high rate; the percentage of private clinic beds has increased from 4% in the early 1990s to currently 10% (see statistics given by Der Spiegel (Hamburg) of 18 September 2005). The privatisation of the federal postal service (Deutsche Bundespost) and local utilities was expected to substantially reduce the overall amount of compensation paid on the federal and municipal levels; see Infratest Burke Rechtsforschung, Zur Reform des Staatshaftungsrechts (1999), vol. 1, 8.


45

3. State Liability in Germany A closer look at Germany – a system which initially addressed the tortious liability of public servants over a century ago, illustrates some of these issues. Of the many different causes of action which are summarised under the heading ‘state liability’ (Staatshaftung) in Germany, this analysis will thereby be limited to the breach of an official duty (Amtshaftung).5

6

The German Civil Code6 established the personal delictual liability of public officials in 1900 by stating as a general principle that officials who wilfully or negligently commit a breach of an official duty incumbent upon them towards a third party shall compensate that third party for any damage arising from the breach.7 The Code does protect individual officials to some extent by excluding, inter alia, their obligation to come up for the damage in cases of simple negligence if the injured party can obtain compensation elsewhere,8 but it was left to the States of the German Empire and – later – the Imperial Constitution of 1919 to introduce a general rule which channelled this personal liability of public officials to the relevant public authority.9 The German constitutional legislator of 1949 chose to confirm this fundamental change in the operation of § 839 BGB. According to art. 34 of the German Constitution,10 liability rests first and foremost with the state or public authority that employs a person who violates an official duty vis-à-vis a third party, and recourse is only allowed if the individual officer in question acted intentionally or with a particularly high degree of negligence.11 If the requirements for § 839 BGB and art. 34 BL are met, the state thus takes responsibility for the tort committed by the official, and the tortfeasor – despite the wording of the Civil Code – will not be party to the action.12 At its core, this structure still reflects the 19th century notion of a personal liability of public officials, but is strongly tempered by modern considerations of a state which should accept responsibility for the

7

5

6 7

8

9

10 11

12

For a brief overview (in German) of the various causes of action see F. Ossenbühl, Staatshaftungsrecht (5th ed. 1998) 1/2. Bürgerliches Gesetzbuch (BGB). § 839(1) BGB. This provision was modelled along the lines of Prussian and Saxon law; see PrALR II. Teil 10. Titel §§ 88–91 (for Prussia) and § 1507 SächsBGB (for Saxony). § 839(2) and (3) BGB declare: (2) If an official violates his official duty by a decision in a legal issue, he is only responsible for the harm arising from this if the violation of duty consists of a criminal act. This provision has no application to a refusal or delay which is contrary to duty in exercise of the office. (3) The duty to compensate does not arise if the victim has intentionally or negligently refrained from averting the harm by the use of a legal remedy. Art. 131 of the Constitution of Weimar (Weimarer Reichsverfassung, WRV). For more details see Ossenbühl (fn. 5) 7–9. Grundgesetz (Basic Law, BL). Art. 34 BL declares: If a person, in the exercise of a public office entrusted to him, violates his official duty to a third party, liability shall rest principally with the state or public body that employs him. In the event of intentional wrongdoing or gross negligence, the right of recourse against the individual officer shall be preserved. The ordinary courts shall not be closed to claims for compensation or indemnity. H. Jarass in: H. Jarass/B. Pieroth, Grundgesetz für die Bundesrepublik Deutschland (6th ed. 2002), Art. 34, no. 23.

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negligent wrongs committed by its servants. The constitutional solution adopted in 1919 – and later transferred to the Basic Law – thereby finds its justification, first, in the desire to avoid overly defensive attitudes of public officials, especially when confronted with emergency situations requiring an immediate response, and, secondly, an overall duty of the state to offer protection to individuals who perform public functions on its behalf. An additional consideration lies in the fact that the state is thought to be a more solvent debtor than the individual public employee.13

8

On a deeper – constitutional – level, state liability is justified by the rule of law. The executive is bound by the law,14 and citizens adversely affected by unlawful activities of the state have a right to judicial review.15 The duty of the state to provide compensation is a third element in this fairly robust network of constitutional protection. It is important to point out, however, that this combination of rules found in the Civil Code and the Constitution only creates a very basic legal framework of protection, and requires more specific rules and principles in order to become fully operational in practice. One reason for this is the catch-all character of these provisions, which are, in principle, applicable to any type of state activity. This is where the courts have appeared on the scene, producing, over the decades, both a rich and complicated jurisprudence involving, inter alia, medical malpractice, law enforcement by public prosecutors, general police activity, decisions of health and safety authorities, building and planning law, duties of care concerning the safety of publicly accessible roads, waterways or harbours, activities of the military, data protection, warning statements concerning defective products, social security, and the participation of state employees in public traffic. Equally diverse is the type of official duty which, if violated, can merit compensation. Starting with the most basic obligation to act lawfully, German courts have developed a dense framework of public duties such as the duty not to act ultra vires, to adhere to the established administrative procedures in a given area, to exercise any discretion (Ermessen) according to the established principles of administrative law, to act in accordance with the idea of proportionally, to make decisions in due course, to provide the citizen with correct information, to act in a way which is consistent with previous administrative practice (both in general and the specific case), and, finally, the duty to counteract any illegal measures previously taken by a public authority in a particular situation.16 The courts have, furthermore, expanded the scope of state liability quite considerably by reducing the impact of the fault requirement found in § 839 BGB, and by adopting a fairly restrictive approach to the interpretation of the statutory privileges contained in that provision. German public authorities have thus been less and less able over the years to successfully invoke the limitations to the li13 14 15 16

See Ossenbühl (fn. 5) 9/10. Art. 20(3) BL. Art. 19(4) BL. A good English introduction to German administrative law is provided by M. Singh, German Administrative Law in a Common Law Perspective (2nd ed. 2001).


47

ability of the individual official established by the Civil Code, though some pockets of protection continue to exist.17 This brief assessment of German law dealing with the delictual liability of public bodies for breach of an official duty thus indicates, on the one hand, that courts have exerted an unusually great influence in shaping the development in this area of tort law,18 and, more importantly, a tendency of this jurisprudence to gradually expand the liability of public authorities. This has, on the other hand, not led to particularly serious discussions about the role of judges in determining the ways in which public funds are put to use. An explanation for the acceptance of this judicial influence on public spending can be found on the constitutional level. Art. 34 BL is not only a technical provision which redirects the claim of the citizen against the individual public official to the responsible public authority; the article also contains a fundamental constitutional choice to compensate – in principle – wrongs committed by the state. This decision – in conjunction with the rule of law – seems to offer a powerful legal basis for what Lord Bingham identified as “a rule of public policy which has first claim to the loyalty of the law: that wrongs should be remedied.”19 In Germany, budgetary constraints have thus far not been raised as an argument to undermine this principle, and courts have been willing to enforce it regardless of the potentially negative effects of their decisions on the financial position of public authorities. Interesting exceptions, however, do exist. A recent example is the degree of care required by public authorities in the maintenance of roads in the eastern parts of the country following German reunification. In dealing with claims of motorists who had suffered accidents due to the poor condition of roads and highways in the area of the former German Democratic Republic, courts were for some time willing to accept a lower level of safety in the light of the huge financial and administrative burdens caused by years of neglect at the hands of the former regime.20 This standard has subsequently been raised to Western levels.21 Of wider importance is a second exception concerning the compensation of damage caused by unconstitutional statutes enacted by the German legislator. In a line of cases reaching back to 1987, the Federal Supreme Court22 has rejected claims of victims with a view to, inter alia, the budgetary prerogative of Parliament (Haushaltsprärogative des Parlaments).23 But these examples are, as stated, exceptions to the rule that 17

18

19 20

21

22 23

E.g., in case ambulances or police vehicles invoke special rights of way under § 35 Straßenverkehrsordnung (Road Traffic Ordinance) or if public authorities act to avert immediate dangers to the public (polizeiliche Gefahrenabwehr). A feature noted by many German writers on the issue; see, e.g., Ossenbühl (fn. 5) 3 (“Staatshaftungsrecht ist … case law”) and C. Stein/P. Itzel/K. Schwall, Praxishandbuch des Amts- und Staatshaftungsrechts (2005) 3 (“richterrechtlich geprägt”). X v. Bedfordshire County Council [1995] 2 Appeal Cases (A.C.) 633, CA at 663. See KrG Potsdam Versicherungsrecht (VersR) 1993, 1501 ff. and KG Berlin VersR 1993, 1371 ff. See OLG Brandenburg VersR 2001, 1259 ff., OLG Dresden VersR 2001, 1260 ff. and OLG Brandenburg VersR 2002, 504 ff. Bundesgerichtshof (BGH). See BGHZ 100, 136 (at 145 ff.), BGHZ 102, 350 (at 358 ff.) and BGH VersR 1988, 1046 ff.

9

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German courts will not usually consider the economic consequences of their judgments for the public purse.

10

The German legislator, on the other hand, has recently lost its appetite in state liability. An ambitious reform of the law, triggered by academic debates in 196824 and launched more than a decade later,25 was aimed at a simplification of the rules and, more importantly, at providing a higher level of protection for the citizen. The fate of this reform project is interesting in our specific context. The State Liability Act of 198126 was declared unconstitutional due to a lack of federal legislative competence,27 but when this competence was eventually introduced through an amendment of the Basic Law in the context of a limited revision of the Constitution following German reunification,28 the resulting opportunities were not pursued with much enthusiasm. Interestingly, German reunification also saw the survival of a stricter form of state liability in some parts of the former German Democratic Republic, where the State Liability Act of 196929 continues to be in force – with some modifications – as regional legislation (Landesgesetzgebung).30 The language of the Unification Treaty thereby expresses strong political support in favour of a more coherent and protective solution for the country as a whole,31 but this did not translate into substantive changes of the law. There are strong indications that financial concerns, especially regarding the introduction of a direct and strict liability for wrongs committed by public authorities, lie at the heart of this legislative restraint. A comprehensive analysis of the financial implications of such an approach for public budgets on all three administrative tiers of the system was initiated by the Federal Ministry of Justice between 1993 and 1995,32 but successive governments – both centre-right and centre-left – have thus far refrained from taking the project forward. In a written response to a parliamentary inquiry raised by members of the Liberal Party in October 2004, the former Schröder Government did acknowledge that a more coherent system of state liability based on a primary obligation of public authorities to compen-

24 25

26 27

28

29

30

31 32

See the deliberations of the 47th Deutscher Juristentag, Volume II (1968), L. 145. For more information on the reform discussions of the 1970s see E. Klein/A. Krekel in: Soergel, Kommentar zum Bürgerlichen Gesetzbuch, Band 12 (13th ed. 2005), Anh § 839, no. 20–22. Staatshaftungsgesetz of 26 June 1981, BGBl I, 553 ff. BVerfGE 61, 149 ff. For a readable (German) account of this decision see T. Linke, BVerfGE 61, 149 – Staatshaftungsgesetz. Das Ende einer Reform: Bundesstaatlichkeit gegen Rechtsstaatlichkeit? in: J. Menzel (ed.), Verfassungsrechtsprechung (2000) 332 ff. Art. 74(1) no. 25 BL; Gesetz zur Änderung des Grundgesetzes of 27 October 1994, BGBl I, 3146. For an account of the reform discussions leading up to this amendment see E. Klein/M. Breuer in: Soergel, Kommentar zum Bürgerlichen Gesetzbuch, Band 12 (13th ed. 2005), Anh § 839, no. 26–32. Gesetz über die Regelung der Staatshaftung in der Deutschen Demokratischen Republik of 12 May 1969, GBl I, 34 ff. See Art. 9(1), (2) in conjunction with Schedule II, Chapter III, Part B: Bürgerliches Recht, Subsection III, no. 1 of the German Unification Treaty (Einigungsvertrag) of 31 August 1990, BGBl II, 889 ff. See Unterrichtung der Bundesregierung zum Einigungsvertrag, BT-Dr 11/7817, 63. Infratest Burke Rechtsforschung (fn. 4).


49

sate the citizen across the board remained a desirable political aim;33 the additional estimated annual costs of over € 500 million, however, seem to have forced this item to the lower end of the political agenda, where it is highly likely to stay in the foreseeable future. This brief exposition of some German developments indicates that financial constraints have prevented the legislator from introducing stricter forms of liability for wrongs committed by public officials in the exercise of their duties, but that these pressures have usually not prevented the courts from developing the law incrementally and increasing substantially the potential liability of the state in many areas.

11

4. The English Scenario Arguments of public policy have, on the other hand, led English courts to adopt, in many cases, a more restrictive approach to the liability of public authorities. In principle, statutory utilities, local authorities, or government departments can be liable in tort for acts or omissions in just the same way as private individuals. The legal basis of such claims is to be found in a wide variety of different tort actions including negligence, trespass to the person, false imprisonment, trespass to property, misfeasance in a public office, and liability for the breach of a statutory duty.34 The development of negligence, in practice certainly the most important of these categories, does, however, provide material for some interesting comparisons. Firmly established in the middle of the 19th century, the liability of public bodies for negligence initially expanded; Crown immunities were gradually reduced,35 and limitations on the liability of local authorities based on the Public Authorities Protection Act of 1893 came to an end in 1954.36 The Anns case of 1978,37 a decision concerning the liability of a local authority for the negligence of its inspectors in failing to exercise with due care the statutory power to check the foundations of houses, further expanded governmental liability by drawing a distinction between so-called ‘operational negligence’ occurring in the course of day-to-day administrative activities, and the more fundamental decisions of public policy, where the House of Lords was willing to accept a limited protection of public authorities from civil liability.

12

The 1990s then saw a turn of the tide. A series of cases including the Hill decision of 198838 and the Osman case of 199339 – both involving police investi-

13

33

34

35

36 37 38

39

Antwort der Bundesregierung auf die Kleine Anfrage der Abgeordneten Rainer Funke, Daniel Bahr (Münster), Rainer Brüderle, weiterer Abgeordneter und der Fraktion der FDP – Drucksache 15/3859 – of 20 October 2004, BT-Dr 15/3952. For details see B.S. Markesinis/S. Deakin/A. Johnston, Markesinis and Deakin’s Tort Law (5th ed. 2003) 359–413. See the Crown Proceedings Act 1947, which restricts the immunity of the Crown to a very limited number of areas. Law Reform (Limitation of Action etc.) Act 1954. Anns v. Merton London Borough Council [1978] A.C. 728. Hill v. Chief Constable of West Yorkshire [1988] 1 Weekly Law Reports (W.L.R.) 1049; [1989] A.C. 53. Osman v. Ferguson [1993] 4 All England Law Reports (All E.R.) 344.

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gations – limited the liability of public bodies for negligence; at one point it seemed quite possible that authorities in many sectors such as policing, welfare, education, and criminal prosecution could eventually even enjoy quite wide-ranging immunities under English Common law. Various public policy arguments were thereby brought forward against the imposition of duties of care under the third limb of a test developed in the Caparo decision of 1990.40 According to the principles set out in the judgment of Lord Bridge in that case, novel situations attracting liability on the basis of negligence should depend on whether, inter alia, the imposition of a duty of care would be considered ‘fair, just and reasonable’. Arguments brought forward against the acceptance of new duties of care thereby included the desire to avoid overly defensive practices which public officials might develop in order to avoid litigation, the disruption of highly sensitive relationships between some public bodies such as social services and the citizen (for example in care proceedings), and the fear of countering the statutory purposes of administrative activities by forcing the concerned authorities to take a too careful approach in the performance of their regulatory duties.41 More importantly, judges also accepted the argument that the imposition of a duty of care could lead to an undesirable diversion of the limited resources available to the state. In the Hill case, involving the claim of a mother against police authorities which had (apparently) failed to catch the murderer of her daughter due to a negligently conducted investigation of similar crimes, Lord Keith held that “a great deal of police time, trouble and expense might be expected to have to be put into the preparation of the defense to the action and the attendance of witnesses at the trial. The result would be a significant diversion of police manpower and attention from their most important function, that of the suppression of crime. Closed investigations would require to be reopened and retraversed, not with the object of bringing any criminal to justice but to ascertain whether or not they had been competently conducted.”42 Lord Hoffmann, went down a similar route when declaring in the Stovin decision some years later that “the creation of a duty of care upon a highway authority, even on grounds of irrationality in failing to exercise a power, would inevitably expose the authority’s budgetary decisions to judicial inquiry. This would distort the priorities of local authorities, which would be bound to play safe by increasing their spending on road improvements rather than risk enormous liabilities for personal injury cases. They will spend less on education or social services.”

40 41

42

Caparo Industries Plc v. Dickman [1990] 2 A.C. 605. For a more detailed analysis of these arguments see Markesinis/Auby/Coester-Waltjen/Deakin (fn. 2) 73 ff. Hill v. Chief Constable of West Yorkshire [1989] A.C. 53 at 63.


51

He went on to say that it was “important, before extending the duty of care owed by public authorities, to consider the cost to the community of the defensive measures which they are likely to take in order to avoid liability.”43 Similar statements can be found in cases involving claims that a local authority negligently and in breach of its statutory obligations failed to make use of its powers to initiate care proceedings despite indications that children had been subjected to serious abuse or neglect by their parents, and in others involving unlawful detention by the Crown Prosecution Service. More recent decisions of the House of Lords indicate that English judges might approach these public policy arguments with greater suspicion in the future, especially when human rights considerations44 come into play.45 English courts, however, still remain fairly reluctant to impose liability for negligence on public authorities if they fear a detrimental effect for the proper performance of a statutory duty. Though not always openly addressed in judgments, the four main arguments against the establishment of state liability – costs, intimidated public officials, the diversion of energies from the provision of services to the deflection of claims, and a court system paralysed by huge numbers of litigants – continue to exert considerable influence on this part of English law. 5. The Financial Burdens of State Liability Courts in Germany and England have thus, on the whole, reacted differently to the financial pressures which have emerged in both systems over the past years. In Germany, ambitious legislative reform proposals have run out of steam with the emergence of a more difficult economical environment in the 1980s, but this has left unaffected the pro-plaintiff stance of the courts, which have in many cases expanded the liability of public authorities regardless of the financial implications for public budgets. The restrictive policy arguments which have influenced some English court decisions in the same period of time have not featured in German judgments, and even the political decisionmakers in the country – increasingly enthusiastic about new ways of saving money – have not openly invoked budgetary difficulties as a reason to effectively scrap the reform initiatives of the 1970s, or to even cut back the current level of protection in the light of empty public coffers. Politicians have rather let the courts run the show, which begs the question whether the financial burdens of state liability are, indeed, as serious as often assumed.

14

Despite the generally favourable view that judges have taken towards the claims of victims suffering from wrongs committed by the state over the past

15

43 44 45

Stovin v. Wise [1996] 3 W.L.R. 388 at 419. Raised under the Human Rights Act 1998. See Barret v. Enfield London Borough Council [2001] 2 A.C. 550 and Phelps v. Hillingdon London Borough Council [2001] 2 A.C. 619.

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decades, the chances of a plaintiff actually succeeding in a German courtroom are surprisingly slim. Empirical studies indicate that roughly 70% of all lawsuits filed against public authorities fail completely, while another 20% of the plaintiffs see their initial demands substantially reduced by the courts.46 Supporters of a comprehensive legislative reform of German state liability law argue that this low success rate is to a large extent caused by the inherently complex structure of the law and an increasingly important – but not readily accessible – system of court decisions.47 The fairly low number of cases filed in the first place may, however, also be an indication that German public authorities have in practice developed effective strategies to settle disputes out of court, and that only the more desperate plaintiffs actually proceed with litigation. Less than 5,000 lawsuits, representing roughly 4% of all claims raised against public authorities, reached German courts in the mid-1990s each year – a high, but certainly not unmanageable number.48

16

Two further sets of figures should be added to complete the picture. Despite claims of roughly € 550 million brought against public authorities for tortious acts each year, the total amount of all payments made on the federal, state, and municipal levels in the western parts of Germany between 1993 and 1995 averaged only € 155 million per annum.49 Estimates in the United Kingdom have placed the financial burden of English local authorities at £ 50 million.50 While these are quite substantial burdens for public budgets in any country (and are likely to have further increased over the past decade), the figures are nevertheless fairly modest when compared to other areas of state expenditure. The German estimate includes, furthermore, the liability of public authorities for accidents caused in general traffic, costs generated by medical malpractice in publicly run hospitals, and claims against former public entities such as the postal service which have subsequently been privatised. Many of these claims would not fall into the category of state liability in other systems, or would equally be met – as in the case of the National Health System in the United Kingdom – without invoking financial arguments. This is not to say that court decisions do not have the potential of putting public bodies in financially difficult positions. Forcing authorities, for example, to check the safety of trees alongside public roads twice a year (instead of once) in order to meet the standards of care (Verkehrssicherungspflicht) recently established by many higher courts in Germany51 does have a tangible financial effect if you bear in mind that a city the size of Hamburg has 245,000 of such trees to maintain. At an 46

47

48 49 50 51

See Bundesministerium der Justiz, Zur Reform des Staatshaftungsrechts (1977) 161, 197; Infratest Burke Rechtsforschung (fn. 4), Tables B 4.1, K 4 and L 4.1. Ossenbühl (fn. 5) 6; B. Tremml/M. Karger, Der Amtshaftungsprozess (2nd ed. 2004) no. 22– 26. See Infratest Burke Rechtsforschung (fn. 4), Tables TB 1/93-95, TL 1/93-95 and TK 1/93-95. Ibid., Table T 1/93-95. T. Weir, Governmental Liability, [1989] Public Law (PL) 40 (at 61). OLG Düsseldorf VersR 1992, 467 ff. and VersR 1997, 463 ff.; OLG Brandenburg OLGR 2002, 411 ff.; OLG Hamm VersR 2003, 1452 ff. BGH VersR 2004, 877 ff.; H.-J. Hötzel, Verkehrssicherungspflicht für Bäume – Zehn Jahre Rechtsprechung zum Visual Tree Assessment, VersR 2004, 28 ff.


53

annual cost of € 40,000 for 10,000 such checks,52 this jurisprudence thus leaves a municipality of this size with an extra bill of roughly € 980,000 – if it decides to comply with this higher standard of care rather than accept the risk of having to pay out more money to injured victims. Compared to the costs generated by the social security system, health care, higher education, or the war against terrorism, these burdens are, however, still quite moderate. A second point to bear in mind is the amount of compensation paid in individual cases. Statistics show that the level of damages awared to victims of state liability are fairly low in Germany, ranging, on average, between € 1,200 and € 1,500.53 While single claims of more than € 50,000 do arise quite regularly, much smaller demands resulting from traffic accidents, for example, make up a considerable share of the annual burden of state liability. Less restrictive approaches in the determination of damages could thus well have a greater financial effect in other systems. 54

17

The negative impact of state liability on public budgets is, finally, strongly reduced by insurance. Federation and States (Länder) in Germany tend to make provisions for potential liability payments directly in their respective annual budgets, but municipalities – which have to bear the lion’s share of state liability since most administrative functions are performed on the local level – usually seek some form of insurance coverage. These special insurance systems spread the loss caused by tortious acts attributed to public authorities, and thus substantially reduce the financial risk for single municipalities.55

18

6. Conclusion Restrictive considerations of public policy which tend to limit the tortious liability of public authorities are appealing in times characterised by increasing financial constraints and will continue to be voiced both in courtrooms and government departments not only for budgetary reasons but also on division of powers grounds. Courts indeed play the decisive role in the development of state liability even in systems like Germany, which by tradition still lean towards a more dominant role of the legislator. We can expect a further increase in the volume of compensation paid to the victims of unlawful state activities in the years to come as trends such as e-government create new risks, and the influences of Community law start having a wider effect. Recent court decisions in Germany also show that authorities dealing with highly complex questions of social security law (such as the determination of pensions56) could, in the future, be faced with new types of claims raised by citizens who 52

53 54

55 56

The annual salary of a professionally qualified gardener; see H. Baumgarten, Baumkontrolle in Städten und Gemeinden, in: D. Dujesiefken/P. Kockerbeck (eds.), Jahrbuch der Baumpflege (2004) 171. See Infratest Burke Rechtsforschung (fn. 4), Table T 1/93-95. Markesinis/Auby/Coester-Waltjen/Deakin (fn. 2) note, however, that the awards in France are often far lower, and not far above German levels in England (at 110–113). C. Rothermund, Haftungsrecht in der kommunalen Praxis (3rd ed. 2004) 427. See, e.g., BGH VersR 2004, 606 ff.

19

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rely on the information given to them. German experience, however, also indicates that the overall financial burdens resulting from the tortious liability of public authorities are, at present, still fairly moderate and should not lead to a limitation of state liability in principle.

IV. The Impact of the Jury on American Tort Law Michael D. Green When Helmut first contacted me about speaking at this conference, I was honored and flattered. When he told me what he wanted, my ego grew considerably. Helmut explained that he was looking for an internationally prominent U.S. torts expert, who was articulate, polished, and could speak to an accomplished group of lawyers and academics from many different countries with differing legal systems.

1

He added that he needed a scintillating, captivating speaker for a late afternoon talk when eyelids get heavy and minds grow weary. In an unusual moment of candor and self-awareness, I blurted out, “Helmut, honestly there are a couple of other people that are better for what you want than me.”

2

Helmut did not miss a beat – he rarely does: “A couple! Hell, Mike, there are a dozen, but every one of them has already turned me down.”

3

One of the impressive aspects of the ECTIL meetings that I have been privileged to attend is the multi-lingualism that is evident among you. In unofficial moments, one can hear a conversation in German here, one in French over there, and a third in Italian among another group.

4

I thought that to demonstrate that I belong among such a group, I would deliver my talk in a foreign language. Then, I recalled a biography of Winston Churchill that I read many years ago. Churchill prided himself not only on his oratory skill but also his facility with foreign languages.

5

Churchill had been invited to speak in Paris toward the end of his career, and he decided to deliver his speech in French. He began by observing that “As I look back upon my long career, I find it is divided into two principal parts.” At that point he noticed a stirring in his audience, many had smiles or smirks on their face, a few had burst into outright laughter, and most of the rest of the audience were exchanging glances.

6

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7

Churchill then translated back to himself what he had just said, which literally was: “As I look back at my large rear-end, I see it is divided into two big globes.”

8

Churchill finished his speech in English, and, after reflecting on his experience, I think I’ll do the same.

9

Americans have a complicated relationship with the civil jury. On the one hand, we have such an affinity for them that they are ensconced in the written United States Constitution, which provides: “In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law.”1

10

In addition to the federal constitution, juries are also enshrined in every state constitution. For example, the Florida Constitution is more succinct than our federal provision: “The right of trial by jury shall be secure to all and remain inviolate.”2

11

That the jury system is enshrined in our written constitutions can be traced to the Colonial period of the U.S. We inherited our legal system from England and along with it the jury. But we took the jury one step further, because it served an important buffering function as tension between the colonies and the Crown grew, leading to the American Revolution.3 Hence, the right to jury trial was thought to be one of the fundamental civil rights of this fledgling federation.

12

But the relationship between Americans and the civil jury is complicated – juries often serve as a whipping post for the problems that bedevil the American civil justice system and criticism of them has a long history. The American author Mark Twain wrote: “The jury system puts a ban upon intelligence and honesty, and a premium upon ignorance, stupidity and perjury. It is a shame that we must continue to use a worthless system because it was good a thousand years ago.”4 And as one recent book about the civil jury concluded: “[F]or each advocate of the jury throughout its long history in America, there seems to have been a matching opponent.”5

13

My thesis today is that the institution of the civil jury has had an important, and often underappreciated, effect on the structure of American tort law. In1

2 3

4 5

U.S. Const. Amend. VII; see also C.W. Wolfram, The Constitutional History of the Seventh Amendment, 57 Minnesota Law Review (MINN. L. REV.) 1973, 639, 653–56 (explaining and documenting commitment to civil jury that existed in the late eighteenth century). Florida Constitution (Fla. Const.) Art. 1, § 22. S. Landsman, The History and Objectives of the Civil Jury System, in: R.E. Litan (ed.) Verdict: Assessing the Civil Jury System (1993) 22, 36–37. M. Twain, Roughing It 247 (Am. Put. & F.G. Gilman & Co. 1872). J. Guinter, The Jury in America xiii (1988).

The Impact of the Jury on American Tort Law

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deed, as I have thought more about my topic, I decided that I should not have limited myself to American tort law; rather I think the impact of the jury that I will describe would occur in any legal system that employs a jury. It is dangerous to isolate one variable – the jury – when trying to understand different legal systems. There are so many differences between the American and European legal systems: We are a common law, adversarial system, rather than operating in an inquisitorial manner with a Code, not to mention different cultures, social welfare schemes, perhaps nuanced differences in regulation, as well as very different methods for selecting judges – half of the states in the United States select their judges through elections.

14

Nevertheless, I believe the impact of the jury on the American legal system that I will explain would also be felt in other systems in which it operated. But that is a matter that I hope to have the opportunity to discuss with those of you who are interested in the subject after my formal remarks are concluded and indeed, over the course of the next couple of days.

15

I should confess that I am not here today to make an assessment of the American jury and speak to its desirability – I have considerable respect for the American jury, but I do not propose to do a cost-benefit assessment of it in my remaining time today. Nor do I want to talk about the impact of the jury on the American tort system; everybody knows that the U.S. tort system is the most robust in the world, and that is no secret.

16

The robustness of the U.S. tort system is a function of procedure, legal ethics that sanction contingent fees, entrepreneurial plaintiff’s lawyers, and, to a significant extent, asbestos, which involved a massive wealth transfer that provided the capital for those entrepreneurial lawyers to invest in tort claims,6 and, of course, the civil jury.7

17

That, however, also is not my subject today. I come today to explain why the substance of American tort law is affected by the jury and that – counter-intuitively – our substantive law is not the reason for the U.S. tort system’s breadth. Indeed, with the exception of punitive damages, it is my thesis that U.S. tort law is no more liberal than European tort law and, in many respects, less expansive. And the reason for that shape is, in large measure, attributable to the civil jury.

18

6

7

See S.D. Sugarman, A Century of Change in Personal Injury Law, 88 California Law Review (CAL. L. REV.) 2000, 2403, 2410–11. It is worth mentioning that most research on differences between judges and juries in deciding cases and determining damages find that there is less difference than one might expect. Overall win rates of cases tried to judges are higher than for those tried to juries, but the possibility of a selection effect in which cases get tried to judges and juries must be recognized. For the latest assessment in judge-jury differences, see E. Helland/A. Tabarrok, Judge & Jury: American Tort Law on Trial (2006) 49–67 (concluding that “if juries and judges were given the same cases, the average judge award would be modestly lower than the average jury award, but not overwhelmingly so”).

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19

I want to go back to the early part of the twentieth century, after tort law had emerged from criminal law and the Industrial Revolution had transformed the subject to something more interesting than straying sheep. At that time, two of the titans of American jurisprudence had a conversation. These two judges were our equivalent of Lord Denning.

20

Oliver Wendell Holmes was a member of the Supreme Court and author of the influential book, The Common Law,8 in which he ruminated about the emerging body of tort law and its role in society. Benjamin Cardozo is no less prominent than Holmes, along with him among the single handful of judges whose opinions are well known by all American lawyers, because of the frequency with which they show up in law school texts. The conversation they had was about the respective role of judge and jury in tort cases. To set the stage, let me provide the background landscape:

21

First, recall that we have no Codes in the United States. Thus, judges very self-consciously “make” law. But they split that function with the civil jury and courts have, for a long time, struggled with the division of labor between judge and jury in a tort case.

22

Despite its blending of historical fact and normative judgment, the question of wrongfulness or negligence had long been consigned to the jury for decision, as a matter of “fact.”9 Thus, judges were to have no role in resolving that issue, unless the plaintiff’s evidence was so inadequate as not to provide a sufficient foundation for such a factual finding or when the evidence pointed so overwhelmingly in one direction or another that the trial judge could declare: “No reasonable jury could find otherwise.”

23

In Baltimore & Ohio Railroad v Goodman,10 Holmes, now a member of the U.S. Supreme Court, had the opportunity to employ the ideas he had written about in The Common Law, in 1881.

24

Goodman involved a railroad crossing accident, in which the plaintiff was injured when driving over railroad tracks. Of course, with the emergence of the railroad in the late nineteenth century and the automobile in the early twentieth century, there were many grade crossing accidents. The issue was the contributory negligence by the plaintiff-driver in crossing the railroad tracks without due care.

25

In his commentary about tort law in The Common Law, Holmes made four observations relevant to this subject: 8 9

10

O.W. Holmes Jr., The Common Law (1881). This appears to have evolved from early American law when the jury served the role of deciding both law and fact. That occurred at a time when there were very few trained professional judges or lawyers. With the growth of professionalization, judges began assuming a greater law-providing role. See Comment, The Changing Role of the Jury in the Nineteenth Century, 74 Yale Law Journal (YALE L. J.) 1964, 170, 180–82. 275 United States Reports (U.S., the official reporter for U.S. Supreme Court decisions) 66 (1927).


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1) Standards of conduct are for judges to set forth, while historical facts are for the jury. 2) However, negligence may be submitted to the jury, even when the doubt is about the appropriate standard of care rather than the facts. 3) Nevertheless, submission to the jury is not required and when a “state of facts often repeated in practice,” exists, then judges should set forth the appropriate standard of care, leaving to juries only the question of historical fact. 4) Setting forth those specific standards of care would further an important function of law: “narrow[ing] the field of uncertainty.”11 And in Goodman, that is just what Justice Holmes did: “When a man goes upon a railroad track he knows that he goes to a place where he will be killed if a train comes upon him,” he must take precautions, including stopping and getting out of his vehicle if unable to determine whether a train is bearing down on him.

26

In one respect, Holmes’ crafting of a specific rule for railroad crossing accidents is about the classical conflict between rules and standards that exists independent of the appropriate role of juries: Rules that are narrow and specific provide certainty of outcome and can be easily applied, but may produce harsh results because of their rigidity.

27

General standards, by contrast, provide flexibility and the ability to account for all circumstances – thus enhancing fair outcomes, but they create uncertainty and the risk that they will be arbitrarily applied by the arbiter entrusted with them.

28

But specificity and certainty was not the primary goal of Holmes: rather he was interested in reining in the authority of the jury: By declaring the standard of care in railroad crossing accidents, Holmes reclaimed significant authority for courts in tort cases by providing a specific standard for what constitutes fault. The jury would continue to decide what happened but courts would prescribe what constitutes due care.

29

Seven years later, Cardozo had replaced Holmes on the Supreme Court (two other justices had also been replaced) and in another railroad crossing case, Pokora v Wabash Railway Co.,12 the Court effectively overruled Goodman, declaring that exiting the car and reconnoitering was not required of a driver in all cases.13

30

11 12 13

See G.E. White, Justice Oliver Wendell Holmes (1993) 161–63. 292 U.S. 98 (1934). Cardozo, a pragmatist, does not appear to be motivated by a concern about the appropriate role of the jury in his torts opinions. He could be quite cavalier about rejecting jury verdicts with which he disagreed. See, e.g., Adams v Bullock, 125 Northeastern Reporter (N.E.) 93 (N.Y. 1919); Greene v Sibley, Lindsay & Carr Co., 177 N.E.2d 416 (N.Y. 1931). Nevertheless, Cardozo’s biographer reports, “Although Cardozo was assiduous in protecting the role of the jury, he did not hesitate to take an issue away from the jury when his reading of a record convinced him that the factual issue should be decided only one way.” A.L. Kaufman, Cardozo (1998) 255–56.

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31

In Pokora, the facts were such that the plaintiff would likely have been less safe stopping and exiting the car because of an obstructed view and the delay in returning to the car and getting across the tracks. Thus, it was for the jury to decide what constituted appropriate conduct and rules of conduct were inappropriate because of the wide variation in circumstances even in something as common as railroad crossings, thus establishing an ethic of particularism for tort cases.

32

The important point about the Goodman/Pokora pair is the impact on the authority of the jury: With a general “reasonable care” standard, the jury would be empowered to decide cases, unencumbered by the normative views of the judge as to the appropriate standard of conduct. It is common wisdom that the Cardozo view of jury hegemony won out and that the American tort system reflects that view.

33

Judge Richard Posner, who will also take his place in the Jurisprudential Hall of Fame along with Holmes and Cardozo, observed recently that while contract law has a number of constraints to limit jury authority: “Tort law does not have these screens against the vagaries of the jury.”14 That view is widely accepted today, but it neglects, I believe, a more refined understanding of American tort law, an understanding I am delighted to report that has benefitted from my experience with the European Group on Tort Law (EGTL) and learning about European tort law.

34

How has the jury provided authority to prescribe norms in individual cases as well as to determine the facts, affected the shape of American tort law?

35

There are four examples I hope, if time permits, to discuss this afternoon that illustrate the impact of the jury on American tort law: 1) The first involves the role of duty in negligence law. 2) The second comes from the American experience with strict products liability 3) The third involves a dramatic revolution in evidence law. 4) And the fourth involves the transition from contributory negligence constituting a complete bar to recovery to comparative responsibility – apportioning liability, which is now the law throughout the U.S.

36

In discussing the role that “duty” plays in American law, I want to simplify and focus on personal injury and put to the side economic loss, emotional disturbance and affirmative obligations such as rescue. Duty is important in the allocation of power between judge and jury because, unlike negligence, duty is an element for the court to decide – it is law.

14

All-Tech Telecom, Inc. v Amway Corp., 174 Federal Reporter, Third Series (F.3d) 862 (7th Cir. 1999).


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When I look at the Principles of European Tort Law, I find no mention of duty playing a role in the realm of personal injury.15 I recognize the limitations on scope of liability in Art. 3:201 of the Principles, but that is an analog to the U.S. concept of proximate cause, although the wording of the Principles is more felicitous than the unfortunate “proximate cause.” But this concept is distinct from the idea of duty and the role it plays in American tort law.

37

Now before I explain one function that “duty” serves – in American law – a consequence of our use of the jury – let us recall that negligence involves consideration of the danger involved in the activity, the foreseeability of harm, and the costs of precaution, factors common to European and American law.16

38

So, consider Posecai v Wal-Mart Stores, Inc.,17 and its curious statement of when a duty exists for a commercial business with regard to security for its customers while on the store property: The court said that whether a duty exists and its extent in the precautions to be taken involve the foreseeability of a crime risk and the magnitude of that risk.18

39

But if whether a duty exists and its extent are based on the same factors as the negligence determination, what remains for a jury to do that is different from what the court does in deciding the duty matter? To put the point slightly differently, what the Posecai court did in crafting its law of the duty of retailers was to retain a gatekeeping function for the court: Only when a court decides under the duty rubric that there was negligence may the jury be permitted to

40

15

16

17

18

Duty does play a role in English law – indeed a surprisingly fulsome role given the absence of juries in virtually all tort cases. W.V.H. Rogers, Winfield & Jolowicz on Torts (16th ed. 2002) 104-34. Duty also is employed in Canadian torts jurisprudence. See Childs v Desormeaux, [2006] Supreme Court Reports (S.C.R.) 18; A.M. Linden/L.N. Klar/B. Feldthusen, Canadian Tort Law (12th ed. 2004) 281–312. This may be the result of historical practices developed during the day of juries. Compare: European Group on Tort Law, Principles of European Tort Law Art. 4:102(1) with Restatement (Third) of Torts: Liability for Physical Harm § 3 (Prosposed Final Draft No. 1, 2005). 752 Southern Reporter, Second Series (So.2d) 762 (La. 1999); see also Herrera v Quality Pontiac, 73 Pacific Reporter, Third Series (P.3d) 181, 187 (N.M. 2003) (“For our duty analysis, ‘it must be determined that the injured party was a foreseeable plaintiff. … that he [or she] was within the zone of danger created by [the defendant’s] actions’ … .”) (alteration in original) (quoting Calkins v Cox Estates, 792 P.2d 36, 38 (N.M. 1990)). The court stated: The foreseeability of the crime risk on the defendant’s property and the gravity of the risk determine the existence and the extent of the defendant’s duty. The greater the foreseeability and gravity of the harm, the greater the duty of care that will be imposed on the business. A very high degree of foreseeability is required to give rise to a duty to post security guards, but a lower degree of foreseeability may support a duty to implement lesser security measures such as using surveillance cameras, installing improved lighting or fencing, or trimming shrubbery. The plaintiff has the burden of establishing the duty the defendant owed under the circumstances. The foreseeability and gravity of the harm are to be determined by the facts and circumstances of the case. Id. at 768.

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hear the case and decide if it, also, finds the defendant’s care to be negligent and therefore subject to liability.

41

This illuminates one of the roles duty serves in American tort law: Ordinary usage of “duty” means “something that one is expected or required to do by moral or legal obligation.”19 But, when used in a tort case, in which the default is a duty of reasonable care for one who creates risks to others – i.e., non-rescue situations – no-duty is a judicial determination that liability will be removed from the province of the jury for that case or a class of cases.

42

Now, I should explain that sometimes no-duty is employed for explicit and identified policies stated by the court, such as concerns about crushing liability.20 That is consistent with what I understand of European law21 – see Art. 10:401 – and reflects substantive policies embedded in tort law.

43

But the Posecai court’s use of foreseeable risk and available precautions employs the specific facts of a case for the court to determine whether a case should be submitted to the jury.

44

There is, in addition, another use of foreseeability that courts employ – once again to keep a rein on the jury and the scope of liability that it might otherwise impose. This entails the use of categorical foreseeability – to withdraw a category of cases from consideration, once again on the grounds of duty. Categorical foreseeability, by contrast with its use in Posecai, entails consideration of the foreseeability of harm for a category of cases.

45

Those categories may be broad: i.e., landowners’ duty to trespassers on their land; or may be quite narrow, such as occurred in a California case in which a fast food restaurant patron was injured when a clerk failed to comply immediately with the demands of a robber, and the court declared that the victims of robberies have no duty to others who may be injured in the course of the robbery.22

46

Another example of this use of categorical foreseeability occurred in a Texas case in which an injured person brought suit against the social provider of alcohol to an intoxicated driver who ran into the plaintiff.23 In deciding that the social hosts had no duty and therefore no liability, the court relied in part on 19 20 21

22 23

Webster’s New Universal Unabridged Dictionary (1996) 608. E.g., Strauss v Belle Realty Co., 482 N.E.2d 34 (N.Y. 1985). The concern with crushing liability is reflected in the reduction section, Art. 10:401. I well recall the controversy in EGTL meetings about this clause, but that is consistent with controversy in the U.S. about whether defendants who cause great harm should be relieved of the burden. Kentucky Fried Chicken of California, Inc. v Superior Court, 927 P.2d 1260 (Cal. 1997). Graff v Beard, 858 South Western Reporter, Second Series (S.W.2d) 918 (Tex. 1993). Another is a somewhat older case, in which a Pennsylvania court held that bank robberies were not sufficiently foreseeable for a bank to have a duty to train its tellers in how to respond to such an event. Noll v Marian, 32 Atlantic Reporter, Second Series (A.2d) 18 (Pa. 1943).


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the unforeseeability of a host of a party that any guest would pose a risk to others.24 The Third Restatement of Torts is quite critical of such use of foreseeability as a ground for non-liability, explaining that whether danger is foreseeable depends on the specific facts of the case – in some cases it will be evident to the social host that a guest poses a risk; in others, there may be no clue.25

47

So, if this evening, Helmut, in an effort to keep me from elaborating further on my remarks, plies me with a dozen drinks, and then half a dozen more for good measure, I should think it quite foreseeable that he has unleashed a potent weapon on the citizenry of Vienna. But this withdrawal of liability reveals the courts’ concern about the consequences of leaving to juries to sort out those cases in which foreseeability exists from those in which it does not.

48

My second example comes from strict products liability. As you know, the U.S. was the first to adopt strict liability for product sellers; in 1965, the Second Restatement of Torts was published with § 402A, imposing strict liability for defective products. True to its contract/warranty lineage, the Restatement defined defectiveness in terms of consumer expectations: When a product failed to meet reasonable consumer expectations of safety it was defective.

49

Twenty years later in 1985, the EU Directive on products liability similarly adopted an expectations-based standard for defect in Art. VI. At that time, American and EU law were in accord.

50

But by the mid-1980s, American courts were confronting the question in design defect cases of how safe we expected product manufacturers to make their products. Virtually any durable good can, by spending more money or sacrificing functionality, be made safer. And the inadequacy of a consumer expectations test, employed by a jury, for providing guidance and limits when, for example, an automobile is driven into an 8 inch-hole in the road or an industrial machine does not have a safeguard interlock to prevent it from being used with its safety guard removed was becoming evident. The consumer expectations test was just too amorphous in these kinds of cases for judicial comfort.

51

24

25

One final and ubiquitous aspect to tort law in the United States is the narrowing of the description of the duty so that it can be withdrawn from consideration under the general reasonable care standard. An example is a Washington court that held that a store had no duty to employ security guards to guarantee the safety of their patrons from all harm. What the store had was a duty of reasonable care and by defining the duty in those terms the court resurrected the approach of Oliver Wendell Holmes in Goodman, yet employing it in an ad hoc manner when the court is discomfitted by permitting jury consideration. Nivens v 7-11 Hoagy’s Corner, 943 P.2d 286 (Wash. 1997). See Restatement (Third) of Torts: Liability for Physical Harm § 7, cmt. j (Proposed Final Draft No. 1, 2005).

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In the late 1990s, the Third Restatement of Torts confirmed the demise of consumer expectations as the basis for design defects and reinstated a negligencelike, risk-benefit standard for these kinds of cases.26 In the hands of the jury, consumer expectations provided too little guidance and insufficient tools for control by the courts to be satisfactory.

53

A related situation occurred in a case, O’Brien v Muskin,27 decided by the New Jersey Supreme Court, one of the leaders of the strict products liability movement, in 1983. In that case, involving a swimmer in an above-ground swimming pool who was injured when diving, the court ruminated about holding the seller strictly liable even if there was no available design change to prevent such injuries. With regard to that possibility, the Court stated: The evaluation of the utility of a product also involves the relative need for that product; some products are essentials, while others are luxuries. A product that fills a critical need and can be designed only one way should be viewed differently from a luxury item. Still other products, including some for which no alternative exists, are so dangerous and of such little use that under the risk-utility analysis, a manufacturer would bear the cost of liability of harm to others.28

54

This was a provocative idea, categorical liability for products whose overall risks outweighed their benefits. It would require consideration of a wide range of consumer benefits and some understanding of the overall risk posed by the product. And while it might have some attractiveness for a handful of products, such as a toy marketed in the 1970s that came with a shaft, pointed end, and fins, along with two targets to be placed on the ground, that had an unfortunate propensity to end up in the limbs and skulls of children playing nearby, it posed a troublesome possibility of juries deciding that alcohol, cigarettes, or even Big Macs were defective and subject the sellers to liability. Thus, it should come as no surprise – given my theme – that the O’Brien court’s suggestions for categorical liability came to naught. The Third Restatement reported when it was published in 1998 that “only one American jurisdiction currently recognizes such a position other than by way of dictum …,”29 reflecting the unwillingness of courts to permit juries this social engineering role.

55

Another influence of the jury on tort law I want to discuss concerns not substantive tort law but the law of evidence. It is no secret that evidence law in a jury system is quite a different matter from evidence rules when the court is the fact-finder. It is also the case that expert witnesses are considerably more problematic when they are selected and prepared in an adversarial system rather than in an inquisitorial one.

26 27 28 29

Restatement (Third) of Torts: Products Liability § 2 (1998). 463 A.2d 298 (N.J. 1983). Id. at 306. Restatement (Third) of Torts: Products Liability § 2, cmt. e, Rptrs. Note (1998).


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But the developments in this area have been revolutionary: One of the most significant in American civil law in the twentieth century – and I must add, driven by concerns about jury decision-making – that make it worth our consideration. For a very long time, in civil cases, courts did very little to limit expert testimony. If an expert was qualified by education or training, he or she was free to testify and it would be left to the jury to decide which expert’s testimony to accept.

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In the latter part of the twentieth century, “toxic torts” have emerged – cases in which the plaintiff suffered disease allegedly as a result of an agent for which the defendant was responsible. This included asbestos, Agent Orange, drugs (such as Contergan), and other chemicals.

57

In 1993, in response to widespread concern about the quality and validity of expert testimony in these cases – and some large case congregations in which jury verdicts were difficult to square with the science that emerged in response to the litigation – here I include Bendectin, a morning sickness drug, and silicone gel breast implants – the United States Supreme Court added another gatekeeping device.

58

In Daubert v Merrell Dow Pharmaceuticals, Inc.,30 the Supreme Court, interpreting the federal evidence code, held that federal judges were responsible for determining whether an expert’s testimony was based on reasoning and methodology that are scientifically valid. Since 1993, federal judges have been requiring experts to set forth the evidence in support of their testimony and explain how that evidence supports the opinions that they propose to proffer.

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Studies performed since 1993 on the impact of Daubert reveal more frequent challenges to the admissibility of proposed expert testimony, courts critically examining the methods and reasoning of experts, and in a substantial number of cases denying admissibility, which often means the end of the case because the expert’s testimony is the only source of proof about an element such as causation.31

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Here we see another effect of the civil jury on law that was raised a century ago by Judge Learned Hand who observed:

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“The whole object of the expert is to tell the jury, not facts, as we have seen, but general truths derived from his specialized experience. But how can the jury judge between two statements each founded upon an experi-

30 31

509 U.S. 759 (1993). S.I. Gatowski et al., Asking the Gatekeepers: A National Survey of Judges on Judging Expert Evidence in a Post-Daubert World, 25 Law and Human Behavior 2001, 433; C. Krafka et al., Judge and Attorney Experiences, Practices, and Concerns Regarding Expert Testimony in Federal Civil Trials, 8 Psych. Pub. Pol’y & Law 2002, 309.

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ence confessedly foreign in kind to their own? It is just because they are incompetent for such a task that the expert is necessary at all.”32

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The final example of jury influence on tort law concerns the longstanding rule of plaintiff’s fault as a complete bar to recovery, which became established in the nineteenth century as negligence emerged as the basis for liability for unintentional harm. This influence, however, has pushed tort law in the opposite direction: expanding liability and replacing a rule now widely viewed as unjust: juries have pushed the law toward a rule of comparative fault and away from contributory negligence. For a long time, American tort law treated liability as an all-or-nothing proposition. Liability existed or did not and if it did exist, it could not be divided.33

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The evolution to comparative apportionment among the parties is now fully complete: The Third Restatement of Torts states the predominant American rule that “Plaintiff’s negligence … reduces the plaintiff’s recovery in proportion to the share of responsibility the factfinder assigns to the plaintiff.”34

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It was no secret during the day of contributory negligence that juries sometimes did not adhere to their instructions, and reduced the plaintiff’s recovery rather than returning a verdict for the defendant. The point is poignantly captured by a judge sitting in a torts case without a jury and therefore fulfilling both the factfinding and law giving role: “Plaintiff’s injuries were not trivial. I am as confident as one can be about these matters that, had the case been tried to a jury, the jury would have determined the sum of plaintiff’s damages in a substantial amount, deducted a portion equivalent of the degree of his negligence, and returned a verdict for the difference. In short, as every trial lawyer knows, the jury would likely have ignored its instructions on contributory negligence and applied a standard of comparative negligence. It would be comfortable for me simply to guess what the jury’s verdict would have been and then file a one-sentence decision holding defendants liable in that amount. Comfortable but false. My duty is to apply the law as I understand it, and I do not understand that, no matter that a jury might do, a judge may pretend to make a decision on the basis of contributory negligence while actually deciding on comparative negligence.”

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The court continued on, reflecting what many courts were thinking at this time at the dawning of the comparative fault era: “Alternatively, and bearing in mind that the law is a living thing, I could ask myself whether it is not time in New York to reconsider the rule of 32

33

34

Learned Hand, Historical & Practical Considerations Regarding Expert Testimony, 15 Harvard Law Review [HARV. L. REV.] 1901, 40, 54. See M. Green, The Future of Proportional Liability, in: S. Madden (ed.), Exploring Tort Law (2005) 352. Restatement (Third) of Torts: Apportionment of Liability § 7 (2000).


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contributory negligence. Is there anything besides habit to recommend it? Does it truly have its origins in nothing but distrust of juries and benevolence to industry?”35 Thus, the pattern of jury resistance to the rule of contributory negligence laid the groundwork for the movement to comparative fault and, more broadly, apportioning liability based on comparative responsibility.36

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There are many more examples of rules whose function is to control juries embedded in American tort law. Juries are the embodiment and most distinctive feature of American tort law – not only in shaping how cases are decided and affecting public perceptions of the system but also in the structure of American tort law.

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35 36

Alibrandi v Helmsley, 314 New York Supplement, Second Series (N.Y.S.2d) 95 (Civ. Ct. 1970). See M.P. Gergen, The Jury’s Role in Deciding Normative Issues in the American Common Law, 68 Fordham Law Review [FORDHAM L. REV.] 1999, 407, 427; R.E. Keeton, Venturing To Do Justice (1968) 74–75.

V. Public Liability in Comparison – England, France, Germany Robert Rebhahn A. INTRODUCTION B. OVERVIEW OF THE NATIONAL SYSTEMS C. THE LIABILITY FOR UNLAWFUL BEHAVIOUR IN DETAIL 1. The Basic Rules a. Germany b. France c. England: (1) General torts (2) Misfeasance (3) Breach of a statutory duty (4) Negligence (a) General; (b) Duty of care; (c) Standard of care 2. In Particular: Liability for Failure to Exercise a Statutory Power, Especially to Protect 3. Causation and Contributory Responsibility 4. Damage and Compensation D. CONCLUSION

A. INTRODUCTION1 1

The topic of State liability covers a wide range of phenomena. Primarily I will try to outline the topic. With regard to the liable entity my study shall comprise all those organisations that function as public authorities, also the local administration and public services. With respect to the activity – action or omission – causing the damage, I will concentrate on areas specific to the State where it can exercise its authority and is so able to interfere with the 1

For a comparative look at State liability see J. Bell/A. Bradley (eds.), Governmental Liability: A comparative study (London, 1991); B. Markesinis/J.-B. Auby/D. Coester-Waltjen/S. Deakin, Tortious Liability of statutory bodies (Oxford, 1999); D. Fairgrieve/M. Andenas/J. Bell (eds.), Tort Liability of public Authorities in comparative perspective (London, 2002); D. Fairgrieve, State Liability in Tort (OUP, 2003). Particularly see in the book edited by Fairgrieve/Andenas/ Bell (eds.), the following studies: R.-A. Surma, A comparative study of the English and German judicial approach to the liability of public bodies in negligence, 355; Sp. Flogiatis, State extracontractual liability in France, England and Greece, 439; B. Markesinis, Unity or division: The search for similarities in contemporary European law, 451. B. Markesinis et al., Tortious Liability, 28 ff.; look at five English cases and how they have been or would be solved in France and Germany. The English cases – which are also dealt with here – are: Hill (fn. 87); X v Bedfordshire (fn. 7); Elguzuoli (fn. 82); Stovin (fn. 7) and W v Essex County (fn. 92).

Public Liability in Comparison – England, France, Germany

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agenda of citizens. This includes especially the police, but also the supervision of private parties. Concerning the element of damage, this analysis looks at pecuniary and non-pecuniary harm that exceeds the bare fact of State interference and the redress for such harm. So three types of remedies will not be examined: First the claim for judicial review to challenge the legality of an act; secondly actions to enforce the due performance of a statutory duty in public law; and thirdly I will not discuss the mere removal of the legal consequences of an individual administrative act after its annulment.2 The topic of State liability is systematised very differently in the three countries. There are a lot of different causes of action. So it seems best to start with a reminder of the basic concepts. Also with regard to State liability there are three basic ways of establishing liability that can be distinguished.3 At the core there is liability for an unlawful behaviour. More specifically, one can distinguish pure liability for unlawful acts from liability for fault, which requires beside unlawfulness also carelessness. From a comparative view, the pure liability for unlawful acts seems in Germany nearer to the “Verschuldenshaftung”, whereas in the common law it is seen more as a strict liability. In the following we find also two other well-known grounds for liability of the State in all countries. The first one is liability for mere interference which means liability for the consequences of lawful and purposeful action, particularly with regard to property or health. Liability for risks means liability for the consequences of certain, lawful or unlawful, conduct or circumstances, because there are reasons to burden someone else, here the State, rather than the injured with such consequences.

2

In the following, liability for unlawful acts will be at the forefront. It is at the centre of all three jurisdictions as far as the liability of the State is concerned. I will leave out liability for lawful interference completely and will mention only briefly liability for risks. State liability based on the Francovich doctrine of the ECJ will also not be considered here. This line of decisions concerns liability for unlawful acts that contain elements of fault.4 In the future it might influence the liability for violation of purely domestic law as well, but this influence is currently not predominant.5

3

Comparative law can either attempt to explain general rules or to point out particularly interesting individual cases. Regarding State liability, individual cases are not especially helpful because they hardly show basic structures.

4

2 3 4

5

Also the liability for faults of the judiciary is not dealt with here. R. Rebhahn, Staatshaftung wegen mangelhafter Gefahrenabwehr (Wien, 1997) 26 ff. See e.g. K. Stanton/P. Skidmore/M. Harris/J. Wright, Statutory Torts (London, 2003) 6.001; B. Schoißwohl, Staatshaftung wegen Gemeinschaftsrechtsverletzung (Wien, 2003); P. Craig/G. de Burca, EU law (3rd ed., Oxford, 2003). See W. van Gerven, The emergence of a common European law in the area of tort law: the EU contribution, in: D. Fairgrieve/M. Andenas/J. Bell (eds.), Tort Liability of public Authorities in comparative perspective, 125; M. Andenas/D. Fairgrieve, Misfeasance in public office, governmental liability, and European influences, in: D. Fairgrieve/M. Andenas/J. Bell (eds.), Tort Liability of public Authorities in comparative perspective, 183.

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This is even true for England. To quote Lord Steyn in Gorringe, “no single decision (of the House of Lords) is capable of providing a comprehensive analysis.”6 Accordingly, my subsequent remarks deal primarily with general rules.

5

State liability is always concerned with a balance between the desire for adequate compensation of mistakes made by the State and the necessity of fulfilling public duties. To quote again Lord Steyn in Gorringe: “On the one hand the courts must not contribute to the creation of a society bent on litigation, which is premised on the illusion that for every misfortune there is a remedy. On the other hand, there are cases where the courts must recognise on principled grounds the compelling demands of corrective justice …; that wrongs should be remedied.” In the three countries the balance is achieved by clearly different means.

6

In the last decade the topic of State liability has received quite a greater share of attention in England than in the other countries. There are at least five House of Lords decisions, which since 1995 have set milestones: Bedfordshire, Stovin, Barrett, Phelps and Three Rivers.7 In the academic literature one should mention at least the books of Harlow and of Stanton, Skidmore, Harris and Wright on Statutory Torts.8 Further there is a Discussion Paper from the Law Commission from 2004 on Monetary Remedies in Public Law.9 In France we have to take note of some decisions of the Conseil d’Etat, e.g. in the Kechichian and the asbestos-case,10 as well of the report about “Responsabilité et socialisation du risque” delivered in the Conseil d’Etat’s annual report of 2005.11 Beside these national contributions there is a remarkable flow of comparative studies. I would like to mention only three: A book of four international co-authors, among them Markesinis and Coester-Waltjen from 1999; the impressive study of Fairgrieve about State liability in tort from 2003, which covers England and France; and the great anthology edited by the British Institute of International and Comparative Law in 2002.12 In these books one can 6

7

8 9

10 11

12

Gorringe v Calderdale Metropolitan Borough Council, [2004] United Kingdom House of Lords (UKHL) 15 para. 2. All decisions of the HL since December 1996 are available on the internet. X (Minors) v Bedfordshire County Council, [1995] 2 Appeal Cases (AC) 633; Stovin v Wise and Norfolk CC, [1996] AC 923; Barrett v London Borough Council of Enfield, [2001] 2 AC 550; Phelps v Hillingdon London Borough Council, [2001] 2 AC 619; Three Rivers DV v Bank of England (No 3), [2000] Weekly Law Reports (W.L.R.) 1220. H. Carol, State Liability (Oxford 2004); see also fn. 5. The Public Law Team (of the Law Commission): Monetary Remedies in Public Law. A Discussion Paper (London, 2004). The paper itself and a discussion upon it are published in the Internet; The Law Commission itself will soon provide for an official report. See www.lawcom.gov.uk/docs/monetary_remedies_disc_paper.pdf and www.lawcom.gov.uk/docs/ Final_report.pdf. See infra no. 54. Conseil d’Etat, Résumé du rapport public 2005: responsabilité et socialisation du risque; See: http://lesrapports.ladocumentationfrancaise.fr/BRP/054000185/0000.pdf. See fn. 1. For a comparative perspective on the Law of Tort in general see: K. Zweigert/H. Kötz, Einführung in die Rechtsvergleichung (3rd ed., Tübingen, 1996) 597; B. Markesinis, The German Law of Torts: A Comparative Treatise (Hart Publishing 2002); W. Wurmnest, Grundzüge eines europäischen Haftungsrechts (Tübingen, 2003); Chr. von Bar, The Common European Law of Torts. Vol. 1 (München, 1998).


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find more descriptive yet in-depth studies as well as flamboyant pleas for more liability.13 My contribution today is situated more on the descriptive side. Not only are the comparative studies anchored more in England. Also on the national level the evolution in England seems to be the most interesting one. Therefore I will deal more with English law than with the other two jurisdictions, which might also meet the interests of tort lawyers, because the English system is the nearest one to the general law of torts. But I am not sure if I have got all the things right.

7

B. OVERVIEW OF THE NATIONAL SYSTEMS14 My next step is to take a brief look at the different systems with a focus on the various causes of action for damages, especially in the case of unlawful behaviour. In any of the three jurisdictions the State does not enjoy full immunity. On the other hand, there are also no general rules on liability in any of the States.

8

In Germany there are several causes of action that are rather un-coordinated. The most important cause is the “Amtshaftung” (public or official liability), which is regulated in § 839 BGB in connection with Art. 34 Grundgesetz (Basic Law). “Amtshaftung” may be invoked in the case of damage which occurs in the exercise of a public office or function, i.e. in the domain of public law. Then the liability of the State, and only of the State, is envisaged for unlawful and faulty, careless conduct. Public liability presupposes behaviour in the area of public law; it is therefore characterised by the dichotomy of public and pri-

9

13

14

The contribution of Fairgrieve is more a descriptive and analysing one, the book of Markesinis and others more an engaged one. For an outline of the national systems of state liability see – beside the comparative contributions from Markesinis et al. and Fairgrieve – especially for: – France: R. Chapus, Droit administratif général, Tome 1 (15th ed., Paris, 2001); and also D. Fairgrieve, State Liability; J. Waline, L’évolution de la responsabilité extra-contractuelle des personnes publiques, Etudes et documents du Conseil d’État n°46 (1994); J.-B. Auby, Répertoire Dalloz – Responsabilité de la puissance publique; Ch. Guettier, La responsabilité administrative (Paris, 1996); J. Moreau, La responsabilité administrative (3rd ed., PUF, Paris 1996); M. Paillet, La responsabilité administrative (Paris, 1996); D. Pouyaud, La responsabilité administrative (La Documentation française, 2004). – Germany: F. Ossenbühl, Staatshaftungsrecht (5th ed. München, 1998); H. Sprau in: PalandtBGB-Kommentar (München, 65th ed. 2006); St. Detterbeck/K. Windthorst/H. Sproll, Staatshaftungsrecht (München, 1999); and with regard to Amtshaftung all Commentaries to the Civil Code; W. Rüfner, Basic Elements of German Law on State Liability, in: J. Bell/A. Bradley (eds.), Governmental Liability, 249–274; G. Brüggemeier, Governmental or state liability in Germany, in: D. Fairgrieve/M. Andenas/J. Bell (eds.), Tort Liability of public Authorities in comparative perspective (London, 2002) 571. – England: Stanton/Skidmore/Harris/Wright (fn. 4); The Public Law Team – Law Commission: Monetary Remedies in Public Law, A Discussion Paper (London, 2004 – see fn. 9); J. Bell, The law of England and Wales, in: J. Bell/A. Bradley (eds.), Governmental Liability, 17–44; B. Markesinis/S. Deakin, Tort law (4th ed. 1999) 354–386; W. Wade/C. Forsyth, Administrative Law (8th ed. 2000) 731 ff.

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vate law.15 Nevertheless the ordinary civil courts and not the administrative courts decide upon claims for public liability. Official liability applies primarily to courts and that central part of the administration where the State acts with its specific authority. In addition, official liability also encompasses social administration as well as some areas of public services such as schools, because one can find also here traces of the State’s specific authority.16 In France in contrast, State liability also covers hospitals, other public services and public buildings,17 whereas in Germany the general rules of private law are applied to these cases. In other words, in Germany the distinction between the specific public administration – it is still called “Hoheitsverwaltung” which translates as sovereign administration – and other types of administration is pronounced and reaches out into the field of State liability. In England, however, this distinction is unknown and in France it is less clear with regard to liability.18

10

The structure of the “Amtshaftung” is relatively clear. This is not so in the case of the second important cause of action, the “enteignungsgleicher Eingriff”, which means “unlawful public authority interference with private property”.19 This cause of action is not in the statute book and many aspects are unclear. It clearly protects only some economic interests, but not pure economic interests. The civil courts and not the special administrative courts have jurisdiction for this cause.20 So it is necessary to distinguish clearly the judicial review of an administrative behaviour (act or omission) in the field of public law from the claim for damages. Beside the two causes of action mentioned, there are some others for lawful interference. But there is no general rule that the German State is liable if a private party is injured by a risk lawfully generated by the State.21

11

In England, the terms liability of public authorities and Crown proceedings deal with a plethora of unwritten causes of action established by case law, which is difficult to systematise.22 The division of private and public law has there no organizing significance. Thus, higher courts have jurisdiction over administrative acts as well as over private law matters. Nevertheless there is a sharp division between the judicial review of an administrative act (or omission) and the claim for damages. Damages (and only damages) can be obtained solely in a private law action. There are scarcely special rules for the liability of public bodies. The rules (torts) applicable to private parties are also 15 16 17

18 19 20 21 22

Palandt-BGB/Sprau, § 839 no. 10 ff. To draw the border-line is sometimes very difficult; see Palandt-BGB/Sprau, § 839 no. 22 ff. See Chapus (fn. 14) 1457–1458; CE 24.1.1990, Université de Lille (elevator); CE 31 March 1999 – Assistance à Marseille (hospital). Markesinis/Deakin (fn. 14) 386. Ossenbühl (fn. 14) 214 ff. This has however now been challenged. Ossenbühl (fn. 14) 364 ff. Markesinis/Deakin (fn. 14) 354; Stanton et al. (fn. 4) 1.001.; The Public Law Team: Monetary Remedies in Public Law, Part 2.


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valid for the State and its public officials.23 This is regarded as an expression of the rule of law according to which everybody is subject to the same rules. But this also means that damages are awarded solely if the administrative behaviour falls within one specific tort. As a consequence, with regard to State liability no distinction is made in principle between liability for interference and activities like building which every citizen could perform. The requirements for liability can be found in various torts. These were developed mainly through case law, also in their application on the State. Today the central tort for public bodies is the tort of negligence. As it is here applied in a very specific way, the State is not really dealt with like a citizen.24 The allusion to equal treatment may explain also why there are hardly any statements on the scope of applicability of the special understanding of the general torts.25 Generally it can be said that English courts – compared to other jurisdictions – tend to limit liability in the public interest, particularly when danger was not prevented, and in the case of pure economic loss.26 Also in France there are no legal provisions which would regulate the “responsabilité de la puissance publique”.27 Nevertheless the rules are without doubt clearer at least with regard to the basics. In general, the administrative courts – and not the civil courts – have jurisdiction over the liability of the “puissance publique”.28 Therefore the Conseil d’Etat has developed the relevant rules, and they differ distinctly from the normal law of torts. There are two limbs of State liability: “responsabilité pour faute” and “responsabilité sans faute”. In the first case, the State is liable for every “faute de service” that directly caused recoverable damage. “Faute de service” means the unlawful exercise of official duties.29 The second limb consists of different cases of liability for risk.30 The special provisions are not only applicable to liability for interference or the area of the German public law, but – as already mentioned – also to other State action. In the case of liability “pour faute”, important restrictions are hidden under the headings of direct causation.31 This State liability is partly broader, partly more limited than liability of private parties. It is broader because it often does not depend on carelessness, and more limited because occasionally a grave mistake will be required.

23 24

25 26

27 28 29 30

31

Bell (fn. 14) 17, 21; Fairgrieve (fn. 14) 16. Markesinis/Deakin (fn. 14) 361 ff.; Fairgrieve (fn. 14) 63 ff. The book of Stanton et al. tries to treat public and private bodies equally with regard to statutory torts, but the lack of general remarks about the liability of public bodies makes the book less coherent than it could be. Fairgrieve (fn. 14) 5; Bell (fn. 14) 17. See Markesinis/Deakin (fn. 14) 364; Fairgrieve (fn. 14) 127 f; and – critical – Markesinis et al. (fn. 1) 73 ff. Chapus (fn. 14) 1401. Fairgrieve (fn. 14) 5. Chapus (fn. 14) 1453; Fairgrieve (fn. 14) 102–105. Chapus (fn. 14) 1484–1520. Responsibility without fault was in France by the judiciary accepted first with regard to the State (1895). See infra no. 61.

12

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As already said I cannot deal with liability for risks. I would only like to stress that the State’s liability for risks is wider and more developed in France than in Germany and very narrow in England. But even in France the core of the liability lies still with the “responsabilité pour faute”.32 Therefore I will turn now to the details of liability for unlawfully inflicted damage.

C. THE LIABILITY FOR UNLAWFUL BEHAVIOUR IN DETAIL 1. The Basic Rules a) Germany

14

In Germany we have two causes of action: public liability and unlawful interference with private property (“enteignungsgleicher Eingriff”). In both cases the State is solely liable. In the case of public liability, the liability of the public official is transferred to the State in the case of damage caused through the exercise of a public office. The public official who acted as a servant of the State and has in this position carelessly inflicted harm is not liable in person vis-à-vis a damaged third party.33

15

The cause of “enteignungsgleicher Eingriff” is a case of pure liability for unlawful acts. The State is liable for all impairment of a legal position protected through ownership that has been caused directly by an unlawful measure in the area of public law. Only an active interference, not an omission will lead to liability.34 Moreover, normally solely damage caused to assets that enjoy protection against everybody or enjoy protection through fundamental rights is recoverable, not pure economic loss.35 Therefore “Amtshaftung” is still of practical consequence beside this cause, particularly with regard to pure economic loss and damage caused by omission.

16

Public liability requires the violation of an official duty (“Amtspflicht”). In most cases the violation of a duty in the relationship between State and citizen is tantamount to a violation of this official duty by a public official. Illegality in the substance of an administrative act normally will establish the violation of an official duty, but is in no way always necessary.36 Mere procedural flaws will not create liability. Liability does not depend upon the fact that an illegal act has already been declared void (has been squashed) by the administrative court; the civil court may then evaluate the illegality for itself.

32 33 34 35 36

Fairgrieve (fn. 14) chap. 5.; Markesinis et al. (fn. 1) 19. Art. 34 Grundgesetz; Palandt-BGB/Sprau § 839 no. 12–16. Ossenbühl (fn. 14) 255. Ossenbühl (fn. 14) 242 ff. Ossenbühl (fn. 14) 43.


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One further precondition of liability is that the violated official duty must exist in favour of the injured party. This relates to the protective purpose of the provision violated. Is it supposed to protect “at least also” the interests of individuals and particularly persons like the injured one? Furthermore, the damage must have been caused by the breach of the official duty, and the public official must have violated the official duty with fault, that is he failed. In German civil law fault always means the failure to meet the objectively required level of care. And the courts do not ask if the official as an individual failed, but if the public body failed to organize properly and in accordance with the required level of care.37

17

German courts are quite willing to use these rules to award damages. If body or assets are unlawfully infringed, the injured can recover damages, even economic loss.38 If the authority unlawfully refuses to grant a licence, the applicant without doubt can recover the damages. Liability occurs if the police careless does not step in against a dangerous obstacle on a road.39 In a similar way liability was established in other cases where the public authority failed or omitted to exercise a statutory power (see infra no. C.2).

18

Compensation according to “Amtshaftung” is excluded if the damaged party can recover compensation in ways other than claiming it from the State.40 This restriction can be practically relevant if the State should be held liable for damage caused directly by a third private party, and when the State, at the same time, can be reproached for not having prevented this immediate wrongdoer from causing the damage. An example is the damage inflicted on a bystander by a dilapidated and then collapsing house for which a demolition order should have been issued by the county. In these cases in Germany the State is not held liable if a claim for compensation can be brought against a third party, e.g. the house owner, and this legal action is reasonable. In this respect the situation is totally different in Austria. Here the State is held liable even if the injured has an action against the private injurer and could easily get compensation from him.

19

b) France

In France, liability for unlawful acts is based on the rule that the State is liable for every “faute de service”. “Faute de service” is basically equated with “illegalité”, i.e. with unlawfulness.41 So the State is liable independently of objective fault, when unlawfulness is accepted without reference to carelessness. In particular with regard to decisions, “illegalité” is independent of such negligence.42 Liability seems to be conceivable even for damage that was not objec37 38

39 40 41 42

Brüggemeier speaks of a “governmental organisational liability”; Brüggemeier (fn. 14) 575. Palandt-BGB/Sprau § 839 no. 37, 131. In these cases liability can (easier) be founded upon the cause of enteignungsgleicher Eingriff or Aufopferung. Palandt-BGB/Sprau § 839 no. 143; Markesinis et al. (fn. 1) 67. § 839 par. 1 s 2 BGB; Palandt-BGB/Sprau § 839 no. 54. Chapus (fn. 14) 1454; Markesinis et al. (fn. 1) 16. Chapus (fn. 14) 1454; CE 26 January 1973 – Driancourt, 77; CE 9 June 1995 – Lesprit, 239.

20

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tively foreseeable and avoidable, and hence seems wider than liability of private parties for their assistants. However, there are still two other requirements for liability: damage and causation. In France these requirements lead to considerable restrictions that can in other countries already be found in the criterion of negligence. Thus the State will not be liable when the decision bears only procedural flaws, but is lawful in substance.

21

When damage has not been caused by a decision but by another activity, “un agissement”, “faute de service” can mostly not be determined as “illegalité”. Then the deciding fact in this case is whether the administration malfunctioned.43 This is often decided only by looking at the result. Thus the mere failure of an appliance can constitute a “faute de service”.44 This comes close to liability for risks.45 However, one does not always go that far.

22

In some areas, the State is only liable for “faute grave”.46 This restriction should abstractly only prevail when the assignment has been particularly difficult. Concretely it is decided on a case-by-case basis by the Conseil d’Etat.47 Today liability is limited to “faute grave” in the following cases: damage by courts, State regulation and control of some economic activities, in particular financial institutions such as banks,48 as well as in case of damage in prisons. Previously, the scope of application of this exception was wider and also included the police.

23

In France a public body can be sued for damages only before the administrative court. And only a public body can be held liable in proceedings before the administrative court. But beside this liability also the person who acted as a servant of the State might be liable in person.49 This personal liability is conceivable only in addition to State liability. It must be claimed at a civil court. Public officials will be personally liable if they are to blame for faute personelle. “Faute de service” and “faute personelle” do not exclude each other today, but are overlapping concepts. “Faute personelle” requires a grave, inexcusable misconduct.50 The borderline is drawn on a case-by-case basis by the Conseil d’Etat. c) England

24

In England the basis for the liability of public authorities or a public servant must be found in individual torts. In contrast to France, unlawfulness of an activity alone does not suffice to establish liability.51 The State is only account43 44 45 46 47 48 49 50 51

Chapus (fn. 14) 1457–1458. CE 5 October 1966 – Del Carlo, 522 (signal appliance); Fairgrieve (fn. 14) 103. See Fairgrieve (fn. 14) 104. Chapus (fn. 14) 1461–1476. Chapus (fn. 14) 1463–1470. Chapus (fn. 14) 1471–1476. Chapus (fn. 14) 1521–1540. Chapus (fn. 14) 1526. Fairgrieve (fn. 14) 41 ff.; Markesinis et al. (fn. 1) 13.


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able if the requirements of one tort are fulfilled, e.g. of negligence. So even if the authority unlawfully refuses a building permit or a licence to engage in a commercial activity, this does not necessarily result in an obligation to compensate the applicant for his economic loss.52 Likewise, the failure to supply water does not lead to compensation, even if the public authorities are under a duty to supply a sufficient amount of water. Also at present in England it is no longer the public official (alone) who is liable but a public body (e.g. police authority or Home Office). The torts relevant here might make the public body directly liable.53 But more relevant in practice is their application via vicarious liability for torts that a worker has committed in the course of employment. If liability is based on a tort, public employers are liable like every other employer according to the rules on vicarious liability for the torts of their employees that have been committed in the course of employment.54 In common law, vicarious liability in extra-contractual situations is wider than in Germany.55

25

In addition to the public authority, it is still the public official who is liable to the injured party.56 This personal liability is excluded by law only in some areas, for example, for local government but not for the police. The official is not exonerated even if he has only followed instructions. Now I will turn to the various torts.

26

(1) Firstly, the general torts which exist in a similar way between private parties if bodily harm or damage to goods occurs are also relevant to public authorities, especially the police. The traditional torts such as trespass to property, nuisance, false imprisonment, public nuisance or defamation normally are applied in the same way as to private parties;57 carelessness is not enough. Instead, deliberate interference without justification is necessary, but also sufficient, even if the official has not behaved carelessly. But case law sometimes limits liability of the State here, because the State has got reasons for deliberately interfering with these values much more often than private parties, and unlawful interference cannot always be prevented.58 Further there is a wide range of specific statutory torts which may apply to private as well as to public bodies, e.g. in relation to data protection or gas storage.59

27

(2) Secondly, there is one tort which deals specifically with public authorities, called misfeasance in public office.60 English lawyers lost sight of it for a long

28

52 53 54 55 56 57 58 59 60

Public Law Team (fn. 9) 2.13. Stanton et al. (fn. 4) 3.027. Bell (fn. 14) 20; Stanton et al. (fn. 4) 3.026–3.027; Fairgrieve (fn. 14) 23. See Zweigert/Kötz (fn. 12) § 41 V (647). Bell (fn. 14) 19 ff. Wade/Forsyth (fn. 14) 738 ff. Bell (fn. 14) 31. They are discussed in Stanton et al. (fn. 4). Stanton et al. (fn. 4) 4.; Fairgrieve (fn. 14) 86 ff.

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time but it was rediscovered in 1982 by the Privy Council, and Lord Steyn in the famous Three Rivers case from 2000 traced it back to 1671.61 The Three Rivers cases deal with the collapse of the BCCI-Bank; the claimants argued that the Bank of England had not sufficiently supervised the merchant bank; the case was settled recently by the parties. Misfeasance demands that damage was caused through the abuse of power in bad faith. For a long time it was considered that bad faith is equivalent to intentional unlawful damage. Only recently in the Three Rivers decision did the House of Lords hold as sufficient for bad faith that the public officer is reckless with the illegality of the proposed action and also reckless with regard to the probability of the damage caused by this action. The new interpretation of bad faith by recklessness is seen by many not only as an alleviation for the aggrieved. It induced some commentators to expect an expansion of State liability as a result of this change,62 also because the tort of misfeasance easily allows recovery for pure economic loss.63 Nevertheless the fault element of recklessness is very difficult to prove, so the tort is only of limited use to claimants.

29

(3) Thirdly, there are two torts – negligence and breach of statutory duty – that also exist between private parties but which are specifically interpreted when applied to a public body. They pose similar questions, but have quite distinct features, and it seems an open question how far they should be assimilated on to the other.

30

The tort of breach of statutory duty is primarily relevant for private parties and comes close to violation of a statute with protective duty.64 However, liability of a public body is only accepted if the statute clearly creates a special duty, and if the absolutely clear intention of the legislator that a wrongdoer shall be liable for damages can be derived.65 To quote again Lord Steyn, “the central question is whether from the provisions and structure of the statute an intention can be gathered to create a private law remedy.”66 Case law makes high demands on this requirement. This can be explained partly with the fact that the main preconditions of the tort are already met with the requirement mentioned. Only causation and damage have still to be examined, fault of the tortfeasor is not required.67 Breach of statutory duty, therefore, is a liability for pure or solely unlawful acts, a form of strict liability.

31

With respect to the question if the statute prescribes an obligation to compensate, it is held particularly important how specific the duty is phrased. In the case of generally phrased duties, liability tends to be rejected. In addition it will be considered if the duty was meant to protect a certain group of citizens 61 62 63 64 65 66 67

[2000] 3 All England Law Reports (All E.R.) 1. See also [2001] 2 All E.R. 513. Andenas/Fairgrieve (fn. 5) 183. Stanton et al. (fn. 4) 4.011.; Fairgrieve (fn. 14) 94. Stanton et al. (fn. 4) 2.; Fairgrieve (fn. 14) 36 ff. Stanton et al. (fn. 4) 2.026–2.039. Gorringe v Calderdale Metropolitan Borough Council, [2004] UKHL 15 par. 3. Fairgrieve (fn. 14) 39.


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or only the public interest. The courts have taken a very restrictive approach, especially with regard to local authorities and welfare or regulatory roles.68 Normally damages will only be awarded if the statute expressly imposes liability. So the Law Lords denied liability for breach with regard to a public body’s duty to look after a child in her parents’ care69 or to house homeless people.70 Also in cases concerning provision of education the House declined to infer a duty which is specific enough for this tort.71 It seems to be difficult to find a case where this kind of action could have succeeded.72 (4) (a) The claimants therefore have to rely mostly on the tort of negligence in its specific form of negligence in the exercise of a statutory power or duty.73 In general, this tort follows the rules for private parties.74 Liability depends especially upon a particular duty of care, which the defendant must owe the injured party, and the breach of this duty. The leading case is still X (Minors) v Bedfordshire, particularly the speech of Lord Browne-Wilberforce.75 The starting point in England is different to that in Germany. There one first asks for the duty and then if it aims to protect the claimant; in England the two questions are seen together. But the question of the duty as such also arises in England.

32

There is a discussion about the relationship between negligence and unlawfulness in the public law sense.76 For a long time it was said that nothing done by a public body within its area of discretion can give rise to liability in negligence. This is no longer valid; today one can say that this “legality” does not automatically exclude liability.77

33

(b) Now I will turn to the central element, that is the duty of care. There is no simple definition of duty of care. Today, the tripartite Caparo-test is used, which deals with foreseeability, proximity, and as a third element, that it must be fair, just and reasonable to place the duty on somebody.78 Especially this third element allows for a policy of the court, which can also take into account that the defendant is a public body and has a statutory power. It seems that liability will only be established if the duty of care exists vis-à-vis the injured

34

68 69

70

71 72 73 74 75 76 77 78

Stanton et al. (fn. 4) 2.026–2.039; Public Law Team, (fn. 9) 2.25. X (Minors) v Bedfordshire County Council, [1995] 2 AC 633 per Lord Browne-Wilkinson; Stanton et al. (fn. 4) 2.020. O’Rourke v Camden L.B.C, [1997] 3 All E.R. 23 per Lord Hoffmann; Stanton et al. (fn. 4) 2.017. X (Minors) v Bedfordshire County Council, [1995] 2 AC 633 per Lord Browne-Wilkinson. Neither Stanton et al. nor Fairgrieve really line out a successful case. Stanton et al. (fn. 4) 3; Public Law Team, (fn. 9) par. 2.29 ff.; Fairgrieve (fn. 14) 59–85. Stanton et al. (fn. 4) 3.001–3.006.; see also fn. 78. Stanton et al. (fn. 4) 3.007. Fairgrieve (fn. 14) 41 ff.; Stanton et al. (fn. 4) 3.020. Phelps v Hillingdon London Borough Council, [2001] 2 AC 619, per Lord Slynn (at 653). Caparo Industries v Dickmann, [1990] 2 AC 605. This test was e.g. several times mentioned in the important case JD v East Berkshire Community NHS Trust, [2005] UKHL 23.

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party, whereas in Germany it suffices to say that the duty existed also vis-à-vis the injured party.79

35

In 1978 the House of Lords took a very extensive view of the duty of care in Anns.80 The claim was for compensation for damage to buildings because of inadequate foundations. The buyers of flats sued the local authority, asserting that the latter would have had the authority to refuse the building permit because of the foundation. In such a case it has to be considered if it is reasonable to use public funds for damage that a private constructor could have easily prevented and, moreover, against which he could have been insured. Nevertheless the House of Lords in Anns answered in the positive. This seemed to open the floodgates for compensation, also for pure economic loss of third parties. But this was only an illusion.81

36

The restrictive attitude can already be seen in cases where the damage was inflicted by action on the side of the public official and not just by omission (nonfeasance) or a lack of supervision of private activities. The most impressive – and perhaps disturbing – case in this area is the Elguzouli-case.82 The public prosecutor arrested suspects and released them because they could not have been the perpetrators, but only did so after several weeks. They asked for compensation for negligence; the public prosecutor could have recognised earlier that the allegations were unfounded. The Court of Appeal rejected this in 1995 reasoning that the public prosecution was generally not under a duty of care vis-à-vis the accused; liability would only obstruct the work of the public authority. In Germany the Federal Court in contrast accepted liability when detention on remand was requested for a businessman although this was unjustifiable based on the facts of the case; loss of earnings and lost profit had to be compensated.83 And in France there is a statute which provides for compensation in the case of improper detention.84

37

The other case, East Berkshire, is one in the field of care for children, where various constellations were brought to court during the last decade.85 It was decided by the House of Lords in 2005.86 The question was whether a child’s parent, falsely and negligently said to have abused or harmed the child, may 79

80 81

82

83

84 85

86

Markesinis et al. (fn. 1) 24, remark that German statutes normally protect individual interests, whereas in England this protective purpose seems to be an exception. Anns v Merton London BC, [1978] A.C. 728; see Markesinis/Deakin (fn. 14) 355. Anns was formerly overruled in 1991 in Murphy v Brentwood District Council, [1991] 1 AC 398. Elguzouli-Daff v Commissioner of Police of the Metropolis, [1995] 2 WLR 173; see Markesinis et al. (fn. 1) 28; Stanton et al. (fn. 4) 14.077. BGH 16 October 1997, Neue Juristische Wochenschrift (NJW) 1998, 751. See Markesinis et al. (fn. 1) 36. See Markesinis et al. (fn. 1) 32. See B. Markesinis/A. Stewart, Tortious liability for negligent misdiagnosis of learning disabilities: A comparative study of English and American Law, in: D. Fairgrieve/M. Andenas/J. Bell (eds.), Tort Liability of public Authorities in comparative perspective, 209. [2005] UKHL 23.


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recover common law damages for negligence against a doctor or social worker who, discharging professional functions, made the false and negligent statement, if the suffering of psychiatric injury by the parent was a foreseeable result of making the allegation and such injury has in fact been suffered by the parent. The 4:1 majority of the House held that there could be no duty of care in this case. As Lord Nicholls in his leading speech said: “In this area of the law, concerned with the reporting and investigation of suspected crime, the balancing point between the public interest and the interest of a suspected individual has long been the presence or absence of good faith. Good faith is required but not more.” So damages would only be awarded if the official acted in bad faith. In Germany and France the award of damages would be held possible in theory. But I doubt if a German or French court would have awarded damages in these cases. In Germany it would be difficult to establish carelessness because the service owes its duties primarily to the children and not to their parents. And in France one would require a gross fault, which was not present and perhaps comes near to bad faith. The reluctant attitude of the House of Lords is even more accentuated in cases where the claim is grounded on a failure to exercise a statutory power, which I will deal with later more intensely. Here I will consider only one other issue related to the prosecution of crimes, the famous and often followed Hill case. In 1989 the House of Lords had to deal with the Yorkshire Ripper, who committed 20 murders in 5 years.87 The mother of his last victim asked for compensation, because the murderer could have been caught earlier if the police had not made some mistakes. The Court rejected this, because the police are not under a duty of care vis-à-vis individuals to find suspects. As a justification it was pointed out that the required proximity between the accused police and the victim did not exist; the murderer as well as the last victim had been unknown to the police before the crime. Also, it would not be reasonable to transfer the means of the police force from the prosecution of crimes to the prevention and fulfilment of claims for compensation.

38

These three cases exemplify that English courts are ready to rely heavily on policy arguments to evaluate – and often deny – the duty of care. The legal literature identified at least four groups of policy arguments:88 if liability makes economic sense; if liability would inhibit the freedom of action of the public authority; if the victim would have an alternative remedy; and finally if it is appropriate for the courts to control elected bodies and tell them how to exercise their discretionary power. Often the courts have used these arguments to deny even from the beginning the possibility of liability and therefore not allowed the action to proceed to trial at all. This was held for example, when the local authority failed to take a child who might be abused by her own parents into care.89 The same was said in the Osman case which dealt with a claim for

39

87 88 89

Hill v Chief Constable of West Yorkshire, [1989] A.C. 53; Stanton et al. (fn. 4) 3.033. Markesinis et al. (fn. 1) 46; see also Stanton et al. (fn. 4) 3.028–3.040; Fairgrieve (fn. 14) 64 ff. X (Minors) v Bedfordshire County Council, [1995] 2 AC 633.

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damages after the police did not protect a pupil from an increasingly dangerous former teacher; the English courts, applying Hill, struck out the claimant’s action without looking at the facts of the case.

40

This decision was challenged at the ECtHR in Strasbourg. And the ECtHR saw in 2000 a violation of Art. 6 ECHR in the general statement that there could not be compensation in such a case: Art. 6 requires that the claimants have the opportunity to argue on the merits of the case. Consequently the ECtHR accepted the obligation for compensation according to Art. 13 ECHR.90 But only two years later the Strasbourg court in the Z case – one of the Bedfordshire cases – receded from its Osman position.91 The majority acknowledged that the denial of the possibility of a duty of care for a specific kind of behaviour is a matter deciding upon the substance of rights to damages, and does not create an immunity shielding the State from control.

41

Nevertheless English courts are nowadays more reluctant to squash down an action right forward and are more willing to look at the facts of the case to assess if there is a duty of care.92 They do and perhaps have to reason in a less generalising way. This evolution is clearly shown by the Barrett and Phelps cases, both from 2000.93 In Barrett a local authority did not react when a child in custody was in danger. In Phelps a school psychologist did not detect dyslexia in a pupil. Previously the court would have flatly rejected liability in such cases. Now at least further proceedings were allowed in order to evaluate if there was a duty of care. And in the Phelps case already the Law Lords accepted that the psychologist owed the pupil a duty of care. But there are still cases where the claim is struck out.94 In these evaluations about the duty the arguments of policy mentioned before are still relevant.

42

The policy arguments have been criticized by academics, especially Markesinis and his co-authors, because they seem unfounded, unfair and not sustained by comparative evidence.95 The “blanket immunity” is criticised for several reasons, in particular because pre-existing public law duties to act are not sufficiently valued, the benign effects of liability to prevent damages are suppressed, and public bodies are treated much better than other professionals. In my opinion the English decisions nowadays really are too restrictive with regard to the protective purpose of the public law rules, particularly when it comes to bodily or physical harm. But it seems appropriate to look in depth where it comes to a duty to act if acting favours purely financial interests. In 90

91 92

93 94 95

European Court of Human Rights (ECtHR) Osman v United Kingdom, [2000] 29 European Human Rights Reports (EHRR) 245. See J. Wright, The retreat from Osman: Z v United Kingdom in the European Court of Human Rights and beyond, in: D. Fairgrieve/M. Andenas/J. Bell (eds.), Tort Liability of public Authorities in comparative perspective, 55. Z v United Kingdom, [2002] 34 EHRR 3. Stanton et al. (fn. 4) 3.005. See e.g. the decision of 16 March 2000, W v Essex County Council, one of the cases mentioned in Markesinis et al. (fn. 1) 29. See fn. 7. JD v East Berkshire Community NHS Trust and others, [2005] UKHL 23. Markesinis et al. (fn. 1) 73–104.


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many such cases there are strong arguments in favour of the opinion that such duties should not protect the financial interest of individuals by liability. Here it is no longer a matter of corrective justice, but one of distributive justice. But even with respect to bodily harm their Lordships do not seem totally convinced by the academic opposition. As Lord Steyn said as recently as 2005, “the core principle of Hill has remained unchallenged in our domestic jurisprudence … for many years. If a case such as the Yorkshire Ripper case … arose for decision today I have no doubt that it would be decided in the same way.”96 So it remains valid that in a case framed in negligence against a public body, the duty of care must be seen against the background of a statutory duty or power. And then one question, if not the basic one, is whether the statute excludes a private law remedy. In consequence the considerations with regard to liability of public bodies are quite different from liability of private parties, because the courts might consider whether it is reasonable to burden the State with the compensation for damage which could impede the State’s compliance with public duties in the future.97

43

(c) If the claimant has successfully accomplished the establishment of a duty of care, there is another hurdle, the breach of this duty.98 As already said, damages may also be awarded if the authority has acted within its discretion. On the other hand unlawfulness of the behaviour of the public body is not a necessary condition for liability on the ground of negligence, but it can help to show a breach of the duty. The relationship between negligence and unlawfulness in England seems quite interesting, because the public law concept of unlawfulness/illegality is assessed by a test of unreasonableness, which seems close to the continental concept of negligence.

44

The breach of the duty depends on the standard of care. Some statutes stipulate a specific standard.99 In this respect the courts seemingly apply the general calculus, which refers to the reasonable professional and the circumstances of the case. Also a public body has to act in a way that accords with a substantial and reasonable body of opinion in the appropriate professional field.100 But with regard to State liability the courts may now apply here arguments which are very similar to the policy arguments mentioned above, particularly economic sense, but also freedom of action and appropriateness to control discretion.101 So these arguments might shift from duty to care.

45

The standard of care can be assessed normally only for the case by the courts. But some general remarks which refer to the standard as well as the duty itself can be made. First, a distinction is still made between policy decisions of the

46

96 97 98 99 100 101

Brooks v Commissioner of Police for the Metropolis, [2005] UKHL 24 at par. 30. Stanton et al. (fn. 4) 3.040. Public Law Team (fn. 9) 2.53 ff.; Fairgrieve (fn. 14) 84 ff. Stanton et al. (fn. 4) 8. Bolam-test; Public Law Team (fn. 9) 2.63. Stanton et al. (fn. 4) 3.023. See especially the Barrett case (fn. 7).

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administration and the execution of these decisions (operational decisions). Policy decisions are hardly ever subject to liability, even if they lead to damage.102 Secondly, the courts tend to respect a public authority’s discretion to exercise a power in claims for damages, too. But the existence of discretion no longer excludes the State’s liability.103 Thirdly a distinction is made between negligence in the exercise of a statutory power and in the exercise of a statutory duty. In the former, the statute gives only a power to act, in the latter it also expressly stipulates a duty to act. This leads to the following subject. 2. In Particular: Liability for Failure to Exercise a Statutory Power, Especially to Protect

47

The question whether an obligation to compensate exists in the case of an omission to act on the defendant’s side is particularly important regarding the State, because the State has numerous duties to supervise and control, and it is often easy to claim that an intervention of the State may have prevented the damage of the private party. Omission means here not only an inaction, but embraces also any kind of non-sufficient protection.

48

In my opinion the situation with regard to liability in these cases is quite different from those where the public body inflicted harm by an active behaviour, although the borderline might be difficult to draw. In cases of the one kind one has to look for a duty to act, to interfere with private bodies, in cases of the other kind the question is “solely” if there was a duty to abstain, to refrain from interfering with the sphere of a private body. And it seems that a duty to refrain can be established more easily than a duty to interfere. In Germany these different situations are reflected already in the language; one speaks about a specific “Pflicht zum Handeln”, a duty to act. In England however there is – unfortunately – no clear distinction amidst the duty of care.

49

a. In Germany in case of omissions there is normally no liability for solely unlawful acts, even if property or health has incurred damage.104 So the claimants have to rely on public liability (“Amtshaftung”). The deciding element is whether the public official had a duty to act and if this duty protects third parties. In this area liability for flawed controls in building law and banking as well as insurance companies has been discussed most. It is well accepted that also omissions may engender liability,105 but it is always necessary to establish a duty do act. The courts are ready to accept liability in many cases. If a council controls the plans or later the state of a building only carelessly, it is liable not only to a user or a bystander but also to the proprietor for the physical damage which would have been avoided by a careful control.106 In the same 102 103 104 105 106

Stanton et al. (fn. 4) 3.013–3.017. Stanton et al. (fn. 4) 3.018–3.024. Ossenbühl (fn. 14) 255, 235. See also Markesinis et al. (fn. 1) 60. Entscheidungen des (deutschen) Bundesgerichtshofs in Zivilsachen (decisions of the Federal Supreme Court, BGHZ) 60, 112.


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way the State is liable if the council allows building on contaminated land.107 And the Federal Court (BGH) even accepted liability for the debts of an insolvent bank if the State did not supervise the bank with due care.108 Hereupon, however, the legislator expressly regulated that supervision of banking and insurance companies is carried out exclusively in the public interest, which excluded liability. This has recently been accepted by the BGH and the ECJ.109 Another example is an old decision which deals with a similar topic as the English Hill case. The police knew members of a band of robbers, but did not proceed against them for no particular reason. The Federal Court accepted as early as 1953 the claim for compensation of a further victim, because the police are under an official duty to prosecute suspects and this duty protects unknown endangered people also.110 But one could distinguish this case from Hill because here the suspects were already known. Nevertheless it is obvious that German courts have no problem in deducing a duty to act from a statutory power. A restriction is that public liability is excluded if the damaged party can recover compensation in ways other than claiming it from the State, particularly if she is entitled to claim compensation from the immediate wrongdoer. This means that someone who suffers damage because of the collapsing of a dilapidated house can only claim damages from the local authority for unlawful and negligent supervision of the construction if he can get compensation neither from the owner of the building nor the planner nor from their insurance.

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b. In England the situation seems quite different.111 The seminal decision was for a long time one from 1941.112 An owner of land sued the local authority for compensation for damage caused through flooding that would not have happened if the local authority had been more diligent when repairing a dam. Their Lordships rejected liability, the main argument being that a public body should not be liable for damage that would also have occurred through natural forces or third parties had the local authority done nothing at all, but only for damage that the local authority caused additionally (fresh damages test). This opinion as such is no longer held today.113 Particularly it was rejected in Anns114 where the House of Lords in 1978 approved liability in these circumstances. But it still continues to have some effect. Only a few years after Anns their Lordships were more reluctant. So in Peabody a local authority, which had carelessly inspected drainage installations, was not held liable for the loss

51

107 108 109

110

111 112 113 114

Palandt-BGB/Sprau § 839 no. 104. BGHZ 75, 120. BGHZ 20 January 2005 – III ZR 48/01; European Court Journal (ECJ) 12 October 2004 C222/02 Peter Paul [2004] European Court Reports (ECR) I-09425. BGHZ 30 April 1953 LM (Lindenmayer-Möhring) § 839 Bürgerliches Gesetzbuch (German Civil Code, BGB) no. 5. Stanton et al. (fn. 4) 3.042 ff.; Public Law Team (fn. 9) 2.71 ff. East Suffolk Rivers Catchments Board v Kent, [1941] A.C. 74; Stanton et al. (fn. 4) 3.043. Although Markesinis/Deakin (fn. 14) 371, hold that a return to East Suffolk is not impossible. See fn. 81; the leading speech was by Lord Wilberforce.

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of developers which would have been avoided by careful inspection.115 And a liability in negligence for the control over financial traders was clearly rejected in Yuen Kun.116

52

Liability for omission is significantly more difficult to substantiate than for active interference – the courts are unwilling to uphold claims for liability grounded on failure to exercise a statutory power. As Lord Hoffmann pointed out in 1996 in the leading case Stovin, “such claims seek to turn a statutory ‘may’ into a common law ‘ought’.”117 The case dealt with a car accident at a junction, where the highway authority had failed to remove an obstacle which blocked the claimant’s view although it had known about the obstacle. Liability can be established only if it was irrational not to have exercised the power, which is equivalent to a duty in public law, and, additionally, that there are exceptional grounds for holding that the statute requires compensation because the power was not exercised.118 The denial of negligence was opposed by a dissenting minority, but the majority’s view was upheld in 2004 in the Gorringe case. A common law duty should not – to quote again Lord Hoffmann – “be founded simply upon the failure (however irrational) to provide some benefit which a public authority has power (or a public duty) to provide.”119 So there is particular restraint in accepting liability if the public authority permitted private activity but not the damaging act itself.120 The reason for this is the fact that, in case of doubt, nobody shall be liable for the free action of another person, not even the State.

53

As already said, a distinction is made between negligence in the exercise of a statutory power and in the exercise of a statutory duty. In the former, the statute gives only a power to act, in the latter it also expressly stipulates a duty to act. If there is only statutory power, liability is only reluctantly accepted, already because there is no general duty to exercise power in English law.121 Therefore, liability for omission is rarely accepted in cases of averting a danger. Finally it seems that damages for negligence are easier to obtain when the person or personality rights have been infringed than for economic loss. And compensation for pure economic loss will seldom be awarded.122 The damages awarded in 1978 in the Anns case to house buyers would no longer be recoverable today. Means to block liability for economic loss are the denial of proximity or the statement that the damage is not linked closely enough to the damaging event.

115 116 117 118 119 120 121 122

Governors of the Peabody Donation Fund v Parkinson & Co., [1984] 3 All E.R. 529. Yuen Kun-Yeu v Attorney-General of Hong Kong, [1988] A.C. 175(P.C.). Stovin v Wise and Norfolk CC, [1996] A.C. 923; Stanton et al. (fn. 4) 3.045, 3.051. Per Lord Hoffmann at 953. Gorringe v Calderdale Metropolitan Borough Council, [2004] UKHL 15, 31. Bell (fn. 14) 30. Stanton et al. (fn. 4) 3.042–3.059. The leading case is now Stovin (fn. 7). Stanton et al. (fn. 4) 11.001; Fairgrieve (fn. 14) 194.


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c. In France the distinction between damage caused through active interference or through omissions does not seem to be of particular importance as such.123 It might be suggested that the problems debated in England and, to a lesser extent, in Germany under the heading of duty and the beneficiaries of such a duty are addressed in France, at least partially, more as a problem of causation.124 Taking this reservation one can say that the Conseil d’Etat is willing to award damages if a public authority has not properly exercised its power to control private parties. According to the Société Linie decision from 1978, ship owners could recover damages for loss they suffered when port authorities refused to tackle blockaders; in Giraud the CE upheld a decision which awarded – more symbolic – damages to a father whose child was not taught a core subject; in 1999 the Communauté de Lille was held liable for not having rescued a child quickly enough from a burning house; the Kechichian decision of 2001 awarded damages to bank depositors because the State had failed to properly supervise a bank, although the claimants received only 10% of their damage because only this part was attributed to the failure.125 A landmark seems to be the asbestos-decisions from 2004.126 The Conseil d’Etat awarded damages to workers who were contaminated with asbestos dust at their workplace, because the competent authorities had failed to evaluate the risks of asbestos and take appropriate action. This constituted a “faute” which engenders liability, but only this “faute” could lead to liability.

54

Nevertheless one has to bear in mind that in certain areas only gross fault can lead to liability, especially in the area of the police, which also includes the police administrative. So it said that in situations like that in the English cases of Hill and Stovin damages could be awarded, but only if there was a “faute lourde”. But in cases such as the Bedfordshire ones it might be possible that any fault would suffice.127

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d. At this point I have to draw your attention to Community law. In many fields it provides for supervision and control by the State, e.g. over the banking system. One can then ask if these Directives also demand that the State is liable for failure to properly exercise the statutory powers required already by Community law. This question was addressed in 2004 by the ECJ in the German case, Peter Paul related especially to the compensation of depositors.128 If the compensation prescribed by the Directive is ensured, this Directive does not preclude a national rule which provides that the already mentioned Ger-

56

123 124

125

126 127

128

Fairgrieve (fn. 14) 129; Markesinis et al. (fn. 1) 57. Chapus (fn. 14) 1414; CE 7 March 1969 – Etabl. Lassailly, 148. Particularly liability pour faute is excluded if there is a cas fortuit on the victim’s side; in these cases one would deny a duty of care. CE 4 October 1978 – Société Linié [1978] Rec 355; CE 27 January 1988 – Giraud [1988] Rec 39; CE 29 December 1999 – Communauté Urbaine de Lille [1999] Rec 436; CE 30 November 2001 – Kechichian [2001] N° 219562. CE Ass. 3 March 2004 N° 241150. Markesinis et al. show how these English cases are or would be treated according to French and German law. ECJ 12 October 2004 C-222/02 Peter Paul, [2004] ECR I-09425.

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man provision bars individuals from claiming compensation for damage resulting from defective supervision over credit institutions. Although this decision concerns only a very specific situation, it shows, in my opinion, that Directives normally do not require State liability for mere failure in supervision, unless the Directive itself explicitly requires the liability.129

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The outcome might be different if a provision of the Treaties has been breached. In 1997 the ECJ decided that a Member State has to take all reasonable steps to remove an obstacle to the free movement of goods such as a blockade of the streets;130 and in the Schmidberger case from 2003 the Court started implicitly, but without doubt from the view that the failure to do so might engender the liability of the State.131 Community law therefore requires that, in this and similar cases, the State is liable for a failure to exercise its powers. This may influence the national views in the future. 3. Causation and Contributory Responsibility

58

In Germany causality is normally only a minor hurdle to compensation. It is principally necessary that the violation of public duty was a conditio sine qua non and an adequate condition. The additional adequacy-test does not exclude much. The causal link has to be proved, and proof means in Germany a very high probability, not just a higher probability. Nevertheless the causal link between the injurer and the facts establishing liability (first violation) can often be established with the help of an alleviation of proof and for the causal link between this violation and (further) damages suffices an estimation of the damage.132

59

In England causation is of more importance. The examination of causation starts with the conditio-test; proof can be established by a higher probability. But in addition it will be examined whether the damaging act was the legal cause of the damage. Therefore it is necessary that the damage was reasonably foreseeable.133 This excludes more cases from compensation than the German adequacy-test. Particularly if damage is directly caused by a private party that the State should only control, compensation will often be rejected because liability for the deliberate acts of another – who is not an assistant – is viewed sceptically (“remoteness of damage”).134 The significance of contributory negligence and contributory responsibility of the injured party is similar in Germany and England. 129

130 131 132

133 134

Before the ECJ’s Peter Paul decision Andenas and Fairgrieve expected a stronger influence of European law on the liability for supervising of financial institutions; Andenas/Fairgrieve (fn. 5) 200. ECJ 9 December 1997 C-265/95 Commission v France, [1997] ECR I-06959. ECJ 12 June 2003 C-112/00 Eugen Schmidberger v Republic of Austria, [2003] ECR I-05659. Palandt-BGB/Heinrichs Vor § 249 BGB no. 172 (§ 273 Zivilprozeßordnung, Civil Procedure Code, ZPO). Markesinis/Deakin (fn. 14) 191 ff.; Stanton et al. (fn. 4) 9.020. See Markesinis/Deakin (fn. 14) 191 f.


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In France the importance of causation seems to be even greater than in Germany and England. Here the element of causation is, also with regard to State liability, a central element to strongly restrict liability for unlawful acts.135 The requirement of “faute de service” alone would lead to a very broad duty to compensate because no considerations on the spreading of risk are allowed. The requirement of adequate causation is understood differently from Germany, even if there is no generally accepted formula. The true cause is sought and it is demanded that the “faute de service” has caused the damage directly.136 Liability may therefore be excluded or reduced in the case that the damage can be attributed solely or partially to a “cause étrangère”, such as a fault on the victim’s side or a force majeure.137 This may exclude further consequences which lie outside the normal course of events, particularly in case of economic loss. The State may also evade liability if the plaintiff has accepted the risk of damages.

60

The function of causation to limit liability is in France even more pronounced in different constellations of cases. Due to lack of causation, liability will never apply when the damaging decision suffers only from procedural flaws or false reasoning, but when the damaging act could have been lawful in substance.138 Almost more important is a contributory causation of the damage by a third party, e.g. by the management of a bank which was not sufficiently supervised by the State. Then the State will only have to compensate that part of the damage that can be attributed to the State evaluating the two contributions.139 There is no solidarity liability of direct wrongdoer and the State.140 In the Kechichian case a bank became insolvent because of fraudulent dealings of the management and the State had not sufficiently supervised the bank; the Conseil d’Etat awarded the investors no more than 10% of their damage, although the supervisors could be blamed for “faute grave”.141

61

4. Damage and Compensation Finally, I will address the question of which interests are protected and how damage is to be recovered. In Germany general tort law is applied to public liability cases. A claim for public liability normally aims at monetary compensation which comprises in principle all pecuniary losses. Since recently compensation for non-pecuniary loss is granted in certain cases such as injury to health or freedom.142 Restitution in kind is rare, but by law excluded only if it would require an administrative act which is under the control of the adminis135 136 137 138 139 140

141 142

Chapus (fn. 14) 1413–1424. Chapus (fn. 14) 1413–1414. Chapus (fn. 14) 1415. Fairgrieve (fn. 14) 172. Chapus (fn. 14) 1415, 1417. In Germany liability may be excluded because the injured has to seek relief primarily with the direct wrongdoer. In sharp contrast to these two solutions, in Austria the direct wrongdoer and the State are held liable in solidarity. CE 30 November 2001 – Kechichian, [2001] N° 219562. Par. 253 s 2 BGB (since 2001).

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trative court; otherwise civil courts would encroach on the competence of administrative courts.

63

In France courts do not order restitution in kind in actions for damages as a matter of principle, but solely award monetary compensation.143 This is astonishing because it is the administrative courts that have jurisdiction anyway. The award should only compensate damage but not punish. Although full compensation is the rule, only such damage is recoverable that is certain, definite.144 Under this heading courts often reduce compensation considerably, particularly in cases of pecuniary loss like lost profits; damage cannot be estimated as easily as in Germany. The standards for the causal link between the facts establishing liability and (further) damages are at least as high as those for the causal link between the injurer and the facts establishing liability, if not higher.145 And also the amount of compensation for pure economic loss is often reduced with the requirement of certainty. Non-pecuniary damages have been – since 1961 – normally recoverable, e.g. for defamation.146

64

Equally in England only damages will be awarded, not restitution in kind.147 There is no compulsory enforcement of judgments against the central government. The claimant always has to prove a special damage, that is a financial loss or physical or mental injury, even for the tort of misfeasance if a constitutional right has been breached.148 Even this tort is not actionable per se. If there is special damage, then gross fault of public officials (arbitrary behaviour) could lead to exemplary or punitive damages.

65

Compensation for economic loss is fiercely debated particularly in common law. Although compensation for such damage is not per se impossible, English courts rarely accept liability, particularly in cases of State liability,149 for example because of false information or faulty control over the financial market. Means to block liability are the denial of a duty of care or the statement that the damage is not linked closely enough to the damaging event. In France, in contrast, the question of pure economic loss as such is hardly debated and compensation is theoretically possible.150 In practice, however, in France, too, only few claims for compensation of economic loss are successful, and if they are, the requirement of certainty of damage is used to reduce the amount of damages granted.151 In Germany, compensation of pure economic loss de143 144 145

146 147

148 149 150 151

Chapus (fn. 14) 1404. Chapus (fn. 14) 1408. Fairgrieve (fn. 14) 172. In contrast to this, in Germany the requirements for the first causal link are higher than for the second one. Chapus (fn. 14) 1410. CE Ass. 24 November 1961 – Letisserand. A mandatory order to exercise a public duty (mandamus) can only be obtained by way of judicial review, and therefore not in a private law action. Watkins v Home Office, [2006] UKHL 17. See Fairgrieve (fn. 14) 193 ff. Fairgrieve (fn. 14) 196 f.; Chapus (fn. 14) 1425 ff. Markesinis et al. (fn. 1) 18.


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pends on the protective purpose of the public duty, which is decided on a case by case basis.

D. CONCLUSION We have seen considerable differences between the three jurisdictions. In general one could say: State liability goes further in Germany and France than in England. In none of the three States is there a codification of the rules related to the law of State liability. Even in Germany only some of the rules can be found in the statutes. Only in France do administrative courts decide, whereas in Germany the civil and in England the ordinary courts decide on such matters.

66

In substantive law there are general rules on liability for unlawful acts in Germany and France, whereas individual torts are decisive in England. Only Germany has special rules on liability in the sphere where the State acts with its specific authority. In France there are special rules for the broader public sector, but these are also applicable to a sector where in Germany the normal law of torts apply. In England, however, the rules of private law are in principle equally applicable to the State, but applied in a modified way. So the principle that liability of the State is treated fully in the same way as liability of private parties has not been developed in any of the three States. Germany and France point out the particularities already in the beginning, in England they are especially emphasised in the further reasoning and therefore in the result.

67

General rules on liability for unlawful acts exist in Germany and France but not in England. Regarding liability for administrative acts carelessness only plays a role in Germany and England, but not in France, but also in France procedural flaws hardly ever lead to liability. In Germany and England the protective purpose of the violated norm is considered, which tends to be regarded more narrowly in England. In France such considerations are missing with regard to “faute”. However, in France some of the mentioned restrictions are made at the causation level.

68

A look particularly at England and France might give the impression that general statements and theories cannot be expected for the liability of the State. This supports what the French Tribunal des conflits said as early as 1873 in its famous arrêt Blanco: La responsabilité de la puissance publique “n’est ni générale, ni absolue; … elle a ses règles spéciales qui varient suivant les besoins du service et la nécessité de concilier les droits de l’État avec les droits privés”.152 In the same manner that we distinguish between liability of doctors and sportsmen and liability for vehicles and bicycles, we have also to accept different constellations in the case of liability of the State. The State’s powers for active interference and for the supervision of private parties are so mani-

69

152

Tribunal des Conflits 8 February 1873, 1er suppl., 61; see Chapus (fn. 14) 1400.

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fold that the reasoning in judgments based on very general considerations easily runs the risk of establishing rules that will not be suitable for other constellations. As in the case of liability of private parties, only those categories can be generalised that are used to decide on liability, but not concrete criteria.

70

The main difference seems to be that the courts in England are reluctant to award damages also in cases where the public official or body has caused the harm by doing and not only by abstaining from (more) action. The English courts in this area deny liability more often than their German or French counterparts. Here comparative law could really show that other countries allow damages without impairing the system.

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The three jurisdictions are much nearer where it comes to liability for careless supervision of private parties and therefore to insufficient prevention of damage caused by private parties.153 In France the State is not liable for the contribution of the private party, in Germany public liability is only subsidiary and sometimes not within the scope of protection, and in England the duty of care is regarded very restrictively for economic loss. This also becomes apparent particularly for the faulty supervision of the financial market. Lack of supervision here hardly ever leads to liability in any of the three States: In England it will fail because of duty of care in most cases, in France because of “faute loured” or direct causation, and in Germany because of the protective purpose of the statute. But the restrictions of liability are achieved with quite different means.

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Neither French nor German courts explicitly argue with such policy arguments as the English courts now do. In particular, they do not explicitly consider the potential costs of a liability or its possible impact on decision-making.154 But in France at least the requirement of “faute loured” seems to be inspired by such thoughts, perhaps also some restrictions with respect to causation and damages. And in Germany there is at least the requirement of carelessness, which might be of nearly no importance in the case of infringement, but which is certainly of some importance when it comes to omissions and supervision.

73

Comparative law can elucidate the possibilities of State liability as well as the dangers of it. Were one to combine the broad French views on unlawfulness that establishes liability with the broad German view on causation, almost unlimited liability will result. Were one, on the contrary, to combine the narrow English view on negligence and protective purpose of the rule with the French view on causation, liability would be reduced to a “quantité négligable”. So it seems not too fair to criticize the Law Lords for their duty-approach and recommend instead the causation-approach of the Conseil d’Etat.155 In my opin153

154 155

The book of Markesinis et al. mentions this differentiation several times, but does not try to build a reform of English law upon it. Markesinis et al. (fn. 1) 51 ff. Andenas/Fairgrieve (fn. 5) 198.


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ion it seems more rational to discuss the question of duties rather than that of adequate causation. As Markesinis and his colleagues have rightly pointed out, the different decisions and deliberations in the field of the State’s liability reflect deep – and different – philosophical views about the role of the State.156 In my view the English courts are too reluctant to award damages where the State inflicts harm by an action and perhaps also where it does not protect enough against bodily harm. But I would appreciate the English perspective as far as protection for goods or financial risks is concerned. In this field some German or French decisions seem to be too generous. In the first area a main argument is corrective justice; in the other one should keep in mind all aspects of distributive justice.

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In 1991 a comparative analysis predicted that there is a trend towards an expansion of State liability.157 This has come true on the European level. But on the national level the prediction has not materialized at least in Germany and France. In England the evolution was more like a wave: From “The king can do no wrong” up to Anns down to Hill and now (slowly) upwards again. Impulses for an expansion of State liability could come from the ECJ case law on liability of Member States. It remains to be seen if sophisticated considerations of English or German case law on the protective purpose of a rule will have to give way to the often one-dimensional, sometimes blunt views of the ECJ.

75

156 157

Markesinis et al. (fn. 1) xi. Rebhahn (fn. 3) 117–244. A. Bradley/J. Bell, Governmental liability: A preliminary assessment, in: J. Bell/A. Bradley (eds.), Governmental Liability, 15.

VI. Tortious Liability of Regulatory Authorities Alessandro P. Scarso A. INTRODUCTION B. LIABILITY OF REGULATORY AUTHORITIES UNDER ITALIAN LAW 1. Financial Regulators in Italy 2. Tortious Liability of the State in Italy 3. The Role of Jurisprudence 4. A Recent Decision by the Italian Supreme Court 5. Comparative Considerations C. COMPARATIVE MATERIAL 1. Tortious Liability of Regulators in the U.K. 2. Tortious Liability of Regulators in Germany D. LIABILITY OF REGULATORY AUTHORITIES UNDER “EUROPEAN LAW” E. CONCLUSION

A. INTRODUCTION 1

Less than two years ago, the spectacular bankruptcy of Parmalat, a familycontrolled dairy group, revealed a € 14 billion accounting hole that had grown over a decade of deception. An investigation is still going on. Actions have been brought against bankers and auditors who, according to the plaintiff, were aware of Parmalat’s precarious financial situation1. The Parmalat bankruptcy cast especially the Italian financial market supervisor CONSOB (Commissione nazionale per la società e la borsa) in an unfavourable light for not spotting the fraud much more quickly than it did.

2

Last year a major Dutch bank announced that it would bid for a medium-sized Italian bank. A competing Italian bank raised its small stake in the bank to be overtaken in several steps that involved allegedly illegal financial manoeuvres, now the subject of investigation. The Banca d’Italia approved each step. By the end of last year prosecutors launched an enquiry into allegations that the competing Italian bank had violated securities laws. Investigations are still going on. The then Governor of the Banca d’Italia has been forced to resign. He was charged with allegations that he allowed the offer by the competing Italian 1

For further details, see A. Scarso, Parmalat, Corporate Governance und die Rolle des Abschlussprüfers nach italienischem Recht, Der Gesellschafter 2004, 291 ff.

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bank despite it lacking the required capital adequacy, as confirmed by the unfavourable opinion of the Banca d’Italia’s own inspectors2, and that he deliberately delayed the approval of the Public Takeover Offer advanced by the Dutch bank in order to allow the competing Italian bank to organize a counterbid. In the end the Dutch bank had to increase the price offered for the disputed stocks, paying an overall price several hundred million Euro higher than the price offered in the original Public Takeover Offer3. Both the Parmalat scandal and the recent facts involving the takeover battle fought by the Dutch bank raise the issue of the liability of Regulatory Authorities, particularly of CONSOB and the Banca d’Italia.

3

The article is organised in the following way. In Part B the liability of Regulatory Authorities under Italian law are discussed, particularly of the Italian securities Regulator and supervisory agency CONSOB and of the Banca d’Italia. In Part C some comparative material is included, particularly with reference to the U.K. and Germany. Part D deals with EU law, whilst some comparative conclusions on the topic will be drawn in Part E.

4

B. LIABILITY OF REGULATORY AUTHORITIES UNDER ITALIAN LAW 1. Financial Regulators in Italy The Italian model of supervision is characterised by a “mixed approach”4. Its main features are5: • •

2

3

4

5

The supervision over banks is delegated to the Banca d’Italia concerning matters of stability, transparency and competition law. Supervision over investment services offered by banks and investment firms and over collective investment undertakings is under the responsibilSee art. 5 T.U.F. (Testo Unico sulla intermediazione finanziaria – Consolidated Act on Financial Intermediaries). For a detailed narration of the sequence of events see M. Gambino/E. Lannutti, I furbetti del quartierino – Dalla razza padrona alla razza mattona (2005) 39 ff. and 70 ff. G. Alpa, The harmonisation of financial markets in the perspective of consumer protection, Economia e diritto del terzario (Econ. dir. terz.) 2002, 1, 26. In the last few years independent administrative agencies have multiplied in Italy: besides the Commissione nazionale per la società e la borsa (CONSOB), the Italian Securities Regulator and supervisory agency, the Istituo per la vigilanza sulle assicurazioni private e di interesse collettivo (ISVAP – insurance sector), the Commissione di vigilanza sui fondi pensione (COVIP – pension/retirement funds), the Antitrust Authority, the Energy Authority, the Telecommunications Authority, the Public Works Authority, the Data Protection Authority, just to name the institutions most frequently involved in the enforcement of regulations. As far as the Bank of Italy is concerned, there is some debate as to whether it should be ascribed to the category of independent administrative agencies. See F. Rossi, Tort liability of Financial Regulators – A Comparative Study of Italian and English Law in a European Context, European Business Law Review (EBLR) 2003, 644–645.

5

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Alessandro P. Scarso

ity of CONSOB6 in relation to transparency and investor protection and of Banca d’Italia in relation to both limitation of the risk of financial stability. Insurance companies are supervised by the ISVAP (Istituto di vigilanza sulle assicurazioni private e di interesse collettivo) in relation to stability and transparency. A completely different model is provided for the supervision over pension funds. Art. 16 of the Legislative Decree (Decreto legislativo – D.lgs) of 21 April 1993, no. 124, identifies in the COVIP (Commissione di Vigilanza sui Fondi Pensione) the competent supervisory authority. The Ministry of Labour, in accordance with the Treasury, issues general directives in relation to the supervision of pension funds and supervises the Commission. Every authorised person carrying out a financial activity for the pension fund is, in addition, subjected to its ordinary regime of supervision.

6

I will mainly refer to the Banca d’Italia and to CONSOB. Both are legal persons organised under public law. Both are independent authorities which join financial independence with the power to determine the autonomous management of the expenditures of their functioning7.

7

The separation of roles between Banca d’Italia and CONSOB depends on the specific field concerned8. As far as the supervision of intermediaries is concerned, Banca d’Italia is responsible for matters related to the limitation of risk and financial stability, whilst CONSOB supervises transparency and ensures proper conduct (Art. 5 T.U.F. – Testo Unico sulla Intermediazione finanziaria – Consolidated Act on Financial Intermediaries). With reference to the regulation and supervision of markets, Banca d’Italia, in agreement with CONSOB, is responsible for the operation of the clearing and settlement service and the gross settlement service for transactions involving financial instruments9. Finally, as far as the regulation and supervision of issuers is con6

7

8 9

Incisive powers have been assigned to the CONSOB by the consolidated law on securities intermediation (Legislative Decree (Decreto legislativo [D.lgs.]) 24 February 1998, no. 58). The powers may be exercised autonomously by CONSOB or, in some cases, upon “consulting” the Bank of Italy. The CONSOB is responsible for ensuring transparency and correct behaviour (art. 5). It is precisely the principle of regulatory supervision which empowers CONSOB, after consulting the Bank of Italy, to regulate the conduct to be observed in dealings with investors, taking into account the need to minimize the risk of conflicts of interests and ensure that asset management on a client-by-client basis is performed in a manner consistent with the specific needs of individual investors, and to establish guidelines for the fulfilment of information requirements (Art. 6). This principle also extends to general criteria concerning the performance of services (Art. 21) and management of investment portfolios (Art. 24) and the de facto regulatory power over the trading of financial instruments. For further information on the regulatory objectives and regulatory principles of CONSOB and its accountability to the Italian Government and Parliament, see Rossi, EBLR 2003, 648–649. See Rossi, EBLR 2003, 648–649. In cases of necessity and as a matter of urgency, Banca d’Italia shall adopt appropriate measures to ensure the timely closure of settlement (Art. 77 T.U.F.), whilst CONSOB is responsible for the orderly conduct of trading with the aim of ensuring the transparency of the market and the protection of investors (Art. 74 T.U.F.).


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cerned, the responsibility for supervision is on CONSOB, which shall exercise its powers having regard to the protection of investors and the efficiency and transparency of the market in corporate control and the capital market (Art. 91 T.U.F.)10. 2. Tortious Liability of the State in Italy In Italy, tortious liability of administrative agencies is ruled – except when otherwise provided for by specific provisions – by ordinary law11. Even though this rule has always been applied, despite some significant exceptions, up until 199812, a clear distinction had to be drawn between material behaviour by administrative agencies13, i.e. for instance a car crash caused by a police patrol, and the exercise of their discretionary powers.

8

As to the discretionary activity of public agencies, even though, in the abstract, the general rule of its liability according to ordinary law was applicable, on a practical level Italian jurisprudence rejected tortious liability. The substantial immunity from liability of Regulatory Authorities was both the result of the allocation of competence between ordinary courts and administrative courts and of the restrictive interpretation of Art. 2043 Civil Code (CC), which is traditionally interpreted as a general clause designed to outline a system of atypical or “innominate” torts in the Italian legal system14.

9

As far as the allocation of competence is concerned, up until 1998 the Italian legal system was characterized by a strict division of jurisdictional competence between ordinary Tribunals and a separate judicial hierarchy of adminis-

10

10

11

12

13

14

A different rule applies in case of issues of debt securities: according to Art. 91 T.U.F. Banca d’Italia has the sole responsibility to ensure the efficiency and the financial stability in the issuing of bonds. See R. Caranta, Attività amministrativa ed illecito aquiliano: la responsabilità della P.A. dopo la L. 21 luglio 2000, no. 205 (2001); id., La responsabilità extracontrattuale della pubblica amministrazione (1993); G. Bronzetti, La responsabilità nella pubblica amministrazione (1991). See D.lgs 31 March 1998, no. 80, amended by Statute 21 July 2000, no. 205. D.lgs 80/1998 confers on the administrative judge (as the sole competent judge) the power to grant compensation for damage (in case of infringement of “legitimate interests” as well as of subjective rights). It provides that administrative courts can also adjudicate damages in subject matters falling within their exclusive jurisdiction. At the same time, D.lgs 80/1998 added many broad new subjects to this jurisdiction, so that now it encompasses the larger portion of litigation of the public administrations (For instance, land and urban planning, access to public records, or agreements on the content of administrative decisions to public utilities, public procurements, or independent authorities acts). The reform was “completed” by Statute 205/2000, which stated that the administrative courts can also adjudicate damages whenever they have jurisdiction, not just when they have exclusive jurisdiction. Cass. 19 April 1996, no. 3939, Responsabilità civile e previdenza (Resp. civ.) 1996, 1183 = Enti pubblici, 1997, 64; Cass. 12 August 1992, no. 9550, Repertorio Foro italiano (Rep. Foro it.), voice Responsabilità civile 1992, 132. M. Bussani/B. Pozzo/A. Venchiarutti, Tort Law, in: J. Lena/U. Mattei (eds.), Introduction to Italian Law (2002) 218.

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trative courts15, intended to implement the principle of the separation of powers. The administrative judge was competent for claims for the breach of socalled “interessi legittimi” (“legitimate interests”), whilst ordinary Tribunals were competent for the infringement of “diritti soggettivi” (“subjective rights”). In administrative law relations, a simple way of describing the difference between “subjective rights” and “legitimate interests” is to say that a person is entitled to a “legitimate interest” if the administrative agency has a discretionary power (subject to legal standards) to decide if his or her specific interest should or should not be satisfied16; by contrast, a person has a “subjective right” when the law does not accord any power of choice to the agency, but directly establishes the conditions under which his or her specific interest must be satisfied by the administration17.

11

In order to comply with the principle of division of powers, the annulment of unlawful administrative acts was precluded to the ordinary courts, which having ascertained violations of the rights protected, could only make a judgment against the administrative agencies for damages, but could not in any case annul, suspend, nor modify an administrative act. Ordinary courts could only set aside the administrative measure inducing the act. By contrast, when the litigation concerned “legitimate interests”, until 1998 the administrative courts could only annul administrative acts, but could not give judgments for damages18. 15

16

17

18

The original Act, regulating the jurisdictional competence between ordinary Tribunals and administrative courts dates back to 1865: see Statute 20 March 1865, no. 2248, Annex E. Legal provisions gave on the one hand (Art. 2 of Appendix E) ordinary courts the competence to protect the “civil or political rights” of the citizens (by and large respecting franchise and eligibility, personal and contractual freedoms, and ownership). On the other hand it established that hierarchical appeals could be brought solely against administrative acts concerning affairs which involved legitimate interests other than “civil or political rights” (Art. 3). Furthermore, per Appendix D, citizens who exhausted their hierarchical appeals were allowed to bring an “extraordinary” appeal to the King, who had to decide, as a rule, in conformity with the advice of the “Council of State” (Consiglio di Stato). See D. Sorace, Materiali del diritto amministrativo (2000) 141. Ibid., 147. However, according to traditional doctrine – still followed by the courts – the situation when an agency is legally bound to behave in a way that actually satisfies the interest of a person, provided that this obligation of the agency has to be construed is aimed to the satisfaction not of the individual interest, but of the public interest, so that the satisfaction of the individual interest should be seen as a mere consequence of the satisfaction of the public interest is considered to constitute a “legitimate interest”. A different, though – in the end – coincident definition, has been proposed by G. Leroy Certoma, The Italian Legal System (1985) 20. According to the author, the “subjective right” is the “power to act for the satisfaction of an interest which is recognised and protected by the legal system”. It is the power to act within the limits indicated by the relevant norm or, in other words, the legal possibility of taking a stance in relation to a given legal situation. Sorace (fn. 15) 147. According to Leroy Certoma (fn. 16) 23, the “legitimate interest” can be defined as “the pretence that the administration validily exercises its power to sacrifice or expand a right” or, in other words, “the pretence that the administration exercises its power in accordance with the norms which regulate the exercise of its power”. Indeed, some damage caused by administrative decisions infringing upon “legitimate interests” was usually compensated. For instance, Italian courts maintained that when a building permit or a commercial license, lawfully granted, was unlawfully repealed or unrenewed, the damage issuing therefrom should be indemnified.


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The second element preventing State liability was strictly related to the traditional interpretation of Art. 2043 CC. It states that “any deliberate or culpable act that causes unfair damage to others obliges the person who committed the act to compensate for the damage.” Italian courts interpreted the reference to “unfair damage” in the sense that the damage suffered had to be non iure, i.e. the injury or damage should not be justified by another legal provision19 and contra jus, i.e. the unlawful behaviour should infringe a subjective situation recognized and protected by the legal system in the form of an absolute “subjective right”20, such as ownership or property rights, freedom, life, bodily integrity, honour, reputation etc. In other words the requirement that the breach had to be contra jus led scholars and jurisprudence to consider tortious liability only in cases where a specific legal rule had been breached. Legal scholars described the limitation of the scope of application of Art. 2043 CC to the infringement of specific provisions by saying that Art. 2043 CC is a “secondary rule” that, in order to be applied, presupposed the breach of a “primary rule” conferring rights on individuals21.

12

3. The Role of Jurisprudence These precedents have been overruled by a relatively recent judgment of the Unified Section of the Corte di Cassazione22 (the Italian Supreme Court for disputes related to civil as well as criminal litigation), which asserts that an individual can claim before an ordinary court the right to be indemnified for an illegal infringement, not only of a “subjective right”, but also of a “legitimate interest”. The Italian Supreme Court stated that the time is ripe for a “radical reassessment” of the non-recoverability of losses deriving from the infringement of so-called “legitimate interests”. The Supreme Court expressed its disappointment with what it considered to be an “island of immunity” conflicting with the “most elementary exigencies of justice”23. Three elements favoured the revirement: i) the strong criticism repeatedly expressed by scholars; ii) the progressive jurisprudential widening of the area of recoverable losses; iii) finally, domestic as well as EU legislation. 19

20

21 22

23

Tort liability can be obviated by the existence of appropriate circumstances justifying the otherwise tortious act. The defenses set forth in the CC are those of self-defense (Art. 2044 CC) and defense of necessity (Art. 2045 CC). Defenses not set forth in the CC are partly framed according to provisions of criminal law (see Art. 50–54 Criminal Code). See, among others, Corte di Cassazione (Cass.) 11 February 1995, no. 1540, Il Foro amministrativo (Foro amm.) 1995, 1822; Cass. 23 November 1985, no. 5813, Giustizia civile (Giust. civ.) 1986, I, 734. See Rossi, EBLR 2003, 657 ff. Cass. 22 July 1999, no. 500, Il Foro italiano (Foro it.) 1999, I, 2487 = Foro it. 1999, I, 3201 = Giornale di diritto amministrativo (Giornale dir. amm.) 1999, 832 = Il nuovo diritto: rassegna giuridica pratica 1999, 691 = Contratti 1999, 869 = Giust. civ. 1999, I, 2261 = Archivio civile (Arch. civ.) 1999, 1107 = Danno e responsabilità (Danno e resp.) 1999, 965 = Danno e resp. 1999, 965 = Corriere giuridico (Corr. giur.) 1999, 1367 = GIUS: rassegna di giurisprudenza civile annotata 1999, 2760 = Rassegna giuridica dell’energia elettrica 1999, 433 = La Gazzetta giuridica 1999, 42 = Guida al diritto 1999, 36 = Diritto e pratica delle societá 1999, 65 = L’amministrazione italiana 1999, 1399 = Diritto pubblico 1999, 463. Cass. 22 July 1999, no. 500 (fn. 22). P.G. Monateri, La responsabilità civile, in: R. Sacco (ed.), Trattato Sacco (1998) 808, points out that, in the end, whether Regulators should be liable to single depositors or should be granted statutory immunity amounts to a policy decision.

13

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14

The Corte di Cassazione took note of the strong criticism by scholars, who repeatedly expressed their dissent to the proposed restrictive interpretation of Art. 2043 CC24, and to the resulting substantial immunity of administrative agencies in case of a misuse of powers conferred on them.

15

As far as jurisprudence is concerned, the Supreme Court recalls the trend towards the widening of the area of recoverable losses both in the relationship between private individuals (by increasing the protected interests) and in the relationships between private individuals and administrative agencies. The Court goes over the most significant stages that in the last few decades led to the progressive giving up of the traditional limitation of liability only in case of the infringement of absolute “subjective rights”. The Supreme Court recalls the (in the meantime established) recoverability of damages suffered as a consequence of a violation of relative “subjective rights”, i.e. credit rights25. It then refers to situations that were elevated by jurisprudence to the dignity of “subjective rights” in order to allow recovery of the losses suffered as a consequence of their infringement, i.e. in case of pure economic losses26. Finally it evokes the protection granted to “legitimate” expectations having an economic nature within family27 and family-like relationships28. The Supreme Court states that – despite criticism expressed by scholars – the recoverability of those damages has been argued by jurisprudence by “disguising” as “subjective rights” situations that neither had their consistency nor structure29. This construction was necessary in order to abide by the rule that considered “un-

24

25

26

27

28

29

Despite claiming that only infringements of “subjective rights” give rise to compensation for damage whenever an action for damages related to the infringement of a “legitimate interest” was brought in, jurisprudence had for some time systematically granted monetary relief in the absence of an infringement of a “subjective right”. See below fn. 25–28. See Cass. 18 December 1987, no. 9407, Foro it. 1988, I, 2321 = Informazione e previdenza (Informazione prev.) 1988, 862 = Giust. civ. 1988, I, 2053; Cass 22 September 1986, no. 5699, Rep. Foro it. 1986, voice Responsabilià civile, no. 96. The recoverability of pure economic losses was explicitly stated by jurisprudence in: Cass. 3 April 1995, no. 3903, Arch. civ. 1995, 941 = Corr. giur. 1995, 1082 = Le Società 1995, 1544 = Giust. civ. 1995, I, 2423; Cass 4 February 1992, no. 1147, Foro it. 1993, I, 3359 = Dir. informazione e informatica 1992, 784 = Responsabilità civile e previdenza (Resp. civ. prev.) 1992, 778 = Giurisprudenza italiana (Giur. it.) 1993, I, 1, 862; Cass. 25 July 86, no. 4755, Nuova giur. civ. 1987, I, 386; Cass. 4 May 1982, no. 2765, Foro it. 1982, I, 2864 = Giust. civ. 1982, I, 1745 = Giust. civ. 1982, I, 3103; Resp. civ. prev. 1982, 602. Cass. 22 February 1995, no. 1959/95, Rep. Foro it., voice Danni civili 1995, no. 235; Cass. 6 December 1982, no. 6651, Foro it. 1983, I, 1630 = Giust. civ. 1983, I, 1155 = Arch. civ. 1983, 600 = Archivio giuridico della circolazione e dei sinistri stradali (Arch. circolaz.) 1983, 758 = Resp. civ. prev. 1983, 633 = Giur. it. 1984, I, 1, 150. Cass. 28 March 1994, no. 2988, Giust. civ. 1994, I, 1849 = Diritto ed economia dell’assicurazione (Dir. ed economia assicuraz.) 1994, 517. According to the Supreme Court (Cass 22 July 1999, no. 500, fn. 22), the preferable option would have been to recognize that Art. 2043 CC should not have been considered as a secondary rule sanctioning primary rules introducing prohibitions, but as containing itself a (primary) general clause, as expressed in the wording “unfair damage” (see below). It addresses the issue of the alleged limitation of compensation for damage to the infringement of absolute “subjective rights” which has been repeatedly criticized by scholars as a “simple lie” (Monateri (fn. 23) 622).


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fair damage”, according to Art. 2043 CC, solely the infringement of “subjective rights”30. On a legislative level, the Corte di Cassazione has taken note of the fact that the exclusion of liability by administrative agencies conflicts both with European Union law and domestic law. As far as the former is concerned, the Supreme Court recalls Directive 89/66531, which grants compensation to individuals who have suffered damage as a consequence of the infringement of Community Law in the award of public supply or public works contracts32. It points out that even though jurisprudence considered its transposition into Italian law as being an extraordinary provision, the Directive affirms the principle of State liability. Its importance for the Italian legal system flows from the supremacy of Community law over domestic law.

16

With specific reference to domestic law, the Supreme Court notes that the enactment of Legislative Decree no. 80/199833 operated a significant redistribution of competence between ordinary courts and administrative courts. The guiding principle is no longer based on the distinction between “legitimate interests” and “subjective rights”. Instead, the competence has been awarded according to single matters, thereby indicating that the central issue is not the denomination of the subjective situation (for instance, as “legitimate interest” or “subjective right”), but its material content, i.e. whether the single interest brought forward by individuals deserves to be protected or not. It therefore is no longer possible to determine a priori which interests deserve protection, i.e. may fund a tortious claim. The court will have to evaluate whether the breach of a “legitimate interest” constitutes “unfair damage” according to Art. 2043 CC by determining whether it infringes upon an “individual interest

17

30

31

32 33

See Constitutional Court, order 8 May 1998, no. 165, Foro it. 1998, I, 3485 = Danno e resp. 1998, 547 = Urbanistica e appalti 1998, 623 = Corr. giur. 1998, 651 = Giust. civ. 1998, I, 1763 = Rivista giuridica dell’edilizia (Riv. giur. edil.) 1998, I, 785 = Giur. it. 1998, 1929 = Giustizia amministrativa siciliana (Giust. amm. sic.) 1998, 314. The decision concerned the constitutional compatibility of Art. 2043 CC with Art. 3 (principle of equality), 24 (right of bringing in actions) and 113 (protection against acts of public entities) Const. The Constitutional Court dismissed the plea by stating its mere hypothetical relevance for the solution of the pending dispute (according to Italian law, only issues relevant for the decision of the pending dispute may be submitted to the Constitutional Court – see Art. 23 Statute 11 March 1953, no. 87). The plea was related to the absence of a provision, in Art. 2043 CC, stating the recovery of losses suffered by third parties as a consequence of illegitimate acts or measures taken by public agencies, infringing “legitimate interests”. The conceptual precedent of the plea clearly lies in the compensation for damage suffered as a consequence of the infringement of a credit right granted by jurisprudence (starting from Court of Appeal of Turin 23 January 1952, Resp. civ. prev. 1952, 173). Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts (OJ 1989 L 395, 33), as amended by Directive 92/50/ EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts (OJ 1992 L 209, 1), itself amended by Directive 97/52/EC of 13 October 1997 (OJ 1997 L 328, 1). Directive 89/665/EEC was implemented in Italy through Statute 8 June 1990, no. 142. See fn. 12.

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significant for the legal order”34. Consequently, Art. 2043 CC requires the damage to be solely non jure (i.e. the damage must be caused in the absence of an excusing rule), without any need for it to be contra jus (i.e. affecting a situation recognized and protected by the legal system in the form of an absolute “subjective right”)35. 4. A Recent Decision by the Italian Supreme Court

18

In a relatively recent decision related to the liability of CONSOB for misleading or false information contained in prospectuses, the Supreme Court36 applied the newly established principles of State liability. The case concerned the publishing of a prospectus according to Art. 18 of Statute 7 June 1974, no. 21637 in order to promote the placement with the public of certain securities38. Despite the initial success of the offer, the press published news concerning irregularities committed by the issuing company. It turned out that the prospectus contained false information with reference to the real value of the assets of the company. A couple of years later, the Court of First Instance of Milan declared two of the promoter’s corporations bankrupt and the issuing company was put into liquidation39.

19

The plaintiffs sued CONSOB’s relevant officers to recover all or part of the money they lost as a consequence of the incorrect information contained in the prospectus. In the complaint, the plaintiffs alleged that authorisation granted by CONSOB in relation to the public offer of securities was unjust and they had been consequently wrongly induced to subscribe to the proposal40. In addition, the identification of the irregularities did not require any particular investigation as a diligent analysis of the documents filed with the Commission was sufficient. 34 35

36

37

38

39 40

Cass. 22 July 1999, no. 500 (fn. 22). The principle affirmed by the Corte di Cassazione is widely accepted: see, i.a., Cass. 11 November 2000, no. 14432, Giustizia civile. Massimario annotato della Cassazione (Giust. civ. Mass.) 2000, 259; Cass. 28 March 2000, no. 3726, Danno e resp. 2000, 878; Cass. 18 February 2000, no. 1814, Foro it. 2000, I, 1857 = Giust. civ. 2000, I, 2655. Cass. 3 March 2001, no. 3132, Foro it. 2001, I, 1139 = Dir. ed. economia assicuraz. 2001, 1093 = Corr. giur. 2001, 880 = Cons. Stato 2001, 2, 1829 = Giur. it. 2001, I, 2269 = Le Società 2001, 576 = Danno e resp. 2001, 509 = Resp. civ. prev. 2001, 571 = Giust. civ. 2001, 913 = La nuova giurisprudenza civile commentata (NGCC) 2001, I, 161 = Giorn. dir. amm. 2001, 1135 = Contratto e impresa 2001, 953 = Banca, borsa e titoli di credito 2002, II, 19 = Giurisprudenza commerciale (Giur. comm.) 2002, II, 12. CONSOB was originally established by D.lgs 8 April 1974, no. 95, and Statute 7 June 1974, no. 216 (Disposizioni relative al mercato mobiliare ed al trattamento fiscale dei titoli azionari) as a mere organ within the structure of the Treasury, to supervise companies listed on the Italian Stock Exchange. However, in 1985 CONSOB was severed from the Governmental structure and provided with full operational independence (Statute 4 June 1985, no. 281). A further step in this direction was taken in 1995 where the Commission has been to be funded through fees collected by supervised undertakings (Art. 40, Statute 23 December 1994, no. 724). For details see F. Rossi, Prospectus liability: Implementing Art 6 of the European Community directive 2003/71/EC in Italy, EBLR 2005, 1565 ff.; Rossi, EBLR 2003, 661 ff. Tribunal of Milan 10 May 1985, Foro it. 1986, I, 560. Rossi, EBLR 2003, 661 ff.


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The claim was rejected by both the Court of First Instance of Milan41 and the Court of Appeal of Milan42. The Corte di Cassazione overruled these decisions in March 200143. It held that CONSOB should exercise its power to carry out both a preventive and subsequent verification of the completeness and truthfulness of the information. Failing to perform this task may lead to liability for damages suffered by investors44.

20

The tortious liability of CONSOB for the loss suffered by investors was argued by referring to the general principle of neminem laedere. The Italian Supreme Court stated that “even within the scopes of discretionary activity, administrative agencies have to exercise their powers not only according to the limits set by specific provisions, but also with respect to the primary rule of neminem laedere”. A failure to abide by the principle of neminem laedere results in an infringement of Art. 97 Const. which establishes that public offices have to respect the principles of legality, impartiality and good administration, which represent the “external limits” to the exercise of the discretionary powers conferred on administrative agencies. According to the Supreme Court, their breach allows individuals to sue the administrative agency in tort under Art. 2043 CC45, the general tort clause.

21

The Italian Supreme Court stated, among others, that:

22

•

The relevant law at the time provided CONSOB with specific powers to ascertain the manifest falsity of the information contained in the prospect and to take initiatives aimed at correcting the information and eventually to stop the Public Offer46.

41

Tribunal of Milan 21 March 1996 (unpublished). The decision of the Milanese Tribunal followed a decision of the Corte di Cassazione in a preliminary ruling dealing with jurisdictional issues (Cass. 14 January 1992, no. 367, Foro it. 1992, I, 1421 = Banca, borsa, titoli di credito 1992, II, 393 = Giust. civ. 1992, I, 2727). The Supreme Court held that the question of establishing whether plaintiffs have a cause of action was related to the definition of their subjective position, which was not considered not to be a question of jurisdiction, but of merit which had to be decided in front of the ordinary judge. See R. Caranta, Problemi di responsabilità degli organi di vigilanza sui mercati mobiliari, Resp. civ. prev. 1993, 335. Court of Appeal of Milan 11 November 1998, Le Società 2001, 570. Cass. 3 March 2001, no. 3132 (fn. 36). Rossi, EBLR 2003, 661 ff. Cass. 3 March 2001, no. 3132, (fn. 36). As the Corte di Cassazione points out (Cass. 3 March 2001, no. 3132, fn. 36), according to Statute 7 June 1974, no. 216, as amended by Statute 23 March 1983, no. 77, every subject wishing to promote the placement to the public of a financial instrument had to provide CONSOB all the information concerning the public offer as well as the organisation, the financial position, evolution and future perspectives of the promoting company. In particular, Art. 18 (3) granted CONSOB the power to ask the promoter additional information. Art. 18 (4) gave CONSOB the power to monitor the truthfulness and completeness of the information provided by the promoting company, conferring on CONSOB the right to require the production and integration of documents, to order inspections and to make inquiries. Failure of the promoting company to comply with its prescriptions allowed CONSOB to stop in limine or to intervene in the public offer (Art. 18 (4)). CONSOB is nowadays provided with even more extensive powers in relation to public offers: see Rossi, EBLR 2003, 665–666.

42 43 44 45 46

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• • • •

23


The terms printed on behalf of CONSOB in the prospectus exonerating the Commission from liability47 for non-discovered breaches of law are contra legem and therefore void48. The Court of Appeal of Milan confused the existence of a causal relationship between CONSOB’s conduct and the damage suffered by investors with aspects related to the assessment of damage suffered by investors. Investors have a subjective right to sue CONSOB in tort in case it fails to use the statutory powers in order to prevent the publication of false information contained in a prospectus. Media reporting of the alleged irregularities committed by promoters should have urged CONSOB to intervene in order to prevent the causation of damage to investors49. It is up to the trial judge to evaluate whether media reporting of the alleged irregularities committed by the promoting company allows the application of Art. 2056 CC50 on contributory negligence, i.e. a proportionate reduction of the recoverable damage, in accordance with the seriousness of the victim’s negligence and the extent of the consequences arising from it (Art. 1227 CC).

The case was then returned to the trial judge to rule in accordance with the (binding) guidelines provided by the Italian Supreme Court. In the second 47

48

49

50

The nullity of exoneration of liability clauses is stated in Art. 1229 CC. In particular, with reference to the above mentioned clauses, their nullity flows from Art. 1229 (2) CC, which rules that “Any agreement which, in advance, exonerates from or limits liability in cases which the act of the debtor or his auxiliaries constitutes a violation of a duty arising from rules of public policy, is also void”. Notably, the terms inserted in the prospectus informing investors that CONSOB was not reviewing the merits of the proposed investment and that the issuer was the only person responsible for the information contained in the prospectus; furthermore, that the publishing of the prospectus implied neither a value judgement on the operation, nor a guarantee that the information provided a fair and correct picture of the proposed investment. Even though the statutory objectives of CONSOB are not explicitly defined, they can be inferred from several provisions, for instance: Art. 5 T.U.F. establishes that the purpose of supervision shall be to ensure transparent and proper conduct as well as the sound and prudent management of authorised subjects, having regard to the protection of investors and the stability, competitiveness and proper functioning of the financial system. Art. 74 T.U.F. states that CONSOB shall supervise regulated markets with the aim of ensuring the transparency of the market, the orderly conduct of trading and the protection of investors. Finally, Art. 91 T.U.F., ruling the issuers, settles that CONSOB shall exercise its powers having regard to the protection of investors and the efficiency and transparency of the corporate control market and the capital market. Art. 2056 CC, ruling the Measure of damages, establishes: “The damages owed to the person injured shall be determined in accordance with the provisions of Art. 1223, 1226 and 1227”. Art. 1223 CC states that “The measure of damages arising from non-performance or delay shall include the loss sustained by the creditor and the lost profits insofar as they are a direct and immediate consequence of the non-performance or delay”. According to Art. 1227 CC, ruling contributory negligence of the creditor, “(1) If the creditor’s negligence has contributed to cause the damage, the compensation is reduced according to the seriousness of the negligence and the extent of the consequences arising from it. (2) Compensation is not due for damage that the creditor could have avoided by using ordinary diligence”. Finally, Art. 1226 CC rules that “If damage cannot be proved in their exact amount, they are equitably liquidated by the court”.


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hearing the Court of Appeal of Milan51 welcomed the principles affirmed by the Italian Supreme Court. The trial judges entered a judgment in favour of the damaged investors. With reference to contributory negligence, the Milanese judges stated that investors are under no obligation to check or control the truthfulness and completeness of the information, which, on the contrary, is a duty explicitly attributed to CONSOB. Nor did the alarming media reporting change the picture: rather than founding contributory negligence by investors, they should have urged CONSOB to verify their reliability, in compliance with its statutory tasks. Indeed, according to the trial judges, CONSOB’s failure to intervene could have reassured prospective investors as to the groundlessness of the alleged irregularities52. 5. Comparative Considerations In a comparative perspective, aimed at determining the liability requirements of Regulatory Authorities, the following aspects gain primary importance: i) the causal link between the alleged infringement of the Authority’s statutory duties and the damage suffered by plaintiffs; ii) the required standard of conduct in order for the Regulatory Authorities to incur liability (mere negligence, gross negligence, bad faith, i.e. intent).

24

As far as causation is concerned, the Corte di Cassazione held that the causal link has to be determined through a prognosis of what should have been the effect of a timely and correct exercise of CONSOB’s powers on the subscriber’s investment, looking especially at the concurrence of charges of other subjects (e.g., the directors of the promoting company), in accordance with Art. 41 Criminal Code (CP)53. In applying Art. 41 CP, the Court of Appeal of Milan54 deems that even risk-friendly investors “would have turned their attention to different forms of investment” if CONSOB had properly fulfilled its duties. The trial judges therefore grant investors compensation for the entire loss suffered.

25

With reference to the required standard of conduct, even though they did not explicitly address the issue, both the Italian Supreme Court and the Court of

26

51

52 53

54

Court of Appeal of Milan 21 March 2003, Foro it. 2004, I, 584. See G.M. Santucci, Responsabilità della CONSOB per omessa vigilanza = Contratti 2004, 329 = A. Tina, Responsabilità della CONSOB per omessa vigilanza sulla veridicità delle informazioni contenute nel prospetto informativo, Corr. giur. 2004, 938 = G. Mignone, Vigilanza CONSOB e responsabilità: brevi osservazioni sul tema = Giur. it. 2004, 800. Court of Appeal of Milan 21 March 2003 (fn. 51). Art. 41 Criminal Code establishes: “(1) The presence of pre-existing, simultaneous or supervening causes, even though independent of the act or omission of the offender, shall not exclude a causal relationship between his act or omission and the event. (2) Supervening causes shall exclude a causal relationship when they were in themselves sufficient to bring about the event. If in that case, the act or omission previously committed itself constitutes an offence, the punishment prescribed therefore shall be applied. The previous provisions shall apply even when the pre-existing, simultaneous or supervening cause consists in the unlawful act of another person”. Court of Appeal of Milan 21 March 2003 (fn. 51).

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Appeal of Milan decisions indicate that the false information contained in the prospectus could and should have been detected using (ordinary) diligence in the review of the documents. The statement raises the issue as to whether the Italian Regulatory Authorities are liable solely in case of gross misconduct or also in case of a mere negligent behaviour. The latter interpretation is supported by Art. 2043 CC, the general tort rule, which does not draw a distinction between a merely negligent and a grossly negligent act or omission causing an “unfair damage”55.

27

Some scholars have argued that liability of Regulatory Authorities should be limited to gross misconduct or intent of Regulators56. They argue that a clear indication limiting liability of administrative agencies to gross misconduct can be inferred from the decisions of the Corte di Cassazione and of the Court of Appeal of Milan. They point out that a limitation of liability to cases of grave negligence allows to reconcile the carrying out of statutory duties by Regulatory Authorities in a reasonable and proper manner (i.e. without being exposed to the risk of incurring excessive costs in defending their actions while discharging their duties) with the need for consumer protection as well as transparency and stability of financial markets57.

28

Other scholars observe that a limitation of liability to grossly negligent conduct cannot be deduced from the above-mentioned decisions58. Indeed, the assessment of CONSOB’s conduct as “grossly negligent” does not imply that disappointed depositors will not succeed in bringing a tortious action against Regulatory Authorities by proving their merely negligent conduct59. Further, the easily detectable falsity of the information provided to CONSOB in the case submitted to the Corte di Cassazione and to the Milanese judges limits the content of its regulatory duties in the specific case, but does not affect – in general – the required standard of conduct60. 55

56

57 58

59

60

A. Blandini, Sulla responsabilità degli organi di vigilanza, in: M. Patroni Griffi/A. Sandulli (eds.), Intermediari finanziari, mercati e società quotate (1999) 325. O. Scotti, Diffusione di informazioni inesatte e tutela degli investitori: configurazione della responsabilità della CONSOB per omessa vigilanza, Giur. comm. 2002, II, 12 ff.; B. Andò, Responsabilità della CONSOB per inadeguato controllo di prospetto falso alla luce della l. no. 216/1974, NGCC 2001, I, 161; M. D’Auria, La responsabilità civile della CONSOB. Profili civilistici, Giur. it. 2001, I, 2269 ff.; G. Vignocchi, Sulla responsabilità dello Stato e della Pubblica amministrazione per l’esercizio del controllo sugli enti bancario-creditizi, in: Scritti in onore di Massimo Severo Giannini, III, 1988, 1003. Rossi, EBLR 2003, 670 ff. A. Palmieri, Responsabilità per omessa o insufficiente vigilanza: si affievolisce l’immunità della pubblica amministrazione, Foro it. 2001, I, 1141; A. Perrone, Falsità da prospetto e responsabilità civile della CONSOB, Banca, borsa e titoli di credito 2002 II, 25; G. Romagnoli, La CONSOB e la sollecitazione all’investimento; esercizio di poteri e obbligazioni verso gli investitori, Giur. comm. 2001, I, 759; A.M. Princigalli, La responsabilità civile degli organi di vigilanza bancaria (1992) 124. F. Fanti, Vigilanza sui mercati responsabilità della CONSOB e risarcimento del danno, Le Società 2004, 60. A. Tina, Corr. giur. 2004, 944. The author points out that, whilst the two aspects may coincide (and do coincide in the specific case), they imply autonomous evaluations.


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C. COMPARATIVE MATERIAL 1. Tortious Liability of Regulators in the U.K. The English system of financial services supervision has recently moved to a single Regulator model61. The Financial Services Authority (FSA) is the body supervising all financial markets. The FSA is charged with the regulation of banking, securities and insurance firms operating in the U.K. It also carries out functions of the U.K. Listing Authority. It is a private company, independent from the government, limited by guarantee and funded entirely by industry levy62.

29

Sec. 2 of the Financial Services and Markets Act 2000 (FSMA) establishes that in discharging its general functions the FSA must, so far as is reasonably possible, act in a way which is compatible with the regulatory objectives and which the FSA considers most appropriate for the purpose of meeting those objectives, namely: a) market confidence; b) public awareness; c) the protection of consumers; d) the reduction of financial crimes.

30

Tort liability of banking supervisors is limited in English law63. Banking Regulators have been accorded a wide statutory immunity from tortious liability. According to Schedule 1, para. 19 (1), FSMA64, “neither the FSA nor any member, officer or employee of the FSA is to incur any liability in damages for any act or omission in the discharge or purported discharge of the organization’s functions”, unless the claimant can demonstrate that the relevant act or omission was taken in bad faith65. This permits claims based on the tort of

31

61

62 63

64

65

Financial Services and Markets Act (FSMA) 2000. Up until 2000, under the Financial Services Act of 1986, the Bank of England technically was the principal Regulator for both banks and securities firms and markets; however, in practice most regulatory powers were delegated to the Securities Investment Board (SIB). The style of regulation established under the Financial Services Act was described as “self regulation within a statutory framework” T. Werlen/P. Wood, Liability of Stock Exchange Authorities and Regulators, http://www.jurist2005.org/Abstracts/ Topic%201/Wood%20and%20Werlen.pdf. The article has also been published in Zeitschrift für Schweizer Recht 2005/5. See Schedule 1, para. 17 (1), FSMA 2000. M. Andenas, Liability for supervisors and depositor’s rights: the Bank on Credit and Commerce International (BCCI) and the Bank of England in the House of Lords, The company lawyer 2001, 228. For an in-depth analysis see C. Hadjiemmanuil, Banking Regulation and the Bank of England (1996) 353 ff.; R. Cranston, Principles of Banking Law (2002) 91 ff. Schedule 1, para. 19 (1) FSMA provides both the FSA and “any person who is, or is acting as, a member or officer or member of staff of the Authority” with a broad immunity for actions in damages. The immunity applies only to acts or omissions “done in the discharge, or purported discharge, of the Authority’s functions”, unless “the act or omission is shown to have been in bad faith; or, so as to prevent an award of damages made in respect of an act or omission on the ground that the act or omission was unlawful as a result of sec. 6 (1) of the Human Rights Act 1998”. Liability cases in negligence have generally not been successful, and have not imposed any duty of care upon Regulators in respect of economic loss, nor with regard to negligent supervision of financial institutions. See Werlen/Wood (fn. 61) 15, fn. 12. See Anns v. Merton Borough Council [1978] Appeal Cases (AC) 728. The rationale behind this scenario is that the recognition of rights of action to individuals in the context of policy decisions by public authorities “can have the perverse effect of shifting the focus of the decision-making process from consideration of public interest towards common-law duties of care owed to private parties” (Hadjiemmanuil (fn. 63) 353).

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misfeasance in public office66. It provides a remedy for citizens who have suffered damage through deliberate and dishonest abuse of power by a public officer67. Attachment of liability requires that the public officer act either with i) targeted (intentional) malice or ii) untargeted malice coupled with the knowledge of such officer that he exceeds his powers and that his act would probably injure the plaintiff.

32

Case history indicates that an action in negligence cannot be brought against a public agency insofar as the action relates to policy (rather than operational) matters or involves the exercise of discretion or a quasi-judicial function68. The rationale behind this scenario is to prevent that the recognition of rights of action to individuals in the context of policy decisions by public authorities has “the perverse effect of shifting the focus of the decision-making process from consideration of public interest towards common-law duties of care owed to private parties”69.

33

Ultimately, the FSA is granted statutory immunity unless its conduct is in bad faith, in which case courts will have to evaluate whether a misfeasance in public office has occurred. 2. Tortious Liability of Regulators in Germany

34

In Germany Sec. 839 BGB provides that public servants can be held personally liable for damages for breach of professional duty owed to third parties. Substantial immunity for the Regulatory Authority BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht) has been provided for in Sec. 4, para. 4 of the 66

67

68

69

Misfeasance in public office is the only specifically “public law” tort in English law. See Bourgoin SA v. MAFF [1986] Queen’s Bench (Q.B.) 716 at 776, CA. See Dunlop v. Woollahra Municipal Council [1982] AC 158 at 172, PC; Jones v. Swansea CC [1990] 1 Weekly Law Reports (WLR) 1453. Relevant information on the liability of Regulators can be drawn from the Three Rivers case. The issue involved the liability of the Bank of England for its allegedly defective supervision on the BCCI under the relevant provisions of the Banking Act 1987. Even though the Three Rivers case does not involve the FSA, the arguments adopted by the House of Lords can be extended to the FSA because of the same statutory immunity contained in both the Banking Act 1987 and the Financial Services and Market Act 2000. Three Rivers District v. Bank of England (no. 3) [2000] 2 WLR, 1220, HL. BCCI, a large bank incorporated in Luxembourg but having its principal office in London, collapsed as a result of fraud and mismanagement. Depositors alleged that the Bank of England should not have granted a licence to the bank in view of the lack of competence and integrity of the management and should in any event have revoked the licence much earlier than they did. The then relevant law (the Banking Act 1979) granted the Bank of England and its officers in the performance of their official functions a substantive immunity unless they acted in bad faith. The depositors brought an action and the House of Lords was requested to strike out the claim on the basis that it had no possibility of success. The House of Lords stated that the case could go to trial and that the depositors would have to prove bad faith by the Bank of England. Werlen/Wood (fn. 61) 16. On the liability of Regulators for negligence see: Minorites Finance v. Arthur Young [1989] 2 All England Law Reports (All ER) 105; [1988] Family Law Reports (FLR) 345; Yuen Ken Yeu v. AG of Hong Kong [1988] AC 175; [1987] 3 WLR 776; [1987] All ER 704 (PC). Hadjiemmanuil (fn. 63) 353.


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FinDAG (Finanzdienstleistungsaufsichtsgesetz – German Financial Services Supervision Act)70, which states that the financial services supervision fulfils its tasks and exercises its capacities solely in the interest of the public, thereby excluding a duty of care owed to individual investors or other (indirectly) damaged third parties. Therefore BaFin is immunized to a substantial degree by this principle of proximity (Unmittelbarkeitsgrundsatz). In the past, the Bundesgerichtshof71 awarded damages to depositors claiming they suffered a loss as a consequence of the failure of the Regulatory Authority to adopt the appropriate measures. The decisions by the German Supreme Court rested on the missing reference, in the then relevant Law (the German Banking Act of 1961), to the interested third parties. In order to prevent a possible flood of tortious claims, the German Parliament amended the rule, stating that the Regulator exercised its functions solely in the public interest (öffentliches Interesse) and therefore had no duty to private individuals72. Legal scholars have correctly pointed out that the core problem of State liability for defective supervision is the so-called Drittbezogenheit73, i.e. the establishing of whether a breach of statutory rules confers rights to single depositors74. As a consequence of the amendment, a single depositor does not have a right to sue BaFin in case of defective supervision, unless there is a so-called abuse of power (Amtsmissbrauch). An abuse of power requires the civil servant to commit an infringement satisfying the requisites of Sec. 826 BGB (i.e. damage intentionally caused in a way infringing upon morals – “gute Sitten”)75 and may also occur, depending on the circumstances, in selected cases of grossly negligent behaviour76.

35

In a recent decision the Bundesgerichtshof (BGH)77, whilst excluding liability of the then Regulatory Authority (the Bundesaufsichtsamt für das Kreditwe-

36

70

71

72

73

74

75

76

77

The relevant provision was recently re-located to the FinDAG in 2002 and was previously incorporated in sec. 6, para. 3 (until 1997) and sec. 6, para. 4 (from 1997 to 2002) of the German Banking Act (Kreditwesengesetz – KWG). See Statute 22 April 2002 (Bundesgesetzblatt, BGBl. I, 1310). Bundesgerichtshof (BGH) 15 February 1979, Entscheidungen des (deutschen) Bundesgerichtshofs in Zivilsachen (BGHZ) 74, 144 = Neue Juristische Wochenschrift (NJW) 1979, 1354 (socalled Wetterstein case: the Regulatory Authority was aware of the fact that a company had issued securities which only an authorized bank was legally allowed to issue); BGH 13 June 1979, BGHZ 75, 120 = NJW 1979, 1879 (so-called Herstatt case: the Regulatory Authority allegedly failed to carry out diligent supervision of a failed bank). See sec. 6, para. 3, German Banking Act of 1984 (later relocated to sec. 6, para. 4, German Banking Act, now incorporated in sec. 4, para. 4 of the Financial Services Supervision Act). J. Geerlings, Staatshaftung und Bankenaufsicht in Deutschland – Ein Rechtsvergleich mit England und den Vereinigten Staaten, Zeitschrift für Bank- und Kapitalmarktrecht (BKR) 2003, 890. See BGH 20 January 2005, NJW 2005, 742, according to which “Es kommt danach auf den Schutzzweck der Amtspflicht an”. H.-J. Papier, in: Münchener Kommentar zum BGB, 4th ed. 2004, § 839, no. 271; C.M. Jeronim, Münchener Anwaltshandbuch, Verwaltungsrecht 2003, no. 36. See, for instance, BGH 22 May 1984, BGHZ 99, 243, 252 = NJW 1984, 2216; BGH 1 November 1973, NJW 1973, 458. BGH 20 January 2005 (fn. 74).

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sen), held that the actual statutory immunity from liability of BaFin for defective supervision towards depositors does not violate Sec. 34 of the German Constitution78, which imposes the rule of law and the right to a fair trial. Even though the statutory immunity will have to be interpreted restrictively, it is up to the Parliament, as long as it does not violate constitutional principles, to enact Acts reversing case law79. Nor does a Drittbezogenheit necessarily follow from Sec. 14, para. 1, of the German Constitution, which urges the State to guarantee and protect ownership. According to the German Supreme Court, unless the Constitution itself explicitly confers upon Parliament a specific duty to a particular legislative solution, or unless such a solution can be inferred from constitutional interpretation, public agencies enjoy wide discretion in the fulfilment of their protective duties (Schutzpflichten)80.

37

An additional argument excluding the constitutional incompatibility of the statutory immunity from liability of BaFin can be drawn from the jurisprudence of the German Constitutional Tribunal (Bundesverfassungsgericht), which limits its constitutional check of parliamentary acts to evident violations of fundamental rights81. This approach reflects the complexity of an evaluation of the implementation of a positive “protective duty” through a specific legislative measure, and should therefore be attributed, according to the principle of separation of powers, to the Parliament82.

38

A comparison between the Italian and the German legal solutions bears interesting results. Even though the respective legal constructions are different, a similarity in the mechanism by which meritorious cases are distinguished from those not deserving legal protection can be detected: whilst the German system requires a “special relationship” (besondere Beziehung)83 to grant a right to single individuals who allegedly suffered a damage as a consequence of defective supervision of BaFin and, more generally, of the unlawful conduct of an administrative agency, Italian jurisprudence has recourse to an evaluation based on the “importance of the individual interest for the legal order”84.

78

79

80 81 82 83 84

Sec. 34 Grundgesetz provides that a public servant’s personal liability arising pursuant to sec. 839 BGB is automatically assumed by the Federal Republic of Germany (or other authority on behalf of which the relevant civil servant was acting when breaching his/her professional duties). Therefore, the liability of the Federal Republic of Germany or BaFin would, if applicable, arise under sec. 839 BGB in conjunction with sec. 34 Grundgesetz. BGH 20 January 2005 (fn. 74). The case law stating the Regulator’s liability in relation to single depositors referred to in the text is mentioned in fn. 74. BGH 20 January 2005 (fn. 74). BGH 20 January 2005 (fn. 74). BGH 20 January 2005 (fn. 74). BGH 20 January 2005 (fn. 74). Cass 22 July 1999, no. 500 (fn. 22).


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D. LIABILITY OF REGULATORY AUTHORITIES UNDER “EUROPEAN LAW” There are two distinct aspects that are, at least in the abstract, of relevance under “European Law” as far as liability of Regulators for lack of supervision is concerned: i) the infringement of statutory immunities with EU Law; ii) the potential incompatibility of the statutory immunity of Regulators with the European Convention of Human Rights.

39

As far as the latter is concerned, the compatibility of the relevant provisions of the FSMA with the ECHR follows from Schedule 1, para. 19 (1) of the FSMA, which provides that standard governmental immunity provisions may not apply in case the FSA violated Sec. 6 (1) of the Human Rights Act of 1998, which renders it unlawful for a public authority to act in a manner incompatible with certain rights established by the ECHR. Art. 6 (1) establishes that “in the determination of his civil rights and obligations […] everyone is entitled to a fair and public hearing […] by an independent and impartial tribunal established by law”. With reference to administrative decisions Sec. 6 (1) has been understood in the sense that a blanket immunity (i.e. exoneration of an administrative agency solely on the basis of its statutory immunity) is effectively a bar to a claim, since it prevents courts from examining meritorious cases. However, it is not a contravention of the ECHR if the court in fact reviews the case, even if it concludes that there is no duty of care under the circumstances85.

40

The same issue has been indirectly addressed by the Bundesgerichtshof. An infringement of the ECHR has to be excluded where Regulators violate their supervisory duties, since Sec. 4, para. 4, FinDAG does not exempt BaFin from liability, but only rules the “Drittbezogenheit”86. As the German Supreme Court explicitly states “the liability for wrong decisions by BaFin in relation to supervised banks, other businesses and private individuals in respect of whom it has the power to intervene remains intact”87. Further, individuals can always have recourse to the relevant Authority and have the right to sue the administrative agency where the damage suffered is a consequence of abuse of power (Amtsmissbrauch)88.

41

85

86

87 88

See Hill v. Chief Constable of West Yorkshire [1989] AC 53; X v. Bedfordshire City Council [1995] 2 AC 633. See also Recital 44 of Directive 71/2003/EC (see below fn. 95), which states that “Provisions should be made for the right of judicial review of decisions taken by Member States’ competent authorities in respect of the application of the directive”. U. Häde, Keine Staatshaftung für mangelhafte Bankenaufsicht – Zum Urteil des EuGH vom 12. 10. 2004 in der Rs C-222/02, Europäische Zeitschrift für Wirtschaftsrecht (EuZW) 2005, 41. BGH 20 January 2005 (fn. 74). See fn. 72–73.

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42

A different aspect of EU law which may have importance refers to its primacy over domestic law. Under EU law an immunization statute (or any restriction of liability) may be overridden if a EU legislative Act applies and is supreme to the domestic statute or restriction at issue. Precisely, the European Court of Justice (ECJ) has held that implementation of EU law would be prejudiced if individuals were deprived of EU rights merely on the grounds that their national States failed in their obligations to implement those rights in national law if the EU statute has direct effect89. As is well known, the principle of direct effect establishes that wherever the provisions of a directive appear to be unconditional and sufficiently precise, those provisions may be relied upon as against every national provision which is incompatible with the directive insofar as the provisions define rights which individuals are able to assert against the state.

43

Both the House of Lords and the Bundesgerichtshof have addressed this issue. Notably, the German Supreme Court90 sought a preliminary ruling, in order to establish whether i) the failure to timely implement the EU Deposit Guarantee Directive gave depositors a right to sue the German State and whether ii) the First Banking Directive conferred them a right to seek compensation from the Regulatory Authority for defective supervision.

44

The ECJ held that the “Codified Banking Directive”91 did not confer direct rights to depositors, but rather was merely a harmonizing directive for purposes of EU law. According to the European Court of Justice92 the “Codified Banking Directive”93 was intended mainly to harmonize EU law, and therefore did not confer individual rights on single investors and depositors. A direct claim by depositors could therefore not be founded on EU law. As the duties 89

90 91

92 93

Member State liability has been stated by the European Court of Justice (ECJ) case law: see the Francovich decision (ECJ 19 November 1991, Cases C-6/90 and 9/90, Francovich v. Italy [1991] European Court Reports (ECR) I-5337). The ECJ established the principle of State liability in cases of non transposition of a directive, thereby implicitly stating that the Italian practice of denying State liability in cases of the infringement of “interessi legittimi” was conflicting with the ECJ position to the subject. In the joined cases Brasserie du Pêcheur v. Factorame III (Cases C-46/93 and C-48/93, Brasserie du Pêcheur SA v. Germany, and R v. Secretary of State for Transport, ex parte Factorame Ltd. [1996] ECR I-1029) the ECJ affirmed that damages should be paid if a national legislature fails to adapt a statute to meet EU standards or enacts one which contravenes Community law. BGH 16 May 2002, NJW 2002, 2464. ECJ 12 October 2004, Paul v. Federal Republic of Germany – Case C-222/02, NJW 2004, 3479 = EuZW 2004, 689. The ECJ points out that Directive 77/780/EEC of 12 December 1977 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of credit institutions, Directive 89/299/EEC of 17 April 1989 on the own funds of credit institutions and Directive 89/646/EEC of 15 December 1989 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of credit have been “codified” by Directive 2000/12/EC of 20 March 2000, on the taking up and pursuit of the business of credit institutions (the so-called “Codified Banking Directive”). ECJ 12 October 2004 Paul v. Federal Republic of Germany (previous fn.). Directive 94/19/EC of 30 May 1994, amending Directive 77/780/EEC of 12 December 1977 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of credit institutions.


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under the subsequent financial market directive are much wider, this may support a wider duty of care on Regulators at the present stage94. For present purposes, Directive 2003/71/EC95 to harmonize the requirements for the drawing up, approval and distribution of the prospectus to be published when securities are either offered to the public or admitted to trading on a regulated market gains particular importance96. The aim of Directive 2003/71/EC is to ensure investor protection together with market efficiency, in accordance with the high regulatory standards in the relevant international fora97.

45

The “Prospectus Directive” obliges Member States to ensure that the national laws, regulations and administrative provisions on civil liability apply to the persons responsible for the information provided in the prospectus98. These shall be at least the issuer (or its administrative, management or supervisory agencies), the offeror, the person asking for admission to trading on a regulated market or the guarantor, as they case may be99.

46

The Directive provides merely a limited harmonization of civil liability for the information disclosed through the prospectus100. While not preclusive, it does not require Member States to introduce a statutory regime governing prospectus liability, limiting its scope to the attachment of liability for information disclosed in the prospectus to be published in a public offer merely to the issuer and the offeror. As such the Directive does not compel Member States to ensure that civil liability applies to underwriters, to outside lawyers, to audit firms and to Regulatory Authorities101. Nevertheless, a convergence towards similar liability standards in different national financial markets – and thus legal systems – even though not expressly required by the Directive, appears to follow a trend progressively implementing a high level and equivalent protection to actual and potential investors102 at a Community level103. German scholars have pointed out that the decision by the European legislator not to regulate the liability of supervisory agencies threatens to provoke a competition bias between the different domestic liability regimes for prospectuses with identical content104.

47

94 95

96 97 98 99 100 101 102 103 104

Rossi, EBLR 2003, 656. Directive 2003/71/EC of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC of 31 December 2003, 64–89. The “Prospectus Directive” has been implemented in April 2004 through the approval of Regulation 809/2004 by the European Commission. It specifies the disclosure requirements to be included in the different models of prospectus. See H. Golden/P. Fischer-Appelt, The EU Prospectus and Transparency Directives – Towards a Unified European Capital Markets Regime, 1460 PLI/Corp. 19. Art. 1, Directive 2003/71/EC. See Recital 10, Directive 2003/71/EC. See art. 6 (2), Directive 2003/71/EC. See art. 6 (1), Directive 2003/71/EC. Rossi, EBLR 2005, 1545. Rossi, EBLR 2005, 1546. See Recital 19, Directive 2003/71/EC. See Recital 20, Directive 2003/71/EC. M. Weber, Unterwegs zu einer europäischen Prospektkultur – Vorgaben der neuen Wertpapierprospektrichtlinie vom 4. 11. 2003, Neue Zeitschrift für Gesellschaftsrecht (NZG) 2004, 366.

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E. CONCLUSION 48

Laying down the limits of liability of Regulatory Authorities cannot be done merely by adopting a formalistic approach105. The judgments mentioned cannot simply be compared without due consideration of the context (for instance, the specific field of financial supervision) and the different starting point (i.e. whether the relevant legal system provides for a statutory immunity).

49

One key distinction with regard to whether immunity will attach to administrative agencies is the “relativity” or “proximity” principle; in other words, whether the Regulatory Authority owes a duty of care to individual depositors or investors. Another key element is the “standard of conduct” required (simple negligence, gross negligence, bad faith) in order to attach liability to Regulators. Both elements are used in order to keep Regulator’s liability “within reasonable bounds”.

50

As far as statutory immunity of Regulators is concerned, there certainly are arguments to support the immunity of Regulatory authorities as well as other arguments which support the attachment of liability to Regulators. Policies which suggest imposing liability on Regulators106 include the following: • • • •

51

Transparency: An efficient financial market needs to maintain the supremacy of law, which requires that “abusive” exercise of power by public authorities is limited and controlled by the rule of law; Promotion of “awareness of responsibility” of Regulators: This argument rests on the assumption that the accountability and discipline of Regulators – and thus their credibility – is enhanced by the risk of liability; Consumer protection: The ordinary members of the public are not able to assess meaningfully the credit strength of regulated firms107; Information asymmetry: It must be taken into account that, because of the existence of a different access to information, investors are compelled to rely on the information and supervision provided by Regulators.

On the other hand, several arguments may suggest the immunity from liability of Regulators: • •

105 106 107 108

Inhibition argument: Regulators may need a certain degree of protection in order to carry out their functions in a reasonable and proper manner; Floodgates argument: Regulators may need protection in order to avoid the possibility of becoming “defendants of last resort”108 and to prevent Rossi, EBLR 2003, 672–673. The arguments are discussed in Rossi, EBLR 2003, 670–671 and Werlen/Wood (fn. 61) 7–8. See also Directive 2003/71/EC (see fn. 95). As Rossi, EBLR 2003, 671, points out, whatever immunity a legal system may recognise there will always be a field to sue it and the Three Rivers case may be a clear example thereof. In principle, the only solution is a blanket immunity, which is incompatible with European Court of Human Rights (ECHR).


•

•

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liability from opening the floodgates of litigation and provides a “deep pocket” for compensation; Moral hazard: This argument suggests that the possibility for consumers to obtain compensation from Regulators may generate moral hazard since they may be less careful in deciding the investment they are going to undertake; Discretionary decisions: Many decisions taken by Regulators are non-justiciable (i.e. non-susceptible to judicial standard-setting).

As far as the “seriousness” of the misconduct is concerned, English scholars have argued that the “tort of misfeasance is restricted to the extent that it leaves an unacceptably broad immunity for banking supervisors”109. Indeed, under the terms of the statute, liability may only arise if the controversial conduct “was in bad faith”110.

52

On the other hand, in relation to the Italian legal system, it remains to be seen whether Italian courts will consider mere negligence sufficient for imposing liability on Regulators. There is a strong dissenting opinion, which warns of the risks implicit in such an extensive approach.

53

In this context, interesting proposals have been advanced in Italy. Some scholars have argued that a limitation to gross negligence could be inferred, as far as the Italian legal system is concerned, from Statute 117/1998111, which limits the liability of judges to bad faith conduct and to selected cases of grossly negligent behaviour (see Art. 2, no. 3)112. Even though it is not applicable to Regulatory Authorities by analogy, its extension to administrative agencies has been argued by pointing out that, from a systematic perspective, the criteria set out in Art. 2, no. 3, 117/1998 should be considered as general tort law principles ruling the exercise of “quasi-jurisdictional” activities.

54

Others have suggested applying the principle of “proportionate liability”, thereby trying to take into account that defective supervision by Regulators often is preceded by an unlawful behaviour of other legal subjects, notably “private gatekeepers” (auditors and, depending on the circumstances, sponsors)113. This proposal calls for an apportionment of the damage as a whole according to their relative responsibility, thus preventing the State or the Financial Market Regulators from becoming the guarantor of regulated firms (including banks and securities firms).

55

109 110

111 112 113

Andenas (fn. 63) 227 ff. Andenas (fn. 63) 228. Liability only arises for acts or omissions that constitute misfeasance in public office or some other intentional tort involving bad faith. Statute 2 April 1988, no. 117. P.G. Monateri, La responsabilità civile delle autorità garanti, Danno e resp. 2000, 361. A. Palmieri, Responsabilità per omessa o insufficiente vigilanza, cit., 1150; G. Sacchi Lodispoto, Responsabilità del revisore contabile e proportionate liability: una via da seguire? Danno e resp. 1997, 665 ff.; M. Giretti, Il revisore che sbaglia paga: ma quanto e a chi? Danno e resp. 2000, 481 ff.; U. Violante, Responsabilità solidale e responsabilità parziale, Danno e resp. 2001, 460 ff.; O. Scotti, Giur. comm. 2002, II, 31.

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I think that useful criteria in addressing the issue can be inferred from the Principles of European Tort Law (PETL): Not only do they indicate, as far as “proportionate liability” is concerned, that it will hardly be implemented, since, as Horton Rogers points out with reference to Multiple Tortfeasors, “solidary liability is so deeply embedded in the European systems that to abandon it would amount to a profound shift in the balance of the law”114; they also indirectly offer support to a possible solution with reference to the standard of conduct required in order to affirm liability of Regulators for defective supervision: Limiting liability to gross misconduct or intent could offer a sufficient degree of protection for Regulators whilst allowing – being based on common tort law – a higher number of litigation cases to arise115. The proposed solution, which has also been adopted by the French Conseil d’Etat116, is coherent with EU law, since it allows a direct protection of consumers, and, though indirectly, with the PETL, according to which the scope of protection depends on the nature (i.e. the basis) of liability117. As Pierre Widmer observes, “It is widely accepted that fault, especially intent and gross negligence should be a factor which has an important weight for the decision and evaluation as to whether a certain conduct should entail liability and to what extent”118.

114

115 116

117 118

H. Rogers, Comments – Multiple Tortfeasors, Principles of European Tort Law – Text and Commentary (2005) no. 3. See art. 9:101 Priniciples of European Tort Law (PETL) and art. 9:102 PETL, which both preserve the picture of solidary liability as it now prevails in European systems generally (Rogers, Introduction – Multiple Tortfeasors, no. 8). See Rossi, EBLR 2003, 672–673. Conseil d’Etat 30 November 2001, Ministre de l’economie, des finances e des l’industrie v. Kechichian, no. 219562, www.conseil-etat.fr; www.rajf.org, which ruled that in order for the Commission bancaire to be held liable a “faute lourde” is required. See art. 2:101 PETL and art. 3:201, lit. c, PETL. P. Widmer, Liability based on Fault, in: Principles of European Tort Law – Text and Commentary (2005) no. 10. See also art. 9:102, para. 2 PETL, which expressly mentions the “respective degrees of fault” of multiple tortfeasors as a factor to be taken into consideration in the determination of their respective portions of liability (in the internal repartition of the damages). Finally, as Widmer points out (no. 16), a link of the rules dealing with fault as a basis of liability exists with the provision on “Reduction of Damages” (art. 10:401 PETL) insofar as the basis of liability is certainly […] one of the most important factors to be taken into account for the decision whether and to which extent a reduction of the damages should take place. Widmer concludes that “A reduction will probably not be conceded to a person who has acted with intent or with gross negligence”.

Reports

I. Austria Barbara C. Steininger*

A. LEGISLATION 1. New Austrian Tort Law Draft1

1

In 2001 the Austrian Ministry of Justice called together a working group to prepare a draft for a new Austrian tort law. The main reason behind the idea of reforming Austrian tort law was that the present set of tort law rules of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch, ABGB) only reflects the current state and practice of tort law to a limited extent. The main tort law provisions are largely still based on the ABGB’s original version from 1811 and on some changes incorporated in the course of a reform in the early 20th century. Only on the basis of extensive court practice and rules laid down in various additional statutes can the current legal situation be assessed.2 Moreover, some of the ABGB’s rules on tort law no longer reflect today’s concepts and values, e.g. the provisions on compensation for non-pecuniary loss. Additionally, the ABGB – for obvious reasons – does not take later developments into account as e.g. those in the field of strict liability, where rules are to be found in various separate statutes not necessarily corresponding to each other.3

2

The working group on tort law reform consists of ministry officials, Supreme Court judges, law professors and one representative of the insurance sector. The group finalised its draft for a new tort law in spring 2005 and on 7 June 2005 the draft was presented to the public. In accordance with the present rules, the draft covers both contractual and delictual liability. It does not intend to radically change Austrian tort law, but rather to build on the Austrian * I would like to thank Donna Stockenhuber M.A. for proof-reading the text. An English translation of the draft is available in an annex to the present report. 2 G. Hopf, Das Reformvorhaben, in: I. Griss/G. Kathrein/H. Koziol (eds.), Entwurf eines neuen österreichischen Schadenersatzrechts (2006) no. 2 ff.; I. Griss, Der Entwurf eines neuen österreichischen Schadenersatzrechts, Juristische Blätter (JBl) 2005, 274. 3 H. Koziol, Der österreichische Entwurf eines neuen Schadenersatzrechts, Haftung und Versicherung (HAVE) 2005, 1; Hopf (fn. 2) no. 2 ff.; Griss (fn. 2) 274. 1

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tradition, and it incorporates present court practice to a substantial degree. At times, however, attempts are made to find new solutions differing quite clearly from the present tort law rules. The working group also strove to take the developments on a European level into account.4 The text of the draft, furnished with commentaries by members of the working group, has meanwhile been published.5 This new Austrian tort law draft is not an official ministry draft. As phrased in the introductory chapter of the draft’s publication, it is no more but also no less than the work of Austrian tort law experts that is based on an initiative of the Austrian Ministry of Justice.6 Notwithstanding this “unofficial” character of the draft, I consider it to be highly interesting for readers of the Yearbook as the draft will certainly serve as a basis and stimulus for discussion in the field of Austrian tort law in the next few years – even if it remains open which turn the question of tort law reform will ultimately take.

3

As it is clearly not possible to cover the whole draft in detail in the framework of the present Yearbook, I will focus on the main provisions of the draft’s general part whereas the rules of the particular part can only be mentioned briefly.

4

a) The Fundamental Rule

The draft starts with a fundamental rule (§ 1292) according to which the aim of tort law is to compensate and prevent damage. With this provision the working group at the same time wanted to clarify that tort law does not have a punitive function.7 Moreover, the fundamental rule’s second section sets out that a person will only be liable to compensate damage if that damage can be legally attributed to him. It is stressed that this provision matches the rule of casum sentit dominus – everyone has to bear his or her own loss unless there are special reasons to shift the damage to someone else.8 Like the ABGB, the draft also gives a definition of damage: According to its § 1293 para. 1, damage is any harm that a person suffers to his person, patrimony or any other of his protected interests. The provision distinguishes between pecuniary loss (if the harm can be measured in money) and non-pecuniary loss (all other cases). In order to find out which interests are protected, the whole legal order has to be taken into account.9 However, similar to Art. 2:102 Principles of European Tort Law (PETL),10 § 1293 para. 2 of the draft outlines the factors to be taken into account when determining the scope of protection: Decisive are the inter4

5

6 7 8 9 10

H. Koziol, Grundgedanken, Grundnorm, Schaden und geschützte Interessen, in: I. Griss/G. Kathrein/H. Koziol (eds.), Entwurf eines neuen österreichischen Schadenersatzrechts (2006) no. 20. I. Griss/G. Kathrein/H. Koziol (eds.), Entwurf eines neuen österreichischen Schadenersatzrechts (2006). Hopf (fn. 2) no. 11. Koziol (fn. 4) no. 23. Koziol (fn. 4) no. 25; id., HAVE 2005, 1 f. Koziol (fn. 4) no. 27. See H. Koziol in: Principles of European Tort Law. Text and Commentary, Art. 2:102, no. 1 ff.

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est’s rank and value, the precision of its definition and its obviousness but also the interest of others in free development and in the exercise of rights as well as public interests. b) Causation

6

§ 1294 of the draft covers questions of causation and uses the conditio sine qua non formula as a basis for causation. It does, however, also provide rules for questions of potential causation.11 Both in case of cumulative and superseding causation does the draft provide for solidary liability. While this is in accordance with the present situation for cumulative causation, the draft clearly deviates from common opinion on the present state of the law concerning superseding causation: Today the second hypothetical cause is widely disregarded.12 In deviation of the present regime, the draft foresees partial instead of solidary liability for alternative causation. The same concept applies if the damaging act of a third person concurs with an act of the victim himself or with chance: Then damage will also be apportioned between the tortfeasor and the victim. Thereby the draft enshrines a clear widening of liability in comparison to the present law.13 In relation to minimal causation the draft contains a presumption that equal shares of the damage were caused in its § 1294 para. 4. Where there is no special rule laying down partial liability, multiple tortfeasors will be solidarily liable according to § 1294 para. 3 of the draft. Finally, § 1294 para. 5 of the draft contains a rule on recourse. c) Liability for Fault or Otherwise Wrongful Conduct

7

§§ 1295 ff. of the draft provide rules on liability for faulty or otherwise wrongful conduct. Fault-based liability presupposes that the tortfeasor acted both unlawfully as well as culpably.14 A person acts unlawfully if he, by violating the objective standard of conduct, injures a protected interest, contravenes a concrete duty of care or acts contra bonos mores.15 The protection of interests may, as is stressed in the commentary, also stem from a contractual or other special relationship between the tortfeasor and the person harmed.16 For determining the required objective standard of conduct, the draft refers to a 11

12

13 14

15

16

Koziol, HAVE 2005, 3; F. Bydlinski, Die Verursachung im Entwurf eines neuen Schadenersatzrechts, in: I. Griss/G. Kathrein/H. Koziol (eds.), Entwurf eines neuen österreichischen Schadenersatzrechts (2006) no. 1 ff. For an overview of the present situation see H. Koziol, Österreichisches Haftpflichtrecht I (3rd ed. 1997), no. 3/58 ff.; cf. also H. Koziol/R. Welser, Bürgerliches Recht II (12th ed. 2001) 315 f.; E. Karner in: H. Koziol/P. Bydlinski/R. Bollenberger (eds.), Kurzkommentar zum ABGB (2005) § 1302 no. 9. Bydlinski (fn. 11) no. 17 f. A. Fenyves, Haftung für schuldhaftes oder sonst fehlerhaftes Verhalten, in: I. Griss/G. Kathrein/ H. Koziol (eds.), Entwurf eines neuen österreichischen Schadenersatzrechts (2006) no. 3. Fenyves (fn. 14) no. 4 ff.; Griss (fn. 2) 275. While § 1295 presently only holds liable a person who wilfully inflicts damage in a way contra bonos mores, such a qualification is not included in the draft. The commentary however stresses that, as an act contra bonos mores is in question, liability, even on the basis of the draft, would regularly presuppose qualified fault on the part of the tortfeasor (Fenyves (fn. 14) no. 6). Fenyves (fn. 14) no. 5.

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reasonable person, having regard to the interests of others, under the circumstances and the draft again17 requires a weighing of interests and provides a list of factors to be taken into account: the rank and value of the interests endangered and the interests pursued, the hazardousness of the situation, the proximity between the parties involved, the possibility of averting the danger and the cost and effort associated therewith. Like the present law the draft increases the duties of care if someone facilitates traffic or maintains a source of danger (we are in the field of the so-called “Verkehrssicherungspflichten”). Again similar to the present legal situation, the draft foresees only limited duties to act. However, the draft goes a step further than today’s tort law when it provides for a duty to act not only if there is a special relationship to the endangered person, if he facilitates traffic or creates or maintains a source of danger but also if the threatened damage is grossly out of proportion to the burden of preventing it.18 According to § 1298 of the draft, pure economic interest will enjoy only limited protection. Finally, § 1299 of the draft deals with defences. As § 1296 of the draft always requires a weighing of interests for the assessment of wrongfulness, the group even considered refraining from stating an express rule on defences, but finally included such a rule, which, in the view of the working group, exemplifies typical results of the weighing of interest required by § 1296 of the draft.19 Concerning fault, the draft, in accordance with the present situation, uses a subjective standard: According to § 1300, a person is at fault, if, on the basis of his abilities and knowledge, he would have been in a position to act differently and should have done so. For persons having attained the age of 14 years it is presumed that they possess ordinary abilities and knowledge while the opposite is presumed for persons below this age (§ 1300 para. 2 of the draft). Similar to the present law, the draft does, however, foresee an objective standard if a person enters into a contract to bring a performance or if someone, without necessity, exercises an activity that requires special abilities and knowledge.20 Finally, § 1301 of the draft provides an exceptional possibility to impose full or partial liability on persons lacking capacity or the necessary abilities and knowledge to comply with the objective standard of conduct. The basis and extent of their liability depends on their being at fault after all by way of exception, on any benefit they derive from the injury and on any omission of defence out of consideration for them as well as their pecuniary circumstances and those of the victim. This provision is similar to the present § 1310 ABGB. However, while § 1310 ABGB is only applicable to persons lacking capacity,21 § 1301 of the draft also applies to persons who – though having 17 18 19 20 21

Cf. the determination of the scope of protection under § 1293 (2) of the draft supra no. 5. See Fenyves (fn. 14) no. 14 f. Fenyves (fn. 14) no. 21. Fenyves (fn. 14) no. 26 f. Although even under present tort law it is argued that § 1310 ABGB should be applied by analogy to persons lacking the necessary knowledge and abilities to come up to the objective standard: See R. Reischauer in: P. Rummel (ed.), Kommentar zum ABGB II (2nd ed. 1992) § 1310 no. 12; Koziol (fn. 12) no. 5/20, 5/41; Karner (fn. 12) § 1310 no. 4.

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capacity – lack the necessary knowledge and abilities to meet the objective standard of conduct.22 d) Strict Liability

9

The draft not only covers fault-based liability but provides innovative rules on strict liability. These rules do not foresee caps. § 1302 of the draft provides a general clause on strict liability for sources of high danger.23 According to this provision, the keeper of a source of high danger will be liable insofar as this danger results in damage. As defined by sec. two of the said provision, a source of high danger exists when a thing, either in itself or in the course of its ordinary use, or an activity involves the risk of frequent or serious damage in spite of the exercise of due care. The draft then provides an exemplary list of sources of high danger mentioning nuclear facilities, dams, oil and gas pipelines and electric power lines, ammunition factories and depots, aircraft, railway, cableway, motor vehicles and motor boats as well as mines and blastings. This strict liability might be excluded or reduced if the damage is caused by force majeure, or in spite of the greatest possible care and the thing being free from defect (unavoidable event), or if the victim consents to the damage or assumes the risk – depending on the weight of the relevant objection and the danger involved. This strict liability clause for sources of high danger might sound revolutionary. However, as the most important areas of strict liability have already been covered by special statutes and as present Austrian tort law practice assumes a general liability for dangerous things and installations on the basis of analogy,24 the draft’s general clause is not as big a step as it may seem at first sight. Therefore, although criticised for increasing liability,25 § 1302 should, in my view, not lead to a significant widening of liability.

10

Another interesting and quite remarkable part of the draft is the provision of § 1303 on liability for increased danger. It holds the keeper of a source of increased danger that does not reach the extent required by § 1302 para. 2, or a person creating such a danger through his activity liable insofar as this danger results in damage and he does not prove that the care necessary to avert the damage was exercised. As in its § 1302, the draft provides an exemplary list of sources of increased danger naming animals, constructions, motor vehicles with low maximum speed or activities like cycling and skiing at high speed. Again although this sounds like a radical change at first, the change is actually not as substantial as it may seem: Under present tort law such liability for violation of the objective standard of conduct combined with a reversal of the burden of proof already exists for constructions and animals and the analogous application of such tightened liability is advocated even for tort law as it 22

23

24 25

Moreover, the question whether the person in question derived any benefit from the injury to someone else is not taken into account under § 1310 ABGB; Fenyves (fn. 14) no. 28. I. Griss, Gefährdungshaftung, Unternehmerhaftung, Eingriffshaftung, in: I. Griss/G. Kathrein/ H. Koziol (eds.), Entwurf eines neuen österreichischen Schadenersatzrechts (2006) no. 9 ff. See H. Koziol, Österreichisches Haftpflichtrecht II (2nd ed. 1984) 575 ff. See C. Fischer-Czermak, Der Entwurf einer allgemeinen Gefährdungshaftung, Österreichische Notariatszeitung (ÖNZ) 2006, 8 f.

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stands.26 § 1303 of the draft extends this liability to all other cases of increased danger by providing a general clause. It thereby takes into account that there is no clear-cut borderline between fault and strict liability. e) Enterprise Liability

The draft with its § 1304 also includes a provision on enterprise liability, a novelty of the draft that will lead to a certain widening of liability compared to the present law of tort: According to this provision, a person who operates an enterprise out of commercial or vocational interests is liable for damage caused by a defect in the enterprise or its products or services unless he proves that the care necessary to avert the damage was exercised. The starting point for enterprise liability therefore is a defect in the sphere of the entrepreneur. A defect is defined as any deviation from the standard that can be expected from the enterprise, its products or services according to the presentation, the state of the art of science and technology and the customary practice (§ 1304 para. 2). If such a defect is proven by the victim, the burden of proof for compliance with the required standard of conduct is reversed.27 The working group put forward reasons for this enterprise liability, namely that first, a defect constitutes a certain danger, second, benefits and risks should be concentrated and third, loss spreading is easier for the entrepreneur.28

11

As product liability, being clearly stricter than enterprise liability as suggested by the draft,29 is foreseen by EC law, the draft had to comply with the relevant rules.30 Therefore, product liability is qualified as lex specialis in relation to enterprise liability and will prevail over the less strict enterprise liability. Finally, it should be mentioned that, in the framework of enterprise liability, pure economic interests and loss of profit resulting from damage to things will only have to be compensated if the enterprise is directed also at the protection of the patrimony.

12

f)

Liability for Auxiliaries and for Technical Equipment

In its sec. 5 the draft deals with vicarious liability. Liability for auxiliaries used in the performance of an obligation (§ 1305 of the draft) largely corresponds to the present legal situation.31 Concerning other auxiliaries, § 1306 of the draft holds the principal liable if the victim proves that the auxiliary was inept or that the principal did not select him carefully or did not supervise him adequately; if, however, the principal is an entrepreneur, liability is sharpened as he has to bear the burden of proof. Moreover, § 1306 para. 2 of the draft 26

27

28

29 30 31

Koziol (fn. 24) 580 f.; cf. also OGH in Entscheidungen des Österreichischen Obersten Gerichtshofes in Zivil- und Justizverwaltungssachen (SZ) 68/180. Cf. H. Koziol, Die außervertragliche Unternehmerhaftung im Diskussionsentwurf eines neuen österreichischen Schadenersatzrechts, JBl 2006, 18 f. Koziol, HAVE 2005, 4; Griss (fn. 23) no. 21 f. On the grounds for the proposed enterprise liability see Koziol, JBl 2006, 22 ff. Because no violation of the objective standard of conduct is required; Griss (fn. 23) no. 22. Koziol, HAVE 2005, 4. Griss (fn. 2) 279.

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holds the keeper of a source of high or increased danger liable for the misconduct of his auxiliaries.32 The most interesting but also rather far-reaching part of the draft’s sec. 5 is, however, its liability for technical devices:33 For the field of performance of obligations, § 1305 para. 2 of the draft declares the principal also liable for the failure of technical equipment which he uses in the same way as an auxiliary in the performance of his obligations. Outside of pre-existing obligations, § 1306 para. 4 holds the principal liable for the failure of technical equipment which he uses in the same way as an auxiliary if the victim proves that the equipment was unsuitable, the principal did not select it with reasonable care or did not monitor it adequately. Again, the principal has to bear the burden of proof if he is an entrepreneur. g) Restrictions of Liability

14

Sec. 7 of the draft provides restrictions of liability. § 1310 limits liability to damage adequately caused and covered by the protective purposes of the norm that was infringed or which in some other way was the basis for liability. In the view of the working group, the boundaries of adequacy and the protective scope of a norm depend on the weight of the grounds of imputation. For example, a damage that would have been qualified as too remote and therefore inadequate in case of negligence might still be considered as adequate if a tortfeasor acted intentionally.34 Moreover, according to the draft, the benefits gained by the person liable have to be taken into account.

15

§ 1310 para. 2 of the draft deals with the question of “alternative lawful behaviour”, i.e. cases in which the tortfeasor acted wrongfully when causing the damage but in which the same damage would have occurred even if the tortfeasor had acted in accordance with the law.35 While today liability is widely denied in such cases,36 the draft – in concordance with its § 1294 para. 2 on potential causation in cases in which the damage was caused either by the tortfeasor or by the victim’s own sphere – foresees partial liability.37 The draft’s solution to this problem, therefore, differs considerably from the prevailing opinion on present tort law.

32

33

34

35

36 37

Present tort law foresees such a widening for the field of railway and motor vehicle liability in § 19 Eisenbahn- und Kraftfahrzeughaftpflichtgesetz (Railway and Motor Vehicle Liability Act, EKHG). Such liability under present law is forseen for special cases of data processing as in the field of the land register or the commercial register. Cf. Koziol, HAVE 2005, 4; K. Hofmann, Haftung für Dritte und für technische Hilfsmittel, in: I. Griss/G. Kathrein/H. Koziol (eds.), Entwurf eines neuen österreichischen Schadenersatzrechts (2006) no. 5. P. Apathy, Begrenzung der Haftung, Art und Umfang des Ersatzes, in: I. Griss/G. Kathrein/H. Koziol (eds.), Entwurf eines neuen österreichischen Schadenersatzrechts (2006) no. 2; Koziol, HAVE 2005, 4. E.g. a driver exceeds the speed limit and kills a pedestrian who – unforeseeable for the driver – jumps onto the road. Even if the driver had not exceeded the speed limit, the pedestrian would have been killed. Cf. Koziol/Welser (fn. 12) 298 f. For an overview on this question see Koziol (fn. 12) no. 8/60 ff. Apathy (fn. 34) no. 3.

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Sec. 7 of the draft also includes a provision on apportionment of damage between the victim and the tortfeasor in cases in which the victim contributed to his damage or neglected to mitigate it (§ 1313). Though the main field of application will be contributory negligence, the provision is not limited to faulty behaviour on the part of the victim but also takes into account other grounds for imputation on the side of the victim such as, for example, dangerousness or the conduct of a person lacking capacity.38 As such other factors are also taken into account under present tort law, the draft does not attempt to change the law here but it explicitly expresses the concept applied by prevailing opinion.39

16

h) Type and Extent of Compensation

Concerning type and extent of compensation, § 1314 of the draft gives preference to restoration in kind unless the interests of the victim in restoration in kind are substantially outweighed by the interests of the tortfeasor in monetary compensation. If his interest in restoration in kind substantially preponderates, the tortfeasor can insist on it. § 1315 para. 2 provides that, if no substantial interest of the person liable to pay compensation speaks against it, the victim can – instead of restoration in kind – claim either reimbursement for the amount of money used for this purpose or an advance (for the disposal of such an advance, account has to be rendered within a reasonable time).

17

If restoration is not in kind, the tortfeasor has to compensate the entire damage in money. Contrary to present tort law, according to which lost profits will only be compensated in case of gross negligence or intent, § 1315 of the draft holds the tortfeasor liable to compensate the entire damage (i.e. both actual loss – “positiver Schaden” – and lost profits)40 even in cases of slight negligence.41 The difference to present tort law is, however, not as substantial as it may sound, as the notion of “positiver Schaden” has been interpreted rather widely in Austrian court practice.42 The victim’s damage is assessed concretely on the basis of the differential method. However, according to § 1315 para. 4, the victim can require that the damage be calculated according to the market price at the time of the damaging event if the damaged good has a market value (abstract calculation). Continuing damage is to be compensated by periodical payments. But for good cause, the victim can seek compensation by a lump sum if this is economically reasonable to the tortfeasor (§ 1315 para. 5 of the draft).

18

Compared to present tort law, the draft leads to a clear widening of liability in the field of compensation for non-pecuniary loss. First of all, non-pecuniary

19

38 39 40 41 42

Apathy (fn. 34) no. 8. Ibid. For an overview of “positiver Schaden” and lost profits see Koziol (fn. 12) no. 2/34 ff. Apathy (fn. 34) no. 14. Ibid. with further references.

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loss is always compensated insofar as restoration in kind is possible and feasible. If restoration in kind is not possible or feasible, the payment of damages depends on the significance of the damaged good, the objective traceability, extent and length of the impairment and the weight of the grounds for imputation.

20

The draft also states that damages shall always be paid for serious and objectively traceable injuries to personality rights and it gives an exemplary list of cases where damages for non-pecuniary loss are to be paid: § 1316 para. 3 mentions 1. bodily injury, injury to health or liberty; 2. the suffering of closely related persons in the event of causing death or particularly severe injury of a person (in the case of spouses, parents and children a close relationship is presumed, other persons must prove a comparable relationship); 3. sexual abuse or injury to the right to sexual self-determination by means of malice, threat or abuse of a relationship of dependence or authority; 4. intentional or serious discrimination because of gender, a disability, ethnic origin, religion or comparable reasons; 5. intentional or serious invasion of privacy; 6. the fear of dying or of being seriously injured if such fear has been caused by a concrete endangerment insofar as serious grounds for imputation exist. i)

Further Provisions

21

Finally, by providing a reduction clause, § 1317 of the draft includes another novelty for Austrian tort law.

22

The draft’s particular part includes provisions on special types of damage (such as bodily injury or defamation), on liability for roads, means of transportation, on product liability as well as on environmental liability. Finally, § 1489 of the draft provides a rule on prescription largely corresponding to the present legal situation: Claims for damages will therefore be time-barred three years after knowledge or manifestness of the damage and the tortfeasor. If the victim does not gain knowledge of the damage or the identity of the tortfeasor or if the damage resulted from one or more criminal actions that could only be committed intentionally and that are punishable with more than one year imprisonment, the claims for damages expire thirty years after the occurrence of the damage. However, according to para. 2 of the draft’s § 1489, the victim must prove all elements of the claim after ten years since the occurrence of the damage – except in cases of personal injury. j)

23

Remarks

In the framework of the present Yearbook report it is clearly not possible to give a detailed analysis or evaluation of the draft. I have therefore mainly limited myself to a description of the draft including some references to the present state of the law. In conclusion, I would, however, like to comment briefly on the draft.

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The draft has been met with quite fierce criticism.43 One of the main points of critique thereby seems to be the method of a flexible system44 chosen for the draft by the working group.45 As clear-cut rigid rules will often not be able to grasp all the potential factual settings, the flexible system approach instead intends to provide the decisive factors and basic values involved.46 In the draft this is for example quite clearly visible in its provisions on protected interests (§ 1293 of the draft) and on the standard of conduct (§ 1296 of the draft) which require a weighing of interests and provide the factors necessary for this weighing of interests. The opponents of the draft fear that this leaves too much discretion for judges and thereby may lead to legal uncertainty.

24

Though the draft certainly includes some points which are debatable, I feel that the main critique, according to which the draft is too wide and too open and leads to legal uncertainty, is not justified. By disclosing the factors to be taken into account it provides more guidance to the person having to apply the rules. This has been exemplified in the commentary on the draft on the basis of a comparison between the present rule on wrongfulness and that of the draft: while § 1294 ABGB only mentions wrongfulness, § 1296 of the draft provides the factors relevant for establishing wrongfulness and therefore does certainly not increase uncertainty.47

25

In all the draft is a most valuable and interesting starting point for discussion on tort law reform. It initiated discussion and has fecundated further debate on the topic. For example, some of the critics of the present draft have decided to draw up their own draft.48 Therefore, although Austrian tort law reform will definitely not be completed soon, the working group’s draft certainly acted as a catalyst for further endeavours.

26

43

44

45

46 47 48

Fischer-Czermak, ÖNZ 2006, 1 ff.; F. Harrer in: M. Schwimann (ed.), Praxiskommentar zum ABGB VI (3rd ed. 2006) Vor §§ 1293 ff. no. 7 ff.; R. Reischauer, Reform des Schadenersatzrechts? Österreichische Juristen-Zeitung (ÖJZ) 2006, 391; K. Spielbüchler, Dankt der Gesetzgeber ab? JBl 2006, 348 ff.; cf. also the conference proceeding by M. Neumayr, Braucht Österreich ein neues Schadenersatzrecht? Zivilrecht aktuell (Zak) 2006, 66. W. Wilburg, Die Elemente des Schadenersatzrechts (1941); id., Entwicklung eines beweglichen Systems im bürgerlichen Recht (1950). See also F. Bydlinski, Juristische Methodenlehre und Rechtsbegriff (2nd ed. 1991) 529 ff. For an overview of this flexible system approach in English see B.A. Koch, Wilburg’s flexible system in a nutshell, in: H. Koziol/B.C. Steininger (eds.), European Tort Law 2001 (2002) 545 ff. The same method was chosen by the European Group on Tort Law for drafting the Principles of European Tort Law. See J. Spier, Drafting European Tort Law, in: H. Koziol/B.C. Steininger (eds.), European Tort Law 2002 (2003) 543. Koziol (fn. 4) no. 13. Ibid. See R. Reischauer, ÖJZ 2006, 406.

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B. CASES 1. Oberster Gerichtshof (Austrian Supreme Court, OGH)49 20 January 2005, 2 Ob 7/05a50: Emotional Shock; Costs of Plastic Surgery a) Brief Summary of the Facts

27

The plaintiff’s daughter had been killed in a car accident caused by the intoxicated driver of a lorry insured by the defendant. As a consequence of her daughter’s death the plaintiff suffered psychiatric injury,51 which also led to a substantial loss of weight. This rapid and uncontrolled weight loss led to an extreme premature ageing that impaired the plaintiff’s appearance. In the course of her work as a hairdresser, the plaintiff’s clients made frequent remarks in relation to her bad appearance. Moreover, she was constantly confronted with the deterioration in her appearance due to the mirrors present at her workplace. Her extreme premature ageing led to additional suffering to such an extent that the plaintiff finally opted for a face-lift. The plastic surgery was successful – both, the plaintiff’s appearance as well as her mental condition were improved. The plaintiff claimed compensation for the costs of the face-lift (€ 9,000) as well as for her pain and suffering related with the surgery (€ 2,250). b) Judgment of the Supreme Court

28

The court of first instance argued that the defendant’s policyholder had caused the plaintiff mental harm to be qualified as “krankheitswertig”, i.e. as reaching the level of an injury to health. According to the court of first instance, this mental harm led to a premature ageing that likewise had to be qualified as “krankheitswertig”. However, as the plaintiff was about 15 kgs overweight before the accident, the court of first instance argued that, had she been of normal weight, she would naturally have had more wrinkles than with 15 kgs overweight. Therefore, in the view of the court of first instance, only 75% of the change in the plaintiff’s appearance was to be qualified as “krankheitswertig” and it reduced damages proportionately. While the court of appeal had annulled this judgment, the OGH reinstalled it on the following grounds:

29

The OGH holds that the plaintiff’s premature ageing caused by her severe mental suffering because of her daughter’s death is an injury to health in the sense of § 1325 ABGB. Therefore, the OGH argues, the plaintiff has a claim for treatment costs. The OGH then stresses that any expenses expedient for recovery, i.e. for an amelioration of the relevant person’s condition, form part of the treatment costs. The OGH therefore holds that, depending on the circumstances, costs for plastic surgery such as the face-lift relevant in the present 49 50

51

OGH decisions are available at http://www.ris.bka.gv.at/jus. Evidenzblatt der Rechtsmittelentscheidungen in: ÖJZ (EvBl) 2005/121 = Zeitschrift für Verkehrsrecht (ZVR) 2005/47 with cmt. by E. Karner. Her claim for compensation of that injury had already been settled out of court.

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case can be qualified as treatment costs, especially as – like in the case at hand – plastic surgery may not only improve a person’s appearance but also enhance her mental condition. The amount of compensation was no longer a matter in dispute in the proceedings before the OGH and, therefore, the court of first instance’s award of 75% was confirmed. c) Commentary

While compensation for the costs of plastic surgery is generally accepted in cases of disfiguration as a consequence of bodily injury, the OGH in the present case had to decide whether such costs should also be compensated if the relevant disfiguration was caused by mental injury. As Karner stresses rightly in his commentary on the present decision, the OGH’s notion of injury includes both, bodily and mental injury. Therefore, Karner correctly concludes that the question whether the disfiguration was caused by bodily or mental injury cannot be decisive, as long as the disfiguration itself has to be qualified as “krankheitswertig”, i.e. as an injury to health in the sense of § 1325 ABGB.52

30

The decision of the OGH to award compensation for the costs of plastic surgery if the disfiguration was caused by mental injury can, therefore, be approved of. However, the court of first instance’s decision to limit the amount of compensation to 75% of the relevant costs seems questionable: First of all, plastic surgery is directed at restoration in kind.53 For obvious reasons a complete restoration of the plaintiff’s former appearance was not possible – after all she had lost 15 kgs. In such cases, restoration in kind aims at creating a largely equivalent condition.54 This was the case after the plaintiff’s face-lift: her appearance was largely equivalent to the one she had before the accident. That she would have had more wrinkles had she been of normal weight before the accident cannot be taken into account, as her individual situation before the accident is relevant. Moreover, according to the general rules, the defendant has to take the plaintiff the way he or she is.55 For instance predispositions of the plaintiff do not change the tortfeasor’s duty of compensation. Therefore a hypothetical lower weight of the plaintiff may not be taken into account.56

31

2. OGH 17 February 2005, 6 Ob 191/04p57: Damage; Burden of Proof a) Brief Summary of the Facts

The plaintiff, a supermarket chain, had issued shopping vouchers and sent them to its chain stores by post. The defendant, who had been working as a 52 53 54 55 56 57

Karner, ZVR 2005, 169 f. Karner, ZVR 2005, 170. R. Reischauer in: P. Rummel (ed.), Kommentar zum ABGB (3rd ed. 2004) § 1323 no. 2. E. Karner, Der Ersatz ideeller Schäden bei Körperverletzung (1999) 140 ff. Karner, ZVR 2005, 170. EvBl 2005/148 = ecolex 2005, 613 with cmt. by G. Wilhelm.

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postwoman, stole vouchers amounting to € 5,550. The plaintiff’s shopping vouchers were consecutively numbered but these numbers were not machinereadable. As a high number of vouchers was circulating, single vouchers could only be identified on the basis of a list with missing numbers if the cashier were particularly attentive. Nevertheless, the defendant was caught when trying to redeem some vouchers a few months later and was convicted of aggravated theft by final judgment of a criminal court.58 In the present civil court trial it remained unclear how the defendant had used the other vouchers. She might have redeemed, kept or destroyed them. According to the fact-finding there is, however, a strong suspicion that the defendant already “turned the vouchers into money”. The plaintiff claimed compensation for the damage caused by the theft of the shopping vouchers arguing that, although it was not able to prove that the vouchers had been redeemed, damage had already been incurred when the vouchers had been stolen as with this an obligation of the plaintiff to redeem the vouchers arose. b) Judgment of the Supreme Court

33

The OGH turns down this argument of the plaintiff. It holds that, outside the law of securities and the law of delivery or payment orders, Austrian law does not know an abstract obligation (“abstraktes Verpflichtungsgeschäft”).59 The OGH states that the production of vouchers alone without the vouchers being circulated cannot lead to an obligation of the person producing the vouchers and adds that the defendant had taken the vouchers before the plaintiff could sell them or give them away as a gift. Moreover, the OGH argues that the plaintiff did not accept to be obliged towards any holder of the voucher but reserved itself to verify whether there is a valid underlying transaction. According to the OGH, this follows from the fact that the vouchers were consecutively numbered. The OGH therefore comes to the conclusion that, for lack of an obligation on the side of the plaintiff, the damage had not yet been incurred when the vouchers were stolen. The OGH then solves the case by assuming a reversal of the burden of proof to the detriment of the defendant concerning existence and amount of the damage suffered: it holds that a reversal of the burden of proof is possible if the plaintiff for lack of knowledge of evidentiary facts encounters special and disproportionate difficulties of proof while the defendant has the necessary information and it can reasonably be expected that the latter provide the relevant information. Therefore, the OGH concludes that the uncertainty in relation to the question whether the vouchers had been redeemed or not goes to the detriment of the defendant and it awarded the plaintiff compensation. 58

59

The decision also raises interesting questions of the binding force of criminal court decisions, which can, however, not be dealt with in the framework of the present Yearbook. H. Hausmaninger, The Austrian Legal System (3rd ed. 2003) 265, explains this concept as follows: “In contrast to German law, Austrian law in principle denies the binding effect of abstract obligations. It requires that the economic purpose of a contract, the cause (e.g., exchange, gratuitous transfer, securing, settlement) be transparent. Exceptions from the cause requirement are assignment, bills of exchange, checks, bearer bonds, etc.”

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c) Commentary

The decision raises several difficult but interesting questions: Decisive for the present case is at first the question whether the damage occurs already when the vouchers are stolen or only when they are redeemed. The OGH’s reasoning denying the emergence of an obligation on the side of the plaintiff and thereby the emergence of a damage with the theft of the vouchers is convincing for Austrian law, which requires the economic purpose of a contract to be transparent.60 The OGH rightly refers to the lack of an underlying transaction in the present case. Apart from that argument, an obligation of the plaintiff towards the defendant could not have emerged because of the theft. Only a bona fide purchaser would have had a claim, but, under Austrian law, a bona fide acquisition is hardly imaginable in the described situation.

34

The second interesting aspect of the present decision is the OGH’s solution of reversing the burden of proof for the existence of damage. In my eyes this is problematic. The existence of damage is a basic and fundamental prerequisite for compensation. Therefore, a reversal of the burden of proof for the existence of damage leads to a sharpening of liability that could only be justified if additional grounds for liability were available. Although the plaintiff in the present case acted wrongfully and with fault when stealing the vouchers, it remains unclear whether the defendant committed the damaging act of redeeming the vouchers at all. A sharpening of liability can, therefore, not be justified. Moreover, even according to the reasoning of the OGH, such a reversal of the burden of proof requires strong obstacles to proof which, in my view, are not present in this case: The plaintiff’s difficulties could have been taken into account in the course of the lower court’s free consideration of evidence and the case could thereby have been solved on the basis of prima facie evidence. Someone who steals vouchers and – a few months later – tries to redeem some of these vouchers can be expected to have converted other vouchers also. It would therefore have been incumbent on the defendant to challenge this prima facie evidence before the lower courts.61

35

60 61

See fn. 59. Although this result may appear similar to a reversal of the burden of proof, there are two important differences: first of all prima facie evidence will not be possible in all cases of strong obstacles to evidence (prima facie evidence requires the existence of a rule of experience indicating a certain course of events) and second, in case of a reversal of the burden of proof, the defendant would have to bring full proof to the contrary while in case of prima facie evidence it would be sufficient to show that an atypical course of events is a serious alternative. Cf. H.W. Fasching/A. Konecny (eds.), Kommentar zu den Zivilprozeßgesetzen III (2nd ed. 2004) Vor § 266 no. 56 ff., 64.

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3. OGH 1 March 2005, 2 Ob 55/04h62: Loss of Life a) Brief Summary of the Facts

36

The intoxicated defendant had caused a car accident in which the plaintiff’s 22-year-old wife was so seriously injured that she died of her injuries the next day. The plaintiff, amongst others,63 claims damages for non-pecuniary loss for his wife’s shortened life. The plaintiff argues that his wife would have had a life expectancy of another 58.9 years and that for this time her amenities of life had been taken from her. According to the plaintiff, this justifies a claim of his wife for non-pecuniary loss which devolved upon him as his wife’s heir. b) Judgment of the Supreme Court

37

Although it has been argued in doctrine that there should be “compensation for a premature death”,64 the OGH, referring to prevailing opinion as well as to German doctrine and court practice, denies the plaintiff’s claim. According to the OGH, compensation awarded for non-pecuniary loss under § 1325 ABGB, the so-called “Schmerzengeld”, aims at compensating the person harmed for all physical and emotional suffering, for the loss of amenities of life and for all the inconvenience resulting from the injury and its consequences. The damages awarded should enable the person harmed to afford something enjoyable and the equilibrium in the victim’s personality should thereby be restored. However, according to the OGH, this compensating function ends with the death of the injured person. After death compensation for lost amenities of life is no longer possible.

38

Finally, the OGH refers to the argument put forward by Koziol65 that by awarding compensation for loss of life one would convert an untransferable and therefore non-inheritable good into a transferable and inheritable monetary claim merely in order to accord the heirs an asset they would not have received had the good not been destroyed. c) Commentary

39

The decision can be approved of and both its result and its reasoning are in line with prevailing doctrine.66 What is referred to as “compensation for a pre62

63

64

65

66

EvBl 2005/150 = JBl 2005, 513 = Österreichisches Recht der Wirtschaft (RdW) 2005, 289 = ZVR 2005/61 with cmt. by E. Karner, ZVR 2005, 253. The plaintiff’s claim for bereavement damages had already been settled before the court of first instance. I. Greiter, Schmerzengeld für verkürztes Leben, in: Festschrift Kohlegger (2001) 239 ff.; id., Schadenersatz für ein verkürztes Leben, Anwaltsblatt (AnwBl) 2001, 274 ff.; id., Der Ersatz immaterieller Schäden. Zukunftsvisionen unter Berücksichtigung der Entwicklung in anderen Ländern, AnwBl 2002, 448 f.; M. Prisching, Immaterieller Schadenersatz in Österreich und den USA (2003) 58 f. H. Koziol, Die Tötung im Schadenersatzrecht, in: Liber Amicorum Pierre Widmer (2003) 203 ff., 213. The decision has meanwhile been confirmed by another 2005 judgment: OGH 21 July 2005, 8 Ob 64/05b = ZVR 2006/88.

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mature death” is in fact a claim for loss of life. By denying such a claim67 of the person killed, while allowing close relatives of the deceased to claim compensation for their suffering under certain circumstances, the OGH sets sensible limits to compensation for non-pecuniary loss. A comparison with cases of comatose victims, can, in my opinion, not change this result. Compensation awards to comatose victims are certainly borderline cases. These awards avoid difficult questions of delimitation and prognosis assessment and ensure that a living person is not treated as if he were dead.68 However, such awards cannot be a reason to treat a dead person as if he were alive. 4. OGH 21 April 2005, 2 Ob 90/05g69: Non-Pecuniary Loss of a Grown-up Sibling a) Brief Summary of the Facts

The plaintiff’s mentally handicapped brother had been killed in a car accident caused by the intoxicated defendant. While the plaintiff, who was born in 1955, had founded his own family, his two years younger mentally handicapped brother still lived in his mother’s house. Although the brothers therefore did not live in the same household, they had a very close relationship: while their father and their other siblings did not take care of their handicapped brother, the plaintiff took care of his brother intensively. He visited him two to three times a week and arranged his affairs. Over the years, the plaintiff and his brother developed an intense, almost father-son-like relationship, which went beyond a normal sibling relationship.

40

The plaintiff suffered considerable distress as a result of his brother’s death. His reaction can, however, not be qualified as injury to health. The plaintiff claims damages for his non-pecuniary loss amounting to € 14,800. Both, the court of first instance and the court of appeal denied the plaintiff’s claim.

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b) Judgment of the Supreme Court

According to the practice of the OGH, certain close relatives of the deceased are eligible for bereavement damages (so-called “Trauerschmerzengeld”) if the tortfeasor acted with gross negligence or intent. In the case at hand the intoxicated defendant had acted with gross negligence. The main question before the OGH was, however, whether a grown-up brother living in a different household is included in the circle of close relatives eligible for bereavement damages. In relation to this question the OGH first provides a comprehensive comparative overview of the position of siblings of a deceased direct victim in numerous European countries. This overview shows that the question whether the siblings lived in the same household will regularly be a decisive factor. For Austrian law, the OGH comes to the conclusion that the intense emotional re67

68 69

A shortened life expectancy will, however, be taken into account in personal injury cases when calculating the quantum of damages. See Karner, ZVR 2005, 253. See Karner, ZVR 2005, 253 fn. 5 with further references. EvBl 2005/165 = JBl 2005, 652 = ZVR 2005/73 with cmt. by E. Karner.

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lationship required for awarding bereavement damages will typically exist between siblings living in the same household. The tortfeasor may however prove the contrary. If the siblings did not live in the same household, the family relationship between siblings will, in the view of the OGH, normally not suffice to justify a claim for bereavement damages. This may, however, be different if an especially close relationship can be proven by the surviving sibling. For the case at hand the OGH concludes that the plaintiff succeeded in proving an especially close relationship with his deceased brother going beyond a normal sibling relationship. Therefore, the OGH awarded the plaintiff bereavement damages amounting to € 9,000. c) Commentary

43

With the present decision the OGH advances its practice on bereavement damages and delimits the circle of persons eligible for such compensation in a sensible way.70 The OGH stresses that the relationship between the deceased and his close relative is the decisive factor for determining the circle of persons entitled to compensation for their bereavement and takes a balanced approach: On the one hand it assumes a sufficiently close relationship in case of siblings sharing the same household71 and on the other hand it also allows the plaintiff to prove that, notwithstanding the lack of a common household, such a close relationship did in fact exist. Using the instrument of burden of proof, the OGH thereby gives consideration to typically existing emotional bonds without excluding atypical constellations. 5. OGH 12 May 2005, 2 Ob 41/03y72: Non-Pecuniary Loss of a Minor a) Brief Summary of the Facts

44

A seven-month-old baby’s grandfather had been killed in a car accident. The baby had not been involved in the accident. Represented by his father, the baby applied to the court to grant him leave for bringing a compensation claim against both, the man who had caused the accident and the latter’s liability insurer (according to § 154 para. 3 ABGB, the parents of a minor can only bring a claim on behalf of the minor if the court grants leave to do so). The claim aimed at compensation amounting to € 15,000 for the non-pecuniary loss suffered by the baby because of having to grow up without a grandfather. Both, the court of first instance as well as the court of appeal refused to grant leave for this claim. b) Judgment of the Supreme Court

45

When deciding whether leave should be granted, the courts have to take the prospects of success of the claim and its risks into account. It is decisive 70 71 72

See the affirmative cmt. by Karner, ZVR 2005, 257 ff. The tortfeasor would have to prove the contrary. ZVR 2005/88 with cmt. by P. Griehser.

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whether, in a comparable case, a bonus pater familias would bring the claim.73 According to the OGH, the claim envisaged by the minor aiming at compensation for the non-pecuniary loss suffered because of having to grow up without a grandfather cannot be successful. The OGH first refers to its practice on compensation for non-pecuniary loss of close relatives distinguishing two different cases, the mental-shock cases in which the relative suffered an injury to health on the one hand and compensation for the close relative’s bereavement without an injury to health on the other hand. In the former case the relative will be eligible for compensation even if the tortfeasor only acted with slight negligence, whereas compensation for bereavement presupposes gross negligence or intent on the part of the tortfeasor. The OGH then holds that the minor had not been able to set forth either an already existing injury to health or bereavement in the sense of the OGH’s practice. Therefore, according to the OGH, it is not necessary to decide whether there is a sufficiently close relationship between the minor and his grandfather or whether the person causing the accident had acted with gross negligence. Whether the minor will suffer compensable mental harm because of having to grow up without a grandfather in the future is, according to the OGH, still unclear. The OGH therefore confirmed the decisions of the lower courts.

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c) Commentary

During the past few years, the OGH has developed its practice on compensation for non-pecuniary loss of relatives who had a close emotional relationship with the deceased direct victim. This practice is therefore comparatively new, which means that it will still require some sharpening of its contours and sensible limits to be set. By denying leave to bring a claim in the present decision such limits are set: Not every relative of a deceased person will be eligible for compensation of non-pecuniary loss. As neither an injury to health nor bereavement of the seven-month-old baby were deductible from the facts of the case, the OGH did not have to deal with the question whether there was a sufficiently close emotional relationship between the baby and its grandfather. However, the mere fact of being someone’s grandchild alone – without a close emotional relationship – will most likely not suffice to justify compensation.

47

6. OGH 12 May 2005, 2 Ob 100/05g: Mental Shock in Case of Property Damage; Adequacy a) Brief Summary of the Facts

The plaintiff’s car had been damaged in an accident in which the plaintiff had not been involved. She claimed compensation for the mental shock suffered as a consequence of her car being damaged. 73

G. Hopf in: Koziol/Bydlinski/Bollenberger (eds.), Kurzkommentar zum ABGB (2005) § 154 no. 11.

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49

The OGH denied the claim for lack of adequacy and argues that mental harm of the owner of a damaged car is not an even passably foreseeable consequence of damage to her car. The OGH states that a special relationship between a human being and a car acknowledged by the legal order is not evident and refers to the floodgates argument. c) Commentary

50

Under Austrian law, compensation of non-pecuniary loss being the consequence of property damage is only possible under very limited circumstances: only if the tortfeasor intentionally violated criminal law, inflicted wanton damage or acted with malicious intent, will he, according to § 1331 ABGB, have to compensate the “sentimental value” of the damaged property. These conditions were not fulfilled in the present case: first of all the claim was not directed at a “sentimental value” of a thing but at compensation for the mental shock suffered as a consequence of damage to the car and, second, the special qualifications in relation to the tortfeasor’s behaviour (malicious intent etc) were not given. The mere fact of § 1331 ABGB foreseeing compensation of a special kind of non-pecuniary loss being the consequence of property damage does in no way sustain the foreseeability of a mental shock as a consequence of property damage. Therefore, the OGH’s decision denying compensation for lack of adequacy merits approval. 7. OGH 4 October 2005, 4 Ob 121/05f74: Medical Liability, Informed Consent a) Brief Summary of the Facts

51

The plaintiff suffered from auditory exostosis that could be excised on both ears. He first underwent surgery on his right ear. Before the operation he had been informed by the senior physician performing the surgery about the potential risks, especially about the risk of scarring and of the wound not healing properly. There were no complications and the plaintiff consequently also opted for surgery to his left ear, which was not urgent but would have been necessary within half a year. Again the plaintiff was informed about the risks by the senior physician who announced to the plaintiff that he would also perform the second surgery. On the same evening the patient lying in the bed next to the plaintiff told the latter that he would not want to be operated on by the head of the department, as he had heard that things frequently went wrong during his operations.

52

Because of organisational problems in the hospital the plaintiff was not operated on by the senior physician but by the head of the department. The deci74

EvBl 2006/21 = JBl 2006, 254 with cmt. by H. Pfersmann = Recht der Medizin (RdM) 2006, 21 = Zak 2006, 17.

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sion for this change of surgeon was taken shortly before the operation and the plaintiff was not informed about this change. During the surgery the ear-drum was slightly perforated but this was corrected immediately. After the surgery the wound did not heal properly which made two additional operations necessary. The complication had, however, not been caused by medical malpractice; the surgery had been performed with appropriate diligence. That a wound does not heal properly may occur after every operation and therefore with every surgeon. On the basis of his contract with the hospital, the plaintiff was not entitled to be treated by a particular physician. He claimed compensation for his pain and suffering amounting to € 3,600 arguing that he would not have given his consent to an operation performed by the head of the department and that, had he been operated on by the senior physician, the complications would not have occurred.

53


The OGH first refers to an earlier decision75 on this topic according to which a patient’s consent will normally not depend on the patient being informed about the person of the surgeon. However, according to that decision, this is different if the patient explicitly states that he only wants to be operated on by a certain physician as then his consent is limited to that specific physician. Moreover, the OGH held that the same is true if the patient merely had a reasonable expectation to be operated on by a certain physician. On that basis the OGH, in the present case, holds that there had been an (implied) agreement according to which the plaintiff was to be operated on by the senior surgeon. His consent was therefore, in the view of the OGH, limited to surgery performed by the senior physician while the surgery actually performed by the head of the department lacked the plaintiff’s consent. The OGH then refers to cases in which the patients’ consent was invalid for lack of information about treatment risks: In such cases, liability is affirmed even if there was no medical malpractice. The OGH now holds that the same must be true if the consent is invalid because it relates to a physician different from the one actually performing the surgery.

54

While according to the OGH’s first decision on this topic it had to be examined whether the complications would also have occurred had the intended physician performed the surgery, the OGH in the present case considers this to be unnecessary. It argues that by examining this aspect one would pose the question of alternative lawful behaviour in relation to the performance of the surgery by the wrong physician, while – as the OGH now argues – the conduct establishing liability is not the surgery by the wrong physician but the lack of information about the physician performing the surgery. This lack of information, according to the OGH, leads to the nullity of the plaintiff’s consent and

55

75

OGH 26 September 2003, 3 Ob 131/03s = RdM 2004, 58 = RdW 2004, 208.

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establishes liability for breach of a statute with protective purpose (the rules of § 110 para. 1 Strafgesetzbuch, StGB, on treatment without consent). c) Commentary

56

In relation to the present decision two decisive questions can be distinguished: Whether an information duty as regards the change of physician did exist and if so, whether a breach of such a duty is able to justify liability for the consequences of an operation performed with appropriate diligence irrespective of the course the hypothetical surgery by the intended surgeon would have taken.

57

Regarding the duty of information, it is important to note that, on the basis of his contract with the hospital, the plaintiff did not have a claim to be treated by a certain physician. Nevertheless, the OGH decided that, if the patient had a reasonable expectation to be operated on by a certain physician, his consent will be limited to surgery by that physician.76 In the present case a reasonable expectation of the plaintiff existed. Moreover, the surgery was not urgent and therefore, it can be agreed with the OGH’s – admitedly rather far-reaching – conclusion that an information duty concerning the change of surgeon existed.

58

The next question relates to the relevance of the hypothetical course of an operation by the intended surgeon, which the OGH denied in the present case. Contrary to the result reached by the OGH, this question will, in my view, have to be taken into account in relation to the protective purpose of the relevant duty of information. The fact-finding implies that, had the plaintiff been informed about the change of surgeon, he would not have given his consent to surgery by the head of the department but that the surgery would have been postponed to be carried out by the senior physician at a later stage. Therefore, the plaintiff was basically willing to accept the normal risk connected with the surgery about which he had after all been informed. This means that the damage suffered by the plaintiff (the complications) is only included in the protective purpose of the duty to inform if his condition would have been better had he been operated on by the senior physician. The burden of proof for this will, however, lie with the defendant hospital: its liability will be excluded if it proves that the damage would also have occurred had the intended surgeon performed the operation. Due to differing abilities and experience of different physicians even in case of operations performed with appropriate diligence, such proof will not be easy to provide. However, if the hospital managed to prove that the physician performing the surgery not only acted without negligence but even acted with higher-than-average care, this could, in my view, be 76

The OGH refers to an “implied agreement” between the parties to the treatment contract. This may, however, lead to misunderstandings as it indicates a modification of the treament contract and such a modification would require authority of the relevant physician for a modification. However, the OGH’s first decision on the relevant topic 3 Ob 131/03s (see fn. 75) shows that it is not decisive whether the physician had authority. The only decisive question is whether the hospital’s employees knew about the plaintiff’s reasonable expectation to be operated on by the senior physician as then they must not have assumed the plaintiff’s consent to surgery by the head of the department.

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qualified as prima facie evidence that the same complication would also have occurred had the intended physician performed the surgery.77 8. OGH 10 October 2005, 3 Ob 67/05g78: Liability of an Expert Towards Third Persons a) Brief Summary of the Facts

The plaintiff intended to sell an oil painting signed with “E.F. Unterberger” at an auction. As the auction house guarantees authenticity of paintings purchased at auction, it commissioned the defendant – “the” expert for the Tyrolean 19th century painter Franz Richard Unterberger – to verify the painting’s authenticity. The defendant, after having inspected the painting, concluded that it was not an original painting by Unterberger but only a replica. Consequently, the auction house refused to sell the painting and included a copy of the defendant’s expertise in its letter to the plaintiff. The plaintiff presented two expert opinions declaring the painting to be an original, and claimed compensation for the costs incurred because the auction house rejected the painting. In addition he claimed a declaratory judgment in relation to the defendant’s liability for all future loss caused by the defendant’s incorrect expertise, arguing that, because of the contradictory expert opinions, the painting was difficult to sell. Both lower courts decided that the painting was an original, i.e. that the defendant’s expertise was wrong, and granted the plaintiff’s claim.

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The OGH first holds that the question whether the painting is an original or a replica is a question of fact that cannot be decided by the OGH. Although the OGH therefore acts on the assumption that the painting is an original, the OGH seems to have had certain doubts about this result. It refers to the fact that the court expert called on by the court of first instance had only seen five original paintings of the painter in question, was giving an expert opinion on this painter for the first time, had only used one original painting for the comparison in the case at hand, admitted that the defendant was an expert in her field and stated that one could never be 100% sure whether a painting is authentic or not.

60

The defendant’s liability could – in the view of the OGH – be based on a contract with a protective purpose towards third persons or on an objective legal duty of care of the expert towards the third person. The OGH then holds that a third person will be protected if the expertise was observably directed towards third persons, i.e. if it should serve the third person as the basis for a decision and the OGH consequently holds the purpose of the expertise to be decisive.

61

77

78

Such prima facie evidence could, however, be rebutted if the claimant can show that the envisaged surgeon was an especially gifted surgeon during whose operations complications rarely occur. JBl 2006, 178 = Zak 2006, 38.

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On the basis of the fact-finding of the lower courts in the case at hand there is, according to the OGH, no indication for assuming that, on the basis of the purpose of the expertise, the plaintiff was included in the defendant’s protective duties. Moreover, the fact-finding did not indicate that the defendant had to face the possibility of the auction house sending on the negative expertise to the plaintiff. Therefore, the plaintiff could only be considered to be included in the range of protection on the basis of additional fact-finding. In addition, the OGH stresses that, in cases of contracts with a protective purpose towards third persons, pure economic loss will only be compensated if the main performance is to be accorded to this third person. The OGH therefore annulled the decision of the lower courts and remitted the case to the court of first instance. c) Commentary

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The OGH is bound by the fact-finding of the lower courts. As the lower courts held the painting to be an original, the authenticity of the painting can no longer be challenged in the proceeding before the OGH. On the basis of a convincing legal reasoning the OGH, nevertheless, comes to a decision reversing the judgments of the lower courts. As the OGH stresses, liability of an expert towards third persons could be based either on a contract with a protective purpose towards third persons or on an objective legal duty of care of the expert towards the third person.79 The OGH generally holds that the fact-finding does not indicate an inclusion of the plaintiff in the protective range of the expert opinion, while it leaves open on which concept the expert’s liability should be based. A contract with a protective purpose can, however, not be a basis for liability in the present case as this would presuppose parallel interests of the third person and the person commissioning the expert opinion.80 But in the case at hand the interests of the plaintiff on the one hand and the auction house on the other hand are not parallel at all. Therefore, liability could only be based on an objective legal duty of care of the defendant. However, as the OGH rightly stresses there is no indication for such a duty of care in the present case: the expertise only served the auction house to avoid liability towards potential buyers; it was not directed towards the plaintiff and it did not serve the plaintiff as basis for a decision.

C. LITERATURE Selected Literature

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ABGB: H. Koziol/P. Bydlinski/R. Bollenberger (eds.), Kurzkommentar zum ABGB (Springer, Vienna 2005) – general commentary on the ABGB including its tort law section; M. Schwimann (ed.), ABGB Praxiskommentar VII (Lexis 79 80

Cf. Karner (fn. 12) § 1300 no. 3 with further references. See E. Karner, Haftung des Gutachters gegenüber Dritten und deren Treugebern, Österreichisches Bank-Archiv (ÖBA) 2001, 893 ff.

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Nexis, 3rd ed., Vienna 2005) – this volume covers the most important liability statutes outside the ABGB. Auditors’ liability: W. Doralt, Haftung der Abschlussprüfer (Lexis Nexis, Vienna 2005); F. Harrer, Die Haftung des Abschlussprüfers, Festschrift Georgiades (Athens/Munich/Bern 2005) 637; F. Harrer, Kritische Anmerkungen zur Haftung des Abschlussprüfers de lege ferenda, Wirtschaftsrechtliche Blätter (wbl) 2005, 108.

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Employers’ liability: S. Kissich, Risikohaftung des Arbeitgebers analog § 1014 ABGB auch für Personenschäden, ZVR 2005, 184.

66

Gambling: O. Riss, Schadenersatz bei Spielsucht – Nicht immer gewinnt die Bank, RdW 2005, 7.

67

Injunctions: B. König, Die verschuldensunabhängige Haftung für „ungerechtfertigten“ einstweiligen Rechtsschutz (§ 394 EO), JBl 2005, 205.

68

Liability in general: K.-H. Danzl, Bemerkenswerte schadenersatzrechtliche Entscheidungen des OGH aus dem Jahr 2004, ZVR 2005, 75.

69

Liability for third persons: I. Griss, Haftung für Dritte im Wettbewerbsrecht und im allgemeinen Zivilrecht, JBl 2005, 69.

70

Medical liability: T. Juen, Arzthaftungsrecht (Manz, 2nd ed., Vienna 2005); K. Prutsch/M. Ploier, Behandlungsfehler in der Medizin (Leykam, Graz 2005).

71

Non-pecuniary loss: W. Kath, Schmerzengeld (Neuer Wissenschaftlicher Verlag, Vienna 2005).

72

Prescription: P. Madl/A. Anderl, Verjährung von Schadenersatzansprüchen bei Vergabeverfahren, ecolex 2005, 200; M. Spitzer, Neue Hemmung der Verjährung bei Verkehrsunfällen, ZVR 2005, 312.

73

Property damage: Ch. Huber, Aktuelle Fragen des Sachschadens, ÖJZ 2005, 161, 211.

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Public liability: F.M. Adamovic, Zur Organhaftung: Bindung an Disziplinarerkenntnis – Haftung eines Beamten in Vollziehung der Gesetze? ÖJZ 2005, 481; M. Frischhut/Ch. Ranacher, Die Unterscheidung zwischen legislativem und administrativem Unrecht in Staatshaftungssachen, ÖJZ 2005, 241; F. Harrer, Schadenersatz wegen hoheitlicher Freiheitsentziehung, Zak 2005, 9; K. Heller, Die Haftung des Staates für den Verstoß seiner Höchstgerichte gegen Gemeinschaftsrecht, Festschrift N. Michalek (Manz, Vienna 2005) 139; B. Raschauer, Bankaufsicht, Amtshaftung und Beihilfenverbot, ÖJZ 2005, 1; G. Schantl, Gesetzwidrige Haft ohne Anspruch auf Haftentschädigung? JBl 2005, 289.

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76

Smoking: Ch. Arbeithuber, Rechtsfragen des Rauchens, ÖJZ 2005, 649; K. Davani, Zum Stand von Wissenschaft und Technik der Tabakindustrie, RdW 2005, 82.

77

Tort Law Reform: I. Griss, Der Entwurf eines neuen österreichischen Schadenersatzrechts, JBl 2005, 273; I. Griss/G. Kathrein/H. Koziol (eds.), Entwurf eines neuen österreichischen Schadenersatzrechts (Springer, Vienna 2006).

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Unification of Tort Law: H. Koziol, Die Vereinheitlichung der Gefährdungshaftung in Europa, Festschrift N. Michalek (Manz, Vienna 2005) 217.

APPENDIX: WORKING GROUP DRAFT I. General Part Section 1 Principles of liability Fundamental rule

§ 1292. (1) It is the task of tort law to compensate damage and at the same time to thereby create an incentive to avoid damage. (2) A person is liable to compensate damage to another if that damage can be legally attributed to him, in particular therefore, if it has been caused by his faulty or otherwise incorrect conduct, by a source of danger for which he is accountable, by a permitted encroachment on another’s rights, or by an auxiliary. Damage; protected interests

§ 1293. (1) Damage is any harm that a person suffers to his person, patrimony or any other of his protected interests. If such harm can be measured in money then there is pecuniary damage, otherwise it is non-pecuniary damage. (2) The protection of interests depends in particular on the interest’s rank and value, the precision of its definition and its obviousness, but also on the interests of others in free development and in the exercise of rights as well as public interests. Causation

§ 1294. (1) An act, an omission or another event is the cause of damage if it would not otherwise have occurred. (2) Damage can be attributed to a person if he caused it or the cause was otherwise within his sphere. This also applies if an event was highly likely to cause the damage but the same is true of another event (cumulative and superseding

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causation). If one of the events is a chance or caused by the victim or if only the one or the other of the events could have caused the damage (alternative causation) then the damage is to be apportioned according to the weight of the respective grounds for imputation and the likelihood of causation. (3) To the extent that the same damage is attributable to multiple persons and nothing else arises from para. 2, they are solidarily liable. If multiple persons have acted wrongfully together, it is presumed that each of them caused the entire damage. (4) In the case of multiple events, all of which may have caused the damage, if none has caused the entire damage or a determined part thereof, but each, however, is highly likely to have caused a part; it is presumed that the events have caused equal shares of the damage. (5) Insofar as multiple persons are solidarily liable, recourse shall be according to the weight of the respective grounds for imputation, especially the gravity of the fault and the degree of the danger. Section 2 Liability for fault or otherwise wrongful conduct Conditions for fault liability

§ 1295. (1) A person is liable on the basis of fault if he unlawfully, that is by violating the objective standard of conduct, and culpably (§ 1300) injures a protected interest or contravenes a concrete duty of care (protective law) or acts contra bonos mores. (2) A person violates bonos mores if he acts contrary to the fundamental values of the legal order or grossly offends against the general morality, if he acts only with the object of injuring another or if he pursues interests which are in gross disproportion to those of the victim. Standard of conduct

§ 1296. (1) In general, the standard of conduct to be applied is that which is to be expected of a reasonable person having regard to the interests of others under the circumstances given. In this context, the rank and value of the interests endangered and the interests pursued, the hazardousness of the situation, the proximity between the parties involved, the possibility of averting the danger and the cost and effort associated therewith, shall be considered. (2) A person who facilitates traffic or creates or maintains a source of danger shall apply all special care reasonable that is necessary in order to prevent damage. Duty to act

§ 1297. Everyone has a duty to prevent damage which discernibly threatens another if there is a special relationship to the endangered person, if he facili-

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tates traffic or creates or maintains a source of danger or if the threatened damage is grossly out of proportion to the burden of preventing it. Protection of pure economic interests

§ 1298. (1) Duties of care to protect pure economic interests consist in particular in a contractual relationship, in the case of pre-contractual contact, of declarations on which the grantee is recognisably dependent or which are directed at arousing the trust of the grantee, as well as in the case of rules of conduct for the protection of patrimony. The same applies when the tortfeasor is aware of the threatened damage and there is a gross disproportion between the interests endangered and those pursued. (2) A person who knows the claim a third party has may not consciously work towards a breach of contract by the debtor, unless he thus protects his own right which is founded earlier in time or in the absence of knowledge of the third party’s claim. A person who merely takes advantage of the fact that a debtor is determined on breaching contract is only liable if he knows the debtor’s obligation or if this obligation is manifest and he cannot prove that the damage would also have occurred regardless. Defences based on justifications

§ 1299. A person who appropriately defends protected interests against unlawful attack (justifiable defence of oneself or another person) or who acts in the non-postponable implementation of a right of his own (lawful self-help) or with the valid consent of the victim, shall not be liable. A person who causes damage in order to avert an immediate threat of danger to himself or others (necessity) may have his liability reduced or extinguished. Fault and otherwise wrongful conduct

§ 1300. (1) A person is at fault if on the basis of his abilities and knowledge he would have been in a position to act differently and should have done so. A person who knowingly acts unlawfully and who at the least approvingly accepts the damaging consequence of his conduct acts with intent, otherwise negligently. (2) In the case of persons having attained the age of 14 years, it is presumed that they possess ordinary abilities and knowledge; in the case of persons below this age the opposite is presumed. (3) A person who enters into a contract to bring a performance must bear the consequences of lacking the abilities and knowledge necessary. The same applies when someone exercises without necessity an activity that requires special abilities and knowledge. § 1301. If persons below the age of 14 or mentally incompetent persons violate the objective standard of conduct, then the basis and extent of their liability depends on their being at fault after all by way of exception, on any benefit

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they derive from the injury and on any omission of defence out of consideration for them as well as on their pecuniary circumstances and those of the victim. The same applies when another person acts without fault because he lacks the necessary abilities and knowledge. Section 3 Strict liability Liability for sources of high danger

§ 1302. (1) The keeper of a source of high danger is liable insofar as this danger results in damage. Who is the keeper depends on who has an especial interest in the source of danger, who bears the costs and who exercises the actual power of disposition. (2) A source of high danger exists when a thing either in itself or in the course of its ordinary use or an activity involves the risk of frequent or serious damage in spite of the exercise of due care. Sources of high danger include in particular nuclear facilities, dams, oil and gas pipelines and electric power lines, ammunition factories and depots, also aircraft, railway, cableway, motor vehicles and motor boats as well as mines and blastings. (3) Liability may be excluded if the damage is caused by force majeure or in spite of the greatest possible care and the thing being free from defect (unavoidable event). The same applies when the victim consents to the damage or assumes the risk. Whether such an objection is to be taken into account depends above all on its weight and the degree of danger, especially in the concrete situation. In cases of especial danger, liability can also merely be reduced. Increased danger

§ 1303. (1) The keeper of a source of increased danger that does not reach the extent required by § 1302 para. 2, is liable insofar as this results in damage and he does not prove that the care necessary to avert the damage was exercised. The same applies if a person creates such a danger through his activity. (2) An increased danger can be generated in particular by animals, constructions, motor vehicles with low maximum speed or activities like cycling or skiing at high speed. Section 4 Enterprise liability

§ 1304. (1) A person who operates an enterprise out of commercial or vocational interests is also liable for damage caused by a defect in the enterprise or its products or services. The entrepreneur is not liable if he proves that the care necessary to avert the damage was exercised.

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(2) A defect is any deviation from the standard that can be expected from the enterprise, its products or services according to the presentation, the state of the art of science and technology and the customary practice. (3) The entrepreneur must compensate pure economic interests and loss of profit resulting from damage to things only if the enterprise is directed also at the protection of the patrimony. Section 5 Liability for third parties and for technical equipment Auxiliaries in the performance of obligations (Erfüllungsgehilfen)

§ 1305. (1) A person who uses auxiliaries in the performance of his obligations or who is thereby assisted by auxiliaries on the basis of the law (Erfüllungsgehilfe) is liable to his partner for such auxiliaries’ misconduct. This applies not only in the case of breach of performance duties but also for other misconduct not extraordinary for the activity of the performance agent. (2) The principal is also liable for the failure of technical equipment which he uses in the same way as an auxiliary in the performance of his obligations. Other auxiliaries (Besorgungsgehilfen)

§ 1306. (1) In the absence of a pre-existing obligation vis-à-vis the victim the principal is only liable for the damage caused by his auxiliaries (Besorgungsgehilfe) if the victim proves that the auxiliary was inept or that the principal did not select him carefully or did not supervise him adequately. If the principal is an entrepreneur (§ 1304 para. 1), then he bears the burden of proof. (2) The keeper of a source of high or increased danger is liable for the misconduct of his auxiliaries. (3) A person who undertakes to carry out work independently is not an auxiliary. The principal is liable only if he has not selected him with reasonable care or not adequately supervised him. (4) The principal is also liable for the failure of technical equipment which he uses in the same way as an auxiliary if the victim proves that the equipment was unsuitable, the principal did not select it with reasonable care or did not monitor it adequately. If the principal is an entrepreneur (§ 1304 para. 1), he bears the burden of proof. (5) The principal is furthermore liable for the wrong conduct of persons who have a leading position in his scope of activities with their own decisionmaking powers and the authority to issue directives. Corporate bodies must in any case answer for their constitutional organs.

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§ 1307. The liability of auxiliaries under other provisions is unaffected by the liability of the principal (§§ 1305 and 1306). Insofar as principal and auxiliaries are both liable they must compensate solidarily. Liability of supervisory persons

§ 1308. Supervisory persons are liable for the misconduct of the persons entrusted to them if they are negligent of their duties. Insofar as the supervisory persons must and can compensate for the non-culpable misconduct of persons below the age of 14 or mentally incompetent persons, the victim has no claim against these persons. Section 6 Liability for encroachment upon another’s right

§ 1309. A person who on the basis of an official or legal authorization encroaches upon another’s right is liable for the damage thus caused, unless otherwise provided. The same applies to anyone who merely invokes such authorization. Section 7 Restrictions of liability Restrictions of imputation

§ 1310. (1) Compensation shall be paid for damage adequately caused and which is covered by the protective purposes of the norm that was infringed or which in some other way was the basis for liability. The weight of the grounds for imputation and the benefits gained by the person liable are to be considered. (2) If the tortfeasor has behaved unlawfully but the damage would also have occurred if he had behaved lawfully, the basis for and amount of the liability depends on the weight of the grounds for imputation. § 1311. Material benefits which would have been gained through unlawful behaviour are not to be compensated unless the purpose of the prohibition norm provides otherwise. § 1312. The victim can also claim compensation if the damage has been shifted to a third party, unless the tortfeasor ought thus to be relieved. Insofar as the third party renders to the victim, the right to compensation is transferred to him. Contributory conduct or activity

§ 1313. (1) If the victim has contributed to his damage or neglected to mitigate it, then the damage is to be apportioned according to the respective grounds for imputation, in particular the gravity of the fault and the degree of danger-

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ousness. In the event of death, the contributory conduct or activity of the person killed is decisive. (2) Even in the absence of a special legal relationship, the wrong conduct of persons to whom the victim entrusted the damaged goods is imputable to the victim. This does not apply to legal agents or to persons who have been assigned to carry out the work independently. (3) If the grounds for imputation on one side far outweigh those on the other, then the damage shall not be apportioned. Also to be considered in this context is whether the tortfeasor was under the very obligation to prevent the damage which occurred. Section 8 Type and extent of compensation Restoration in kind

§ 1314. The victim can demand the restoration of the previous or a similar or an equivalent state as far as restoration in kind is possible and is not substantially outweighed by the interests of the tortfeasor in monetary compensation. The tortfeasor can insist on restoration in kind if his interest therein substantially preponderates. Compensation for pecuniary damage

§ 1315. (1) If restoration is not to be in kind, then the tortfeasor shall compensate the entire damage in money. The damage is to be calculated under consideration of all consequences, including loss of profit, precisely for the victim (concrete calculation). Benefits the victim gained from the damaging event reduce the claim for damages, with the exception of mere shifts of damage (§ 1312) or allocations intended to serve the interests of the victim. (2) If no substantial interest of the person liable to pay compensation speaks against it, the victim can instead of restoration in kind (§ 1314) claim either reimbursement for the amount of money used for this purpose or an advance. Account shall be rendered within a reasonable time for the disposal of this advance. (3) If restoration in kind is not possible and if therefore the victim replaces the damaged item with a new one then the victim can claim for the replacement value of the damaged thing and the costs incurred by the earlier replacement. If a replacement value cannot be established, the costs of the acquisition or the making of the newer thing with a deduction for the possibility of longer use shall be decisive. (4) If the damaged good has a market value, the victim can require that the damage be calculated according to the market price at the time of the damaging event (abstract calculation). (5) Continuing damage is to be compensated by periodical payments. For good cause, the victim can seek compensation by a lump sum if this is eco-

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nomically reasonable to the tortfeasor. The lump sum is to be calculated according to the estimated length of time the periodical payments would be paid, with the interest discounted. Compensation for non-pecuniary damage

§ 1316. (1) Non-pecuniary damage shall always be compensated insofar as the restoration in kind is possible and feasible (§ 1314). (2) Whether damages are to be paid depends on the significance of the damaged good, the objective traceability, extent and length of the impairment and the weight of the grounds for imputation. For serious and objectively traceable injuries to personality rights, damages shall always be paid. (3) An appropriate compensation for pain and suffering is to be paid in the following cases in particular: 1. bodily injury, injury to health or liberty, 2. for the suffering of closely related persons in the event of causing death or particularly severe injury of a person; in the case of spouses, parents and children a close relationship is presumed, other persons must prove a comparable relationship, 3. in the case of sexual abuse or injury to the right to sexual self-determination by means of malice, threat or abuse of a relationship of dependence or authority, 4. in the case of intentional or serious discrimination because of gender, a disability, ethnic origin, religion or comparable reasons, 5. in the case of intentional or serious invasion of privacy or, 6. insofar as serious grounds for imputation exist, for the fear of dying or of being seriously injured if such fear has been caused by a concrete endangerment. (4) In the case of intentional damage to items of property, the value of special affection shall be compensated. In the case of breach of a contract, the nonpecuniary damage is to be compensated if the contract is aimed above all at the satisfaction of non-pecuniary interests and these are substantially impaired and an appropriate compensation cannot be obtained anyway by the reversal of the transaction. (5) In assessing damages, regard must be had to the circumstances listed in para. 2 and the benefits gained by the tortfeasor from the conduct establishing liability. In the case of compensation for the damage because of improper performance of a contract, the amount of the agreed contract price is to be considered. (6) Claims for the compensation of non-pecuniary damage are transferable and hereditary.

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Barbara C. Steininger Reduction of damages

§ 1317. In exceptional circumstances, damages can be reduced if they would be an unreasonable and oppressive burden for the tortfeasor and a merely partial compensation would be reasonable to the victim. The weight of the grounds for imputation, the economic circumstances of the victim as well as those of the tortfeasor and the benefits gained by the latter are to be taken into consideration. Section 9 Burden of proof

§ 1318. Insofar as not otherwise provided, the victim must prove all requirements of his claim. If the victim has a special legal relationship to the tortfeasor and if he proves a defect in the tortfeasor’s sphere, then the latter must show that he complied with the required standard of conduct. If the victim desires compensation for non-performance of a contractual or legal obligation, then the tortfeasor must prove compliance with the required standard of conduct or the absence of fault. II. Particular Part Section 1 Special types of damage Bodily injury

§ 1319. (1) A person who causes bodily injury or injury to the health of another must in particular compensate medical expenses and increased expenses, loss of earnings including future loss of earnings, the impediment of better advancement (§ 1315) and for pain and suffering (§ 1316). Impairment of earning capacity shall be compensated even while the actual earnings are not yet reduced. (2) If the injury leads to death, the tortfeasor must reimburse those who paid the funeral costs and compensate those who were legally entitled to be maintained by the deceased or for whom the deceased would have paid the necessary maintenance, for the loss of this maintenance including future maintenance. Interference with liberty

§ 1320. (1) A person who interferes with the liberty of another must restore it (§ 1314) and compensate the pecuniary (§ 1315) and non-pecuniary damage (§ 1316). (2) If the deprivation of liberty stems from a non-public untrue communication, the tortfeasor is not liable if there was a justified interest in the communication and he proves that he did not know that it was untrue.

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(3) If the victim does not obtain his liberty and cannot enforce his claim, the tortfeasor must compensate those who were legally entitled to be maintained by the victim or for whom the victim would have paid the necessary maintenance, for the loss of this maintenance including future maintenance. Defamation

§ 1321. (1) A person who is defamed or whose credit, earnings or advancement is impaired by libel or slander can seek the retraction of the utterance (§ 1314), the compensation of the pecuniary loss (§ 1315) and in the case of serious impairment of his standing, also the non-pecuniary loss (§ 1316). (2) The tortfeasor is not liable for the non-public distribution of untrue statements if there was a justified interest in the communication and he proves that he did not know they were untrue. (3) The tortfeasor is liable for the distribution of true facts only if these were not generally known, there was no justified interest in their communication and the facts originate from the private sphere or if the distribution was manifestly capable of impairing another person seriously. (4) Owners of media are liable for the distribution of untrue statements of fact unless they prove that the damage was caused in spite of compliance with the highest possible standard of conduct or otherwise through an unavoidable event (§ 1302 para. 3). In compensating the non-pecuniary damage (para. 1), the damages to be paid under the Media Act shall be taken into account. Damage to property and injury of an animal

§ 1322. (1) If the tortfeasor destroys a thing he must at least replace its market value (§ 1315 para. 4), in the case of intent also the value of special affection. (2) If a thing is damaged, the victim can also seek costs of repair exceeding the loss of its value (§ 1315 para. 2) insofar as a reasonable victim would have invested the costs, in particular because of a non-pecuniary interest in the thing. (3) The same shall apply for the killing or injuring of an animal. Section 2 Liability for roads Liability of the keeper of a road

§ 1323. (1) If at fault, the keeper of a road is liable for damage that occurs as a result of a permitted use because of the inadequate state of the road. Any use which is not opposed by precept or prohibition or the type of road shall be deemed permitted. Whether the state of a road is inadequate depends on the users’ safety expectations justified by the type of road. (2) The keeper’s duty of care is reduced when the road serves above all the interest of the users. This is without prejudice to the contractual liability arising

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from special arrangement. Public authorities are liable as road keepers in the same way as an entrepreneur (§ 1304). (3) A road consists of the ground area designated for traffic including the constructions belonging thereto. Section 3 Liability for means of transportation Liability of the keeper

§ 1324. (1) If through an accident in the operation of means of transportation, that is railway, cable car or motor vehicle, a person is killed or injured (§ 1319) or a thing is damaged, the keeper is liable under § 1302. (2) The keeper of a drag lift is liable for the damage which arises merely out of the condition of the drag track only on a fault basis. § 1325. (1) The keeper is not subject to strict liability if the injured or deceased person at the time of the accident was using the means of transportation (§ 1326) or was being transported therewith without the consent of the keeper. (2) For damage to transported goods, the keeper is only subject to strict liability if at the time of the accident they were being carried by a passenger as hand luggage or on the passenger’s person. Liability in the case of illegal use of means of transportation

§ 1326. (1) A person who knowingly without the consent of the keeper, operates or takes part in the operation of means of transportation, is liable in place of the keeper. The keeper is liable solidarily with him if he or his auxiliaries who are engaged in the operation of the means of transportation made the illegal use possible through their fault. (2) If the keeper has employed the user for the operation of the means of transportation or handed it over to him, then the user is not liable in place of the keeper provided that the non-consensual use was minimal or justified by a particular cause. Reduction or exclusion of liability

§ 1327. The liability can be excluded or reduced under the rule of § 1302 para. 3 (unavoidable event). Exclusion of liability

§ 1328. The liability for causing death or injury of paying passengers can neither be excluded nor reduced in advance.

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§ 1329. (1) If a person is killed or injured by a defect in a movable, physical thing (product) (§ 1319) or if property separate from the product is damaged, the producer is liable. The same applies if the product is part of another movable thing or is attached to an immovable thing. (2) Damage to property is only to be compensated under this section insofar as it exceeds EUR 500, and if such property is of a type ordinarily intended for private use or consumption, and if it indeed was used by the injured person mainly for his own private use or consumption. (3) The provisions of this section are not to be applied to damage caused by a nuclear event that is covered by a treaty ratified by the member states of the Treaty on the European Economic Area. Producer

§ 1330. The producer is the manufacturer of the product, or the person who 1. produced any raw material or a component part of the product, 2. presents himself as the producer by the putting of his name, his trade mark or other distinguishing feature on the product, 3. imports the product into the European Economic Area for sale, hire, leasing or any form of distribution in the course of his business (importer) or 4. supplied the product unless he informs the injured person, within a reasonable time, of the identity of the producer or of the person who supplied him with the product, or, in the case of an imported product, of the importer, even if the name of the producer is indicated. Defectiveness

§ 1331. (1) A product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account, including: 1. the presentation of the product; 2. the use to which it could reasonably be expected that the product would be put; 3. the time when the product was put into circulation. (2) A product shall not be considered defective for the sole reason that a better product is subsequently put into circulation.

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Barbara C. Steininger Limitation of liability

§ 1332. (1) The producer shall not be liable under this section if he proves: 1. that the defect is due to compliance of the product with mandatory regulations issued by the public authorities; or 2. that he did not put the product into circulation; or that the product was neither manufactured by him for sale or any form of distribution for economic purpose nor manufactured or distributed by him in the course of his business; or 3. that, having regard to the circumstances, it is probable that the defect which caused the damage did not exist at the time when the product was put into circulation by him or that this defect came into being afterwards; or 4. that the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered; or 5. in the case of a manufacturer of a component, that the defect is attributable to the design of the product in which the component has been fitted or to the instructions given by the manufacturer of the product. (2) Liability under this section is extinguished, if not time-barred earlier, upon the expiry of a period of 10 years from the date on which the producer put into circulation the actual product which caused the damage, unless the injured person has in the meantime instituted proceedings against the producer. Exclusion of liability

§ 1333. The liability under this section cannot be excluded in advance. Section 5 Environmental liability Liability for environmental damage

§ 1334. A person is liable for a source of high danger (§ 1302) also if he operates a facility or engages in an activity which involves the risk of frequent or serious environmental damage. In the same way, a person who operates a facility or engages in an activity for which the risk for the environment obviously cannot be assessed shall be liable for serious environmental damage. Presumed causation

§ 1335. If, according to the circumstances of the case in point, in particular the type of the damage, time and place of the occurrence of the damage, the operating procedure, the equipment used, the type and concentration of the substances used and the meteorological conditions, a facility or activity which carries a risk for the environment is capable of causing damage, it will be assumed that it did cause the damage. This assumption is rebutted if the keeper

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proves that there is a preponderant probability that his facility or activity did not cause the damage. In such a case, the damage can be apportioned under § 1294 para. 2. Environmental damage

§ 1336. If damage to property at the same time constitutes an impairment of the environment, the importance of the damaged or destroyed thing for the environment is to find appropriate consideration when assessing the claim for restoration in kind (§ 1314) or compensation for the amount of money used for restoration (§ 1315 para. 2). III. Prescription

§ 1489. (1) Claims for damages are time-barred three years after knowledge or manifestness of the damage and the tortfeasor. If the victim does not gain knowledge of the damage or the identity of the tortfeasor or if the damage resulted from one or more criminal actions that could only be committed intentionally and that are punishable with more than one year imprisonment, the claims for damages expire thirty years after the occurrence of the damage. (2) After ten years since the occurrence of the damage, the victim – except in cases of personal injury – must prove all elements of the claim.

II. Belgium Isabelle C. Durant 1

A. LEGISLATION 1. Loi du 3 juillet 2005 relative aux droits des volontaires/Wet van 3 juli 2005 betreffende de rechten van vrijwilligers (Act of 3 July 2005 Relating to the Rights of Volunteers)2

1

In July 2005, the Belgian legislator adopted an Act introducing a legal framework for voluntary service. There are approximately 1.5 million volunteers in Belgium who exercise their activities in various sectors: health sector, cultural sector, social sector, sporting sector, religious sector, entertaining sector, etc.3

2

Voluntary service is defined by the legislator as being any activity which is exercised without payment or obligation, for the benefit of one or several persons or for the benefit of a group of persons, of an organization or of the whole community, and which is organized by an organization outside the domestic or the private sphere.4 An organization is any non-profit-making association with or without legal personality.5

1 2

3

4 5

With many thanks to Donna Stockenhuber for her invaluable help. Belgian official journal of 29 August 2005, 37309 (Moniteur belge/Belgisch Staatsblad). This Act had already been modified by an Act of 27 December 2005 containing sparse provisions (Loi du 27 décembre 2005 portant dispositions diverses [1]/Wet van 27 december 2005 houdende diverse bepalingen [1]), published in the Belgian official journal of 30 December 2005 (2nd ed.), 57359, and by an Act of 7 March 2006 postponing the entry into force of the Act (Loi du 7 mars 2006 modifiant la loi du 3 juillet 2005 relative aux droits des volontaires et la loi du 27 décembre 2005 portant des dispositions diverses/Wet van 7 maart 2006 tot wijziging van de wet van 3 juli 2005 betreffende de rechten van vrijwilligers en van de wet van 27 december 2005 houdende diverse bepalingen), published in the Belgian official journal of 13 April 2006, 20403. Parliamentary documents (Chambre des représentants de Belgique – Proposition de loi du 19 novembre 2003/Belgische Kamer van volksvertegenwoordigers – Wetsvoorstel van 19 november 2003, doc. 51-0455/001, 4). Art. 3, 1°. Art. 3, 3°.

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According to art. 2, § 1, the Act is applicable to voluntary service which is exercised on Belgian soil. The Act is also applicable to voluntary service which is exercised outside Belgium but organized from Belgium, provided that the volunteer is habitually resident in Belgium and without prejudice to the law of the country where the activity is exercised. The most typical example is the organization of a youth holiday camp during summer outside Belgium (e.g. scout groups).

3

Art. 5 of the Act concerns the liability of the volunteer and of the organization. The first months of the existence of this article have been turbulent. Indeed, before the Act of 3 July 2005 even entered into force, it was modified, as it were surreptitiously, by an Act of 27 December 2005 containing all kinds of provisions. Art. 5, that initially contained four paragraphs, is now reduced to two paragraphs, considering that the second and the third paragraphs were abrogated by the Act of 27 December 2005. Besides, the first paragraph has been modified. Unfortunately, it must be said that the actual result is less satisfactory than the primary version of the text.

4

For understanding the new art. 5, which is badly written, it could be interesting to remember first the four rules contained in the initial published version of art. 5. Afterwards, the new version of the provision will be commented on briefly.

5

According to the first rule, originally contained in art. 5, each organization was liable for damage caused by the volunteer to third persons in the exercise of his/her voluntary activity, in the same way as masters are liable for damage caused by their servants. With these last words, art. 5 referred implicitly but certainly to art. 1384 (3) of the Civil Code, according to which “Masters and employers (are liable) for the damage caused by their servants and employees in the functions for which they have been employed”. The idea was to model the liability of the organization on the rules applicable to employers (although the volunteer is not an employee).6 According to parliamentary works, it means that the victim has to sue the organization (if it is an association with legal personality) or the members of the organization (if it is an association without legal personality). In this latter case, the members should be liable jointly. One has to observe that, according to art. 6 of the Act, the organization must take out liability insurance covering its (non-contractual) civil liability. Taking into consideration art. 7 of the Act and the parliamentary documents, it seems that the liability insurance must be regarded as a compulsory insurance.7

6

6

7

Cf. parliamentary documents (Chambre des représentants de Belgique – Proposition de loi du 9 mai 2005/Belgische Kamer van volksvertegenwoordigers – Wetsvoorstel van 9 mei 2005, doc. 51-0455/008, 68). Cf. parliamentary documents (doc. 51-0455/008, 26 and 50 in particular).

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7

According to the second rule, originally contained in art. 5 of the Act of 2005, when damage was caused by a volunteer to the organization or to third persons in the exercise of the voluntary activity, the volunteer was usually not liable. One can say that art. 5 exempted volunteers from civil liability in the same way as art. 18 of the Workmen’s Compensation Act of April 1971 towards employees.8

8

The third rule originally contained in art. 5 of the Act of 2005 consisted in a limitation to the second rule. Indeed, the volunteer should remain personally liable if he/she committed a fraud or a grossly negligent act or a slight customary negligence. Such a limitation exists also towards employees. On the contrary – and this is the exact meaning of the second rule – the volunteer should not be liable if he/she occasionally commits a slight negligence.

9

Finally, art. 5 of the Act of 2005 contains a rule of evidence applicable when the organization that organized the voluntary service is an association without legal personality. In such a case, it could be difficult to distinguish the volunteers from the members of the association. Therefore, the legislator introduces a non-rebuttable presumption according to which the one who receives and signs the organization memorandum as a volunteer (note d’organisation/organisatienota) is presumed not to be a member of this association. Art. 4 of the Act of 2005 is devoted to this organization memorandum. It stipulates that the organization has to deliver informatively a memorandum to the volunteer before he/she begins the voluntary service. This memo indicates especially the objectives and the legal status of the association, the existence of an insurance covering the civil liability, possibly the obligation to professional confidentiality, etc.

10

As initially adopted, the Act of July 2005 created some difficulties. For instance, relating to the first rule – the liability of the organization – one has to observe that the application of it could be problematic in the presence of an association without legal personality: In this case, who will be regarded as the master? The Act, which was therefore already subject to criticism, became hardly comprehensible after it was modified by the above mentioned Act of 27 December 2005.

11

On 1 December 2005, a bill was submitted by eight Members of Parliament to change the Act of July 2005.9 According to these Members, art. 5 of the Act contained superfluous provisions. They considered especially that the implicit reference to the principle contained in art. 1384 (3) was not necessary because this provision is applicable anyway! What follows is even more unexpected: The Members considered that the second and the third rules reformulated the first rule (which is obviously not the case as shown above) and suggested

8 9

Art. 18 of the Workmen’s Compensation Act of 10 April 1971. Cf. parliamentary documents (doc. 51-2098/008).

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therefore to “mix” the first three rules into one single paragraph (the new art. 5(1))! The result of this combination is a provision which is difficult to understand. The new version of art. 5 (1) provides that any organization is liable for the damage caused by a volunteer to the organization or to third parties in the exercise of his/her voluntary function, except in case of fraud, gross negligence or habitual slight negligence of the volunteer. At least, two difficulties arise when reading this provision.10

12

Firstly, considering the concept of vicarious civil liability, to speak about the liability of the organization for the damage caused by a volunteer to the organization itself is unusual: on the one hand, one is liable for damage caused to someone else and not for damage caused to one’s own person; on the other hand, vicarious liability is usually provided by the legislator in favour of third parties and not in favour of the vicariously liable party.

13

Secondly, should the text be strictly applied, the results should be the following: (i) the organization should not be liable in a certain number of cases (i.e. when the volunteer committed a fraud, a grossly negligent act or a slight but customary negligence), (ii) the volunteer should never be exempted from liability (in the absence of a legal text providing this exemption). These results are very probably not those that were wished for by the eight Members of Parliament but they strictly follow from the very bad wording of the new art. 5 (1). Indeed, in the parliamentary works, one reads that the new version of the text clearly (!) provides that the volunteer is not liable for the damage he caused to the organization and to third parties while exercising his/her function, except in cases of fraud, gross negligence or habitual slight negligence.11 One reads also that the legislator intended to keep the exemption of liability of the volunteer in case of slight negligence committed occasionally.12 Apparently, “clarity” is a flexible notion …

14

The consequence of this is that the legislator modified once again the Act of 3 July 2005. Originally, the Act should have entered into force on 1 February 2006. Considering the number of problems generated by the Act,13 the legislator decided to postpone the entry into force until 1 August 2006. This delay was achieved by a new modification of the law, dated 7 March 2006.14

15

10

11 12 13 14

Cf. in particular the notice C/2005/4 of the insurance commission of 22 February 2006 (Commission des assurances/Commissie voor verzekeringen) available on http://www.cbfa.be/fr/ aboutcbfa/advorg/cvv/html/cvv_adv.asp. Cf. parliamentary documents (doc. 51-2098/008, 3). Cf. parliamentary documents (doc. 51-2205/003, 4). Not only in the field of tort law, but also, and essentially, in the field of insurance law. Act of 2 February 2006, Belgian official journal of 7 March 2006, 20403. On 18 May 2006, a new bill was submitted that will be commented on in the next Yearbook.

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2. Loi du 17 septembre 2005 relative aux activités de lancement, d’opération de vol ou de guidage d’objets spatiaux/Wet van 17 september 2005 met betrekking tot de activiteiten op het gebied van het lanceren, het bedienen van de vlucht of het geleiden van ruimtevoorwerpen (Act of 17 September 2005 Concerning the Activities Relating to Launching, Flight Operation or Guidance Operation of Space Objects)15

16

The Act of 17 September 2005 concerns the activities of launching, flight operation or guidance operation of space objects exercised in areas placed under Belgian jurisdiction or Belgian control or by way of facilities belonging to Belgium or placed under Belgian jurisdiction or Belgian control.16

17

The Act has been adopted mainly with the aim of complying with four international treaties relating to space activities:17 the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and other Celestial Bodies,18 the Agreement on the Rescue of Astronauts, the Return of Astronauts and the Return of Objects Launched into Space,19 the Convention on International Liability for Damage Caused by Space Objects20 and the Convention on Registration of Objects Launched into Outer Space.21

18

Chapter VI of the Act of 17 September 2005 concerns liability and recourse in case of fallout of space objects. Considering that the Belgian State loses more and more the control of space launching activities but meanwhile remains liable for the damage caused by the operators on the basis of international conventions, the Belgian legislator decided to establish a claim for recourse in favour of the Belgian State against the operator (or directly against its insurer22) whose activities of launching caused a damage when Belgium is liable as launching State according to the international conventions.23 It means that the recourse may be exercised by the Belgian State against the operator only once the liability of the Belgian State is first engaged on the basis of Art. VII of the 15

16 17

18

19

20

21

22 23

Belgian official journal of 16 November 2005 (2nd ed.) 48818; errat. Belgian official journal of 6 March 2005 (2nd ed.) 13442. Art. 2. Cf. parliamentary documents (Exposé des motifs/Memorie van toelichting, doc. 51-1607/001, 6). Opened for signature in Moscow, London and Washington, on 27 January 1967, ratified by Belgium on 30 March 1973 (Act of 4 December 1973, Belgian official journal of 12 February 1974). Opened for signature in Moscow, London and Washington, on 22 April 1968, ratified by Belgium on 15 April 1977 (Act of 16 February 1977, Belgian official journal of 18 October 1978). Opened for signature in Moscow, London and Washington, on 29 March 1972, ratified by Belgium on 13 August 1976 (Act of 13 July 1976, Belgian official journal of 28 July 1977). Opened for signature in New York, on 14 January 1975, ratified by Belgium on 24 February 1977 (Belgian official journal of 14 April 1977). Art. 15 (7) of the Act of 17 September 2005. Cf. parliamentary documents (Exposé des motifs/Memorie van toelichting, doc. 51-1607/001, 5).

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Treaty Governing the Activities of States in the Exploration and Use of Outer Space or on the basis of the Convention on International Liability for Damage Caused by Space Objects.24 It is recalled that the liability established by these international conventions remains an international liability of the States Parties to it. According to art. 15 (1), the recourse of the Belgian State may also be exercised when its liability is engaged on the basis of the Act of 17 September 2005. This extension has to be compared with the concept of damage used in the Act. For the purposes of this Act, the damage which leads to liability of the Belgian State is the damage as defined in the Convention on International Liability.25 In addition, the liability of the Belgian State will also be engaged when the launching activity caused a damage to Belgian citizens, except when they participated in the damaging operation.26 This extension of the concept of damage and of the cases in which the liability of the Belgian State could be engaged is justified by the will of the legislator not to discriminate victims due to their nationality. This kind of discrimination would not be acceptable under Belgian law.27

19

The damage for which the State has recourse against the operator is assessed according to the terms of art. 15 (2). When the damage is caused by the operator to a third State or to foreign nationals, it is assessed by Belgium and the State who represents the victim according to the Convention on International Liability.28 When the damage is caused by the operator to Belgian nationals, the damage is assessed by a group of three experts (each party designates one expert and the third expert is designated by both parties). In both cases, the amount of damage may be limited by the King. If the amount is limited, the recourse of the State against the operator may not exceed the fixed limit.

20

24

25

26 27

28

Art. 15 (1) of the Act of 17 September 2005. Art. VII of the Treaty on Principles: “Each State Party to the Treaty that launches or procures the launching of an object into outer space, including the moon and other celestial bodies, and each State Party from whose territory or facility an object is launched, is internationally liable for damage to another State or its component parts on the Earth, in air or in outer space, including the moon and other celestial bodies”. Art. 1 of this Convention: “The term ‘damage’ means loss of life, personal injury or other impairment of health; or loss of or damage to property of States or of persons, natural or juridical, or property of international intergovernmental organizations”. The Convention on International Liability shall not apply to damage caused to nationals of the launching State (Art. VII) and the Treaty on Principles concerns damage caused by a State Party to another State Party or to its natural or juridical persons (Art. VII). Art. 3 (12) of the Act of 17 September 2005. Cf. parliamentary documents (Exposé des motifs/Memorie van toelichting, doc. 51-1607/001, 17). Cf. especially art. XII of this international convention: “The compensation which the launching State shall be liable to pay for damage under this Convention shall be determined in accordance with international law and the principles of justice and equity, in order to provide such reparation in respect of the damage as will restore the person, natural or juridical, State or international organization on whose behalf the claim is presented to the condition which would have existed if the damage had not occurred”. Cf. also art. XIV: “If no settlement of a claim is arrived at through diplomatic negotiations as provided for in art. IX, within one year from the date on which the claimant State notifies the launching State that it has submitted the documentation of its claim, the parties concerned shall establish a Claims Commission at the request of either party”.

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However, the limit would not be taken into consideration in three situations: (i) when the operator has not complied with the (previous compulsory) authorization to exercise its launching space activities, (ii) when the operator has not informed the authorities of the bad functioning of the space object that caused the damage and (iii) when the operator has exercised activities of launching without preliminary authorization or when the operator communicates intentionally wrong or incomplete information at the moment he introduced a request for authorization.29

21

The recourse of the Belgian State against another launching State under art. V.2 of the Convention on International Liability or under other international provisions does not prevent the recourse of the Belgian State against the operator according to the Act of 2005.30

22

The chapter of the Act of 17 September 2005 relating to liability also contains a provision devoted to the obligation of the operators to inform the Belgian authorities of each manoeuvre, bad functioning or anomaly deemed to generate a danger for persons on the earth, for aircrafts in air and for other space objects which could potentially cause damage.31

23

The Act of 17 September 2005 entered into force on 1 January 2006.32

B. CASES33 1. Cour de cassation/Hof van Cassatie (Supreme Court), 15 November 2004, C.03.0355.F: The Guardian of Navigable Rivers a) Brief Summary of the Facts

24

The Walloon Region entrusted the execution of dredging works into a navigable river to the Belgian firm Dredging International. According to the contractual specifications, the contractor had to ensure the continuity of the sailing during the works, had to signal the works and was not to stand in the way of water traf29 30

31 32 33

Art. 15 (3), 15 (4), 16 (2) and 19 (3) of the Act of 17 September 2005. Art. 15 (6) of the Act of 17 September 2005. Art. V.2 of this international convention: “A launching State which has paid compensation for damage shall have the right to present a claim for indemnification to other participants in the joint launching. The participants in a joint launching may conclude agreements regarding the apportioning among themselves of the financial obligation in respect of which they are jointly and severally liable. Such agreement shall be without prejudice to the right of a State sustaining damage to seek the entire compensation due under this Convention from any or all of the launching States which are jointly and severally liable”. Art. 16 (1) of the Act of 17 September 2005. Art. 20 of the Act of 17 September 2005. All the commented decisions are to be found on the official website of the Belgian judicial power: www.juridat.be, except the decision which was not given by the Belgian Supreme Court but by the court of appeal of Brussels. For this last decision, the reference of publication in legal reviews is mentioned in fn. 75.

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fic. A damage occurred in the zone of the river where the dredging works were being executed. Apparently, the accident was due to water depth problems. The court of appeal of Liège decided that the Walloon Region was the sole guardian of the navigable river, not the contractor, and that consequently only the Region was liable on the basis of art. 1384 (1) of the Civil Code, according to which the guardian of a defective thing is liable for the damage caused by a defect of the thing. The result of this decision is that the claim for recourse introduced by the Region against the contractor was said not to be founded on the basis of the above mentioned provision.

25

The Walloon Region did not agree with the decision of the court of appeal. It was of the opinion that the court of appeal did not correctly motivate its decision because it did not consider in its arguments that the contractor was at least co-guardian of the navigable river. Therefore the Region appealed to the Supreme Court. According to the Region, the custody of the river was also exercised by the contractor (and therefore there was co-guardianship) considering that when works are carried out a part of the prerogatives falling to the guardian are transferred to the contractor. According to the Region, the contractual specifications showed indeed that the contractor had obtained some of the guardian’s obligations (e.g. the contractor had to ensure the continuity of the sailing during the works, had to signal the works, had to allow the free flow of traffic, etc.).

26

b) Judgment of the Court

The Supreme Court did not quash the decision of the court of appeal, deeming that its decision was legally justified considering the motivations on which it was based.

27

The court of appeal had founded its decision on three grounds that are underlined by the Supreme Court: (i) the Walloon Region may not transfer the custody of navigable rivers to dredging firms because the duty of exploiting the navigable rivers is assigned to the Region by law, (ii) the contractual specifications did not grant the dredging firm the power of direction and the power of inspection (surveillance) of the navigable river and (iii) the sign placed by the firm after the accident was not an indication of a control of the river, but has to be regarded as being the performance of a contractual obligation.

28

c) Commentary

It is generally said that when one instructs a contractor to undertake work, as a result of this contract, the custody of the construction site may be temporarily exercised by the contractor and no longer by the master.34 Most of the time, the 34

R.O. Dalcq, Examen de jurisprudence (1980 à 1986). La responsabilité délictuelle et quasi délictuelle, Revue critique de jurisprudence belge (RCJB) 1987, 661; M.A. Flamme/Ph. Flamme/A. Delvaux/Fr. Pottier, Le contrat d’entreprise. Chronique de jurisprudence 1990– 2000 (2001) 410; H. Vandenberghe/M. Van Quickenborne/K. Geelen/S. De Coster, Overzicht van rechtspraak. Aansprakelijkheid uit onrechtmatige daad (1979–1984) Tijdschrift voor privaatrecht (TPR) 1987, 1389.

29

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contractor is considered to be the sole guardian of the site until the approval of the works by the master (or, at least, according to some, until the end of works). This can be explained by the fact that the site is placed under the inspection (surveillance) of the contractor during the works. For instance, it was decided that a contractor for work was liable for the damage suffered by a pedestrian walking along the side of a house under construction. A fence was erected in front of the house and the pedestrian snagged the sleeve of his coat on a nail protruding from the fence. The contractor was considered as being the guardian of the site (and of the defective fence).35

30

However, it is also sometimes decided that the master of the works still continues to exercise a certain power over the construction site or over the object of the contract together with the contractor for work. In these cases, one can speak about co-guardianship. Such decisions are not very frequent and rather old.36 Nowadays, one can observe that judges are inclined to designate one sole guardian of the defective thing.37

31

In this case law context, one can understand that the Walloon Region tried to convince the court of appeal that the dredging firm was the sole guardian or, at least, the co-guardian of the navigable river, considering that the accident occurred during the dredging works.

32

From the decision of the Supreme Court, one has however to deduce that when the Walloon Region instructs a firm to do some work in rivers, traditional case law relating to contractors is not applicable. This particular situation is explained by the fact that the Walloon Region is expressly charged by law to exploit navigable rivers.38 This legal charge is a charge of public policy. Therefore, it may not be transferred to a third party, not even to a contractor.

35

36

37

38

J.P. Mouscron, 20 June 1984, Revue Générale des Assurances et des Responsabilités (RGAR) 1985, 10992. Cf. also civ. Malines, 9 May 1988, Pasicrisie (Pas) 1988, III, 121; civ. Namur, 19 October 1998, Droit de la circulation Jurisprudence/Verkeersrecht Jurisprudentie (DCJ/VKJ) 1999, 164; civ. Dinant, 20 April 2001, RGAR 2002, 13527. Civ. Charleroi, 16 April 1951, RGAR 1952, 4928. The decision of the Supreme Court of 25 March 1943 (Pas 1943, I, 110) is also sometimes quoted, but it did not result from the facts of it that the accident occurred during works (in this case, the defective thing was a water pipe; the city, owner of the pipe, and the water company in charge of the placement, the maintenance and the repair of it, were considered as co-guardians of it; both were held liable towards the victim of the broken pipe). More recently, cf. court of appeal of Mons, 13 February 1990, DCJ/VKJ 1991, 37 (implicit decision). B. Dubuisson, Développements récents concernant les responsabilités du fait des choses (choses, animaux, bâtiments), RGAR 1997, 12729 (5verso); I. Moreau-Margrève/A. Gosselin, Grands arrêts récents en matière de responsabilité civile, Actualités du droit (Act dr) 1998, 479. Art. 5 and 6 of the Decree of the Walloon Region of 24 November 1994 (Décret portant dissolution de l’Office de la navigation et création de l’Office de promotion des voies navigables), published in the Belgian official journal of 23 December 1994, 31827.

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2. Cour de cassation/Hof van Cassatie, 28 January 2005, C.02.0272.N: The Guardian of a Defective Cycle Path or Road Way a) Brief Summary of the Facts

An iron wire used for hanging up fair lighting was drooping “in the air” over a bicycle path, creating a danger for the users. The end of the wire was stuck under the wheels of a parked car. Due to the presence of this wire, an accident occurred. The victim sued, but not successfully, the city of Zoersel on the territory of which the bicycle path was located.

33

According to the court of appeal, it was indeed not established that the city committed a fault by not taking appropriate measures, because the victim did not prove that the city was aware or should have been aware of the dangerousness of the situation. Therefore, the court of appeal dismissed the victim’s claim on the basis of art. 1382 of the Civil Code, according to which, “Any act whatever of man, which causes damage to another, obliges the one by whose fault it occurred, to compensate it”.39 The victim did not agree with this decision. She was of the opinion that the city had to bear the consequences of the accident due to the fact that it had not complied with its obligation to open to the public only sufficiently safe paths. This obligation is expressly mentioned in art. 135 (2) of the Act of 24 June 1988 relating to cities’ powers (Nouvelle loi communale/Nieuwe Gemeentewet). According to the victim, the city had committed a fault because (i) the city did not remove the obstacle drooping over the path and (ii) the city did not show that an external cause, which may not be ascribed to it, prevented it from taking the appropriate safety measures. Therefore, the liability of the city should have been engaged on the basis of art. 1382 of the Civil Code.

34

The court of appeal also dismissed the victim’s claim on the basis of art. 1384 (1) of the Civil Code recalled above.40 According to the court of appeal, the bicycle path did not constitute a defective thing and the liability of the guardian of it (i.e. the city) may therefore not be engaged. For the judges, the presence of an external thing such as a cable on a bicycle path may not be considered as a feature of this path. The victim did not agree with this point of view. She was of the opinion that the bicycle path constituted a defective thing. Therefore, the liability of the city should have been engaged on the basis of art. 1384 (1) of the Civil Code.

35

For these two reasons, the victim appealed to the Supreme Court.

36

39

40

Translation by G. Rouhette, with the assistance of A. Berton, and published on the official website of the French Government: http://www.legifrance.gouv.fr/html/codes_traduits/code_civil_ textA.htm. Cf. no. 25.

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37

Relating to liability based on art. 1382 of the Civil Code, the Supreme Court did not subscribe to the arguments of the victim concerning the onus of proof. According to the Supreme Court, the obligation contained in art. 135 (2) of the City Act is not an obligation to achieve a particular result (obligation de résultat/ resultaatsverbintenis), but a “best-effort” obligation (obligation de moyens/ middelenverbintenis). Consequently, it was important to know whether the city was aware or should have been aware of the danger at the moment the accident occurred in order to decide if it had committed a fault or not. Therefore the decision of the court of appeal to turn down the idea of fault by taking into consideration the ignorance of the existence of the danger by the city was legally justified.

38

On the contrary, relating to liability based on art. 1384 (1) of the Civil Code, the Supreme Court considered that the decision of the court of appeal was not legally justified. According to the Supreme Court, a thing is defective when it shows an abnormal feature deemed to cause damage in certain circumstances. The defect of the thing is not necessarily an intrinsic defect and is not necessarily a permanent defect. In addition, to determine whether there is a defect depends on the concrete circumstances of each case. According to the Supreme Court, the court of appeal did not examine (sufficiently) precisely the circumstances of the accident in order to declare that the bicycle path was not defective. Indeed, the court of appeal assumed as a general rule that the presence of an external thing such as a cable on a bicycle path may not be considered as a feature of this path and deduced its decision from this general rule without any other concrete judgment. Therefore, the Supreme Court quashed the decision of the court of appeal insofar as it was based on art. 1384 of the Civil Code. c) Commentary

39

First of all, the developments relating to the obligations of cities not to open to traffic unsafe paths are quite interesting. The distinction between an obligation to achieve a particular result (obligation de résultat/resultaatsverbintenis) and a “best-effort” obligation (obligation de moyens/middelenverbintenis) is traditionally used in contract law and is less used in tort law. One can say that an obligation to achieve a particular result obliges the debtor to reach the prescribed result while the debtor of a “best-effort” obligation has to make use of all reasonable means to comply with the prescribed obligation.41 The distinction between both types of obligations implies repercussions regarding the onus of proof. In the presence of an obligation to achieve a particular result, the debtor is presumed to be at fault as soon as the result is not achieved. However, he can escape liability by showing that the result was not obtained due to force majeure or due to a fact attributable to the victim or to a third party. In the presence of a “best-effort” obligation, when the obligation is not per41

For a (critical) presentation of this distinction in a contribution written in English, cf. D. Alessi, The Distinction between Obligations de Résultat and Obligations de Moyens and the Enforceability of Promises, European Review of Private Law (ERPL) 2005, 657 ff.

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formed, the person who has suffered the harm has to prove that the debtor behaved negligently by not using all the reasonable means in view of the performance of the obligation. Qualifying the obligation contained in art. 135 (2) of the Act of 24 June 1988 as not constituting any obligation to achieve a particular result, the Supreme Court placed the onus of proving the existence of a fault on the shoulders of the victim. The simple statement that an unsafe road was opened to public traffic is consequently not sufficient to conclude that the city adopted a faulty conduct. This conclusion would only be reached if the victim proves that the city did not take any safety measures although it was informed or should have been informed of the dangerousness of the situation. Should the victim provide this proof, the city would be allowed to show that it did not take any measures due to an external cause.

40

This decision of the Supreme Court complies with the majority of case law42 and with the opinion of many authors,43 as recalled by the public prosecutor in a later similar case, dated 3 February 2005.44 In this latter case, a road accident occurred due to the presence of hydrocarbon tracks on the road. The widow of the victim sued the Walloon Region in its capacity as guardian of the defective road and the city of Liège. The city was sued for not having complied with the obligation contained in the above mentioned art. 135 (2) of the Act of 24 June 1988, but not successfully. Indeed, the claimant did not show that the city should have been informed of the recent presence of hydrocarbon on the road and therefore did not prove any faulty conduct of the city. One understands that this could not be proved considering that the hydrocarbon tracks dated only from approximately forty-five minutes before the fatal accident occurred,

41

42

43

44

Cf. the decisions quoted by H. Vandenberghe/M. Van Quickenborne/L. Wynant/M. Debaene, Overzicht van rechtspraak. Aansprakelijkheid uit onrechtmatige daad (1994–1999), TPR 2000, 1574; H. Vandenberghe, Overheidsaansprakelijkheid. Aansprakelijkheid uit de uitvoerende macht, in: H. Vandenberghe (ed.), Overheidsaansprakelijkheid (2005) 24. Cf. also civ. Namur, 24 October 2003, RGAR 2005, 14024; Rb. Dendermonde, 16 December 2004, Bulletin des assurances/De Verzekering (Bull Ass/De Verz) 2005, 375. Contra: pol. Antwerp, 25 September 2002, Circulation, Responsabilité, Assurance/Verkeer, Aansprakelijkheid, Verzekering (CRA/ VAV) 2005, 295; Rb. Leuven, 16 February 2005, Bull Ass/De Verz 2005, 744. According to this last decision, as soon as the existence of an abnormal danger on the way is shown by the victim, it results from this existence that the city committed a fault. The court of first instance of Leuven referred to L. Cornelis, Beginselen van het Belgische buitencontractuele aansprakelijkheidsrecht. De onrechtmatige daad (1989) 131. R.O. Dalcq/G. Schamps, Examen de jurisprudence (1987 à 1993). La responsabilité délictuelle et quasi délictuelle, RCJB 1995, 686; S. Mosselmans, De veiligheidsverplichting van de gemeente met betrekking tot de wegen op haar grondgebied: in hoeverre ‘speelt’ het feit dat de gemeente de litigieuze gevaarstoestand kende of behoorde te kennen?, DCJ/VKJ 2003, 209; S. Smoos, Responsabilité des communes en matière de voirie, Mouvement communal 2005, 430; H. Vandenberghe/M. Van Quickenborne/L. Wynant, Overzicht van rechtspraak. Aansprakelijkheid uit onrechtmatige daad (1985–1993), TPR 1995, 1161; Vandenberghe/Van Quickenborne/ Wynant/Debaene TPR 2000, 1574; Vandenberghe (fn. 42) 24. Cass., 3 February 2005, C.03.0574.F; Revue de jurisprudence de Liège, Mons et Bruxelles (JLMB) 2005, 720.

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according to the expert. Consequently, only the guardian of the road (the Walloon Region) was declared liable for the death of the motorist and not the city.

42

It results from the foregoing that the city, on the shoulders of which rests the obligation contained in art. 135 (2) of the City Act, has not to keep watch over the safety of the roads around the clock.45 However, the obligation implies that the city has to take the appropriate measures without any delay when it is informed or should have been informed about the danger.46

43

Secondly, the developments relating to the notion of defect of a thing are also quite interesting. On this occasion one can recall that a thing can be defective due to an intrinsic defect but that a thing intrinsically not defective may make defective the thing on which it is placed or in which it is incorporated (one speaks about compound or complex things).47 For instance, considered as being defective was the soil of a market on which there was (accidentally fallen) ice cream or salad leaves, or the ground in which grenades were buried.48 In the present case, the court of appeal did not consider that the presence of the cable in the air over a path constituted a defect of the path but the Supreme Court did not agree with this decision. In the future, one could therefore observe a new extension of the notion of defective things that could possibly include things rendered dangerous due to the presence above them (in the air) of another thing. 3. Cour de cassation/Hof van Cassatie, 25 April 2005, C.03.0400.N: Abnormal Feature of a Defective Thing a) Brief Summary of the Facts

44

Due to the fact that the decision of the Supreme Court is partially not published, it is quite difficult to give many factual details on the case. However, one can say that an accident occurred due to a door that opens and closes automatically. The victim sued the guardian of the door, but not successfully. The court of appeal considered indeed that the victim did not prove that the door and the access to it would have presented features diverging from the standard 45

46

47

48

J.P. Brussels, 21 June 1984, RGAR 1985, 10929; Rb. Brugge, 7 December 1988, Rechtskundig weekblad (RW) 1990–1991, 859; civ. Brussels, 9 June 1994, Revue Générale de Droit Civil Belge/Tijdschrift voor Belgisch Burgerlijk Recht (RGDC/TBBR) 1995, 149; civ. Mons, 23 April 1997, RGAR 1999, 13155; pol. Brugge, 30 May 2002, Tijdschrift voor Aansprakelijkheid en Verzekering in het Wegverkeer (TAVW) 2003, 201; pol. Tournai, 9 February 2004, Journal des juges de paix et de police/Tijdschrift van de vrede- en politierechters (JJP/T Vred) 2005, 320. Civ. Nivelles, 25 May 1982, RGAR 1984, 10786. For being complete one has to add that Art. 135 of the City Act is not applicable when the danger is permanent or periodical (Art. 10 of the Act relating to road traffic; cass., 24 June 2004, C.02.0279.N). On this notion, cf. L. Cornelis, Aansprakelijkheid voor het gebrek van samengestelde zaken, RW 1980–1981, 1691. Ice cream: cass., 30 December 1988, Pas 1989, I, 471; salad leaves: court of appeal of Brussels, 8 March 2000, JLMB 2001, 727, cmt. D. Philippe; RGAR 2001, 13457; cass., 2 September 1993, Journal des tribunaux (JT) 1993, 841; grenade: cass., 7 December 1962, Pas 1963, I, 432.

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door and standard access as existing at the time the door had been installed. The victim did not agree with the decision and appealed to the Supreme Court. b) Judgment of the Court

According to the Supreme Court, (i) a thing is defective when it presents an abnormal feature deemed to cause damage in certain circumstances; (ii) the trial judge must verify whether the feature of the thing that is said to have caused the damage constituted an abnormal characteristic of it at the moment the accident occurred; (iii) the judge may conclude the existence of a defect only by comparing the alleged defective thing with a thing of the same type as existing at the moment of the accident. Considering that in the present case the comparison was made with a standard automatic door as existing in 1994 (year the door was installed), the Supreme Court quashed the decision of the court of appeal.

45

c) Commentary

The defect of a thing is an abnormal characteristic of it. Therefore it is generally said that the so-called defective thing must show a departure from the normal thing.49 Nevertheless, the way of deciding whether there is a departure or not is controversial.50

46

According to some authors, the existence of a departure would require a comparison between the thing having caused the damage and its model. From this perspective, the defect would be the “difference” between the (defective) thing and its model.51 On the other hand, the difficulty in determining the model52 would lead some judges to favour another way of identifying defective things: the defect would be highlighted by reference to the normal use of the thing. From this second perspective, the thing would be said to be defective because it does not meet the requirements which are reasonably to be expected from it.53

47

Considering the commented decision, one may wonder whether the first way of determining the defect has not been officially advocated by the Supreme Court. The Court indeed said explicitly that the abnormal feature of a thing may only be inferred from the comparison with similar things. Additionally,

48

49

50 51

52

53

F. Baudoncq/M. Debaene, De aansprakelijkheid voor zaken in het licht van artikel 1384, lid 1 B.W., in: B. Tilleman/I. Claeys (eds.), Buitencontractuele aansprakelijkheid (2004) 100. On the controversy, cf. Dubuisson RGAR 1997, 12729 (9verso). Cornelis RW 1980–1981, 1694; L. Cornelis, De buitencontractuele aansprakelijkheid voor schade veroorzaakt door zaken (1982) 84 ff.; L. Cornelis/I. Vuillard, La responsabilité du fait des choses, in: J.-L. Fagnart (ed.), Responsabilités. Traité théorique et pratique (2000) 19. What is a model: an ordinary thing or a perfect thing? Placed in the same circumstances or in ideal circumstances? Necessarily employed for the same use? Dubuisson RGAR 1997, 12729 (10); De la légèreté de la faute au poids du hasard. Réflexions sur l’évolution du droit de la responsabilité civile, RGAR 2005, 14009 (4verso). Cf. also R. Marchetti, Quelques considérations à l’égard de la notion de vice et de l’exigence causale dans le cadre de la responsabilité du fait des choses vicieuses, RGDC/TBBR 2005, 340. In case law, recently, cf. e.g. pol. Verviers, 29 September 2003, RGAR 2004, 13924.

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the Supreme Court took care of specifying that the similar things with which the comparison is made are things of the same kind and of the same type at the moment of the harmful facts. Apparently, it would mean that a thing may become defective considering later technical improvements of similar products. 4. Cour de cassation/Hof van Cassatie, 19 May 2005, C. 04.0337.F54: Purchase of a Second-Hand Car and Third Party Interference a) Brief Summary of the Facts

49

In 1991, forty vehicles were leased by the company PSA Finance Belux to the company AL. Three of the forty vehicles were new cars of trademark P. During the same period, PSA Finance Belux sold by instalments to VDT about twenty vehicles, six cars of which were P models. Neither AL nor VDT complied with their obligations towards PSA Finance Belux. Considering that all the cars had disappeared, a complaint was lodged against AL and VDT. In 1999, the executive directors of both companies were convicted to punishment.

50

Moreover, it was discovered that the company VDT had sold to the company Sunset three cars of trademark P leased to AL and the company AL had sold to Sunset the six cars of trademark P sold by instalments to VDT.

51

Therefore, PSA Finance Belux sued the Sunset company to obtain damages, arguing that this latter committed a fault by not verifying whether the companies that sold it the cars of trademark P were entitled to sell them. According to PSA Finance Belux, Sunset should have requested the purchase invoices of the cars and should have checked whether the acquisition of the cars by AL and VDT occurred thanks to a financing. The reason for this last demand is that, in case of financing arrangements, generally the seller remains the full owner of the car until complete payment by retention of title.

52

The court of appeal dismissed the claim of PSA Finance Belux. According to the trial judges, the professional purchaser does not have to mistrust the sellers and suspect them of swindling and committing fraud as a matter of course; the existence of a fault may not be deduced from the fact that the (Belgian) second-hand car market is flooded with illegal practices.

53

PSA Finance Belux did not agree with the decision of the court of appeal and appealed to the Supreme Court. According to PSA Finance Belux, the concrete circumstances of the case required taking specific precautions, such as checking the purchase invoices. b) Judgment of the Court

54

The Supreme Court recalled that for deciding whether a fault, including third party interference, has been committed, the trial judge has to take into consider54

Also published in: JLMB 2005, 1449.

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ation all the concrete circumstances of the case. Consequently, said the Supreme Court, the assertion of the court of appeal according to which “the existence of third party interference may not be deduced from the sole fact that the secondhand car market is flooded with illegal practices”, may not be accepted, because by so doing the court of appeal did not take into consideration all the concrete circumstances of the case. It must be stated that the court of appeal had not impugned the fact that fraud is frequent in the car trade but had not taken this fact into consideration. The decision of the court of appeal was quashed. c) Commentary

The Supreme Court recalled that for deciding whether a fault has been committed, the trial judge has to take into consideration all the concrete circumstances of the case. Considering that this was not the case in the present matter, the Supreme Court quashed the decision. One has to understand that the trial judges should have taken into consideration the fact that the Belgian second-hand car market is flooded with illegal practices.

55

By publishing this decision, the Supreme Court made a connection with a previous decision dated 28 November 2002.55 In this latter decision, the court of appeal of Brussels considered, to the satisfaction of the Supreme Court, that the professional buyer of second-hand vehicles has to know that a great number of vehicles are leased and therefore has to take measures with the aim of verifying the identity of the owner of each vehicle bought. Considering that the defendant did not obtain any reliable document which would have ascertained the ownership of the bought vehicle and that the purchase of the vehicle occurred just a few months after the first registration of it, the Court was of the opinion that the professional buyer committed a tortious fault and was liable for the damage thereby caused to the lessor. This faulty conduct is called tierce complicité/derde-medeplichtigheid (third party interference), for the reason that it consists of a third party (the professional buyer) participating knowingly in a contractual breach committed by a contracting party (the lessee). Committing this fault, the buyer incurred non-contractual liability towards the lessor on the basis of art. 1382 of the Civil Code.56

56

It results from the foregoing that the existence of illegal practices leads to an obligation of professional buyers of second-hand cars to verify systematically whether the seller is really the owner of the sold car. This obligation is quasi always imposed on them by trial judges.57

57

55 56

57

Cass., 28 November 2002, C.01.0532.F. I. Banmeyer, L’action paulienne et la tierce complicité: points de contact, in: P. Wéry (coord.), La théorie générale des obligations (1998) 239 ff. Cf. the case law of the five Belgian courts of appeal. Court of appeal of Brussels, 7 May 1991, JLMB 1992, 294, cmt. Cl. Parmentier; court of appeal of Mons, 8 October 1990, Revue régionale de droit (RRD) 1991, 36, cmt. P. Jadoul; 9 June 1993, RRD 1994, 64; court of appeal of Liège, 24 December 1991, JT 1992, 202; court of appeal of Antwerp, 19 October 1988, RGDC/ TBBR 1989, 468, cmt. Y. Merchiers; court of appeal of Ghent, 4 December 2002, Rechtspraak Antwerpen Brussel Gent (RABG) 2003, 676.

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5. Cour de cassation/Hof van Cassatie, 23 June 2005, C.03.0551.F/ C.03.0556.F: Several Liable Parties and Internal Recourse a) Brief Summary of the Facts

58

After having elaborated a work scheme through a design office, the city of Courcelles invited tenders for improvement works of a street. The project was awarded to the company Ph. R. An agreement for work was signed between the city (master of work) and the company Ph. R. (contractor for work).

59

According to the tender documents, the contractor for work had to realise a formwork (cement work) and to this end had to make earthworks 60 cm in depth in the street. In order to achieve a uniform result, the contractor had to use mechanical earth moving machines.

60

After the agreement was signed, it soon became apparent that phone cables of the phone operator Belgacom were buried only 20 to 55 cm deep, i.e. at a depth within which the formwork was to be constructed. For this reason, the contractor for work was not able to begin the works on time. Finally, works got started after the city and the contractor had signed an amendment to the contract for work, according to which the depth of the formwork was reduced, the sub-foundations were suppressed and the structure of the foundations of the street was modified.

61

The contractor for work claimed damages from the city to compensate the damage resulting from the delay in performance. The court of appeal awarded damages to the contractor Ph. R. considering that the city had been negligent at the time of developing the project: The city did not undertake all necessary investigations in the subsoil; consequently, the project awarded to Ph. R. was not executable due to the presence of phone cables.

62

On its side, the city introduced a claim for recourse against the phone operator Belgacom, owner of the phone cables buried at the place where the works had to be executed. The court of appeal of Mons considered that the claim was justified: The city of Courcelles was allowed to claim total reimbursement of the sum to be paid to Ph. R. from the phone operator. The court of appeal of Mons took such a decision considering that the negligence in the development of the project led to damage only for the reason that the phone operator acted with fault following the negligence of the city. The court of appeal was of the opinion that the phone operator committed a fault: Before the beginning of works, the operator was present at a meeting of the presumed owners of cables; it mentioned the presence of a great number of cables in the subsoil, knew that the relocation of its cables would be necessary for the good performance of the planned yard, promised to relocate the cables but did not fully perform its promises.

Belgium

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The city of Courcelles as well as the phone operator did not agree with the decision of the court of appeal for various reasons. The phone operator in particular criticised the part of the decision of the court of appeal relating to the claim for recourse. Therefore, it appealed to the Supreme Court.

63


The Supreme Court quashed the decision of the court of appeal, particularly for causal reasons. From the moment it was established that the city of Courcelles committed a fault by negligently preparing the tender and that the phone operator also committed a fault, it was not possible to hold the phone operator solely liable at the moment of contribution, in the absence of a particular agreement.

64

c) Commentary

Under Belgian tort law, each fault without which the damage would not have happened as it did in concreto is a cause of the whole damage without any other requirement. The Belgian causal approach is a one-stage approach: the butfor test is the sole test to be applied in order to conclude the existence of causation. This rule concerns the relationship between each tortfeasor and the victim. The result of this is that the victim may claim the entire compensation of his/her damage from any of the tortfeasors. Each tortfeasor sued by the victim may be sentenced to compensate the whole damage. In case of concurrent causes, when several persons are declared liable for the same damage towards the victim, the trial judge may not totally discharge one of them at the moment of contribution. If this were the case, such a decision would be in contradiction with the decision according to which each tortfeasor committed a fault which caused the damage.58

65

Applying this rule in the present case, arriving at the conclusion that the decision of the court of appeal was not legally justified was unavoidable. From the moment the judges had considered that two faults had been committed (the first by the city and the second, subsequent to the first, by the phone operator), each tortfeasor had finally to bear a part of the damage. Although the rule may be criticised, one observes that most of the time the apportionment between the tortfeasors is made in accordance with the seriousness of the committed faults.59

66

58

59

Cf. also cass., 25 September 1992, 7780; 5 September 2002, C.00.0239.F-C.01.0017.F; 5 September 2003, C.01.0602.F. J.-L. Fagnart, La responsabilité civile. Chronique de jurisprudence 1985–1995 (1997) 36.

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6. Cour de cassation/Hof van Cassatie, 16 September 2005, C.04.0276.F: Invincible Mistake Committed by an Administrative Authority a) Brief Summary of the Facts

67

As VG had been exercising the function of headmaster (proviseur/provisor) in a secondary school since 1 January 1984, the studies principal (préfet des études/studieprefect) of that school was transferred in August 1988. A new (temporary) principal was designated by Ministerial Decree in August 1988. This new principal (L.) remained in office until 24 December 1988 and was replaced by D. designated by the Ministerial Decree of 15 December 1988 (also for a temporary period).

68

In 1990, the Ministerial Decrees which had designated L. and D. respectively were declared void by the Supreme Administrative Court of Belgium. The declaration of being void was founded on art. 1 of the Royal Decree of 23 November 1970 relating to the duties of headmasters.60 According to this provision, the headmaster is the direct collaborator of the studies principal and replaces him when he is absent. According to the administrative judges, considering that in the present case the principal was absent due to his transfer to another school, VG should have replaced him (at least temporarily, that is to say until the final nomination of the new principal).

69

Considering that the French Community, a Minister of which adopted the illegal decrees, committed a fault, VG decided to sue this federated public body.61 The court of appeal of Brussels awarded his claim. In its decision, the court of appeal said expressly that the claimant (VG) had not to show the existence of a faulty conduct on the part of the public body because this faulty conduct was (automatically) established by the existence of the decisions of the Supreme Administrative Court declaring both ministerial decrees to be void. Consequently, the court of appeal awarded VG damages.62

70

The French Community did not agree with the decision of the court of appeal. According to the French Community, it should have escaped liability because its conduct arose from an invincible mistake (erreur invincible/onoverkomelijke dwaling) consisting in a sudden change to case law. Indeed, until the decision of the Supreme Administrative Court was given, it was admitted in case law – according to the Community – that the temporary replacement of the principal by the headmaster was not compulsory in case of transfer of the studies principal to another school and had principally to be done in cases of illness of the studies principal, or, more generally, in cases of occasional absences. Considering that the new interpretation of the legal provision relating to the replacement was unexpected and unforeseeable (always according to 60 61

62

Belgian official journal of 30 March 1971, 3951. Education is one of the matters allocated to the Belgium’s French Community which is a Belgian federated body. Court of appeal of Brussels, 1 October 2003, JT 2004, 698.

Belgium

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the Community), its liability should not have been engaged. Therefore, the Community appealed to the Supreme Court. It must be added that the argument relating to the invincible mistake had been made by the French Community before the court of appeal. However, the court of appeal pushed aside this argument answering that, at the time the contested Ministerial Decrees were adopted, the case law of the Supreme Administrative Court was actually in a state of fluctuation, however most of the time established in favour of the compulsory replacement by the headmaster not only in cases of illness but also in cases of transfer.

71


The Supreme Court did not quash the decision. Consequently, the French Community did not escape liability.

72

According to the Supreme Court, in certain circumstances, a legal mistake may be considered by the judge as being an invincible mistake providing that it may be deduced from these circumstances that the administrative authority, to which the mistake is ascribed, acted as a reasonable and cautious body. From the moment the court of appeal noticed that the case law of the Supreme Administrative Court was established in a way diverging from the interpretation of the legal provision made by the administration, it can be considered, said the Supreme Court, that the court of appeal was of the opinion that the French Community did not act as a reasonable and cautious administrative authority. The decision to hold the Community liable was therefore legally justified.

73

c) Commentary

It is generally maintained under Belgian tort law that an administrative authority acts with fault when it takes or approves a regulation that does not comply with constitutional or legal rules. In other words, in the field of liability of administrative authorities, not having acted in accordance with superior rules would be sufficient to establish the existence of a tortious conduct: Illegality (illégalité/onwettelijkheid) would imply unlawfulness (illicéité/onrechtmatigheid).63 This rule has however to be qualified on two points.

74

First of all, the similarity (identity) between illegality and unlawfulness would not constitute an absolute rule but would only apply when the superior rule imposes a well-defined conduct. Already suggested by some authors,64 this point of view should have been adopted by the Supreme Court in 2004.65 This

75

63

64

65

R.O. Dalcq, Unité ou dualité des notions de faute et d’illégalité, RCJB 1984, 30; B. Dubuisson, Faute, illégalité et erreur d’interprétation en droit de la responsabilité civile, RCJB 2001, 47. I. Opdebeek, Rechtsbescherming tegen het stilzitten van het bestuur (1992) 22 ff.; K. Stangherlin, A la rescousse de l’article 1382 du Code civil. A propos d’une question préjudicielle à la Cour d’arbitrage, RGDC/TBBR 2003, 612 ff. Cass., 25 October 2004, S.03.0072.F. The facts of this decision are detailed in the previous Yearbook (I.C. Durant, Belgium, in: H. Koziol/B.C. Steininger (eds.), European Tort Law 2004 (2005) 189). Cf. also D. De Roy, La jurisprudence de la Cour de cassation en matière de responsabilité civile des autorités administratives: revirement ou affinement?, JLMB 2005, 642 ff.

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point is not treated in the commented case and will therefore not be dealt with in detail here.

76

Secondly, in accordance with the case law of the Supreme Court,66 it is unanimously accepted that the liability of the administrative authority may not be engaged in case of invincible mistake.67 Concerning this cause of exemption, the commented case gives the following indication: A mistake may be considered as being invincible providing that the administrative authority acted as a reasonable and cautious body. Had the administration been reasonable and cautious, then a mistake in the interpretation of a superior rule should be regarded as invincible. It results from the case law that the adoption of the common majority interpretation is normally regarded as being the cautious and reasonable conduct.68 7. Cour de cassation/Hof van Cassatie, 12 October 2005, P.05.0262.F: Causal Uncertainty and Loss of a Chance a) Brief Summary of the Facts

77

Following a fight, E.B. died. His heirs sued several persons reproaching them for having caused the death of E.B. by omitting to help him when they knew or should have known that this latter was in great danger. The court of appeal of Liège considered that it was not shown that a quicker intervention by a doctor would have saved the victim from death. Therefore the court of appeal decided (i) that it was not established that the faulty conduct of the defendants necessarily and certainly caused the death of E.B. and (ii) that the damage they have to compensate consisted consequently of the victim’s loss of a chance to have survived. The court of appeal valuated the lost chance to one third of the (real) occurred damage (which was the consequences of the death).

78

Due to causal reasons, the defendants did not agree with the decision of the court of appeal and appealed to the Supreme Court. b) Judgment of the Court

79

The Supreme Court ruled that the claimant has to prove the existence of a causal link between the faulty conduct and the damage such as it happened and that the existence of causation is established by application of the but-for test. As a consequence of this principle, a claimant will not be successful and will not obtain any damages to compensate the concrete damage which occurred if the judge decides that uncertainty remains concerning causation. Considering that in the present case causation between the omission in coming to the aid of E.B. and the 66 67

68

Cass., 13 May 1982, Pas 1982, I, 1080. Cf. also recently cass., 23 June 2005, C.04.0160.F. On the notion of invincible mistake, cf. cass., 18 January 1999, F.98.0084.F; 25 October 1999, S.98.0112.N; 24 May 2002, F.01.0065.F. Vandenberghe (fn. 42) 13.

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so-called suffered damage (i.e. the consequences of the death) was not shown, the Supreme Court quashed the decision of the court of appeal. c) Commentary

One will remember that on 1 April 2004, the Belgian Supreme Court delivered a judgment that created some controversy among Belgian lawyers. This decision was reported in the previous Yearbook.69 It apparently resulted from the decision of 1 April 2004 that it was no longer possible to use the concept of loss of a chance for masking causal uncertainty. The commented decision sounds like a confirmation of this conclusion, although the Supreme Court, as in the case from 2004, did not say expressly that the notion of loss of a chance must be avoided. It would result from the new case law that more often than in the past, judges will have to decide that there is legal causation although natural causation is not established with certainty.

80

Nevertheless, what could remain problematic is that it would still be allowed to use the concept of loss of a chance when the judge is of the opinion that causation is established with certainty but that the damage is a lost chance.70 Indeed, in a decision dated 23 February 2005, the Supreme Court did not quash the judgment that had used the notion of loss of a chance for qualifying the damage resulting from a faulty conduct.71 In that case, without the fraudulent organization of their insolvency by the defendants, the claimant would have had a chance to recover the amount of an outstanding debt.

81

It follows from the above that one may deplore the new case law which should oblige judges in situations of causal uncertainty to take a clear cut decision concerning causation,72 removing the opportunity to prefer an approach based on proportional liability,73 although this approach would nevertheless remain acceptable in certain situations in which there is also uncertainty (the difficulty being to determine which are precisely those situations). In any case, the new case law does not yet seem to have been adopted by trial judges.74

82

69 70

71 72

73

74

Durant (fn. 65) 178 ff. For instance, a lawyer was negligent as a result of which the legal proceedings were not introduced on time. Therefore, his client lost a chance to obtain a legal decision in his favour. Cass., 23 February 2005, P.04.1517.F. There is causation and the damage is totally compensated; there is no causation and the victim does not receive anything. In the case Bergui, which led to the decision of the Supreme Court of 1 April 2004, the court of appeal of Mons finally decided that causation was established between the faulty conduct of the police and the public prosecutor and the aggression of the victim (court of appeal of Mons, 10 October 2005, JT 2005, 717). J. Spier, Causation, in: European Group on Tort Law, Principles of European Tort Law. Text and Commentary (2005) 57. Cf. for instance: court of appeal of Liège, 13 May 2004, RGAR 2005, 14025 (chance to avoid bankruptcy); court of appeal of Antwerp, 7 June 2004, Revue de droit de la santé/Tijdschrift voor gezondheidsrecht (Rev Dr Santé/T Gez) 2005–2006, 138 (the patient lost a chance to survive longer); court of appeal of Brussels, 22 June 2004, RGAR 2005, 14026 (lack of information); Rb. Ghent, 1 December 2004, Nieuw Juridisch Weekblad (NjW) 2005, 172 (absence of monitor on the verge of a swimming pool); civ. Dinant, 27 June 2005, RGDC/TBBR 2005, 491 (medical malpractice).

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8. Cour d’appel de Bruxelles/Hof van Beroep van Brussel (Court of Appeal of Brussels), 28 June 2005, R.G./A.R. 2000/3035: Freedom of the Members of the Parliament and Liability of the State75 a) Brief Summary of the Facts

83

On 24 June 1998, the non-profit-making organization Eglise universelle du Royaume de Dieu/Universele Kerk van het Rijk God (below “the Church”) and three natural persons (its president, its secretary and its treasurer) sued the Belgian State through the Chambre des représentants/Kamer van volksvertegenwoordigers, one of two Belgian federal legislative assemblies, represented by its president, before the court of first instance of Brussels with the aim of obtaining damages. They considered they had suffered damage caused by a faulty conduct of the parliamentary commission responsible for an investigation into sects. More precisely, they criticized the use of some words and sentences in the final written report established by the commission and (partially) voted by the legislative assembly. In the first instance, judges considered that the judicial suit was inadmissible. Therefore, the claimants appealed to the court of appeal. b) Judgment of the Court

84

Before the court of appeal, the claimants were successful. According to the court of appeal, the Belgian State breached the precautionary duty in writing the report. Indeed, one can read in it that the Church is apparently a criminal organization, the sole aim of which is its enrichment, that its activities are assimilated to swindling, that sexual scandals have happened within the organization, etc. Noting that the report was established by a parliamentary commission that holds powers similar to the powers of an examining magistrate, that the authors of the report alleged they had adopted an objective point of view and that the report was intended to be widely read by the public, the court of appeal considered that the parliamentary commission showed great negligence and great tactlessness and that this attitude constituted a tortious fault of the State: the State, embodied by the parliamentary commission, did not take into consideration the usual caution in writing public reports.

85

Having considered that the State committed a fault, the court of appeal was of the opinion that the best way to compensate the damage resulting from the fault was to have its judgment partially published in newspapers. Indeed, according to the court of appeal, the report exposes the Church to public contempt. The certain and non-pecuniary damage caused by the fault was described by the court of appeal as being an attack against the social image of an association.

75

JLMB, 2005, 1576, cmt. M. Uyttendaele and cmt. J. Wildemeersch; JT 2005, cmt. M.-Fr. Rigaux; RGDC/TBBR 2005, 596, cmt. H. Vuye; Chroniques de droit public/Publiekrechtelijke Kronieken (CDPK) 2005, 655, cmt. K. Muylle.

Belgium

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c) Commentary

The decision of the court of appeal was profusely commented upon in several newspapers as well as in legal journals. Some authors approved the decision founded on art. 1382 of the Civil Code; others disapproved of it.

86

Briefly, it can be said that the authors who disapproved of the decision essentially based their criticism on art. 58 of the Constitution, exactly as the defendant (i.e. the Belgian State) did before the court of appeal. According to this art. 58, none of the natural persons forming the legislative assemblies may be sued on the occasion of opinions delivered or votes formulated in their functions. This art. 58 aims to insure each member of the Parliament a total freedom of speech and expression in the exercise of his/her function.76 This freedom, said an older public prosecutor, protects the national representation against the government, against the judicial power, against any of the authorities (other than the legislative assemblies) and against the particulars.77

87

The court of appeal did (obviously) not deny the existence of this total freedom which results from the Constitution but considered that the immunity of the natural members of Parliament did not constitute any obstacle to sue the State. According to the court of appeal, the liability of the Belgian State is not excluded because the liability of one of its bodies (i.e. the members of the Parliamentary commission) may not be invoked.

88

According to Prof. Dr. M. Uyttendaele, this interpretation of art. 58 of the Constitution, which is new, is not admissible.78 This author is of the opinion that art. 58 creates a chain of exemptions of liability: The members of Parliament, then the parliamentary commissions and, finally, the Parliament itself are exempted from liability. This may be explained by the fact that the members of Parliament would no longer be totally free if they knew that the liability of third parties (such as the State) could be engaged owing to their opinion or to their vote. This author realises that this point of view could lead in certain circumstances to a lack of liability but this should be accepted for the benefit of the Parliament.79 Nevertheless, the author would be in favour of pushing aside the special protection provided by art. 58 when the freedom of speech and expression is used to put in jeopardy the foundations of the democracy that are precisely protected by the provision.80

89

76

77 78

79 80

Fr. Delpérée/S. Depré, Le système constitutionnel de la Belgique (2000) 206; Fr. Delpérée, Le droit constitutionnel de la Belgique (2000) 529; M. Verdussen, La Constitution belge. Lignes et entrelignes (2004) 172. R. Hayoit de Termicourt, L’immunité parlementaire, JT 1955, 613. M. Uyttendaele, Réflexions à froid sur un petit coup d’Etat jurisprudentiel, JLMB 2005, 1591. Cf. also K. Muylle, Luidt artikel 1382 B.W. de doodsklok over artikel 58 G.W.?, CDPK 2005, 655 ff. Ibid., 1594. Ibid., 1594.

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90

Taking the opposite view, some authors approved the decision of the court of appeal. In summarizing all their points of view, one could say that these authors consider that the organ theory (théorie de l’organe/orgaantheorie) would apply. One recalls that an organ (organe/orgaan) is the natural person through which the legal person (private such as a company or public like the State) acts; the organ acts as if it were the legal person: a legal person may not act otherwise than through a natural person who is called the organ. Therefore, when an organ acted with fault, the liability of the legal person may be incurred directly on the basis of art. 1382 of the Civil Code. There is no question of vicarious liability: the acts performed by the natural person are regarded as having been performed by the legal person itself.

91

Three authors at least consider that the decision of 28 June 2005 is justified under the organ theory. Prof. Dr. H. Vuye, for instance, who had already pleaded for the application of this theory in 1997,81 wrote once again that the theory may apply to the State for acts performed by the members of Parliament.82 It means concretely, according to this author, that under the organ theory the Belgian State may incur liability for faulty conduct of members of Parliament while these members personally do not incur any liability by application of art. 58 of the Constitution.83

92

By way of short conclusion, one may note that mathematically the authors who approved the decision of the court of appeal seem to form the majority. Nevertheless, one should not lose sight of the fact that the Belgian State, represented by the President of the Chambre des Représentants/Kamer van volksvertegenwoordigers, did not agree with the decision of the court of appeal and appealed to the Supreme Court. The case is therefore not really closed …84

C. LITERATURE85 1. M. Debaene/P. Soens (eds.), Aansprakelijkheidsrecht. Actuele tendensen (Ghent, Larcier, 2005) 246 pp.

93

This book contains reports on various topics in tort law. It was published on the occasion of a symposium organized by the Vlaams Pleitgenootschap – Balie van Brussel, on 25 March 2005. 81

82

83

84

85

H. Vuye, Les irresponsabilités parlementaire et ministérielle: les articles 58, 101, alinéa 2, 120 et 124 de la Constitution, CDPK 1997, 5 ff. H. Vuye, Overheidsaansprakelijkheid voor het doen en laten van parlementaire onderzoekscommissies … waarom niet en waarom wel?, RGDC/TBBR 2005, 505. Ibid., 506. Apparently also in favour of the organ theory: M.-Fr. Rigaux, La responsabilité de l’Etat pour une faute commise par une commission d’enquête parlementaire, JT 2005, 601; J. Wildemeersch, Quand le pouvoir judiciaire se mêle du pouvoir législatif …, JLMB 2005, 1608. Indeed, on 1 June 2006, the Supreme Court quashed the decision of the court of appeal of Brussels. This decision (C.05.0494.N) will be commented on in the next Yearbook. Obviously, a selection …

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First of all, Prof. Dr. H. Vuye recalls the fundamental rules concerning the doctrine of nuisance or equilibrium theory (théorie des troubles de voisinage/ burenhinderleer). The contribution constitutes an interesting synthesis of this topic, which is at the boundaries of the law of obligations, property law and tort law. Particular attention is paid to cases in which the origin of the nuisance remains uncertain and to those in which the nuisance is attributable to public bodies.

94

The second contribution is devoted to product liability and is the work of J. Verlinden. The author analyses not only the Belgian Act of 25 February 1991 which implements the Directive of 25 July 1985, but also the principal facets of other legal instruments that could be used by the victim: the rules relating to the safety of products, the rules governing sale contracts, and in particular the new rules concerning guarantees,86 tort law and criminal law.

95

L. Wynant and P. Soens wrote a contribution on the liability of directors. They started from an interesting point of view, making a useful distinction between the liability of directors towards their company and their liability towards third parties.

96

The contribution of Prof. Dr. H. Vandenberghe concerns the liability of mass media. According to the author, the abundant and increasing case law shows the importance of freedom of speech in a democracy.

97

Further, Prof. Dr. L. Cornelis demonstrates the close relation between damage and causation. Starting from the actual definition of damage in Belgian tort law and from the method used by the courts for verifying the existence of causation, the author comes to the conclusion that tortious conduct and damage are the sole useful conditions for establishing liability. He also pays special attention to the notion of interruption of causation and to some aspects of damage (notably the fees of legal counsels).

98

Finally, Prof. Dr. A. Van Oevelen devotes his contribution to recent case law relating to damage and to compensation. He approves the recent decisions of the Supreme Court relating to the performance of contractual or legal obligations after the occurrence of damage, he examines the role of trial judges in the assessment of damage and regrets the lack of certainty concerning the taking into account of events subsequent to the tortious conduct for estimating the damage.

99

86

Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of the consumer goods and associated guarantees. Belgium complied with this Directive by adopting a new Act of 1 September 2004 (Loi du 1er septembre 2004 relative à la protection des consommateurs en cas de vente de biens de consommation/Wet van 1 september 2004 betreffende de bescherming van de consumenten bij verkoop van consumptiegoederen), published in the Belgian official journal of 21 September 2004.

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2. E. Dirix/A. Van Oevelen (eds.), Bijzondere overeenkomsten. Artikelsgewijze commentaar met overzicht van rechtspraak en rechtsleer (Mechelen, Kluwer)

100

Recently, a part devoted to torts has been added to the treatise on contracts edited by Prof. Dr. E. Dirix and Prof. Dr. A. Van Oevelen. At the present time, this part contains six contributions: Prof. Dr. A. Carette deals with environmental liability,87 M. and P. Debaene deal with liability for one’s conduct88 and with liability of public authorities,89 Prof. Dr. P. De Tavernier with liability for others,90 F. Swennen with liability of and for demented persons91 and Prof. Dr. Th. Vansweevelt of liability with damage caused by animals.92 Besides, the treatise contains a chapter written by Prof. Dr. A. De Boeck on pre-contractual liability.93 3. J.-L. Fagnart (ed.), Responsabilités. Traité théorique et pratique (Brussels, Kluwer)

101

The treatise on torts edited by Prof. Dr. J.-L. Fagnart became richer by four new manuals in 2005: Chr. Gilles deals with the legal proceedings,94 B. Goemans with the liability of means of transport,95 I. Lutte with technology product liability96 and C. Tubeuf with international jurisdiction.97 4. H. Vandenberghe (ed.), Overheidsaansprakelijkheid (Brugge, Die Keure 2005) 295 pp.

102

This book contains four contributions on the liability of authorities, each of them being orientated to a specific power.

103

The contribution of Prof. Dr. H. Vandenberghe concerns the executive power, from which it is required that it acts carefully and towards which the necessity to act in the presence of a danger or a risk would be determined by case law with severity.

104

Prof. Dr. H. Vuye deals with the liability of the State for the damage caused by the legislative power, in particular the liability of the State for breach of Community law. On this occasion European case law is systematically and deeply examined (starting from the famous Francovich decision). Having analyzed 87 88 89 90 91 92 93 94

95 96 97

A. Carette, Milieuaansprakelijkheid (2005) 69 pp. M. Debaene/P. Debaene, De aansprakelijkheid voor eigen foutieve daad (2004) 52 pp. M. Debaene/P. Debaene, Overheidsaansprakelijkheid (2005) 116 pp. P. De Tavernier, Aansprakelijkheid voor anderen (ouders, aanstellers, …) (2005) 66 pp. F. Swennen, Aansprakelijkheid van en voor geestesgestoorden (2003) 75 pp. Th. Vansweevelt, Aansprakelijkheid voor schade veroorzaakt door dieren (2003) 36 pp. A. De Boeck, De precontractuele aansprakelijkheid (2004) 29 pp. Chr. Gilles, Les actions judiciaires en matière de responsabilité et d’assurances, 2 volumes (50 pp. and 42 pp.). B. Goemans, La responsabilité du fait des engins de transport (45 pp.). I. Lutte, La responsabilité du fait des produits de la technologie (57 pp.). C. Tubeuf, La compétence internationale, 2 volumes (36 pp. and 24 pp.).

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the European case law, the author compares the criteria formulated by the European Court of Justice and those used by the Belgian Supreme Court in the field of State liability and particularly lays stress on the European requirement of “sufficiently serious breach of law” which is unknown under Belgian tort law. The notions of damage and causation are not forgotten. In the last part of his contribution, Prof. Dr. H. Vuye examines the liability of the Belgian legislative power for imperfect acts as well as in cases of breach of a higher Belgian norm (for instance the Constitution) and cases of breaches of the general duty of care. The third contribution is the work of Prof. Dr. A. Van Oevelen. He examines the liability of the State for faulty conduct of judges considering Belgian and European case law (starting notably from the Köbler decision) from a comparative perspective.

105

Finally, L. Wynant examines the liability of the financial authorities in charge of the inspection of markets. Two situations are analyzed: The first is the situation in which the financial authority adopts a faulty conduct in the inspection itself; the second is the situation in which a European norm has to be transposed into the national legislation.

106

5. A. Wijffels (ed.), Le Code civil entre ius commune et droit privé européen (Brussels, Bruylant 2005) 666 pp. This book contains various studies elaborated on the occasion of the bicentenary of the Civil Code (1804–2004). The contributions aim notably to answer the question whether the Civil Code still constitutes the civil “common law”. Two of the studies concern tort law.

107

The first contribution is by Prof. Dr. B. Dubuisson which concludes that the notion of fault still holds a major place in Belgian tort law although an erasing of it is observed in certain circumstances (e.g. traffic accidents), as a result of which tort law has lost some coherence.98

108

The second contribution by Prof. Dr. G. Schamps examines the opportunity to consider the precautionary principle as a new ground of civil liability. She concludes that this view would lead to undesirable effects. She would prefer the adoption of a general principal founded on a specific danger that would give birth to risk liability.99

109

98

99

B. Dubuisson, La responsabilité aquilienne deux cents ans après l’adoption du Code civil, 471 ff. G. Schamps, Le principe de précaution justifie-t-il une nouvelle responsabilité en droit civil belge? D’autres alternatives existent …, 517 ff. Of the same author, in English: The Precautionary Principle versus a General Principle for Compensation of Victims of Dangerous Activities in Belgian Law, in: H. Koziol/B.C. Steininger (eds.), European Tort Law 2004 (2005) 121 ff.

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6. M. Anthonis et al., Aansprakelijkheid van de gemeente. Burgerrechtelijke aansprakelijkheid van de gemeente en haar personeel (Brugge, Vandenbroele 2005) 169 pp.

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This book contains contributions concerning the liability of the cities and of their personnel and officials. The contributions are by Prof. Dr. A. Van Oevelen (on liability of the cities and liability of the members of the personnel of the city), H. Sebreghts (on breach of the general duty of care), M. Anthonis and E. Deplanter (on the liability of certain officials) and G. Vandenwyngaert (on insurance). 7. I. Claeys, De verjaring van de burgerlijke rechtsvordering na de burgerlijke verjaringswet, in: F. Verbruggen/R. Verstraeten (eds.), De verjaring van de strafvordering voor rechtspractici (Leuven, Universitaire Pers Leuven 2005) 157 ff.

111

The contribution of Prof. Dr. I. Claeys is published in a book about the prescription (limitation) of criminal proceedings but is especially devoted to the prescription (limitation) of the civil action in law. 8. B. Dubuisson, De la légèreté de la faute au poids du hazard. Réflexions sur l’évolution du droit de la responsabilité civile, RGAR 2005, 14009

112

In this highly interesting contribution, published on the occasion of the ceremony organized by the Chambre des représentants/Kamer van volksvertegenwoordigers, one of the two Belgian federal legislative assemblies, on the occasion of the bicentenary of the Civil Code, Prof. Dr. B. Dubuisson passes judgment on the provisions of the Civil Code which are devoted to tort law. He is of the opinion that these provisions have to remain the common core of tort law, eventually with some adaptations (in particular concerning liability for others and liability for things). On the other hand, the author observes the increasing number of specific provisions relating to liability outside the Civil Code and would be in favour of a better organization of these numerous systems. He also considers the emergence of a “law of bodily accidents” and the role that could be attributed in this context to private insurers and to the State. 9. R. Marchetti, Quelques considérations à l’égard de la notion de vice et de l’exigence causale dans le cadre de la responsabilité du fait des choses vicieuses, RGDC/TBBR 2005, 336 ff.

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This contribution of R. Marchetti is a comment of a decision delivered by the Belgian Supreme Court on 30 September 2004.100 The decision that concerns the liability of the guardian of a defective thing is the occasion for the author to consider what is a defective thing and to plead for a functional conception of the abnormal characteristic. He also pays some attention to the existence of causation between this characteristic and the damage and to external causes which may be invoked by the guardian in order to be exempt from liability. 100

Cass., 30 September 2004, C.03.0376.F.

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10. M. Matagne/M. Vanderweckene, Considérations relatives au projet de guide-barème européen, RGAR 2005, 13960 The authors propose some remarks concerning the European project of assessment of bodily damage. They particularly fear that the adoption of a tariff would banish any form of differentiation among the victims and therefore would be in contradiction with the idea according to which the damage must be evaluated concretely. The systematisation at a European level would seem hardly satisfactory, at least if the consequence of it would be the elimination of a made-to-measure evaluation.

114

11. D. Philippe/M. Gouden/L. Halbrecq, Inédits de responsabilité civile (XI), JLMB 2005, 1799 ff. From time to time authors gather abstracts of (not yet published) decisions in tort law and present them so that legal practitioners are informed of the state of case law.

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12. P. Van Ommeslaghe, La responsabilité du banquier, de ses administrateurs et de son personnel en matière d’obligations fiscales, in: M. Tison/J. Schuermans/G. T’Jonck (eds.), La banque et le fisc (Brussels, Bruylant 2004) 203 ff. In this contribution, the author examines the different types of liability of banks: contractual, non-contractual, criminal and specific liability.

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13. Th. Vansweevelt, De wet experimenten op de menselijke persoon: objectieve aansprakelijkheid en verzekering, Revue de droit de la santé/Tijdschrift voor gezondheidsrecht 2005–2006, 22 ff. In this contribution, the author carries out an examination of the Act of 7 May 2004 relating to human experiments, that implements the Directive 2001/20/ EC on clinical trials.101 The author examines more precisely the strict liability that may be incurred by the sponsor of the experiment and the compulsory liability insurance he must take out.

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14. A. Vijverman, Medische experimenten op mensen. De wet van 7 mei 2004 en haar toepassing in de praktijk: de krachtlijnen en het toepassingsgebied van de wet, Revue de droit de la santé/Tijdschrift voor gezondheidsrecht 2005–2006, 2 ff. In this contribution, the author carries out an examination of the same Act of 7 May 2004 relating to human experiments. The author focuses on two points: the strengths of the Act and its scope.

101

This Act is briefly reported in the Yearbook 2004 (Durant (fn. 65), 166 ff.).

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III. Czech Republic Jiří Hrádek

A. LEGISLATION 1. Draft of the New Civil Code

1

The most important event concerning legislation in the Czech law is the publication of the official draft of the Civil Code, which shall replace the current Civil Code dated 1964. As mentioned in Yearbook 20021, the first proposals for the text had already been introduced by its authors, Prof. Karel Eliáš and Michaela Zuklínová, in 2002. Finally, in April 2005, the Ministry of Justice published on its website the first draft of the Civil Code, arranged in sections. This draft should now become subject to public discussion. For instance, Charles University’s Faculty of Law commenced in January 2006 a series of conferences which should provide for discussion on the new Civil Code and its approaches.

2

Due to the short existence of the draft of the new Civil Code and the less than lively discussion about the law of delicts, the following description of the relevant provisions is based on the official legal reasoning of the draft, as it is cited by the authors, and, further, on the speech of Prof. Eliáš published in the collection of speeches of the international conference at Charles University concerning the development of the law of delict liability in the Czech Republic, Austria and Europe issued in 2005.2 General Introduction

3

The provisions concerning liability for damage are systematically arranged at the end of the new Civil Code, namely into sec. 2400 ff. In addition, the proposed legislation should also now include some cases of liability for damage 1

2

J. Hrádek, Czech Republic, in: H. Koziol/B.C. Steininger (eds.), European Tort Law (2002) 123 ff. L. Tichý, Vývoj práva deliktní odpovědnosti za škodu v České republice, Rakousku a Evropě (The Development of Law of Delictual Liability for Damage in the Czech Republic, Austria and Europe) (2005).

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which are currently regulated in other laws, in particular product liability set forth in Act No. 59/1998 Coll.3, or compensation for damage caused by unfair competition, which is subject to current legislation of Act No. 513/1991 Coll., of the Commercial Code. The draft is based on the idea that legislation of the liability for damage should be reduced to only one basic law. However, the latest draft of the new Labour Code (Act No. 262/2006 Coll.) aspires to become again crucial legislation for labour law, and it is very likely that it will succeed in defending its large autonomy with independent regulation of the liability issue, so that once again at least two rather autonomous regulations will exist. On the other hand, the Commercial Code will probably be reduced to the regulation of business entities and cooperatives so that the legislation of the Civil Code concerning liability should be applicable in full.

4

General Principles The draft differentiates between contractual and non-contractual (delictual) liability. In both cases, however, the basic approach is liability based on fault, wherein fault is presumed. This approach represents a great change in contrast to the current Commercial Code, which is strictly based on the objective liability of the liable party.

5

Compensation for damage is based on the concept that proprietary damage shall be compensated, whereas non-material harm shall be subject to compensation only in special cases determined by the law. The general conditions for establishing the duty to compensate damage shall be, however, applicable also for the duty to compensate for non-material harm. Pursuant to the draft, the wrongdoer cannot waive possible liability by means of a unilateral statement which would exclude it; on the other hand, in contrast to the current legislation, the general ban on the waiver of rights which may arise in the future will no longer be contained in the Civil Code, so that parties can exclude liability by mutual arrangement. As such a waiver is not possible according to today’s legislation, this will present a significant change. However, liability for intentional or grossly negligent damage or damage to the natural human rights cannot be waived before its establishment.

6

The draft of the Civil Code is based on the principle of neminem laedere. In this respect it sets out the duty to prevent damage as its main principle, and now, in contrast to the current law, it also explicitly sets out the information duty of the wrongdoer. Anybody who has breached this information duty will be liable for damage that arises in connection with such breach. The duty to actively prevent one’s own property from causing the damage, as well as the regulation of self-defence and extreme emergency, were taken over un-

7

3

Zák. č. 59/1998 Sb., o odpovědnosti za škodu způsobenou vadou výrobku (on Liability for Damage Caused by Defective Products).

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changed from the current Civil Code. The draft, however, tries to elaborate a closer interpretation of the latter concepts.

8

The regulation of the liability for damage is based on the principle that anybody who is at fault for breaching his legal duty shall be obliged to compensate for damage. If the injured party proves certain conditions for the establishment of the wrongdoer’s liability, the fault of the wrongdoer shall be presumed, even if only in the form of negligence.

9

The draft distinguishes between fault in the case of contractual and non-contractual liability. In the case of non-contractual liability, the rebuttable presumption of fault in private relationships is formed in such a way that a person is at negligence if he acts carelessly and without the kind of knowledge and skills typically expected of a person of average abilities. If a certain person shows special knowledge, skills or accuracy, the person is consequently at fault if he does not make use of such qualities. By contrast hereto, in cases of damage caused by a breach of contractual duty, the wrongdoer is required to show that the fulfilment of the duty, which was accepted by contract, was prevented by an extraordinary impediment which could not have been foreseen or impeded through exercising due care and which does not originate in the personal conditions of the wrongdoer.

10

The proposed regulation of contributory fault or the liability of multiple tortfeasors is based on the current legislation. The liability of multiple tortfeasors is joint and several, unless in justified cases the liability qualifies as being joint. However, in the internal relationship the wrongdoers shall always settle according to their individual shares in the fault. Special Cases of Liability

11

The part dealing with special cases of liability starts with the liability of persons who are unable to judge the consequences of their conduct. The proposed regulation is basically compatible with the current one; however, it has been extended to include two important points. First, the injured party is also entitled to compensation for damage in the case of the injured party not proceeding against the wrongdoer due to consideration and discretion (because the wrongdoer is a minor or mentally ill). The second point, which was inspired by many examples of foreign legislation, is the possibility to oblige a wrongdoer incapable of judging the consequences of his actions to compensate for damage in cases which merit special consideration, and when such obligation corresponds with the principles of justice.

12

Further cases of special liability are as follows: liability for persons with dangerous qualities, liability for damage caused by operational activities, damage caused by means of transport, damage caused by an animal, damage caused by a thing and product liability, damage to a received thing, a thing brought in or put aside and finally damage caused by information or counsel.

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Damages Concerning the kinds of damages, the proposed legislation prefers restitution in kind to monetary compensation. Monetary compensation comes into consideration only if the injured party so requests or if restitution in kind is not possible. Therefore, if restitution in kind were possible, it should be the consideration of the injured party to determine the kind of damages, and the court can no longer examine whether the kind of compensation is, in its opinion, reasonable or usual. Non-material harm shall be subject to compensation only if this harm cannot be compensated in another way.

13

Pursuant to the draft, the scope of the recoverable damages shall be limited to damage to property. The scope of such damages shall be determined by the actual damage and lost profit. Non-material harm shall also be recoverable, but only in special cases. Compensation for non-material harm must be granted especially in cases of interference with the personality rights of an individual or a legal entity (in that regard it follows the regulation in the current sec. 11 ff. of the Civil Code) or if it is justified by special circumstances under which the wrongdoer caused damage by an illegal act.

14

All interferences with personality rights, including mental suffering and, similar to the current legislation, damage to health will entail damages which are recoverable for non-material harm. In case of damage to health this means pain, suffering and aggravation of social position, and lump sum compensation for survivors in the case of homicide. From the proprietary elements of the damage to health the following damage shall be compensated: costs of reasonable and useful medical treatment, costs of burial, lost earnings and pension, and compensation for the maintenance of survivors. Explicit reference is also made to the duty to compensate a third party by repeated payments for work of the injured party in the household or enterprise or for harm caused to the liberty of the injured party.

15

The courts shall have the discretionary power to reduce the amount of compensation if the case merits special consideration, but only if the wrongdoer is an individual and he did not act intentionally. The reduction of the payable compensation is also excluded if the damage was caused by a breach of professional care by a person who claims professional performance as a member of a certain occupation.

16

Other Provisions Completely new provisions in the Civil Code include liability for the restriction or abuse of competition. These provisions are partly contained in the current Commercial Code – unfair competition in sec. 44 ff. – and some principles are based on a special Act on the protection of competition,4 which, 4

Zák. č. 143/2001 Sb., o ochraně hospodářské soutěže a o změně některých zákonů (on Protection of Economic Competition and Changes in Some Laws).

17

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however, does not include any provisions of a private law nature. These provisions are amended by provisions on the competition clause, which shall become a general provision.5

18

The draft also contains a new explicit category – quasi-delicts – which was used only by the doctrine. In particular, this category consists of unjust enrichment and contract of agency without mandate, which are more precise in contrast to the current regulation of the Civil Code, and the utilisation of a thing in favour of another (versio in rem), which is completely new. 2. Act No. 59/2005 Coll., Which Changes Act No. 99/1963 Coll., Civil Procedure Code6

19

This Act aims especially to make civil proceedings before courts of first and second instance faster and more efficient. The basic principle is that law restricts the possibility to return a case from the appellate court to the court of first instance. This means that the appellate court should mostly only affirm or amend the previous judgment, but it would be allowed to cancel the judgment only in an exhaustively specified number of cases.

20

However, this Act does not only introduce new trial proceedings, but also sets out some special duties for parties with regard to the damage caused by the commencement of proceedings, especially by interlocutory injunction. The part of the Act which concerns compensation for delicts amended the current Civil Procedure Code in sec. 75 ff. It introduces the duty to pay a security deposit in the case of a petition with issuance of interlocutory injunction and regulates the proceedings concerning the claim of damages.

21

The claimant is obliged to pay a security deposit at the latest on the day of filing the petition for interlocutory injunction. The deposits for securing possible damages caused by his petition amount to CZK 50,000 (€ 1,724) and in commercial matters CZK 100,000 (€ 3,448). If there are more claimants, they are obliged jointly and severally. There are some exemptions from this obligation that take specific interests into account, especially to arrive at the solution to the case as quickly as possible. Typical examples of such exemptions, set out in sec. 75b of the Civil Procedure Code, are interlocutory injunctions in alimony or labour matters, or in cases of damage to health.

22

If the petition with the interlocutory injunction was dismissed by a final and conclusive decision of the court of first instance, or if the proceeding was conclusively discontinued, the security deposit shall be returned. In the case of an order in the interlocutory injunction, the deposit can be paid out to the security

5 6

This provision is inspired by the Italian Codice Civile. Zák. č. 59/2005 Sb., kterým se mění zákon č. 99/1963 Sb., občanský soudní řád, ve znění pozdějších předpisů, a některé další zákony (which Changes Act No. 99/1963 Coll., Civil Procedure Code, as Amended, and Some Other Laws).

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payer only if no action was taken by the other party or such action did not succeed and the court did not grant compensation. If the interlocutory injunction was rescinded by a fact other than that the petition was not settled or the right of the petitioner was not satisfied, the claimant is obliged to compensate everybody who suffered damage due to the interlocutory injunction.

23

The action for compensation for damage and other harm must be filed within 6 months of the discharge or rescission of the interlocutory injunction otherwise it expires. This period cannot be prolonged. The damage shall be compensated from the security deposit; however, if the deposit amount is insufficient, the liability of the claimant remains unchanged.

24

3. Act No. 203/2005 Coll., on the Compensation of Certain Victims of the Occupation of Czechoslovakia by the Military Forces of the Soviet Union, Poland, Hungary and Bulgaria7 The purpose of the Act is to compensate citizens of Czechoslovakia or the Czech Republic who were killed, raped or injured in connection with the stay of occupational military forces of the Soviet Union, Poland, Hungary and Bulgaria in the area of the former Czechoslovakia in the period from 20 August 1968 to 27 June 1991.

25

A person or his legal descendants have a claim for lump sum compensation if the person was killed, raped or injured in the period from 20 August 1968 to 27 June 1991 by occupational military forces of the above-mentioned states, if the person was a citizen of Czechoslovakia or the Czech Republic, the recoverable event happened in Czechoslovakia and the rape or injury has not been compensated on the basis of other laws.

26

The entitled person must be a Czech citizen. The condition for being a Czech citizen is deemed to be fulfilled if citizenship exists on the day the petition for the lump sum compensation is filed. The monetary compensation amounts to CZK 150,000 (€ 5,172) for children and husband/wife of the person who died in direct connection with the occupation and CZK 70,000 (€ 2,414) or CZK 30,000 (€ 1,034) if the petitioner was raped or injured.

27

In order to sufficiently prove the claim, the entitled person must attach to the written petition a medical report or certificate of death. However, witness testimony or other appropriate evidence can substitute such evidence. The Czech Republic bears the costs of compensation in full.

28

7

Zák. č. 203/2005 Sb., o odškodnění některých obětí okupace Československa vojsky Svazu sovětských socialistických republik, Německé demokratické republiky, Polské lidové republiky, Maďarské lidové republiky a Bulharské lidové republiky.

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4. Regulation No. 67/2005 Coll., on Compensation for Loss of Earnings8 and Regulation No. 329/2005 Coll., on the Regulation Concerning Compensation for Loss of Earnings of Soldiers9

29

Compensation for loss of earnings because of the inability to work or disability shall be changed by increasing by 5.4% the average earnings, which is the deciding factor for the computation of the compensation (possibly changed by earlier regulations). This change shall apply only to cases of compensation that arose at the latest by 31 December 2004.

30

The compensation based on sec. 445 and 447 of the Civil Code is always provided in the form of a pecuniary pension. The aim of this provision is that if damage to health occurred in causality with the activity of the wrongdoer, this person shall consequently compensate the difference between the wage of the injured before and after the damage. The authorization of the government based on sec. 447 (3) of the Civil Code should ensure that the standard of living of the injured remains the same, despite the influence of inflation or the general improvement of standards of living.

31

The regulation concerning soldiers has the same purpose. In this case the loss of earnings which arose in the period from 1 December 1999 to 31 December 1999 shall be increased by 25.4%, in 2000 by 19.4%, in 2001 by 14.9%, in 2002 and 2003 by 7.9% and in 2004 by 5.4%. This change shall apply only to cases of compensation that arose at the latest on 31 December 2004. The authorization of the government is based on sec. 62 of Act No. 220/1999 Coll. and sec. 118 of Act No. 221/1999 Coll., both acts regulating the service relationships of soldiers in the Czech army.

8

9

Regulation No. 67/2005 Coll., on the regulation concerning compensation for the loss of earnings after the period of inability to work caused by injury at work or by occupational disease and on the regulation concerning compensation for costs of maintenance of survivors and loss of earnings after the period of inability to work or in the event of disability (regulation on compensation for loss of earnings). Regulation No. 329/2005 Coll., on the regulation concerning compensation for loss of earnings of soldiers (on the regulation concerning compensation for loss of earnings after the period of inability to serve caused by injury at service or by occupational disease of soldiers during the performance of military service or military drill and on the regulation concerning compensation for wages after the period of inability to serve or in the event of disability caused by injury at service or occupational disease of professional soldiers).

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B. CASES 1. Ústavní soud (Constitutional Court) 4 May 2005, Pl. ÚS 16/04, 265/ 2005 Coll.: Constitutional Complaint Against the Compatibility of a Provision of the Czech Civil Code with the Czech Constitution a) Brief Summary of the Facts

The plaintiff claimed compensation from the defendant, a legal entity providing the maintenance of rivers, amounting to CZK 2,000,000 (€ 68,965) based on the death of the plaintiff’s son who died after he slipped into a non-secured area under a weir on the Svratka river in the recreational area Riviera in Brno. He claimed the defendant was at fault due to the fact that it had not secured the relevant area, even though in the past similar events had happened. The plaintiff claimed compensation for the costs of the burial and for the costs of a gravestone, amounting to CZK 13,510 (€ 466). The remaining amount was to compensate the material and non-material harm caused by the death of his son, in particular the emotional harm caused by the suffering in connection with the sudden death of the son, and the further losses based on the reason that the son could have helped in the future in his business or possibly taken care of the plaintiff and his wife and given care and support in case of disease or disability.

32

The court of first instance granted compensation only for the costs of the burial and for the gravestone, the remaining amount was dismissed. It reasoned its decision by the fact that the provision of sec. 442 (1), sec. 448 (1) and sec. 449 (2) of the Civil Code does not allow claims to be granted for compensation for non-material harm which arose under conditions other than those specified in the relevant provisions. The conditions were met only with regard to the claim for compensation of burial costs. Both the appellate court and the Supreme Court confirmed the findings of the court of first instance.

33

In the opinion of the Supreme Court, the claim for compensation for help the dead person might have granted in terms of support and care in the future to the survivors (or possible help in business, in the household, etc.) cannot be construed even under joint application of sec. 448, 449 (2,3) sec. 11 of the Civil Code (under these provisions the individual is entitled to the protection of his personality, especially life, honour, dignity as well as privacy, name and expression) and sec. 13 of the Civil Code (if the satisfaction granted under paragraph 1 seems to be insufficient, especially as the honour of the person or his dignity in society were greatly harmed, the person is entitled to monetary compensation).

34

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35

The Constitutional Court dismissed the complaint against the compatibility of sec. 442 and 448 of the Civil Code with the Czech Constitution. It reasoned its findings as follows:

36

The provision of sec. 442 (1) of the Civil Code is a reporting provision to the chapter “Kind and Scope of Damages”. It sets out that actual damage and lost profit are recoverable. It is a provision which has existed in the Czech legal order for almost 200 years and has practically remained unchanged.

37

Therefore, it can be concluded that the problem established by the plaintiff in his petition for cancellation of the provisions of sec. 442 (1) and sec. 449 (2) of the Civil Code does not consist in the contravention to the Constitution, but in facts that are not explicitly stated in provisions regulating compensation for damage. The core of the complaint of the plaintiff is that in such provisions the regulation of compensation for non-material harm is missing, with the exception of cases exhaustively listed in the laws. The claim for compensation for help the dead person may have given, including support and care of the survivors in the future, cannot be construed even under joint application of sec. 448, 449 (2, 3) and sec. 11 and 13 of the Civil Code, which establish the right to protection of personality rights, and whose main purpose is the protection of the personality of an individual and his integrity as a condition for dignified existence and the free development of the individual.

38

The Constitutional Court considered whether it is possible to interpret the provisions of the Civil Code regulating the compensation for damage in such a way that it would cover also claims for compensation for non-material harm consisting in the loss of a close person but in the end it denied the possibility of such an interpretation. Nevertheless the Court mentioned that a new regulation on compensation for the loss of a close person has been incorporated into sec. 444 (3) of the Civil Code which now grants lump sum compensation. According to the Court, the newest legislation regulates in this provision the kind and the scope of the compensation for this kind of non-material harm. It is so general that it cannot be considered as an exhaustive solution to that issue and therefore it does not exclude the further actions of injured parties for further satisfaction under the provisions concerning the protection of personality rights if the lump sum compensation seems to be insufficient satisfaction for the harm to the personality rights. c) Commentary

39

In this case the plaintiff tried to break through the traditional understanding of damage in the Czech Republic by means of a constitutional complaint against the compatibility with the Czech Constitution. The Czech legal order understands damage as proprietary harm and, consequently, it does not allow compensation for non-material harm based on the general clause for damages.

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Therefore, unless explicitly given in the legislation, non-material harm cannot be compensated. Due to this fact, attempts have been made in the past to change either the legislation or at least its interpretation, and consequently make easier the compensation for non-material harm.

40

The Constitutional Court expressed its opinion already in its findings in 2000 that family life, including relationships among close relatives, must also be considered a part of private life. The death of a close person may therefore, with regard to the close relationships represented by mutual and strong social, moral, cultural and emotional connections, represent very important non-material harm, which can be qualified as harm that reduces honour and dignity in society. With respect to the current legislation, such a claim presents a different claim than a claim for compensation for damage. This case law was amended in 2004 by the above-mentioned Sec. 444(3) of the Civil Code.

41

The Constitutional Court expressed in this respect its need to emphasize that it would be more correct from the legislative point of view to leave the current qualification of damage as proprietary harm. It proposes to extend the definition of damage for any harm to the physical and intellectual integrity of the injured person. The Constitutional Court mentioned, with respect to the qualification of damage, the approach expressed in the Principles of European Tort Law and also in the Austrian amendment to the ABGB.

42

It can be said in conclusion that the Constitutional Court repeated its opinion concerning the protection of personality rights and compensation. This finding also shows a changing tendency in the qualification of damage which might be taken into account in the published draft of the new Civil Code.

43

2. Ústavní soud, 29 September 2005, ÚS 350/03: Protection of Health a) Brief Summary of the Facts

The subject matter of the dispute was the interpretation of the then valid Decree No. 32/1965 Coll., on compensation for pain suffered and aggravation of social position, which was a statutory instrument issued on the basis of sec. 444 (2) of the Civil Code.10 The core of the dispute was especially sec. 7 (3) of the Decree under which, in cases that merit special consideration, the court may reasonably increase the sum to be compensated over the sum contemplated pursuant to the Decree. 10

The Decree is based on the authorization pursuant to Sec. 444 of the Civil Code which presumes a decree which shall specify the amount of compensation for pain suffered and aggravated social position. The system is based on a point evaluation of each accident. For every instance of damage to health, a parallel in the decree can be found and this number of points is subsequently multiplied currently by CZK 120 (€ 4), in accordance with Decree No. 32/1965 by CZK 30 (€ 1), to obtain the sum of compensation. It must be mentioned that such compensation may be increased only in the cases and in a manner set by the Decree so that the sum obtained as a result of the multiplication expresses the final damages precisely enough.

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The court of first instance concluded that the present case merits special consideration and increased the sum of compensation. The court of second instance and the Supreme Court were inclined toward the opposite opinion and dismissed the claim. Their reasoning was that the court is not allowed to compensate the imperfection of the then valid legislation, which assessed 1 point with an amount of CZK 30 (€ 1), and which did not correspond with wage relations, by increasing such recoverable sum pursuant to sec. 7 (3) of the Decree. b) Judgment of the Court

46

A modern unwritten constitutional rule, which in accordance with the current case law has been applied also by the Constitutional Court, is the principle of proportionality. This principle pertains to general legal rules, which, even if not explicitly contained in the legal provisions, have been applied without objection in the entire European legal culture. Thus such an interpretation influences the interpretation of particular legal provisions, i.e. in that case the amount of compensation for damage to health (compensation for aggravation of social position).

47

In the given case the conditions for liability for damage to health were fulfilled because it was proved that the plaintiff lost her healthy kidney as a result of an act by a physician. The Constitutional Court agreed with the plaintiff that the amount of compensation for aggravation of social position amounting to CZK 24,000 (€ 828) is not proportional to the result caused by the physician.

48

In the opinion of the Constitutional Court, it would be difficult to find a better example of a case which merits special consideration pursuant to sec. 7 (3) of the Decree than the irreversible and permanent damage to health, which consequently led to a limitation of the functions of one of the most important organs in the human body – the kidney. The Constitutional Court based its consideration on the following criteria, which should be taken into account in its opinion and which were fulfilled in the given case: • •

•

49

the seriousness of the damage caused, i.e. whether organs of vital importance were harmed or injured; the probability of curing or eliminating the harm caused, i.e. whether the injured party is limited in his way of life as a result of the harm or if the injured party is forced to go to regular check-ups or to undergo further surgery or if he has become dependent on technical equipment as a consequence of the damage to health; the scope of fault of the physician, i.e. how much he deviated from the standards of a typical and ordinary operation.

For deciding on extraordinary cases the common courts have a certain discretionary power, which allows for multiplication of the basic amount. However from the point of view of the protection of constitutionality, it must be taken

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into account that the adjudicated amount must be based on objective and reasonable reasons and that the adjudicated amount (monetary sum) and the damage caused (harm) – destroying of a kidney – must stay in proportion. c) Commentary

Even though this case deals with Decree No. 35/1965 Coll., which is the previous Decree to the current No. 440/2001 Coll., the basic approach in both Decrees is comparable and the findings of the Constitutional Court can be applied also today. The previous Decree granted 1 point in the valuation of damage to health by CZK 30 (€ 1) which, compared to the current CZK 120 (€ 4) was substantially less, and the “borderline” cases were at an extreme disadvantage. The given case was a typical example.

50

Up to now, the common courts have followed the case law of the Supreme Court dated 1992. The Supreme Court ruled in its decision11 that the justification for the increase is to be applied only to exceptional cases when the cultural, sporting or other activities of the injured were at a very high, abnormal, level prior to the injury. However, this was not the case.

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Based on the above-mentioned facts, the Constitutional Court decided on the matter and expressed its opinion, which is capable of changing the current case law. Based on the principle of proportionality, it set out three basic points to be taken into account in the case of damage to health and which should help the court to assess correctly the amount of compensation. These include: the severity of the damage, the probability of remedying the damage, and the scope of fault of the wrongdoer. At the same time the Constitutional Court confirmed the right of the courts to use their discretionary power when assessing the amount of compensation.

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3. Nejvyšší soud České republiky (Supreme Court – NS ČR) 9 December 2004, 25 Cdo 2614/2003: State Liability in the Case of Release from Criminal Charges a) Brief Summary of the Facts

The police charged the plaintiff with murder and battery. Both criminal offences allegedly took place on 6 August 2000 in a football stadium when, after a row, the plaintiff killed one person and seriously injured another. The court of first instance dismissed the charges because the acts the plaintiff had been charged with did not qualify as criminal offences, as he had acted in self-defence. As the plaintiff had appointed a counsel who was entitled to a non-contractual fee amounting to CZK 44,000 (€ 1,517), after his release he asked for compensation for this fee.

11

Supreme Court R 10/1992.

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54

The court examined the asserted claim for compensation for costs incurred due to compulsory defence pursuant to sec. 8 of Act No. 82/1998 Coll., on Liability for Damage Based Either on Misadministration or on Illegal Decisions (State Liability Act)12 and concluded that the plaintiff and his legal counsel had not requested revision of the course of investigation pursuant to sec. 167 of Act No. 141/1961 Coll., the Criminal Procedure Act, and therefore had not used all legal possibilities granted by the criminal proceedings. As a consequence the claim was dismissed.

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The court of second instance affirmed the previous judgment. The court believed that the accusation was not illegal, and the conditions set forth by the State Liability Act for awarding compensation for damage consisting of the costs of legal counsel were not fulfilled because the plaintiff was discharged pursuant to sec. 226 lit. b) of the Criminal Procedure Act, and he was released from criminal charges only when the court decided that the act he was charged with was committed in self-defence pursuant to sec. 13 of Act No. 140/1961 Coll., the Criminal Code. Under this provision an act which fulfils all the elements of a crime is not a crime if conditions for self-defence are met. b) Judgment of the Court

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A claim for compensation for damage caused by the commencement of criminal proceedings, which does not end in a final and conclusive conviction, presents a specific case of state liability pursuant to the State Liability Act. The case law concluded that state liability is legally regulated because all proprietary harm caused by the wrongful or illegal interference of the state with a citizen should be compensated. The Supreme Court concluded, therefore, using systematic and logical interpretation that if, for certain reasons, the charges had been dropped, it would have been necessary to arrive at the conclusion that the citizen had not committed the crime and the proceedings should never have commenced. The claim for damages caused by the commencement of criminal proceedings shall be judged pursuant to sec. 5, 7 and 8 of the State Liability Act and the decisive criterion for the legitimacy of the commencement of the criminal proceedings is the subsequent result of the criminal proceedings.

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In the given case it must therefore be concluded that the plaintiff was accused of a crime that, in accordance with the Criminal Code, was not a crime from the outset. Therefore, the prosecution had commenced proceedings against him for a permitted act, and the conditions for state liability for damage caused to the plaintiff by incurring costs for his compulsory defence are met.

12

Zák. č. 82/1998 Sb., o odpovědnosti za škodu způsobenou při výkonu veřejné moci rozhodnutím nebo nesprávným úředním postupem a o změně zákona České národní rady č. 358/1992 Sb., o notářích a jejich činnosti (notářský řád) (on Liability for Damage Based Either on Misadministration or on Illegal Decisions and on Changes in the Act No. 358/1992 Coll., on Notaries and Their Activity (Notary Order)).

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The charges against the plaintiff were dismissed under sec. 226 lit. b) of the Criminal Procedure Act. This release from charges is not based on criminal incapacity nor are other conditions pursuant to sec. 12 (1 lit. b), 2) of the State Liability Act fulfilled which would also exclude the claim for damages. Therefore, the plaintiff’s claim could be dismissed only in the case of the plaintiff causing the commencement of the criminal prosecution pursuant to sec. 12 (1) lit. a) of the State Liability Act per analogiam.

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The fault of the accused party in the commencement of the proceedings against him pursuant to sec. 12 (1) lit. a) of the State Liability Act means, in general, that the accused, through his faulty action, contributed to the fact that the criminal proceedings had to commence; in other words, his activity was the reason for the commencement of the proceedings against him. The causal connection between the commencement of the proceedings and the fault of the accused should be sought not in his act, which in the opinion of the prosecutor fulfils the elements of the crime which he has been charged with, but in his behaviour before the commencement of or during the proceedings, especially in his position with regard to the prosecuting and adjudicating bodies.

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c) Commentary

The Supreme Court decided on a very current topic, which is the liability of the state, regardless of what the reason for its liability is. Even though there have been acts regulating this issue since 1969, the case law and the interpretation of conditions for state liability are still developing.

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In the given case the Supreme Court clarified the conditions for state liability when an accused person is released from charges based on self-defence. It concluded expressly that in the case of self-defence, the accused is fully entitled to compensation, because the plaintiff was accused of a crime which, in accordance with the Criminal Code, was not a crime from the outset. Therefore, the proceedings against him were commenced for a permitted act, and the conditions for liability of the state for damage caused to the plaintiff by costs which he incurred for his compulsory defence are met.

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4. NS ČR, 19 January 2005, 25 Cdo 762/2004: Compensation for Moral and Emotional Harm Caused by Imprisonment a) Brief Summary of the Facts

The plaintiff was sentenced to six months of imprisonment with one year probation, which was later changed to an unconditional sentence. By a decision of the Supreme Court, this verdict and all verdicts connected herewith were overturned. Earlier, the plaintiff had been convicted of the same crime and sentenced to unconditional imprisonment for eight months, but this verdict was also overturned by a decision of the Supreme Court. However, the plaintiff served both sentences, completing a total of 14 months of imprisonment. After the Supreme Court overturned the verdict, he was compensated by the

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state for imprisonment based on the State Liability Act. He was compensated for all claims with the exception of moral and emotional harm, for which he made a claim in the present proceedings.

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The court examined the matter pursuant to provisions of the Act No. 58/1969 Coll. (“former State Liability Act”), the State Liability Act, provisions of the Civil Code concerning compensation for damage and art. 5 (1) lit. a) and art. 41 of the Convention on the Protection of Rights and Basic Freedoms (Convention) and concluded that if the plaintiff put forward a claim based on a right to compensation under art. 5 (5) of the Convention, he is not entitled to directly rely on this right because Czech law does not provide for such a right, in particular as concerns the former State Liability Act.

64

Neither the Charter of Basic Rights and Freedoms (part of the Czech Constitution) nor the Constitution sets forth that compensation other than damages regulated by the national law should be considered as compensation. The compensation for moral and emotional harm could become subject to consideration only in the case of just satisfaction pursuant to art. 41 of the Convention, however, such satisfaction can only be awarded by the European Court for Human Rights. The court of second instance stated that art. 5 (5) of the Convention does not relate to the plaintiff’s claim because this would mean compensation, i.e. damages, and not compensation for non-material harm (satisfaction); it also refused compensation pursuant to art. 41 of the Convention as it is the exclusive right of the European Court to grant such satisfaction. Under the current case law it is necessary to ensure the effective application of law by a guaranteed means, and the Czech legal order fulfils this. b) Judgment of the Court

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Under the provisions of the Czech Civil Code concerning damages, non-material damages are not recoverable – save for one exception: the compensation for pain suffered and aggravation of social position pursuant to sec. 444 of the Civil Code. The claim for compensation for non-material harm for being convicted of a crime and serving time in prison is not established in the former State Liability Act (nor in the present State Liability Act), which presents a lex specialis to the Civil Code, and it cannot be deduced herefrom that the court could constitute by its decision some other claims than those set forth both in the present or the former State Liability Act.

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As far as the plaintiff’s references to the judgment of the EHRC in the matter T and K v. Greece dated 29.5.1997 is concerned, this decision does not deal with the issue under consideration in the present case. In the case T and K v. Greece the plaintiffs were not compensated for serving time in prison because Greece maintained in their position that the imprisonment had not been illegal. The EHRC granted them, consequently, just satisfaction pursuant to art. 41 of the Convention. In this case, the Czech Republic acknowledged the illegality of having had the plaintiff serve a sentence in prison. The guilty verdict as a result of which the plaintiff had served the sentence was overturned and the

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criminal proceedings were discontinued. Also under the national law the plaintiff was compensated to the fullest extent, i.e. pursuant to art. 5 (5) of the Convention and art. 3 of the Protocol No. 7 to the Convention. c) Commentary

In this case the Supreme Court dealt again with the issue of compensation for non-material harm. The plaintiff reasoned his claim on the provision of the Convention which is directly applicable in the Czech Republic and which grants jurisdiction to the European Court for Human Rights.

67

With regard to the extent of the compensation for the imprisonment, both the present and the former State Liability Act set out conditions for awarding such compensation. The scope of the compensation is, however, set forth in the Civil Code and does not cover satisfaction for non-material harm. According to this legislation, satisfaction for non-material harm is recoverable only in certain cases determined by the law.

68

Therefore, the court dismissed the plaintiff’s petition, reasoning that the claim for compensation for non-material harm for being convicted of a crime and serving time in prison is not authorised by the former State Liability Act, which presents a lex specialis to the Civil Code. Therefore it cannot be deduced herefrom that the court could not base its decision on claims which are not set forth in the Act. The awarding of just satisfaction pursuant to art. 41 of the Convention is then subject to the decision of the European Court which, however, under the constant case law, does not grant satisfaction in cases when national law ensures and enables full compensation.

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5. NS ČR, 22 February 2005, 25 Cdo 1319/2004: Liability of a Mayor a) Brief Summary of the Facts

The defendant held the function of mayor. In a resolution dated 17 August 1999 the town council decided to dismiss E.K. as secretary of the city. The defendant was authorised to perform both the function of mayor and the function of secretary, including the function of the statutory body of the employer. At the same time he was authorised to terminate the labour relationship with E.K. However, the defendant did not ensure the proper delivery of the termination of the labour relationship to E.K. even though he had consulted legal counsel on this matter. Based on this fact, the court decided that the termination had been illegal. The town was obliged to compensate E.K. for trial costs and in the following judgment to pay compensation for lost wages amounting to CZK 210,000 (€ 7,241) incl. 8% interest. In accordance with these judgments, the town paid a total sum of CZK 233,440 (€ 8,050), from which it requested from the defendant the amount of CZK 135,000 (€ 4,655) based on his liability for the damage which occurred. The court concluded that the defendant failed to fulfil his duties as an employer and caused damage to the town. It concluded the defendant’s liability pursuant to provisions of the Labour Code.

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The appellate court overturned the previous judgment. It disagreed with the qualification of the claim pursuant to provisions of the Labour Code as the defendant is not an employee of the plaintiff. With regard to sec. 2 (1) of the Labour Code, under which the Labour Code regulates relations resulting from the execution of a public function if it is expressly stated herein or in special laws, the court concluded that the claim for compensation for damage caused by execution of a public function must be considered in accordance with the Civil Code. No other option is available according to either sec. 206 of the Labour or regulation No. 108/1994 Coll., implementing the Labour Code (the regulation sets forth that natural persons executing public functions are liable for damage to the person for which they acted). However, the liability of the mayor must be considered as “political liability” and as he had consulted a legal counsel regarding all the steps he took, his behaviour cannot be considered as wrongful. b) Judgment of the Court

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The Supreme Court agreed with the appellate court that the mayor’s liability for the damage he caused when executing his function shall be governed by the Civil Code. Whereas the secretary of the town hall is an employee of this office and presents ex lege the statutory body of the employer, the mayor represents the municipality with regard to third persons and acts as statutory body of the employer only if the function of the secretary is not established.

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The mayor was neither an employee of the municipality, nor did he become an employee due to his authorisation to perform the function of secretary. Neither the Labour Code nor other laws set forth that the provisions of the Labour Code should apply to the relationship of the mayor towards the municipality or to claims resulting from the liability for damage caused by execution of the public function.

74

If the town council imposes on the defendant as the mayor of the town the duty to fulfil a certain specific, clearly defined task and the defendant does not fulfil this duty, such failure must be considered as a breach of duty, which is one of the basic conditions for general liability for damage pursuant to sec. 420 of the Civil Code. Under such provision anybody is liable for damage caused by breach of his legal duty. The defendant did not cause a breach of duty in the position of a person authorised to perform the tasks of town hall secretary, performing the function of a statutory body of the employer, but in the position of mayor, which was authorised by the town council.

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The mayor does not possess privileges and immunities that would exempt him from liability for damage caused by him. In the same manner as other natural persons, he must be held liable for his actions and omissions as a result of which a proprietary damage to a third party has arisen. Therefore, the Supreme Court held the mayor liable.

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c) Commentary

The Supreme Court dealt with the issue of whether a mayor shall be held liable pursuant to provisions of the Civil Code or the Labour Code. As the Labour Code includes a clause which specifically sets out the scope of persons subject to the Code, and the mayor of a municipality is neither included under the scope of the Labour Code nor of other regulatory provisions or laws, the liability pursuant to this provision had to be dismissed.

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The most important outcome of the judgment is the confirmation, however, that the mayor does not possess privileges and immunities that would exempt him from liability for damage caused. Therefore a person executing a public function must also be liable for damage resulting from his actions or omissions and is liable pursuant to sec. 420 ff. of the Civil Code, regardless of his position. With regard to public functions, no so-called political liability shall be applied, which was the reasoning of the court of second instance. As a result, the basic principles of acting with due care and prevention must be applied by all persons, regardless of their positions.

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6. NS ČR, 8 September 2005, 25 Cdo 2880/2004: Liability of a Hotel Provider for Parked Cars a) Brief Summary of the Facts

The plaintiff concluded an agreement for accommodation in hotel B, which is run by the defendant. He also paid for parking in an area next to the hotel. In the period between 13 and 15 May 2002 the car was broken into and the car radio and some keys were stolen.

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The court of first instance concluded that the defendant is not liable for such damage pursuant to sec. 433 of the Civil Code13 because he had not offered the plaintiff the possibility to park his car in so-called “hotel parking”. He would be liable for “things brought in” (věci vnesené) only if the parking area were closed in such a manner that the entrance of unauthorised persons would not be possible, e.g. garage or parking spaces located inside the building or fenced area. Nor could liability be concluded in accordance with sec. 435 of the Civil Code14, because the operation of the parking area was not a qualified

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13

14

Sec. 433 (1): A person operating an establishment offering accommodation services shall be liable for damage to things which have been brought onto its premises by or for individuals accommodated there, unless the damage would have occurred in any event. Things brought into rooms reserved for accommodation or into space reserved for placing things there, or things handed over to the operator or one of his employees, shall be considered to be things brought onto the premises. (2) If the operation of some activity usually involves putting things aside, the operator of such an establishment shall be liable to individuals for damage caused to things put in a place designated for that purpose, or in a place where such things are customarily put, unless the damage would have occurred in any event. (3) No one may exonerate himself from liability under subs. (1) and (2) either by a unilateral declaration or by an agreement (Translation: Trade Links). Sec. 435: The operators of garages or similar business shall be liable for damage to means of transport, including their accessories, placed therein under the same statutory provisions which apply to operators offering accommodation services (Translation: Trade Links).

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activity establishing strict liability, i.e. that the parked cars were guarded (socalled “guarded parking”). The court of second instance affirmed the first judgment. b) Judgment of the Court

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If the provider of accommodation offers a guest the possibility to park his car in so-called “hotel parking”, then the liability of the provider for damage pursuant to sec. 433 of the Civil Code is given only in the case when the parking area presents a proximate area, so that the entrance of unauthorised persons is not possible, e.g. garage or parking spaces located inside the building or fenced area outside the building.

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If the provider does not provide a closed parking space for the hotel guests (he offers for instance certain places in the street or freely accessible area in front of the hotel), liability for damage to the guest’s car cannot be established according to the provision of sec. 433 of the Civil Code, but possibly only under sec. 435 of the Civil Code. The provider may namely fulfil the basic conditions for being qualified as the provider of a garage or similar facility with respect to guests if the parking space has the character of such a facility.

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The decisive task is to establish the character of the provided parking area. The provision of sec. 435 of the Civil Code does not place emphasis on the proximity of the parking place and on how the parking area is divided (in contrast to sec. 433 (1) of the Civil Code, it does not use the term “premises”), and therefore it must be concluded that the parking area need not be fenced or otherwise separated. However, for the parking operation to qualify as the operation of another facility of a similar kind, according to sec. 435 of the Civil Code, such activity must be regarded as qualified, i.e. as establishing strict liability when the parked cars are guarded by the operator (guarded parking); the operator offers not only the possibility of parking the car in a certain area, but also undertakes to guard the car for a certain period of time against robbery and damage.

83

The parking provided by the defendant (despite the fact that it was subject to a fee) meets neither the conditions for premises determined for the safe-keeping of possessions of guests according to sec. 433 of the Civil Code, nor is it a garage or similar facility pursuant to sec. 435 of the Civil Code. Based on these facts, the ruling of both courts rejecting the strict liability of the hotel operator for the parked car was correct. c) Commentary

84

The Supreme Court specified more clearly the conditions of liability for parked cars. The liability based on special cases of liability set out in the Civil Code, for instance liability for possessions left in the care of the provider of

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accommodation, presents a wide range of cases which must be determined and considered very precisely. Even though Czech legal literature has acknowledged for many years the possibility of the lease of a parking space without being guarded as being the source of special strict liability, in this case the Supreme Court expressly states what the basic criteria are for distinguishing a guarded parking place from a leased parking area.

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7. NS ČR, 23 June 2005, 25 Cdo 379/2004: State Liability a) Brief Summary of the Facts

A delay in the execution proceedings consisting of an inventory of property of the obliged party caused the plaintiff to be deprived of its rights because the execution became ineffective. The plaintiff lost the possibility to recover the receivable awarded by the court’s compulsory payment order.

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The court concluded that the delay described represents a misadministration pursuant to sec. 13 of the former State Liability Act; however, the conditions for state liability are not met because it was not proved that damage had occurred or that between the establishment of the damage and the misadministration a causal connection can be found. The plaintiff did not suffer actual damage because the value of the property he owned did not decrease. The appellate court affirmed the previous decision.

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Because the former State Liability Act, which contains the regulation of liability for damage caused by the state body, neither defines more precisely the concept of damage nor regulates the kinds of compensation involved, this issue must be resolved pursuant to sec. 442 of the Civil Code. In accordance with this section, the actual damage and the lost profit of the injured party shall be compensated.

88

The nature of the lost profit also includes the material damage represented by the loss of the proprietary benefit which the creditor might have expected under normal circumstances from its debtor in the execution proceedings if the misadministration had not occurred. The creditor lost his proprietary benefit equal to the amount of the receivables awarded by the enforceable judgment, because he had not been satisfied by the execution and his property did not change, which, based on the court proceedings, could have been reasonably expected.

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The circumstance that within the proceedings the plaintiff’s receivables were not satisfied did not itself represent the damage. The damage falls under the former State Liability Act and is recoverable only if the delay in the execution proceedings influences the property owned by the plaintiff, i.e. that the receiv-

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ables to be enforced cannot be satisfied in another way, for instance by other means in the execution proceedings against the same debtor. As this was the situation in the present case, the conclusion that the occurrence of damage as a condition for state liability was not fulfilled, which was reasoned by the fact that the plaintiff had not suffered any actual damage, is not correct. The unsatisfied claim for performance must qualify as lost profit. c) Commentary

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Based on the courts’ delay the execution proceedings against the obliged party as well as the claim of the plaintiff became void. However, in the opinion of the lower courts, no damage to the plaintiff occurred because he still had the possibility to get his money based on other means of compulsory payment, and he did not suffer any actual damage.

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The most important issue is that the Supreme Court acknowledged causality between the damage in the form of lost profit and the delay of the courts in execution proceedings. In this case the plaintiff could theoretically use other means of execution proceedings to get his money back from the debtor or the debtor could pay off all debts voluntarily; however, the Supreme Court qualified the claim as unenforceable based on the factual situation and awarded damages for lost profit. 8. NS ČR, 23 February 2005, 25 Cdo 1016/2004: Causal Connection Between Damage to Forest and Emissions, the Appropriate Evidence a) Brief Summary of the Facts

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Between 1 January 1991 and 31 January 1992 the defendant emitted toxic substances in connection with its business activities which influenced forests and forest soil, and as a result, damage to forests in the Czech Republic occurred. The court of first instance concluded strict liability of the defendant for damaging the forest in accordance with provisions of sec. 10 (2) of Act No. 61/1977 Coll., on Forests15 in connection with provisions of sec. 420a (1, 3) of the Civil Code16. The court considered the causal connection between the emission of the harmful substances and damage to the particular forests of the plaintiff as evidenced, by determining the impact of particular sources of emissions from the defendant’s business. The outcome of the standard Gauss’ mathematical model performed by an expert determined the contribution of particular sources of emissions to the damage caused by emissions to the forests in the property of the plaintiff in 1991. The causal connection was deter15

16

This Act was abolished by the current Act No. 289/1995 Coll., on Forests; however, at the time the damage occurred, the previous Act was in force. Sec. 420a (1): Any person shall be liable for damage which he causes to another person while operating a business; (3) A person shall be released from liability for damage caused only upon providing that such damage was caused either by an unavoidable event not arising from the operation of a certain business (enterprise), or by own conduct of the person injured (Translation: Trade Links).

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mined for the most common substance polluting the air in the given period, i.e. sulphur dioxide. According to the expert’s evaluation, the share of the defendant’s contribution to the damage caused by emissions to the forests in 1991 amounted to CZK 163,000 (€ 5,621). The court of second instance affirmed the previous judgment. b) Judgment of the Court

The method used by the expert based on the diffusion survey and so-called Gauss’ mathematic model for the determination of damage are standard solutions corresponding to the long-term damage to forests by a large number of emission sources, and take into account that the diffusion of harmful substances into the forests is influenced by a number of circumstances. These circumstances influence the intensity and the distribution of the final impact of the harmful substances.

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The everyday impact of emissions on the forests cannot be considered as the event which caused the damage to the forests, but the damage is the result of the repeated emissions which appeared over a certain period of time. Therefore the scope of damage was determined for the period of one year, and later statutory provisions concerning the assessment of compensation for damage to forests contain the same regulation, in particular Decree No. 81/1996 Coll.17 and Decree No. 55/1999 Coll.18 It is obvious from the mentioned point that the described method of assessing the amount of damage must be considered as the most precise method with regard to the current level of scientific knowledge about the impact of emissions and the technical possibilities of its assessment. Such method fulfils the requirements of sec. 442 (1) of the Civil Code concerning the assessment of damage. If there is no other method available to allow an absolutely exact assessment of damage to forests in the particular areas with respect to the particular sources of the pollution, the method based on the diffusion survey and the Gauss’ mathematic model is a fully adequate method for concluding the amount of damage.

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c) Commentary

The importance of this case consists in the confirmation of the methods of assessment of damage caused by emissions of many producers to the forests in the whole of the Czech Republic. It is especially very uncertain which producer was in this particular case liable for the damage to the forests and the contamination of soil, and it is also not clear whether the particular producer caused the alleged part of the damage.

17

18

Vyhláška č. 81/1996 Sb., o způsobu výpočtu výše újmy nebo škody způsobené na produkčních funkcích lesa (on the Assessment of the Harm or Damage Caused to the Production Function of Forests). Vyhláška č. 55/1999 Sb., o způsobu výpočtu výše újmy nebo škody způsobené na lesích (on the Assessment of the Harm or Damage Caused to Forests).

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The Supreme Court acknowledged, however, the methods used, reasoning that if there is no other method available which would allow an absolutely exact assessment of damage to forests in particular areas with respect to the particular sources of the pollution, then the method based on the diffusion survey and Gauss’ mathematic model sufficiently justifies the conclusion as to the amount of damage.

C. LITERATURE 1. L. Tichý, Vývoj práva deliktní odpovědnosti za škodu v České republice, Rakousku a Evropě (2005)19

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This book is not a classical publication monitoring the branch of delictual liability for damage, but a collection of speeches delivered at the international conference at Charles University in Prague, Faculty of Law, which took place in Prague on 5 and 6 June 2004. The conference dealt with the preparation of the new Czech Civil Code in the area of liability for damage, whose draft was introduced a few months before the conference. The conference dealt further with the Austrian reform of liability for damage and the publication of the Principles of European Tort Law prepared by the European Group on Tort Law.

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The contributions of all authors are published in the same form as they were delivered by the participants. The following contributions are published in the collection:

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“Principles of the European Group on Tort Law” and “Problems of Causation” by H. Koziol; “Reform of the Austrian Law of Liability for Damage” and “Compensation of Pure Economic Loss Under the Austrian Proposal of the Reform and Principles of European Tort Law” by E. Karner; “Czech Delict Law in the Light of Development Tendency” and “Compensation for Costs Incurred by Prevention of Damage” by L. Tichý; “Compensation for Damage in the Prepared Bill of the Czech Civil Code” by K. Eliáš; “Claims of Third Parties, Especially Survivors” by P. Vojtek; “Lost Profit, Development of the Legislation and Current Problems Connected with Finding the Limits of the Court’s Decision Making” by B. Petr; “About One Case of the Supreme Court Concerning Preconditions for Liability for Damage” by J. Salač; “Harmful Event, Liability and Insurance” by D. Tříska; “Lost Profit and Limitation of Damages Under the Commercial Code” by J. Bejček; “Damages for Breach of Competition Law” by J. Hladík; “Compensation for Non-material Harm in Slovak Law” by A. Dulak.

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The Development of Law of Delictual Liability for Damage in the Czech Republic, Austria and Europe.

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The book also includes Czech translations of the Principles of European Tort Law published by the European Group on Tort Law and the draft of the Austrian tort law (§ 1292 – § 1318 ABGB).

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2. P. Vojtek, Odpovědnost za škodu při výkonu veřejné moci – komentář (2005) Vojtek introduces his first book which is a commentary on the Act No. 82/ 1998 Coll., on state liability based either on misadministration or on illegal decisions (State Liability Act)20. With regard to his experience in the branch of compensation for damage which he gained within the execution of his position as Supreme Court judge, this book presents a very good source for both legal opinions and the relevant case law.

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In this book, Vojtek follows some older commentaries both on the previous Act No. 58/1969 Coll., which remained effective in the Czech law for almost 30 years and which was very similar to the present one, and on the commentary on the State Liability Act published in the 5th edition of the commentary on the Civil Code. The importance of the book consists especially in the systematic collection of the existing case law relating to state liability and in taking into account the latest trends in the development in the judicature of the Supreme Court.

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The book also contains other laws and decrees relevant to the branch of state liability, including the decision of the Constitutional Court on abolition of sec. 31 (3) of the State Liability Act, which was published in Yearbook 2002.21

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3. J. Šilhán, Smluvní limitace náhrady škody v obchodním právu, Právní rozhledy (PR) 845 ff.22 The Czech Commercial Code contains an autonomous regulation concerning compensation for damage which is governed by its own principles different to the Civil Code. One of the most disputed issues is the limitation of damages based on a contractual arrangement. The Commercial Code prohibits the waiver of claims for damages until the relevant duty is breached. However, this provision is very often subject to discussion.

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The author concludes that the contractual limitation of compensation for damage, including the limitation before the breach of the relevant duty, which may have caused the damage, is basically allowed. The particular amount of the

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20

21

22

Zák. č. 82/1998 Sb., o odpovědnosti za škodu způsobenou při výkonu veřejné moci rozhodnutím nebo nesprávným úředním postupem a o změně zákona České národní rady č. 358/1992 Sb., o notářích a jejich činnosti (notářský řád) (on Liability for Damage Based either on Misadministration or on Illegal Decisions and on Changes in the Act No. 358/1992 Coll., on Notaries and Their Activity (Notary Order)). J. Hrádek, Czech Republic, in: H. Koziol/B.C. Steininger (eds.), European Tort Law (2002) 121 ff. Contractual Limitation of Compensation for Damage in Commercial Law.

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limitation must, however, take into account the principle of proportionality with regard to all circumstances of the case. 4. R. Neruda, Náhrada škody způsobené protisoutěžním jednáním jako způsob soukromého vymáhání antimonopolního práva, PR 2005, 435 ff.23

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The author deals in his article with the issue of the private enforcement of the competition law and its application in legal orders of the US, Europe and of the Czech Republic. The author tries to define private enforcement and to find its place in an effective legal system. After this introduction he analyses its existence and effects in the Czech law, especially with regard to the provisions of commercial law. He deals with both the substantial law and proceedings concerning the enforcement of law.

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The author’s conclusion is that the Czech legal system should adopt the legislation of the US, especially the lump sum compensation and the reversal of the burden of proof. His ideas correspond in many areas with the proposal on private enforcement published by the European Commission in December 2005.

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Compensation for Damage Caused by Anti-competition Acts as a Way of Private Enforcement of the Anti-trust Law.

IV. Denmark Vibe Ulfbeck and Søren Bergenser

A. LEGISLATION No new tort law legislation was introduced in 2005.

1

B. CASES 1. Højesteret (Danish Supreme Court) 13 May 2005, U (Ugeskrift for Retsvæsen, Weekly Law Report) 2005.2416 H (Højesteret, Supreme Court): Liability of Repairer a) Brief Summary of the Facts

In carrying out a repair of roofing felt on a building, the repairer, R, heated the roofing felt with a gas flame. A fire broke out and caused extensive damage to the property. The owner of the building sued R claiming damages.

2


Based on the evidence of the case it had to be assumed that the roof was set on fire by the gas flame, either by the flame penetrating cracks in the layers of roofing felt or by the roofing felt being heated to the extent that it melted or caught fire. Consequently, the question before the court was whether R had acted negligently. A majority of the judges found that this was the case since R – in the opinion of the majority – had failed to comply with fire-prevention instructions issued by the Danish Institute of Fire and Security Technology. Consequently, R was held liable. A minority of the judges found it unclear whether R had failed to comply with the fire-prevention instructions or had otherwise acted negligently and voted for the acquittal of R.

3

c) Commentary

In Danish tort law a high standard of care is required by roofers working with tools that can cause fire. Over the years the judicial decisions in this area of

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the law have shown that although the roofer applies a working method which is common and correct and accepted in general, the roofer cannot be sure to avoid liability since the nature of the work requires specific caution.1 In the past few years the regulations in this area have become more and more detailed. In this case the court looked very thoroughly into the detailed and technical regulation of how to act as a roofer before imposing liability. It is not clear from the case whether R would have been acquitted had he fulfilled all the requirements. In that case, the judgment of the court could be a sign of an introduction of a less harsh line towards roofers. 2. Højesteret, 30 June 2005, U 2005.2949: Liability for Spreading Granulated Material on a Horse Riding Ground a) Brief Summary of the Facts

5

A scrap iron and metal business, B, received cable scrap and converted it into plastic granulate, a waste product. The granulated material was normally used for manufacturing different products such as traffic signs and flooring material. However, one year B agreed with O, the owner of a horse riding ground, to spread granulated material on the riding ground. The arrangement was free of charge for O. Later it turned out that applying granulated material for this purpose required permission from the authorities for environmental reasons. As no such permission existed, O was required to pay for the removal of the granulated material. O sued B claiming reimbursement of his expenses. b) Judgment of the Court

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The Danish Supreme Court found that O as well as B had acted negligently by spreading the granulated material on the horse riding ground without further investigation of the environmental consequences. Consequently, the Supreme Court found that the expenses should be split equally between the two parties. c) Commentary

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This case concerns the area of environmental liability which is an area that in the past few years has become more and more regulated.2 It is also an area of the law where there has been a rise in the number of cases in which large amounts of damages have been awarded. The case shows that the liability is still based on negligence.

1

2

See U (Ugeskrift for Retsvæsen, UfR Weekly Law Report) 1992.287 H, (Højesteret, Supreme Court) U 1984.23 H, U 1971.600 H, U 64.309 H. B. von Eyben/H. Isager, Lærebog i erstatningsret (5th ed. 2003) 185 ff.

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3. Vestre Landsret, 22 December 2004 (Danish Court of Appeal), U 2005.1064 V (vest, west): Strict Liability for Horse a) Brief Summary of the Facts

K owned a horse riding school. A’s horse F was stabled on K’s property. Several other horses were stabled there as well, including K’s horse, G. A helped by taking in the horses at night. There were several paddocks on the property. One evening as A passed through the paddock which G was in, she was pulled over from behind by G. A hereby injured her collar bone. A sued K claiming damages.

8


The court found that the relevant rule was title 6, part 10, art. 2 of the Danish Code of Law of 1683 (“Danske Lov”). According to this rule, the owner of the horse is strictly liable for damage caused by untethered horses. The question was whether a horse which was in a paddock could be considered untethered. The court found that this was the case. It did not matter whether A had been on her way to take F or G into the stable and the fact that the horse owners had an agreement to help and assist each other did not render A a possessor of G. In relation to G, A was therefore a third party who had been injured. There was no assumption of risk, nor any contributory negligence. Consequently, K was considered liable and his insurance company obliged to pay damages pursuant to title 6, part 10, art. 2 of the Danish Code of Law of 1683 to the extent that A’s injuries were to be regarded as a consequence of the accident.

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c) Commentary

According to an old rule from 1683 in Danish law, the owner of horses or other larger animals is liable for any damage caused by the animal on a no-fault liability basis. In order for the owner of the horse to be liable it is a condition that the animal is “untethered”. The case shows that, although a horse is kept in a paddock, it is to be considered untethered.

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4. Højesteret, 25 October 2004, U 2005.320 H: Municipality not Liable for the Rejection of an Application a) Brief Summary of the Facts

In 1996, A, who ran a guest-house, was granted a license to sell alcohol for a period of two years from 1996 to 1998. A applied for an extension of the period but this was rejected by the municipal authority, M, as A on the facts of the case was not considered capable of running the guest-house. A brought the issue of M’s rejection before court and by a ruling of the High Court in September 1999, the decision of M was set aside as invalid due to procedural aspects of M’s handling of the case. A sued M claiming damages for the loss incurred as a result of M’s invalid rejection of granting the permission.

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12

The Supreme Court ruled in favour of M. Thus, although M had acted negligently in setting aside procedural rules, this was found to have had no impact on the result reached by M. The extension would have been denied anyway. Therefore, the negligence of M had caused no loss and M was acquitted. c) Commentary

13

The case illustrates the common problem of proving a causal link between negligence in decisions made by public bodies and a loss on the part of the individual. Thus, although procedural rules had been set aside in the case at hand, damages were rejected since A’s application would have been turned down anyway. 5. Højesteret, 5 November 2004, U 2005.523 H: Municipality not Liable for Prolonged Processing of an Application a) Brief Summary of the Facts

14

In May 1987, C was granted permission by the municipality (M) to erect a windmill on his property. After the windmill had been erected, a neighbour, N, complained. It turned out that the windmill had been placed too close to N’s property. In 1988 it was decided that the case had to be remitted to M for renewed processing. Subsequently, 13 years passed until the position of the windmill was approved of by the authorities (M). During the 13 years C was under so much psychological pressure that he developed what was medically diagnosed as a “chronic strain syndrome”. C sued M claiming damages for loss of the ability to work and compensation for permanent injury. Alternatively, C claimed compensation for a smaller amount to be estimated by the court based on sec. 26 of the Danish Liability Act concerning infringements of another person’s “liberty, peace, honour or person” and on art. 6(1) of the European Convention on Human Rights. b) Judgment of the Court

15

The Danish Supreme Court found that M had acted negligently by prolonging the case. It also found that the chronic strain syndrome had been caused by the fact that C’s case had been pending for 13 years. However, the court did not find that the strain syndrome had been a foreseeable consequence for M. Accordingly, the claim for damages for loss of the ability to work and for permanent injury was rejected. Furthermore the court noted that there was also “no basis” for claiming compensation under § 26 of the Danish Liability Act3 or for claiming compensation for “other non-pecuniary loss”. Consequently, M was acquitted.

3

§ 26 of the Danish Liability Act reads as follows (unauthorized translation): “A person who is liable for a wrongful infringement of another person’s liberty, honour or person must pay compensation”.

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c) Commentary

In relation to the claim for damages for loss of the ability to work and for permanent injury, the decision by the Supreme Court clearly rests on the concept of foreseeability (adequacy). It seems reasonable to assume that developing a chronic strain syndrome is not a typical reaction in such a situation as the case at hand. Therefore it seems understandable that the court rejected C’s claim in this respect. As regards § 26 of the Danish Liability Act, the rule is interpreted quite narrowly in court decisions. It only applies if the person seeking compensation has been humiliated in some way. This is probably the reason why the court found no basis for granting compensation under this rule. As regards the reference to compensation for “other non-pecuniary loss” it is not quite clear what is meant by this. Presumably, the Supreme Court hereby inter alia rejects the application of art. 6, subsection 1 in the European Convention of Human Rights. The Supreme Court does not give any clear reasons for the rejection of the application of the rule.4

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6. Vestre Landsret, 6 January 2005, U 2005.1363 V: Injury due to Use of a Computer Mouse was Industrial Injury a) Brief Summary of the Facts

A was educated as a technical assistant and had been employed by B since 1992. Her work consisted in making drawings on a computer. Consequently, A used a computer mouse daily. Due to an introduction of a new system, A’s work with the computer mouse intensified from around 1997. During the summer of 1997 A started feeling pain in her right arm. During the following year the pain in her arm prevented A from going to work for two periods of time. A returned to work after her second absence in March 1998. It was recommended by an expert from the Danish Working Environment Service that A’s work with the computer be reduced to four hours a week. The employer did not follow this recommendation. Instead, the employer arranged for A to have a new computer and a new computer mouse during the summer of 1998. Nevertheless, in October 1998 A again had to stay home due to illness and this time did not resume work again. In April 1999 A was dismissed due to the need for rationalisation. In 2001 A sued B claiming damages for loss of the ability to work and compensation for permanent injury and pain and suffering.

17


A majority of two judges out of three found that the employer was liable. They found that since the mid-1990s the employer had undoubtedly been aware of the fact that computer work could result in a “mouse injury”. Consequently, by not following the recommendation in March 1997 to reduce A’s computer 4

For a commentary see J. Christoffersen, Det offentliges kompensationsansvar for krænkelser af internationale menneskerettigheder (Public Bodies’ liability for violations of international human rights), UfR 2005B.133 (Ugeskrift for retsvæsen 2005, sektion B, 133, Weekly Law Report, 2005, section B, 133).

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work, the employer had set aside the duty to organize the work in such a way that it could be carried out in a safe way. A minority of the judges voted for the acquittal of the employer on the basis, inter alia, that the employer had accepted that A took breaks during her work to reduce the negative consequences of the computer work. c) Commentary

19

For several years it has been discussed whether the employer’s liability for the personal injury of his employees is based on negligence or is a no-fault liability. Only one Supreme Court decision (U 1989.1108 H) has stated that the liability is a no-fault liability, but later decisions from the Supreme Court have shown that the general rule is still negligence liability which this decision also shows. The employer must, however, provide a high standard of care. Thus, although the employer had been aware of the problem and had taken precautions this was not sufficient. The case probably shows that an employer must meet all recommendations from The Danish Working Environment Service to avoid liability. 7. Vestre Landsret, 4 January 2005, U 2005.1359 V: Injury Caused by Using a Special “Fun Track” for Runners and Walkers in a Wood a) Brief Summary of the Facts

20

A municipality (M) owned a wood and had constructed a special “fun track” for runners and walkers. The track had wooden underlay and some of the joists were intentionally designed to tip up and down. A few of the joists were designed to tip sideways. The track began at a parking lot. Here there was a sign drawing attention in general terms to the peculiarities of the track. One day A and her husband decided to follow the track for the first time. It is not quite clear whether they had seen the sign in advance or not. When they had almost reached the end of the track A stepped on the joists that tipped sideways and was injured. A sued the municipality claiming damages. b) Judgment of the Court

21

A majority of two judges voted for the acquittal of M. The reason for this was that M had warned against the peculiarities of the track albeit in general terms. In addition, the joists which tipped sideways were placed only a few inches above the ground and there was no evidence to the fact that M had set aside any formal rules by making the track. A minority consisting of one judge found that M should be liable since the sign at the parking lot did not warn specifically about the tipping joists and there were also no warning signs on the joists themselves. c) Commentary

22

Since it is not clear whether A had seen the warning sign in advance or not, the court decides the case without making reference to this aspect. Consequently,

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it is not explored to what extent it could be said that A has assumed a risk by voluntarily deciding to try the track. The court applies a negligence standard in deciding whether M is liable. As a general rule the organizer of special events is judged by a strict negligence standard. Nevertheless, the majority of judges voted for the acquittal of M. The evaluation of M seems to be quite mild. It seems doubtful whether a viable explanation for this could be the fact that M is a public body. 8. Danish Court of Appeal, 20 December 2003, U 2005.1131 Ø (øst, east). Accusation of Theft Amounted to an Infringement of Honour a) Brief Summary of the Facts

A was employed as a seller by a firm selling timber and tools. The employer, E, had a suspicion that A was embezzling. E based his suspicion on the fact that A had cancelled many payments. Although E had not seen any videotapes that could confirm his suspicion he dismissed A accusing him of embezzlement. On the same day in the afternoon E put up a note informing all employees that A had been dismissed because of theft. The note was removed the following morning. In a later criminal case against A theft could not be proven and A was acquitted. A sued E claiming compensation. He argued that he had suffered a loss of liberty since he – without his knowledge – had been videotaped during his work. He also claimed compensation arguing that the note put up by E had infringed his honour.

23

b) Judgement of the Court

The court found that E had had the right to dismiss A since he had acted in a way that had given E the right to suspect A of theft. The videotaping of A also did not amount to a loss of liberty since it was organized with the general acceptance of the employees. However, since E at the time when he put up the note had not been in possession of any videotape that could confirm his suspicion, A’s honour had been infringed. Consequently, he was entitled to compensation according to § 26 of the Danish Tort Liability Act.

24

c) Commentary

It is a prerequisite for applying § 26 that the plaintiff has suffered some kind of humiliation. The case shows that the accusation of a criminal offence amounts to such a humiliation. In addition, it is worth noticing that A succeeds with his claim although the note was taken down the following day and its content had only become known to the limited number of people employed by E.

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C. LITERATURE 1. Torkil Høg, Udbudsretlige erstatningsspørgsmål (Copenhagen 2005)

26

This book, “Liability Issues in Procurement”, contains an overview of legislation and practice of particular importance for deciding liability cases arising out of the violation of procurement rules. In particular, this book deals with liability issues in connection with the violation of EU procurement rules and the Danish Act on public procurement below the EU threshold level in the construction sector. The conditions for incurring liability form the basis of the book. It focuses on explaining the case law established by the courts and the Complaints Board for Public Procurement. The book is aimed at practitioners. 2. Lars Bo Langsted/Paul Krüger Andersen/Mogens Christensen, Revisoransvar (Aalborg 2005)

27

This 6th edition of “Accountants’ Liability” contains an up-to-date review of rules and practice relating to accountants’ civil, criminal and disciplinary liability.

28

Effective as of 1 September 2003, Danish legislation on accountants has undergone a radical change. At the same time, a process was initiated to replace the former Danish auditing standards with auditing standards based on international standards. These changes are all dealt with in the book, which also describes the historical development of rules applying to accountants and the present requirements in relation to the role and functions of an accountant.

29

The book describes the conditions for incurring the three forms of liability and compares them with each other. In connection with the issue of civil liability, the insurance aspects of an accountant’s activities are reviewed.

30

The book includes the most recent case law from courts and disciplinary boards and also deals with new statutory requirements such as the duty to report under the Danish Act on laundering as well as the duty to report serious white-collar crime.

31

The book is aimed at accountants and accountancy students as well as anyone dealing professionally with accountants’ liability, for example attorneys, the prosecution service, the courts and members of the executive boards and boards of directors of businesses. 3. Søren Halling-Overgaard/Rasmus Mehl, Ejendomsformidlerens og ejendomsmæglerens erstatningsansvar (Aarhus 2005)

32

This book, “Liability of Real Estate Intermediaries and Real Estate Agents”, starts out by defining the concepts of a real estate intermediary and a real estate agent and goes on to consider the nature and scope of the liability incurred by a real estate intermediary and a real estate agent, respectively.

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Furthermore, the book describes additional further conditions for incurring liability and contains chapters on joint tortfeasors, time-barring and the special provisions on insurance and guarantee applying to real estate intermediaries and real estate agents.

33

The book is a practical handbook aimed at attorneys, insurance companies, courts of law, real estate agents and anyone needing to assess the quality of the services provided by real estate intermediaries and real estate agents in the context of liability.

34

4. Søren Halling-Overgaard, Advokaters erstatningsansvar (Aarhus 2005) “Attorneys’ Liability” is a practical handbook aimed at attorneys, courts of law, financial institutions, insurance companies, public authorities and anyone needing to assess the quality of the services provided by attorneys in the context of liability.

35

Based on case law in recent years, the book contains a review of the legal rights in this particular field of liability. In this connection, liability is explored in the context of lawsuits, a person’s capacity as a member of a board of directors, completion of property transactions, administration of estates, various forms of advice, mergers and acquisitions and several other contexts.

36

Moreover, the book contains a review of the additional conditions for incurring liability, including causation, proximate cause, calculation of loss and the special circumstances in the event that more than one party is liable. Finally, the book deals with insurance aspects of attorney liability.

37

5. Eva Aaen Skovbo, Erstatning for ophavsretlige krænkelser (Aarhus 2005) This book, “Compensation for Copyright Infringement”, deals with all sanctions available for infringement of copyrights focusing mainly on the sanction of liability in tort. The book gives a detailed analysis of case law. Furthermore, the book includes relevant EU law and international law.

38

6. Jonas Christoffersen, Det offentliges kompensationsansvar for krænkelser af internationale menneskerettigheder (The Liability of Public Bodies for Violations of International Human Rights), U 2005B.133 (Ugeskrift for Retsvæsen, 2005 sektion B, 133, Weekly Law Report, 2005, section B, 133). Inspired by the case U 2005.523 H,5 this article discusses certain basic aspects of the relationship between the Danish law of tort and the right to have an effective remedy against infringements of international human rights. In the 5

See supra no. 14.

39

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conclusion it is pointed out that it is not possible to state with certainty how Danish courts will deal with a claim for compensation relying on the European Convention on Human Rights, but it must be assumed that the general rules of Danish law on public authority liability are not in all respects sufficiently strict to serve as the basis for a claim for damages relying solely on infringement of the European Convention on Human Rights. Similarly, it must be assumed that the definition according to Danish law of the concept of a “protected interest” under the law of tort is too narrow to fully ensure compensation for non-pecuniary losses in accordance with the European Convention on Human Rights.

Contributors Håkan ANDERSSON Uppsala University, Faculty of Law P.O. Box 512 SE-751 20 Uppsala Sweden Tel.: (+46) 18 471 2001 hakan.andersson @jur.uu.se

Håkan Andersson is Professor of Private Law at Uppsala University. After graduating (LL.D, Dr juris) in 1993 on a thesis in tort law (Purpose of Protection and Adequacy. On the Limits of Liability in Tort Law), he has developed his interest in constructive use of newer philosophy in the field of private law, especially tort law. His research project “Transformation of the Legal Argumentation in Late Modernism” is developing discourse theory and philosophy of language in direct contact with private law. He has written more than 60 opus.

Bjarte ASKELAND Bjarte Askeland Faculty of Law University of Bergen Magnus Lagabøtes plass 1 5010 Bergen Norway Tel.: (+47) 55 58 95 84 Fax: (+47) 55 58 95 71 bjarte.askeland@ jur.uib.no

Bjarte Askeland studied law at the University of Bergen and finished as cand. jur. in 1991. From 1992–1994 he worked as an assistant judge and as a judge in Jæren district county court, Norway. He later worked at the Faculty of Law, University of Bergen as assistant professor, research fellow, and associate professor. He works now (as of 2005) as a professor at the same faculty. He became doctor juris in 2001 on a thesis on vicarious liability. He has written two books and a number of articles, mainly within tort law and legal theory.

Ewa BAGIŃSKA Uniwersytet Mikolaja Kopernika ul. Gagarina 15 87-100 Torun Poland Tel.: (+48-56) 662 3296 Fax: (+48-56) 611 4005 [email protected]

Ewa Bagińska holds a PhD in law and is Assistant Professor in the Department of Civil and International Commercial Law, Faculty of Law and Administration, Nicholas Copernicus University (UMK), Torun. Fulbright Visiting Scholar (1998/ 1999) and NATO Science Fellowship grantee (2000/2001) at The Catholic University of America, Columbus School of Law, Washington, DC.

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Contributors

Areas of expertise: civil and commercial law – civil liability, contracts, consumer protection, products liability, unfair competition, health law, e-commerce. Author of the book Odpowiedzialnosc za produkt w USA (Products liability in the USA), Torun 2000, and several articles. In 2006 she published her habilitation thesis Odpowiedzialnosc odszkodowawcza za wykonywanie wladzy publicznej (Public liability). Elena BARGELLI Facoltà di Scienze Politiche Universitá di Pisa Via Serafini, 3 56126 Pisa Italy Tel.: (+39-050) 2212458 Fax: (+39-050) 2212470 [email protected]

Elena Bargelli has been Associate Professor of Private Law at the Faculty of Political Science (University of Pisa) since 2006. She graduated in Law at the University of Pisa, got a PhD in Private Law in 1999, and became lecturer at the Faculty of Economics in Pisa in 2001. She is author of a book on Property and Tenancy Law, and has written several articles concerning Tort Law (with particular regard to non-pecuniary losses), Contract Law and Family Law.

Søren BERGENSER University of Copenhagen Studiestraede 6, 1455 Copenhagen Denmark Tel.: (+45) 26 14 71 17 [email protected]

Søren Bergenser is an assistant professor at the University of Copenhagen, institute of private law under Professor Vibe Ulfbeck, where he deals with professional and product liability and the liability of public authorities. Søren Bergenser graduated from Aarhus University in 1999 where he also worked as an assistant professor from 1997–1999. Søren Bergenser is also a practising lawyer and has liability and insurance law and litigation and arbitration as his expertise areas.

Agris BITĀNS University of Latvia, Lecturer at Faculty of Law, Attorney at Law Law Office “BALTMANE & BITĀNS” Lāčplēša iela 20a, Riga, Latvia, LV 1010 Tel.: (+371) 7280102

Agris Bitāns graduated from the Faculty of Law at the University of Latvia with a Bachelor’s degree in law in 1993 and with a Master’s degree in law in 1995. Apart from practising as an attorney at law at the “BALTMANE & BITĀNS” law office, he continues his academic studies at the University of Latvia for a Doctor’s degree. He is also a lecturer at the Civil Law Department, Faculty of Law, University of Latvia. His area of expertise is

Contributors

Fax: (+371) 7504566 agris.bitans@ baltmanebitans.com

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the law of obligations, with a focus on contract law and civil liability, tort law, and intellectual property law. He is a co-author of the commentary on the Latvian Civil Code. He is the author of the book “Civil liability and its kinds” (Civiltiesiskâ atbildîba un tâs veidi) and of many articles relating to law issues. He is a member of the Latvian Bar, International Bar Association and AIPPI (International Association for the Protection of Industrial Property). Since his admittance to the Latvian Bar in 1998, he has been practising mostly in civil (contracts and tort), intellectual property, commercial and administrative matters. His fields of legal research include contract and tort law, personal and personality right, medical law and media law. He is also a regular participant at international conferences and workshops dealing with intellectual property law, civil law, litigation and arbitration.

Willem H. van BOOM Erasmus University Rotterdam PO Box 1738 3000 DR Rotterdam The Netherlands [email protected] www. professorvanboom.eu

Willem van Boom (1969) was born in the Netherlands, where he enjoyed his legal education as well. He acquired his degree in law at the University of Amsterdam (1992), and his doctorate at Tilburg University (1999). From 1992 to 1997 he was appointed assistant professor at the Tilburg University, and from 1997 to 1999 at Leiden University. In 1999, he was appointed associate professor at Tilburg University, and in 2002 full professor at the same university. As of 2005, Van Boom holds tenure at Erasmus University Rotterdam. Van Boom’s research and teaching expertise cover civil and commercial law. His thesis ‘Hoofdelijke verbintenissen’ (1999) dealt with doctrinal issues concerning the general principles of joint and several liability. His current field of interest covers contracts, torts and insurance, their efficacy, their relationship with other forms of private and public law regulation, and alternative arrangements aiming at prevention and compensation. Van Boom was formerly editor of the legal journal Aansprakelijkheid, Verzekering en Schade (AV&S) [Liability, Insurance and Damage]. He currently participates in the board of editors of Tijdschrift voor Consumentenrecht en Handels-

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Contributors

praktijken [Journal of Consumer Law and Trade Practices] and Jurisprudentie Aansprakelijkheid [Liability Case Law Digest]. Van Boom is deputy judge at the District Court of Den Bosch (2000-) and deputy judge at the Court of Appeal of the Hague (2005-). He also chairs the public utility consumer claims resolution committee (2005-). Matthias CORNILS Universität Bonn Institut für Öffentliches Recht (Institute for Public Law) Adenauerallee 42-44 D-53113 Bonn Tel.: (+49) 228-735574 [email protected]

Matthias Cornils obtained his doctorate at the University of Bonn in 1995 for a thesis on State liability for breach of Community Law deriving from the ECJ’s Francovich-doctrine. He completed his habilitation in Bonn in 2004 with a study on the interdependances between constitutional fundamental rights and parliamentary laws. He transitorily held a chair for public law as a substitute professor at the University ErlangenNürnberg and is so doing also at present at the University of Munich. Publications in different fields of National and European public law.

Eugenia G. DACORONIA Attorney-at-Law Assistant Professor of Civil law at the Athens University Department of Law 312, Patission Str. GR-11141 Athens Greece Tel.: (+30-210) 2010011 Tel./Fax: (+30-210) 2237150 [email protected]

Eugenia Dacoronia was born of Greek nationality in Cairo (Egypt) in 1958. She graduated with excellence in 1979 from the Athens Faculty of Law, where she also received her doctorate with excellence in 1994. She has attended several courses abroad (Amsterdam, King’s College London, Tulane University). Since her admittance to the Athens Bar in 1981, she has been practising mostly in civil (contracts and real property), intellectual property, commercial and administrative matters. She is also a European Patent Attorney. Since September 2005 Eugenia Dacoronia is an Assistant Professor of Civil law at the Athens University Department of Law, where she has been lecturing Civil law since 1995 and has worked as an assistant since 1980. She teaches, among other subjects, General Principles of Civil Law, Real Property Law, Law of Environment, Torts in the legal system of the U.S.A. She is the author of two books “Sublease of Movables” (in Greek) and “The Issue of Construction of Wills under Greek law” (in Greek) and she has

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published various articles and notes on Court decisions in Greek legal periodicals and in the European Review of Private Law (in English and French). Eugenia Dacoronia has taken part in international congresses as a national representative and participates in the Trento Common Core project as well as the Study Group on a European Civil Code as a member of the Advisory Council on: a) Torts and b) Lease of movables. Anton DULAK Univerzita Komenského v Bratislave Právnická fakulta Šafárikovo nám. 6 818 05 Bratislava Slovakia Tel./Fax: +421 2 434 26 611 Anton.Dulak@flaw. uniba.sk

Anton Dulak was born in 1963 in Košice. After graduating in law in 1985, he started to work at the Department of Civil Law at the Commenius University Bratislava as an assistant. In 2001 he obtained his PhD degree. In 2003 Anton Dulak habilitated with a thesis on Product Liability Law and was promoted to an associate professor. His main fields of research include Tort Law and Consumer Protection Law.

Isabelle C. DURANT Université catholique de Louvain Faculté de droit Place Montesquieu 2/38 B-1348 Louvain-laNeuve Belgium Tel.: (+) 32 (0)10 47 47 41 Fax: (+) 32 (0)10 47 47 32 isabelle.durant@obli. ucl.ac.be

Isabelle Claire Durant studied law at the Université catholique de Louvain (UCL), where she was a teaching and research assistant from 1991 until 2004. She got her PhD Degree in law in 2003 in this university and is currently professor at the Department of Private Law. She teaches law of obligations, contract and real property law and publishes mainly in the areas of contract and tort law. She also contributes to several research projects for the Austrian Academy of Sciences’ Research Unit for European Tort Law and for the European Centre of Tort and Insurance Law in Vienna where she was on leave for work from October 2004 to March 2005. In addition, she was attorney at the Brussels Bar from 1991 until 2004.

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Contributors

Michael FAURE METRO, Faculty of Law Maastricht University P.O. Box 616 6200 MD Maastricht The Netherlands Tel.: (+31-43) 388-3028 Fax: (+31-43) 325-9091 Metro.Institute@ facburfdr.unimaas.nl

Michael Faure studied law at the University of Antwerp (licenciate in law 1982) and criminology at the University of Gent (licenciate in criminology 1983). He obtained a Master of Laws from the University of Chicago Law School (1984) and a doctor iuris from the Albert-Ludwigs-Universität Freiburg im Breisgau. He was first a lecturer and then a senior lecturer at the department of criminal law of the law faculty of Leiden University (1988–1999) and became academic director of the Maastricht European Institute for Transnational Legal Research (METRO) and professor of Comparative and International Environmental Law at the law faculty of Maastricht University in September 1991. He still holds both positions today. In addition, he is academic director of the Ius Commune Research School and member of the board of directors of ECTIL. Since 1982 he is equally attorney at the Antwerp Bar. He publishes in the areas of environmental (criminal) law, tort and insurance and economic analysis of (accident) law.

Jörg FEDTKE University College London Institute of Global Law Faculty of Laws Bentham House Endsleigh Gardens London, WC1H OEG United Kingdom Tel.: (+44-20) 76791474 Fax: (+44-20) 76791502 [email protected]

Jörg Fedtke obtained a doctorate at the University of Hamburg in 2000, where he worked as a researcher at the Seminar für ausländisches und internationales Privat- und Prozessrecht in 2001 and 2002. He currently teaches at University College London, where he is Reader in Law and the Director of the Institute of Global Law. Since 2003 he also holds a post as Visiting Professor at The University of Texas. He publishes in the areas of tort, constitutional and comparative law.

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Herkus GABARTAS Mykolas Romeris University Department of European Union Law Ateities st. 20 LT-08303 Vilnius Lithuania Tel.: (+370 5) 204-2340 Fax: (+370 5) 238-7881 [email protected]

Herkus Gabartas obtained his doctorate degree from Mykolas Romeris University (Vilnius, Lithuania) in 2004, where he currently teaches various courses on EC Law. He is also a graduate of Vilnius University, Lithuania (Master’s degree, 1999) and the University of Florida, USA (LL.M. in Comparative Law, Certificate in International Business & Trade Law, 2001). Herkus Gabartas is also a practising attorney at the Lithuanian Bar. The areas of his particular interest are: EC Law, Tax Law, Tort Law.

Michael D. GREEN Wake Forest School of Law P.O. Box 7206 Reynolda Station Winston-Salem, NC 27109 U.S.A. Tel.: (336) 758-4842 Fax: (336) 758-4496 [email protected]

Michael D. Green teaches and writes about tort law, product liability, complex litigation, and toxic substances litigation. He is the co-author of several casebooks on Products Liability and Torts. He is currently the Williams Professor of Law at Wake Forest University, where he has taught for six years. Previously he taught at the University of Iowa from 1980–2000, and he has also been a visiting professor at Cornell University and NYU. Professor Green currently serves as a Co-Reporter for the Restatement (Third) of Torts: Liability for Physical Harm. He became an invited member of the European Centre of Tort and Insurance Law and the European Group on Tort Law in 2002. He previously was a Co-Reporter for the Restatement (Third) of Torts: Apportionment of Liability.

Suvianna HAKALEHTO-WAINIO University of Helsinki Department of Public Law P.O. Box 4 FI-00014 Finland Tel.: +358 44 344 7768 hakaleht@mappi. helsinki.fi

Suvianna Hakalehto-Wainio was born in Helsinki in 1966. She works as a lecturer in administrative law in the Department of Public Law, Faculty of Law, University of Helsinki. She has been working there in various research projects since 1996. Suvianna Hakalehto-Wainio spent the academic year 1994–1995 in Estonia lecturing at the University of Tartu (Eurofaculty program). She is currently working on her PhD on the tort liability of public authorities. Suvianna Hakalehto-Wainio’s main fields of interest are tort law, administrative law, education law, child law and human rights.

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Ton HARTLIEF University of Maastricht Postbus 616 NL-6200 MD Maastricht The Netherlands Tel.: (+31-43) 388-3104 Fax: (+31-43) 325-8981 [email protected]

Ton Hartlief is professor of private law at the University of Maastricht.

Jiří HRÁDEK Jáchymova 2 110 00 Praha 1 Czech Republic Tel.: (+420) 728 228224 Fax: (+420) 224235450 [email protected] [email protected]

Jiří Hrádek graduated in law from the Charles University in Prague in 2002. He studied at the University of Hamburg (2000–2001), LL.M. programme at the University of Tübingen (2002– 2003) and is currently working on his PhD at the Charles University in Prague. Since 2003 he has been an associate at the Czech law firm, Procházka/Randl/Kubr, in Prague. Jiří Hrádek’s current research focuses on the area of EC law, particularly in relation to liability issues and conflict of laws. He is a regular participant in international conferences and workshops dealing with EC law and civil law.

Bernhard A. KOCH University of Innsbruck Innrain 52, A-6020 Innsbruck Austria Tel.: (+43-512) 5078110 Fax: (+43-512) 5079885 bernhard.a.koch@ uibk.ac.at http://www.zivilrechts. info

Bernhard A. Koch was born in 1966 in Feldkirch (Austria). He studied law in Innsbruck (Mag. iur. 1989), Tübingen (Germany, Dr. iur. summa cum laude 1992), and Michigan (USA, LL.M. 1993). He completed his habilitation for private law and comparative law in 1998. Bernhard A. Koch started to work as an assistant at the University of Innsbruck in 1985, where he was awarded tenure in 1999. After two years on leave for work at ECTIL and the Austrian Academy of Sciences, he returned to Innsbruck, where he holds a chair in civil law. Since 2004, Koch is the Vice Director of the Austrian Academy of Sciences’ Research Unit for European Tort Law. Bernhard A. Koch’s main fields of research are tort, contract, real property and family law. He is a member of the European Group on Tort Law.

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Helmut KOZIOL European Centre of Tort and Insurance Law and Research Unit for European Tort Law Landesgerichtsstraße 11 A-1080 Vienna, Austria Tel.: (+43-1) 401271680 Fax: (+43-1) 401271685 [email protected] and helmut.koziol@oeaw. ac.at

Helmut Koziol is currently Executive Director of the European Centre of Tort and Insurance Law as well as Director of the Research Unit for European Tort Law of the Austrian Academy of Sciences. He was born in 1940 in Vienna and, after graduating (Dr. iuris) from the University of Graz in 1963, he worked as an assistant at the Law Faculty in Bonn. Helmut Koziol returned to Austria in 1967 when he became Professor of Private Law at the University of Linz (1967–1969), subsequently being offered a chair at the University of Vienna which he held until 2000. His main fields of legal research include Tort Law and Banking Law.

Irene KULL University of Tartu Faculty of Law Näituse 20 50416 Tartu Estonia Tel.: + 372 7 375 385 Fax: + 372 7 375 983 www.iuridicum.ee www.ut.ee [email protected]

Irene Kull obtained her PhD in Civil Law at the University of Tartu in 2002. She is currently assistant professor of civil law and holder of the chair of Contract Law. Since 1995 she has worked as an advisor to the civil chamber of the Estonian Supreme Court. Irene Kull participates in the Study Group on a European Civil Code as an advisor on the Working Team on Rental of Movable Property. She was a member of the group working on the draft of the Estonian Law of Obligations Act. Among her publications there are two textbooks and a variety of journal articles on issues in contract law and the harmonisation of private law. She lectures on contract law, law of obligations and European commercial law. Her main interests include the law of obligations, contract and tort law, harmonisation of European private law, comparative law and family law.

Rok LAMPE University of Maribor Smetanova ul. 17 2000 Maribor Slovenia Tel.: +386 40 84 66 21 [email protected]

Rok Lampe is currently assistant professor (docent) at the University of Maribor. He was born in 1973. He graduated from the Faculty of Law, University of Maribor (Slovenia) and obtained an LL.M. from the University of Utah. He defended his PhD thesis at the Faculty of Law, University of Maribor where he worked as an assistant. Research Stays: 1996 – European Law at University of Amsterdam, Tempus scholarship pro-

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gramme. 1999 – Governmental scholarship of the Czech Republic for PhD research at the Charles University in Prague. 2001 – Visiting researcher at Yale Law School under tutorship of Prof. Anita L. Allen for the PhD thesis “The Right of Privacy, In Defence of a Broad Concept of the Right of Privacy”. His fields of legal research include tort law, personality law, medical law and media law. Milda LAUČIENĖ Health Policy Centre S.Konarskio g. 49 LT-03123 Vilnius Lithuania Tel.: +370 686 93581 Fax: +370 5 260 8559 [email protected]

Milda Laučienė graduated from the University of Vilnius, Faculty of Law (Lithuania) in 2000. In 1997 she received a bachelor in English at the Faculty of Philology of the same University. She is a practising attorney-at-law at the Lithuanian Bar and her areas of expertise include medical law and civil liability. She is a member of the public institution, Health Policy Centre, which takes an active part in the process of healthcare reform in Lithuania.

Peter LOSER University of Basel; St. Galler Kantonalbank Legal & Compliance St. Leonhardstrasse 25 CH-9000 St. Gallen Switzerland Tel.: (+41-71) 231 3131 [email protected]

Peter Loser was born in 1964. He studied law in St. Gallen and Lausanne, Switzerland (University of St. Gallen, lic.iur. 1990; Dr.iur. summa cum laude 1994) and has habilitated at the University of Basel (Privatdozent for Private, Commercial and Comparative Law, 2006). He was a visiting scholar at Yale University in 1992/93 and did research at the UNIDROIT in 1999 and at the University of Oxford in 1999. Currently Peter Loser teaches private, company and tort law at the Universities of Basel, Lucern and St. Gallen. He is an active participant of the project “The Common Core of European Private Law” (University of Trento, Italy). Peter Loser has also worked as a lawyer since 1995 and is legal counsel and member of the Direction of a bank.

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693

Attila MENYHÁRD ELTE Faculty of Law, Civil Law Department Egyetem tér 1-3 H-1364 Budapest Hungary Tel.: (+36-1) 411 6510 [email protected]

Attila Menyhárd was born in 1968. He works at the University of Eötvös Loránd, Faculty of Law, Civil Law Department (Budapest) and he is also a practising lawyer. Special research fields are: contract law, tort law and property law. Participant in several international projects on contract and tort law. Promoted with PhD degree in 2003.

Olivier MORÉTEAU Paul M. Hebert Law Center Louisiana State University W323 Law Center Baton Rouge, LA 70803 United States Tel.: +1 225 578 1126 Fax: +1 225 578 3677 [email protected]

Olivier Moréteau was born in 1956 in Lyon. He studied law at the Université Jean Moulin Lyon 3 where he completed his doctorate (Estoppel and protection of reliance in comparative law), after research in Cambridge with a British Council scholarship. He worked as an assistant and then lecturer at the Université Jean Moulin Lyon 3. He was appointed professor (agrégation de droit privé) at the University of Grenoble 2 and then Lyon 3. He served as a Director and Vice-President for International Relations at Université Jean Moulin Lyon 3 (1993–1999) and as the Director of the Edouard Lambert Institute of Comparative Law (Deputy Director 1985–2000, Director 2000–2005). He was visiting professor at the University of Minnesota (1992), Boston University (almost every year between 1993 and 2004) and the University of Melbourne (2002, 2004). In 2005, he was appointed Professor of Comparative Law on the newly created Russell Long Chair of Excellence, at Louisiana State University (Baton Rouge) where he is the Director of the Center of Civil Law Studies. He teaches comparative law and the law of obligations. He publishes books and articles on English law and comparative law, especially in the field of obligations and the relationship of law and languages. He is a member of the European Group on Tort Law, the International Academy of Comparative Law and the American Law Institute.

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Ken OLIPHANT School of Law, University of Bristol, Wills Memorial Building, Queens Road, Bristol BS8 1RJ, United Kingdom Ken.Oliphant@ bris.ac.uk

Ken Oliphant was born in Glasgow but educated in England. He is now City Solicitors Educational Trust Reader in Tort at the School of Law in the University of Bristol. Previously he lectured at Cardiff University (1999–2006) and King’s College London (1988–99). He has written extensively in the fields of tort law and compensation for incapacity. He is the joint author of Tort Law: Text & Materials, Oxford University Press, 2nd edn., 2003 (with Mark Lunney) and Torts, Palgrave MacMillan, 3rd edn., 2003 (with Alastair Mullis), and has been appointed general editor of the practitioners’ reference work, Tort Law, in the Butterworths Common Law Series (2nd edn. forthcoming). He is also UK correspondent for the Torts Law Journal.

André G. Dias PEREIRA University of Coimbra P-3004-545 Coimbra Portugal Tel.: (+351) 239-859801 Fax: (+351) 239-821043 [email protected]

André Gonçalo Dias Pereira studied law at the University of Coimbra (awarded Prof. Manuel de Andrade Prize for best student). He has attended several courses abroad in Göttingen, Utrecht and Helsinki and has been abroad doing research as invited Scholar at the Roger Williams University School of Law (Rhode Island – USA), at the European Centre of Tort and Insurance Law/Research Unit for European Tort Law of the Austrian Academy of Sciences in Vienna and at the Faculty of Law, University of Salzburg. He wrote the thesis “Informed Consent on the Patient-Doctor Relationship”, obtaining the highest mark and published it in 2004 (700 pp.). He has also published several articles in Portugal and abroad (in some European countries and in Brazil). He is presently Assistant Professor at the Faculty of Law of the University of Coimbra (Department of Civil Law) and lectures Medical Law in several academic institutions. He is the Scientific Secretary of the Centre for Biomedical Law, Secretary of the Journal: Lex Medicinae – Revista Portuguesa de Direito da Saúde, member of the Editorial Board of the Revista Portuguesa do Dano Corporal and the journal Direito & Desporto; invited Professor at the Summer Course on European Private Law of the University of Salzburg.

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He is involved in several international research projects, especially in the fields of tort law, biomedical law and human rights. Pereira has been invited internationally for papers, lectures and seminars. He has given papers in Brazil, Austria, England, Estonia, Germany, Greece, the Netherlands, Spain and in Israel. He is Vice-President of an Institutional Review Board of a Health and Research Institution in Coimbra and member of the National Council on Forensic Medicine. Andrea PINNA Erasmus University Rotterdam P.O. Box 1738 3000 DR Rotterdam The Netherlands [email protected] Institut de Droit des Affaires Internationales (IDAI) 26, rue Cardinet 75017 Paris France [email protected]

Andrea Pinna (1974) was born in Italy. He received a French legal education (law degree in 1997 and master in 1998 from the University of Paris 2, Panthéon-Assas) and is the author of fundamental articles on French law of obligations, such as “L’exception pour risque d’inexécution”, published in the Revue Trimestrielle de Droit Civil, 2003, 31–50. Pinna defended a first Ph.D thesis at Tilburg University on a comparative study on the Obligations to inform and to advise in European Contract Law (2003) and a second one at the University of Paris 2 (2006) on the issue of measure of damages in French contract law. Additionally he has actively participated in the works of the Study Group on a European Civil Code working on the follow-up of the PECL the results of which will soon be published (Principles of European Law on Service Contracts (PELSC), together with M. Barendrecht, C. Jansen, M. Loos, R. Cascao, S. van Gulijk, Sellier European Publishers, Oxford University Press, Bruylant, 2006). Pinna is now assistant professor at the Erasmus University Rotterdam and Research Director at the Institut de Droit des Affaires Internationales (IDAI) in Paris.

Eoin QUILL University of Limerick School of Law Limerick Ireland Tel.: (+353-61) 20-2220 Fax: (+353-61) 20-2682 [email protected]

Eoin Quill was born in Limerick in 1965. He studied law at University College Cork, a constituent college of the National University of Ireland, between 1982 and 1988 obtaining two bachelors and a masters degree – BCL; LLB; LLM. He lectured at the School of Professional and Management Studies in Limerick from 1988–

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1990 and has been lecturing in the University of Limerick since 1991 in a variety of subjects including Tort, Commercial law and Comparative Civil Obligations. His publications include a textbook – Torts in Ireland (Gill & Macmillan 1999, 2nd edn. 2004) – and a variety of journal articles on issues in tort and contract. He was treasurer of the Irish Association of Law Teachers from 1997 to 2000 and is currently an examiner in Tort for the Law Society of Ireland. Robert REBHAHN University of Vienna Institut für Arbeitsrecht und Sozialrecht A-1010 Hessgasse 1 Tel.: ++43-1-427735602 robert.rebhahn@ univie.ac.at

Robert Rebhahn was born in 1954 in Linz, Austria and studied Law in Vienna and Linz. He graduated in 1977 at the University of Linz, where he afterwards worked as an Assistant. At the University of Klagenfurt he became Professor for Business Law in 1984 and later Full Professor for Private Law. In 1996 he was appointed Full Professor for Private Law and Labour Law at the Humboldt University Berlin and in 2003 Professor for Labour Law and Social Security Law at the University of Vienna. His main field of interests are now Labour Law (especially contractual aspects and comparative law) and Social Security law (especially the relations with European and economic law). In 1997 he published a book about state liability in the case of insufficient protection against harm.

Jordi RIBOT University of Girona Facultat de Dret Campus de Montilivi E-17071 Girona Spain Tel.: (+34-972) 418 140 Fax: (+34-972) 418 146 [email protected] Website: civil.udg.es/ members/Pages/ jribot.htm

Jordi Ribot was born in 1966. He graduated from the Autonomous University of Barcelona in 1989 and obtained his PhD in 1993. He became lecturer in Civil Law at the Autonomous University of Barcelona in 1994 and at the University of Girona in 1996, where he currently teaches Spanish and Catalan Civil Law. Co-coordinator of the Internet Project “Norma Civil” from 1997, from 2000 to 2004 he was member of the “Harmonisation Section” of the Observatory of Catalan Private Law, dependent on the Department of Justice of Catalonia. Member of the “Observatory of European and Comparative Private Law” of the University of Girona and of the “International Society of Fam-

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ily Law”. His main fields of research are tort law, family law and contract law. Albert RUDA University of Girona Facultat de Dret Campus de Montilivi E-17071 Girona Spain Tel.: (+34-972) 418 142 Fax: (+34-972) 418 146 [email protected] Website: civil.udg.es/ ruda

Albert Ruda was born in 1975 in Barcelona. He graduated from the University of Girona in 1997, where as an assistant professor he is currently teaching law of obligations, contracts and consumer law. After having been Van Calker scholar at the Swiss Institute of Comparative Law (2001), he published a short dissertation on barter agreements of immovables (2002) and has recently presented a Doctoral Thesis on liability for pure ecological damage (2006) under the direction of Prof. Dr. M. Martín-Casals. Member of the Observatory of European and Comparative Private Law of the University of Girona, he has extensive experience as a webmaster. He has also done research stays at ECTIL (Vienna, 2001 and 2003) and the Centrum voor Aansprakelijkheidsrecht at the Tilburg University (2004) and the Faculty of Law of the University of Cambridge (2006).

Alessandro P. SCARSO University of Parma Strada dell’Università 12 43100 Parma Italy Tel.: +39 0521 034508 Fax: +39 521 034511 Alessandropietro. [email protected]

Alessandro Scarso is Associate Professor of Private Law at the University of Parma. He studied Economics and Law in Milan. He is enrolled in the Milan Law Society and is a Certified Public Accountant. He has taught Private Law, Contract Law, Family Law and Principles of European Private Law at Bocconi University in Milan and at the University of Parma, both at a graduate and postgraduate level. He is a member of the editorial staff of Responsabilità civile e previdenza, and an ECTIL fellow.

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Barbara C. STEININGER Research Unit for European Tort Law Landesgerichtsstraße 11 A-1080 Vienna, Austria Tel.: (+43-1) 401271610 Fax: (+43-1) 401271685 barbara.steininger @oeaw.ac.at

Barbara Steininger was born in Feldkirch (Austria) in 1977 and was brought up bilingually (German/ Dutch). She studied law in Vienna and Leiden and graduated in 1999. Between 1998 and 2000 she worked as a student assistant at the Institute of Roman Law, University of Vienna. Between 1999 and 2003 Barbara Steininger worked at the European Centre of Tort and Insurance Law in Vienna. Since 2002 she has been a staff member of the Research Unit for European Tort Law of the Austrian Academy of Sciences. In 2002 Barbara Steininger conducted research at the Maastricht European Institute for Transnational Legal Research (METRO) in Maastricht and at the Institut Suisse de Droit Comparé in Lausanne. From June to December 2004 she was on leave for work at the University of Geneva. In 2005 she finished her doctoral thesis under the supervision of Prof. Helmut Koziol (“Verschärfung der Verschuldenshaftung”) and completed a nine month full-time court internship at various courts in Vienna.

Christian TAKOFF University of Sofia Zar Osvoboditel Blvd. 15 1000 Sofia Bulgaria christian_takoff@yahoo. com www.geocities.com/ christian_takoff

Christian Takoff (1965) was born in Sofia, Bulgaria, where he enjoyed his legal education as well. He acquired his Master degree in law at the University of Sofia (1992), his Legum magister degree (LL.M.) in Hamburg, Germany (1995) and his doctorate at the University of Sofia (1997). His thesis “The Bank Guarantee” (1997) dealt with doctrinal and practical issues concerning the respective ICC-Rules and the Bulgarian banking legislation. Christian Takoff was an Alexander von Humboldt Fellow in Hamburg (2004–2006). As of 1992 he is assistant professor at the University of Sofia (since 1996 major assistant professor). Since 1997, Christian Takoff holds tenure main lecturer at the the Veliko Turnovo University (Bulgaria) in Civil Law as well. His current field of interest covers general part of the civil law, law of contracts and comparative law. He has more than 20 publications and 3 monographs. The newest ones “Voluntary representation” deal with the problems of agency in Bulgarian law under comparative perspective, and

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the “Method for solving of civil cases” – with theoretical and practical issues of the legal methodology. Christian Takoff works as legal advisor and arbitrator at the Arbitration Court of the Bulgarian Chamber of Commerce and Industry as well. Christian Takoff participated at the Supervisory Board of the State Agency for Postprivatisation Control (2000–2004). Vibe ULFBECK University of Copenhagen Studiegaarden, Studiestraede 6 1455 Copenhagen, Denmark Tel.: 35323148 [email protected]

Vibe Ulfbeck was born in 1966 and graduated as a lawyer at the University of Copenhagen in 1990. In 1991 she obtained an LL.M. degree at the University of Cambrigde, UK. From 1991–1992 she was employed in the Danish Justice Department and since 1993 she has been at the University of Copenhagen where she obtained her doctorate in 2000. In 2004 she was appointed professor of private law.

Gerhard WAGNER Universität Bonn Rechts- und Staatswissenschaftliche Fakultät Adenauerallee 24-42 53113 Bonn Germany Tel.: +49 228 739251 Fax: +49 228 739273

Born 1962, Dr. jur., University of Göttingen, Germany, 1989; LL.M., University of Chicago, 1995. As of 1999, professor of German and European Private Law at the Faculty of Law and Economics at Bonn University. His main field of research is the law of torts, both from a domestic and European perspective. He has written one of the major commentaries on the German law of torts (Münchener Kommentar zum BGB, Vol. 5, 4th ed. 2004); published a textbook on the subject, together with Kötz (Deliktsrecht, 10th ed. 2006), contributed to a volume on the foundations of European tort law (Zimmermann (ed.), Grundstrukturen des Europäischen Deliktsrechts, 2003, 189 – 340) and taken care of the section on the Law of Torts in the forthcoming Oxford Handbook on Comparative Law (Zimmermann/Reimann, ed.). Another major contribution was a consultation paper on the reform of the law of damages written for the Deutsche Juristentag (Neue Perspektiven im Schadensersatzrecht, 2006). Wagner is a fellow of ECTIL and participated in research projects such as “Children in Tort Law”

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(Vol. I ed. by Martín-Casals), sponsored by the European Science Foundation, and “Tort Law and Liability Insurance” (Wagner, ed., 2005). Other than the law of torts and damages his research interests focus on European civil practice and domestic as well as international arbitration.

Index The numbers refer to the marginal notes and the letters refer to the reports; A stands for Austria, B for Belgium, BP for the Report of Willem H. van Boom and Andrea Pinna, BU for Bulgaria, C for the report of Matthias Cornils, CH for Switzerland, CO for the Comparative Overview, CZ for the Czech Republic, D for Germany, DK for Denmark, E for Spain, EST for Estonia, EU for European Union, EW for England and Wales, F for France, FE for the report of Jörg Fedtke, G for the report of Michael D. Green, GR for Greece, H for Hungary, I for Italy, IRL for Ireland, LT for Lithuania, LV for Latvia, N for Norway, NL for the Netherlands, P for Portugal, PL for Poland, R for the report of Robert Rebhahn, S for Sweden, SK for Slovakia, SLO for Slovenia and W for the report of Gerhard Wagner. ability to work, see earning capacity abortion PL 74, 77, 80–81, 84 act of God, see force majeure additional compensation, see damages, additional ~ adequacy D 16; N 12 administrative acts, see public liability adventure activities EW 53 advertising EW 4 affection damage, see psychological harm AIDS see HIV alternative compensation systems D 52 alternative lawful behaviour A 15, 55 animals A 10; B 100; CH 54; CZ 12; D 32–35, 57, 61; DK 8–10; E 1–3; GR 9–12; H 30–32; NL 20; SLO 34 asbestos IRL 40; NL 27–33 assessment of damages, see damages, calculation of ~ associations B 2, 9–10, 83 auditors D 27–31 authority B 67–76; EST 18 aviation A 9; D 6, 60; EST 9–11; NL 26; P8

bank B 116; CH 8, 16, 26–28; D 63; E 31–32; GR 13; H 36; LT 22–23; PL 54–59; SK 16–20 bankruptcy EST 7; S 3; SK 1–5, 8 barristers, see lawyers battery CZ 53 Bill of Rights EW 1–5 blood D 48–51; F 17 breach of duty EW 1–3; F 22; I 27–32; IRL 14, 17–20, 28; N 43; P 91; PL 8; SK 16 burden of proof A 7, 13, 43, 58; B 37– 40; CH 40; D 50, 53; E 14, 28, 40; EST 11; GR 42; H 31–32; LT 31; N 39; NL 34; P 75–77; PL 39–44; SK 30; SW 36 reversal of the ~ A 10–11, 33–35; CZ 108; D 4, 43–47; NL 46 cableway A 9 capacity A 8, 16 care EW 6 effective ~ NL 7–11 catastrophes E 4–5; GR 1, 19–24; IRL 6 causal uncertainty B 77–82; NL 46

702 causation A 6; B 65, 98; CH 1; D 51, 56; DK 37; E 30, 45, 51; EW 8–15, 52; F 5, 22–25; H 3, 5, 17, 46; IRL 17– 20; PL 9, 14, 93 alternative ~ A 6 legal ~ B 80; BU 68–69, 89–90 proof of ~ B 79; EW 8 cheque GR 13–15, 78, 80 child abuse, see sexual abuse children, see minors church EW 47 cigarettes, see smoking civil code reform A 1–26; CZ 1–7; F 1– 11 civil immunity B 88–90; CZ 75–77; EW 29; IRL 21–24, 41 claims culture EW 1–2; NL 55 compensation, see damages compensation funds E 8, 12; FIN 3 confidence EW 33, 37, 40–42 conflict of laws EU 10–14 consent, informed ~ A 51–52; PL 28, 34, 38–45; S 44 constitutional rights CH 58; CZ 32–43; D 57; IRL 32–33; LT 42 constructions A 10; E 19–22 consumer protection BU 118; D 40–42; I 12–24; P 13–23 contra bonos mores, see good faith contract CH 43, 47; D 56; E 53; H 2; I 16–24 breach of ~ E 31, 34; GR 27; H 36– 38; S 64; SK 16 contractual liability A 2, 61; B 24–31; BU 7 ff.; CZ 5, 9; D 24–26; E 33–36; EST 13, 16–17; EW 44; F 3–8; FIN 17; GR 84; H 12–14, 36–38; I 18–26; LV 77; NL 52; S 22, 64; SW 43 contribution N 18 contributory negligence A 16; CZ 10; D 53; DK 9; EU 15; EW 45–46, 50; F 13; I 37–41; IRL 27; N 25, 33, 47– 48; NL 38–39, 48–49; PL 55, 60, 63– 64 control H 42–44 corruption P 85 court expert, see expert, witness crime victims CH 2–3; EW 27–28; FIN 3; LT 3; PL 1–4; S 55; SLO 1–4 criminal act E 43–46; FIN 3; N 29–31; S 16, 26, 33–35, 50

Index criminal procedure B 111; CH 2; CZ 54– 61; LV 21–28 damage continuing ~ CZ 48 direct ~ BU 65; EST 14 future ~ D 37, 43; E 19; EW 56; GR 74; PL 17–18 indirect ~ GR 45, 49–51 reflex ~ P 94 damages additional ~ EW 36 adjustment of ~ EW 15 aggravated ~ EW 30; IRL 29–31, 34; S 33, 37 bereavement ~ A 42–43, 46; GR 35– 42, 62–74 calculation of ~ A 18; CO 37; CZ 95–97; D 53; E 52; EW 50; IRL 34; N 6–10, 37–38; NL 57; S 53 exemplary ~ see punitive damages general ~ D 56, 59, 65; CZ 39 mass ~ NL 3, 62, 71 quantum of ~ A 29, 44; B 62; BU 82–84, 127; CH 3, 11; CO 40–41; CZ 16, 52; E 6, 12, 18, 28, 34; EST 4, 21; FIN 1; IRL 6, 8–13, 32–35; LT 14, 21; LV 14–15; PL 20; S 55; SLO 5– 8, 16, 19, 29 danger A 7, 9, 13; B 33, 37; D 38–39, 42; E 39; GR 20, 32; H 21–23; I 33–39; IRL 14–16 increased ~ A 10; NL 8, 12 danno biologico I 2–7 death A 20, 27, 36–39; B 77; BU 139; CZ 15, 25–28, 32–37, 41, 53; D 17, 53; E 35, 39, 43, 52; EU 15; EW 27, 31; GR 16–24, 35–45, 52, 59, 62–66; H 6, 33, 49; I 33; LV 34 defamation A 22; D 66; EW 57; IRL 8– 13, 35 defect A 11; B 35–43, 44–48; GR 20–24; LT 30 defences A 7–8; CH 53–55; CZ 54; F 5; SLO 15–17, 34–36 delictual capacity CZ 58 disability LV 42–49 disclaimer, see waiver of liability discrimination A 20; D 1–5; LV 45–49, 59–64; S 38 disfiguration A 30–31

Index dolus eventualis GR 20–24 drugs FIN 6, 20; IRL 32 duty legal ~ CZ 8, 74; GR 20–23 of prevention CH 22; D 51; DK 18; F 10; GR 85 to inform A 56–58; CH 6; CZ 7, 12; D 43, 51; E 14–17, 40–41; EST 7; F 22–25; FIN 34–38; I 36; PL 40, 44 to mitigate the loss F 10 to protect D 25; EST 12; GR 21; LT 41 to supervise B 28–29; BU 32–37; E 38; F 6, 13, 17; GR 5, 32–34; NL 56, 58; SK 36–39 to warn E 16; GR 2–8; P 81–84 duty of care A 7, 13; D 16–17, 57, 67; EW 2, 16, 18, 20–29; H 34; IRL 22; NL 18, 21, 27–30, 46, 70; P 80, 82; PL 59, 61 objective legal ~ A 63 earning capacity CH 12; CZ 29–31; DK 17; EST 9; GR 39 ECHR, see human rights economic torts D 55; EW 33–43; NL 69; S 11 emotional harm, see psychological harm employees’ liability EST 12–13; PL 12; SK 2 employers’ liability BU 119; CZ 4, 70– 77; DK 17–19; E 43, 46; F 18; H 12– 14, 18–20; IRL 2; LV 57–66; NL 1, 9, 21–25, 27–31, 34–37, 67–68, 72 immunity, see civil immunity enterprise liability A 11–12 environment EW 52; H 48, 51; LT 8–12 environmental liability A 22; B 100; CH 56; CZ 93–97; D 68; DK 5–7; E 9– 12, 23–26; FIN 21; LT 44; NL 12, 60 equal treatment of men and women D 2; LV 60 estate agents DK 32; N 13–16 evidence A 35, 58; B 9; EST 10–11; EW 13, 55; GR 17–18; IRL 32; S 54, 57 expert A 59–63; H 15–17 witness A 60; SLO 12 family life CO 31; D 16–22; EW 31; I 31; IRL 33

703 family of the victim, see persons close to the victim fault A 7–8, 35; B 34–39, 51–57, 62–66, 69, 74, 85, 108; BU 54–64, 85, 96; CH 1, 20, 40; CZ 5, 8, 32, 52, 59; D 21, 26; E 21–22, 33, 38; EST 20; EW 57; F 6; GR 16–18, 32, 55–56, 59– 61; H 5, 7–8, 10, 17, 24–26; LV 68– 70; PL 9, 63–64 fear A 20; FIN 30; SLO 31 flexible system A 24; H 17, 38, 46 force majeure A 9; B 39; E 39; F 13; P 92 foreseeability DK 16; E 13–14, 34; EW 7, 21, 38; GR 20–21, 32; P 92 fraud B 8, 12, 14, 52–57; BU 3, 86; CH 34; DK 23; GR 13–15; H 15; LT 22; P 85; PL 46, 48, 52, 58–62, 93; S 15; SK 16–23 freedom of establishment LV 51 freedom of expression B 87–89, 97; EW 35; P 88–99; SLO 21 freedom of the press LT 42; P 88–89 funeral costs CZ 15, 33; D 53; PL 2; SLO 5, 10 good faith CH 31; E 36, 38; EST 4; EW 22; GR 4–8, 39; H 14 harassment S 38 harmonization of tort law S 60; W 1 ff. health A 20, 29–30, 46; CO 22; CZ 15, 30, 44–52; D 23, 38, 40–42; E 27, 30; EW 6; GR 49–51; I 33–42; P 9; SLO 2, 5–6 HIV D 48–51 holidays E 39; PL 91 homicide, see death household damage CH 12–15; EST 15 human rights CO 3–4, 18, 21, 24; CZ 64–67; D 7–15, 34–35; DK 14–16, 39; EST 18–19; EW 21–26, 29–31; FIN 20, 26, 30; I 8–11, 30, 32; IRL 8, 41; LT 14, 16; LV 46; N 43; S 4, 7; SLO 27 illegal, see wrongfulness illegality defence IRL 25–28 imprisonment CZ 62–69; D 7–15, 17; H 15; IRL 32; S 26–28, 50 indirect loss, see damage, indirect ~

704 information, see duty to inform incorrect ~ A 52, LV 31–32 injunction CZ 20–24; EW 32 injury bodily ~ A 22, 30; B 114; BU 105; CO 22, 36; CZ 48, 53; DK 20; E 27, 39; EST 9; EW 8; F 3, 8, 27; GR 3, 6, 22–25, 28, 46–48, 50; LT 29; LV 36– 37; N 20; NL 21, 36; P 34, 102, 104; PL 16; SLO 2, 5, 14, 22, 30–31, 33 permanent ~ DK 14–18 personal, see personal injury prenatal ~ IRL 39 serious ~ A 20; EU 15; H 33; IRL 6; N 32; PL 6–8 insurance BU 99, 110; CH 5–8, 13, 34– 37; D 69; EST 15, 21–22; GR 75; I 1, 12, 22; IRL 6; NL 25–26, 51, 59; SLO 37; S 2 compulsory ~ B 6, 117 liability ~, see liability, insurance intellectual property DK 38; EST 2–4; EW 42; I 43; LT 45–46; N 2–5 intent A 18, 42, 46, 50; E 43–46; D 10, 24–25; F 20; GR 16: P 21–22; PL 2 interest A 5, 7 internet CH 57; E 48 intoxication A 27, 36, 40; EU 6, 15, 26; S 33, SLO 14, 30 invalidity severe ~, see disability jury G 1 ff. lawyers B 80; CH 48; CZ 12; D 62; IRL 17–20; NL 61; P 1–3; PL 5; SLO 40 legal person BU 3; CO 21; H 51; GR 58 liability contractual, see contractual liability for other persons B 6, 100; F 6, 31; NL 58 for things A 9; CH 20, CZ 78–85; F 29–33; GR 1; P 60–63, 81 insurance B 6, 9, 117; CH 29–33; D 6, 25–26, 55; E 2, 43–45, 47; F 20; GR 1, 76; H 24–26; LV 33–38; N 7; NL 21, 25; P 2–8; SK 3 joint ~ B 6; BU 3, 101, 108; EW 47– 48 joint and several ~ B 58–66; CZ 10; E 11; GR 26–27, 32; SK 7

Index limited ~ EST 5, 14; P 16, 20 restriction of ~ A 14 solidary ~ A 6; EST 8, 15–17; F 18, 22; N 16 third party ~ B 89; BU 3; D 3, 56; S 16 liberty D 23–24 limitation B 111; BU 3, 73; CZ 105–106; GR 20–24, 75–77; IRL 3; LV 14; NL 50–51; S 45–48 litigation D 39; EW 1–4, 56; IRL 7, 36 loss of amenities of life A 36–37; EW 9; IRL 33 of chance B 77–82; EW 8–15; H 4 of earnings BU 127–131; CH 12, 17; CZ 29–31; DK 14–18; H 1; I 4; IRL 12; LV 64; S 4, 15, 26, 60 of profit A 12, 18; BU 67; CZ 89– 92; GR 43–44, 46–48; H 2; P 21 of use P 93 lump sum A 18; CO 37; CZ 15, 25–28, 38, 108; EW 7 maintenance CH 9–11; CZ 15; D 53; FIN 2; GR 35–42, 45 manager’s liability EST 5–8 marine pollution E 7–8; GR 1; IRL 3; P 10–12 marriage GR 35–42; I 27–32 media B 97; CH 16–19; D 27–35, 66; E 27; EW 32–43; LT 42–43; LV 29–32; P 46, 85; SLO 21; S 66 medical expenses A 27–30; GR 49–51; IRL 4 medical law D 48–51; P 24, 29; PL 87, 94, 97; SLO 43 medical liability A 51–58; D 43–47, 48–61, 70; E 17; EW 7; F 17– 20; FIN 23–25; H 9–10, 18–20, 27–29, 33–35, 39–41; LT 13–14, 21; NL 14, 65–66; P 52, 68–80; PL 27–28 medical treatment A 27; BU 132; CZ 15, 47–49; D 43–47, 53; E 13; EW 8–15; F 22–26; I 27; IRL 12; P 90, 97–99; PL 2, 92; S 44; SLO 22, 34, 41–42, 43 mental shock A 28, 46, 48–50 military service CZ 25–28 mining A 9

Index minors A 8, 44; D 16–22, 54, 71; F 12– 16; FIN 21; GR 32–34; IRL 38; N 32; NL 17–19; SK 31–39; SLO 18– 20 Montreal Convention D 60 moral hazard E 45 motor insurance EU 3–7, 13, 16–26; I 12; LV 33–41 motor vehicles A 9–10; B 49–57; CH 12, 29; CZ 78–85; D 72; EST 12; EU 15–18; GR 2–8, 28–30, 46, 52; H 24–26, 30–32; IRL 29; LV 33–41; NL 38, 41–44; PL 46 multiple tortfeasors A 6; B 58–66; CZ 10; D 53; DK 33; E 11; GR 25–27; N 4; PL 93 negligence A 14, 46; B 61–64; CZ 8–9; D 24–25; DK 3, 6–7, 12–13, 19; E 38; EW 1–3, 8–28, 44–45, 48, 52; F 7–8; FIN 20–21, 26, 29, 31–32; GR 14–18, 20–22; H 20; LT 13, 29, 32; P 71, 91; PL 9–13, 78; S 5, 23, 26, 30– 31, 45–47, 62 gross ~ A 18, 42, 46; B 8, 12, 85; CZ 6; DK 22; IRL 16; P 21–22 negotiorum gestio EW 54 neighbours DK 14; H 42–44; NL 13; SLO 14 nervous shock, see mental shock non-pecuniary loss A 1, 5, 19–20, 36– 47, 50; B 85; BU 104–107, 133–135; CH 12; CO 3, 7, 29, 31, 36, 39; CZ 13–15, 32, 37–38, 65–69; D 4, 10– 12, 37, 40, 43, 52; DK 15–16; E 5 20, 22, 31–34; EST 10–11; EW 56; FIN 7–20, 30; GR 33, 53–56, 59–61, 70; H 6, 15, 21–23, 27–29, 50; I 4, 8–11, 27–32, 38; IRL 33; LT 1, 4, 13–21, 29, 41; LV 1–4, 21–24, 52– 55, 64–67; NL 4; P 31–32, 35–42, 46, 50–51, 68, 71–73, 95–96; PL 16– 21, 25, 77, 86, 90, 92; S 4, 6, 10–11, 33, 35, 38, 50, 66; SLO 2, 6, 18, 22– 25, 32 notaries LT 22–28 nuclear liability A 9 nuisance B 93, E 28–29; NL 13 occupational diseases IRL 2 occupier’s liability IRL 14–16

705 omission BU 46; E 56; GR 2–6; H 22; P 91; PL 10, 14, 96 pain and suffering A 27, 53; CO 40, 42; CZ 15, 44, 65; D 12, 19, 37, 43, 52– 53, 73; DK 18; EW 9; GR 54–55, 59–75; H 39–40; LT 13; LV 34–41; P 72; PL 20–23, 26; S 51–53, 59 parents’ liability EW 1–19; F 15–16; GR 30; NL 17–19; SK 31–35 pecuniary loss A 5; BU 70, 104, 136– 137; D 4, 37, 40, 43; DK 11, EST 3, 9–11, 14, 18; EW 7; FIN 7–16; GR 33, 53–56, 60; H 6, 21–23; I 3, 27; IRL 35; LT 1, 4–5, 26, 36; LV 1–5, 23–25; NL 42–43; P 95; PL 18, 24; SK 11; SLO 2, 6–9, 25, 37, 37 periodical payments A 18; EW 7 personal injury BU 139; CH 53; CO 7; CZ 25–28; D 53; E 1, 18, 52; EU 4– 5; EW 7, 11, 52, 55, 56; F 1; FIN 2, 13; I 1–7; IRL 4–6, 12, 14, 25, 33– 35; LT 4–5; N 35, 37, PL 19–26; S 49, 52 personality rights A 20; CH 16; CO 3, 19–20, 25; CZ 14–15, 37–38; D 7– 15, 27–35, 74; H 49; I 8–11, 29–30, 43; LT 42–43; LV 5, 10; P 85–89; SLO 18, 21, 27; S 33 persons close to the victim A 20, 39, 40, 44–47; BU 139–141; CO 32–33; GR 52–58, 62–74; H 6; LT 13; P 35; SLO 22 perte d’une chance, see loss, of chance pharmaceuticals D 32; F 21–26 police EW 27–28; S 32, 63; SLO 30–32 polluter pays principle LT 8 post-traumatic stress disorder E 39; EW 27 prescription, see limitation press, see media presumption GR 32; LT 34 of causation A 6 of fault CZ 9; I 36; P 61, 65–67 Principles of European Tort Law A 5; CH 1; CZ 98–101; E 26; F 6, 9; N 43; NL 74 privacy A 20; D 27–31; EW 32–43 product liability A 12, 22; B 95, 101, CZ 3, 12; D 36–39, 41, 56, 75; EW 58; F

706 3; FIN 21; H 36–38; NL 32–33, 58; P 43–45; PL 46–52; EU 12, 28 professional liability D 57; E 5, 42; EST 23; EW 20–26; GR 19–24; H 15–17; IRL 17–20; PL 9–13 property damage A 48–50; CH 54; CZ 14–16; EST 4; EU 4–5; FIN 13; NL 5; SLO 11 proportionate liability B 82, CZ 46; EW 55 protective norm EW 27; GR 9–12 protective purpose A 55, 61; D 22 psychiatric injury A 27; EW 16–18, 20, 56; PL 17–19 psychological harm A 30, 37, 41, 46; CH 12–13; CZ 32, 62–69; DK 14; E 13; EST 9–11; FIN 11; GR 52–58, 60– 61; H 12, 27–29; NL 35–37, 68; SLO 18–20, 22 public liability B 18–19, 34–43, 88–92, 104–105, 110; BP 1 ff.; BU 120, 153; C 1 ff.; CH 2; EU 30–35; CO 10–17; CZ 53–61, 62–69, 86–92, 102–104; D 8–26, 57–58, 79; DK 35–37, 39; E 6, 48–49; EST 18; EW 31, 58; F 12– 16; FE 1 ff.; FIN 9–20, 21, 34–38; GR 81–82; H 42–44, 52; IRL 23–24, 31, 33; LT 21–34; LV 1–20; N 23– 24, 28; NL 56, 73; P 24–30, 56–59, 73; PL 1–4, 29, 36, 38–45, 68–70, 88, 95; R 1 ff.; S 4, 26; SK 9, 12–13; SLO 30–32 punitive damages A 5; EU 13; EW 30; F 10; D 76 pure economic loss A 7, 12, 62; CH 42, 54; E 5, 7; EST 23; EW 12; FIN 34– 38; IRL 24; N 45–46; P 100; PL 90; S 16–24, 39, 60, 64 railways A 8 rape CZ 25–28 recourse A 6; B 18–22, 25, 62; EW 6; P 23 redress, see recourse reduction clause A 21; BU 82–84; N 29– 31 relationship A 40; D 27–31; GR 28– 30 special ~ A 7, 49 remedies CO 29; D 15; DK 39; EST 2–3; EU 30; EW 22; LT 42

Index restitution in kind A 17–19, 31; BU 70– 72; CZ 13; EST 18; P 46–51 reversal rule, see burden of proof, reversal of the ~ risk GR 2 assumption of ~ A 9; D 9; E 39; IRL 27; N 47–50 road transport A 22; B 33–43; E 52; F 2– 3; GR 79; H 6–8 ROME II EU 10; W 4, 10–11, 56, 60 RSI NL 34 safety of premises CH 23–24; E 35–38; GR 19–21, 59–61 of roads H 6–8; P 103 scope of employment F 19–20 self defence, see defence service providers, see internet sexual abuse A 20; EW 16, 20, 24, 47; S 50–53, 66; SLO 18, 5–29 sexual life, loss of ~ SLO 26 sexual self-determination A 20 shortened life expectancy A 36; D 36; EW 8–15; GR 38; IRL 31 smoking D 36–39, 77; I 33–42 social services D 16–22; EW 16–18 solicitors, see lawyers sports A 10; D 20–21; F 28–33; H 21– 23; NL 41; P 90–91; SLO 37 standard of care D 4, 19; EW 1–2, 21; H 20 state liability, see public liability statutory duty D 18–22; F 20; IRL 1–2 breach of ~ A 55 sterilisation CH 9 strict liability A 9; B 117; BU 13, 18–24; CH 1, 24–25; CO 8; CZ 78–85, 93; D 52, 55; DK 8–10; E 24–26; EST 20; EW 57; F 6, 9; FIN 21; GR 29, H 8, 24–26, 30–35; LT 12, 33; NL 17–20; P 54; SLO 41–42 subcontractor EW 44 tax PL 65–73; S 9 third party B 49–57; CH 46, 50–52; CO 30; EST 3, 5, 16–17; N 9,12; P 33, 94; S 39 tort law reform A 1–26; EW 52 traffic liability E 1–3; EU 13; N 20; NL 5, 38–40; SLO 22 travel agencies E 39–40

Index unfair competition CZ 3, 17; EU 12; H 2–5; LT 35–40 unjust enrichment B 8; CZ 18; EST 4, EW 36, 40; GR 83; N 17–19 VAT (value-added tax) D 80 Verkehrssicherungspflichten A 7 vicarious liability A 13; B 13, 90; BU 25–31, 108, 111–114, 142–143; CH 1; E 6; EW 44–51; FIN 21; GR 28– 30 violence victims EW 27; LT 1–7 vis maior, see force majeure volunteers B 1–15; NL 25, 64

707 waiver of liability CZ 6, 105 work accidents E 19; GR 19–24, 59–61; IRL 1 wrongful birth CH 54; CO 26; E 50; F 17; H 9–11, 18–20, 27–28; IRL 39; LT 13; P 105; PL 74–85 wrongful life CO 27–28; E 50; H 11; NL 6, 15–16, 72, 74; P 105 wrongfulness A 7, 25, 35; B 54–57, 74– 75; BU 48–53, 91–94; CZ 14, 56; EST 4; D 9, 13; GR 4–6, 20, 32, 38, 60; H 4, 14–17, 50; I 18; LT 24–27, 37, 40; N 2–3, 22; NL 18–19; P 84, 91; PL 9–13, 31, 35, 71, 78, 96

Publications Principles of European Tort Law Volume 1: The Limits of Liability: Keeping the Floodgates Shut. Edited by Jaap Spier. Kluwer Law International, The Hague. Hardbound. ISBN 90-411-0169-1. 1996, 162 pp.

Volume 5: Unification of Tort Law: Damages. Edited by Ulrich Magnus. Kluwer Law International, The Hague. Hardbound. ISBN 90-411-1481-5. 2001, 255 pp.

Volume 2: The Limits of Expanding Liability. Eight Fundamental Cases in a Comparative Perspective. Edited by Jaap Spier. Kluwer Law International, The Hague. Hardbound. ISBN 90-411-0581-6. 1998, 244 pp.

Volume 6: Unification of Tort Law: Strict Liability. Edited by Bernhard A. Koch and Helmut Koziol. Kluwer Law International, The Hague. Hardbound. ISBN 90-411-1705-9. 2002, 444 pp.

Volume 3: Unification of Tort Law: Wrongfulness. Edited by Helmut Koziol. Kluwer Law International, The Hague. Hardbound. ISBN 90-411-1019-4. 1998, 144 pp.

Volume 7: Unification of Tort Law: Liability for Damage Caused by Others. Edited by Jaap Spier. Kluwer Law International, The Hague. Hardbound. ISBN 90-411-2185-4. 2003, 335 pp.

Volume 4: Unification of Tort Law: Causation. Edited by Jaap Spier. Kluwer Law International, The Hague. Hardbound. ISBN 90-411-1325-8. 2000, 161 pp.

Volume 8: Unification of Tort Law: Contributory Negligence. Edited by Ulrich Magnus and Miquel Martín-Casals. Kluwer Law International, The Hague. Hardbound. ISBN 90-411-2220-6. 2004, 300 pp.

Publications

Volume 9: Unification of Tort Law: Multiple Tortfeasors. Edited by W.V. Horton Rogers. Kluwer Law International, The Hague. Hardbound. ISBN 90-411-2319-9. 2004, 313 pp.

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Volume 10: Unification of Tort Law: Fault. Edited by Pierre Widmer. Kluwer Law International, The Hague. Hardbound. ISBN 90-411-2098-X. 2005, 391 pp.

Tort and Insurance Law Volume 1: Cases on Medical Malpractice in a Comparative Perspective. Edited by Michael Faure and Helmut Koziol. Springer, Vienna/New York. Softcover. ISBN 3-211-83595-4. 2001, 331 pp.

Volume 5: Deterrence, Insurability and Compensation in Environmental Liability. Future Developments in the European Union. Edited by Michael Faure. Springer, Vienna/New York. Softcover. ISBN 3-211-83863-5. 2003, 408 pp.

Volume 2: Damages for NonPecuniary Loss in a Comparative Perspective. Edited by W.V. Horton Rogers. Springer, Vienna/New York. Softcover. ISBN 3-211-83602-0. 2001, 318 pp.

Volume 6: Der Ersatz frustrierter Aufwendungen. Vermögens- und Nichtvermögensschaden im österreichischen und deutschen Recht. By Thomas Schobel. Springer, Vienna/New York. Softcover. ISBN 3-211-83877-5. 2003, 342 pp.

Volume 3: The Impact of Social Security on Tort Law. Edited by Ulrich Magnus. Springer, Vienna/New York. Softcover. ISBN 3-211-83795-7. 2003, 314 pp. Volume 4: Compensation for Personal Injury in a Comparative Perspective. Edited by Bernhard A. Koch and Helmut Koziol. Springer, Vienna/New York. Softcover. ISBN 3-211-83791-4. 2003, 501 pp.

Volume 7: Liability for and Insurability of Biomedical Research with Human Subjects in a Comparative Perspective. Edited by Jos Dute, Michael G. Faure and Helmut Koziol. Springer, Vienna/New York. Softcover. ISBN 3-211-20098-3. 2004, 445 pp. Volume 8: No Fault Compensation System in the Health Care Sector. Edited by Jos Dute, Michael G. Faure and Helmut Koziol. Springer, Vienna/New York. Softcover. ISBN 3-211-20799-6. 2004, 492 pp.

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Publications

Volume 9: Pure Economic Loss. Edited by Willem H. van Boom, Helmut Koziol and Christian A. Witting. Springer, Vienna/New York. Softcover. ISBN 3-211-00514-5. 2004, 214 pp.

Volume 14: Financial Compensation for Victims of Catastrophes. Edited by Michael Faure and Ton Hartlief. Springer, Vienna/New York. Softcover. ISBN 3-211-24481-6. 2006, 466 pp.

Volume 10: Liber Amicorum Pierre Widmer. Edited by Helmut Koziol and Jaap Spier. Springer, Vienna/New York. Softcover. ISBN 3-211-00522-6. 2003, 376 pp.

Volume 15: Entwurf eines neuen österreichischen Schadenersatzrechts. Edited by Irmgard Griss, Georg Kathrein and Helmut Koziol. Springer, Vienna/New York. Softcover. ISBN 3-211-30827-X. 2006, 146 pp.

Volume 11: Terrorism, Tort Law and Insurance. A Comparative Survey. Edited by Bernhard A. Koch. Springer, Vienna/New York. Softcover. ISBN 3-211-01867-0. 2004, 313 pp. Volume 12: Abschlussprüfer. Haftung und Versicherung. Edited by Helmut Koziol and Walter Doralt. Springer, Vienna/New York. Softcover. ISBN 3-211-20800-3. 2004, 180 pp. Volume 13: Persönlichkeitsschutz gegenüber Massenmedien/The Protection of Personality Rights against Invasions by Mass Media. Edited by Helmut Koziol and Alexander Warzilek. Springer, Vienna/New York. Softcover. ISBN 3-211-23835-2. 2005, 713 pp.

Volume 16: Tort Law and Liability Insurance. Edited by Gerhard Wagner. Springer, Vienna/New York. Softcover. ISBN 3-211-24482-4. 2005, 361 pp. Volume 17: Children in Tort Law. Part I: Children as Tortfeasors. Edited by Miquel Martín-Casals. Springer, Vienna/New York. Softcover. ISBN 3-211-24480-8. 2006, 476 pp. Volume 18: Children in Tort Law. Part II: Children as Victims. Edited by Miquel Martín-Casals. Springer, Vienna/New York. Softcover. ISBN 3-211-31130-0. 2006, 315 pp. Volume 19: Tort and Regulatory Law. Edited by Willem H. van Boom, Meinhard Lukas and Christa Kissling. Springer, Vienna/New York. Softcover. ISBN 3-211-31133-5 (forthcoming).

Publications

711

European Tort Law Yearbook European Tort Law 2001. Edited by Helmut Koziol and Barbara C. Steininger. Springer, Vienna/New York. Softcover. ISBN 3-211-83824-4. 2002, 571 pp.

European Tort Law 2003. Edited by Helmut Koziol and Barbara C. Steininger. Springer, Vienna/New York. Softcover. ISBN 3-211-21033-4. 2004, 493 pp.



Principles of European Tort Law Text and Commentary. Edited by the European Group on Tort Law. Springer, Vienna/New York. Softcover. ISBN 3-211-23084-X. 2005, 282 pp.

European Tort Law 2005 (Tort and Insurance Law Tort and Insurance Law - Yearbooks)

European Tort Law 2008 (Tort and Insurance Law Tort and Insurance Law - Yearbooks)

European Tort Law 2007 (Tort and Insurance Law Tort and Insurance Law - Yearbooks)

European Tort Law 2004 (Tort and Insurance Law Tort and Insurance Law - Yearbooks)

European Tort Law 2006 (Tort and Insurance Law Tort and Insurance Law - Yearbooks)

Tort Law and Liability Insurance (Tort and Insurance Law)

Shifts in Compensation for Environmental Damage (Tort and Insurance Law) (Tort and Insurance Law)

Tort Law and Social Morality

Children in Tort Law, Part II: Children as Victims (Tort and Insurance Law) (Pt. 2)

Children in Tort Law, Part I: Children as Tortfeasors (Tort and Insurance Law) (Pt. 1)

Exploring tort law

Principles of Tort Law

Tort Law (Essentials Series)

Aggregation and Divisibility of Damage (Tort and Insurance Law)

Punitive Damages: Common Law and Civil Law Perspectives (Tort and Insurance Law)

Law of Tort (Foundation Studies in Law)

Sourcebook on Tort Law (Sourcebook)

Tort Law and Economics (Encyclopedia of Law and Economics)

Tort Law in America: An Intellectual History

Essential Tort Law, 2nd Edition (Essential)

Tort Law (The Elliott & Quinn Series)

Dark Tort

Tort Wars

Shifts in Compensating Work-Related Injuries and Diseases (Tort and Insurance Law)

Dark Tort

Law of Marine Insurance

Shifts in Compensating Work-Related Injuries and Diseases (Tort and Insurance Law)

Dark Tort

Dark Tort

Tort Wars

The Measure of Injury: Race, Gender, and Tort Law

European Tort Law 2005 (Tort and Insurance Law Tort and Insurance Law - Yearbooks)

European Tort Law 2008 (Tort and Insurance Law Tort and Insurance Law - Yearbooks)

European Tort Law 2007 (Tort and Insurance Law Tort and Insurance Law - Yearbooks)

European Tort Law 2004 (Tort and Insurance Law Tort and Insurance Law - Yearbooks)

European Tort Law 2006 (Tort and Insurance Law Tort and Insurance Law - Yearbooks)

Tort Law and Liability Insurance (Tort and Insurance Law)

Shifts in Compensation for Environmental Damage (Tort and Insurance Law) (Tort and Insurance Law)

Tort Law and Social Morality

Children in Tort Law, Part II: Children as Victims (Tort and Insurance Law) (Pt. 2)

Children in Tort Law, Part I: Children as Tortfeasors (Tort and Insurance Law) (Pt. 1)

Exploring tort law

Principles of Tort Law

Tort Law (Essentials Series)

Aggregation and Divisibility of Damage (Tort and Insurance Law)

Punitive Damages: Common Law and Civil Law Perspectives (Tort and Insurance Law)

Law of Tort (Foundation Studies in Law)

Sourcebook on Tort Law (Sourcebook)

Tort Law and Economics (Encyclopedia of Law and Economics)

Tort Law in America: An Intellectual History

Essential Tort Law, 2nd Edition (Essential)

Tort Law (The Elliott & Quinn Series)

Dark Tort

Tort Wars

Shifts in Compensating Work-Related Injuries and Diseases (Tort and Insurance Law)

Dark Tort

Law of Marine Insurance

Shifts in Compensating Work-Related Injuries and Diseases (Tort and Insurance Law)

Dark Tort

Dark Tort

Tort Wars

The Measure of Injury: Race, Gender, and Tort Law

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