Dr. Ullrich Spelsberg-Korspeter Zieblandstraße 32 a D München. Ladies and Gentlemen,

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1 Dr. Ullrich Spelsberg-Korspeter Zieblandstraße 32 a D München Ladies and Gentlemen, In the following, I would like to give you an overview of the statutory provisions and case law governing compensation for pain and suffering in the German legal system. With reference to the subject of this conference, the main focus will be on claims deriving from traffic accidents and on the insurer s position in according lawsuits. I. In the German legal system, compensation for non-pecuniary damage is not the rule, but an exception. In practice, most cases concern compensation for pain and suffering deriving from bodily harm and compensation for the infringement of personal rights. Compensation for pain and suffering deriving from bodily harm is provided for by statute, in particular by section 253 paragraph 2 of the German Civil Code and by various specific provisions such as section 11 of the Road Traffic Act and section 8 of the Product Liability Act. On the contrary, compensation for the infringement of personal rights is based on customary law. The fact that compensation for non-pecuniary damage is an exception may explain why courts are generally reluctant to grant an indemnity for damage, which does not consist of an impairment of the plaintiff s fortune. On the one hand, courts tend to tighten the prerequisites to according claims. On the other hand, the sums they award are often considered as low, although this might partly be due to the fact, that most reports about sums awarded by foreign courts concern cases from the U.S. where the respective amounts are considerably higher.

2 2 An example for the courts restrictive interpretation of the relevant statutory provisions is that the Federal Court of Justice has ruled that a plaintiff can be denied compensation for pain and suffering if the bodily harm on which the claim is based can be considered negligible. This is a confinement which has been discussed in the context of a reform of the law of damages in 2002, but which neither the German Civil Code nor any of the according specific statutes explicitly provide for. Moreover, the Federal Court of Justice has ruled that the compensation for the time expenditure and inconvenience related to making a claim for damages will not be granted. Most notably, however, the courts general reluctance to award plaintiffs compensation for non-pecuniary damage has influenced the jurisprudence on the question whether pain and suffering deriving from the loss or injury of a closely associated person can entitle the claimant to an indemnity. Unlike in other European legal systems, the shock caused by the loss or injury of a closely associated person as such does not entitle the claimant to compensation. This means that if pain and suffering do not considerably exceed the level of discord which must usually be expected if someone is confronted with an according situation, compensation will not be granted. But even if pain and suffering do considerably exceed the mentioned level of discord and induce physical illness which given the wording of the relevant statutory provisions would in general entitle the claimant to compensation, two additional confinements apply: Compensation will only be granted if the relationship between the claimant and the person killed or injured is sufficiently close and if the event, which has caused the shock, is sufficiently grave. If these conditions are met, the amount of compensation varies. In 1993, the county court of Heilbronn, for example, awarded a mother who was forced to observe her 17-year old daughter being stabbed to death with a knife by a disappointed admirer

3 3 compensation in the amount of DM 5, which would today correspond to about DM 7,000.00, or EUR 3, On the contrary, in 2004, the district court of Frankfurt awarded a husband who saw wife being killed in a train accident compensation in the amount of EUR 15, II. The mentioned observation that within Germany the sums awarded by the courts are often considered as rather low does not only apply to cases concerning compensation for pain and suffering deriving from the loss or injury of a closely associated person. The assessment of a certain level of compensation, however, depends on the point of view of the observer. In order to give you an impression of the amounts a plaintiff might expect in a lawsuit in a German court, I would like to refer to a few examples: The district court of Berlin has granted a plaintiff compensation in the amount of EUR 15, for the loss of an arm. The district court of Frankfurt has granted a plaintiff compensation in the amount of EUR 20, for the loss of a leg. And several local courts have each granted compensation in the amount of EUR for a whiplash-injury caused by the plaintiff s head being catapulted to the front in a traffic accident. The relevant statutory provisions do not provide for any fixed guidelines concerning the level of compensation. Thus, the determination of the amount awarded is entirely at the discretion of the courts. In addition, the procedural rules applying for the establishment of the underlying facts further strengthen the position of the courts. Whereas in general evidence must be

4 4 heard on every relevant question of fact on which the parties explicitly disagree, this does not apply to questions of fact pertaining exclusively to the assessment of damage, be it pecuniary or non-pecuniary. Insofar, the extent to which evidence is heard is put at the discretion of the courts. Moreover, as far as the relevant questions of fact exclusively pertain to the assessment of damage, the standard of evidence is lowered. Whereas in general the court must be fully convinced that a contested statement is true, the amount of damage can be estimated. Given these facts, one could assume that the amounts awarded by the courts strongly differ. However, this seems not to be true. On the contrary, bearing in mind that each case is different and that comparisons can be difficult because often claimants have suffered multiple injuries, the sums awarded tend to be astonishingly similar. This is partly due to the fact that the criteria for assessing the amount of compensation are widely acknowledged. Besides of operational hazard, which plays a role in cases relating to traffic accidents, there are two main groups of criteria. The one group of criteria is focused on the injured party and includes (1) contributory negligence, (2) the gravity of the injuries suffered, and (3) the impact of the injured party s conduct of life and professional career including the injured party s age, social and financial situation. The second group of criteria is focused on the person held liable, in particular (1) his level of misconduct, (2) his financial situation, and (3) his reaction to the presentation of the claim, meaning the question whether settlement is unduly delayed.

5 5 The latter is of particular relevance in cases in which an insurer acts on behalf of a defendant. However, the main reason for the wide homogeneity of the sums awarded is that most courts consult tables of amounts of compensation granted in similar cases. These tables are compilations of a great number of first and second instance decisions, which are edited by private authors. The most widely used table is the one by three authors named Hacks, Lepa and Ring. This table is structured by the amounts awarded, beginning with the lowest and ending with the highest. In addition, it provides for an index linking the relevant decisions to different types of injury and displays to which extent the court has accounted for contributory negligence on the part of the claimant. The decisions listed in the mentioned tables are usually made accessible to the authors by the attorneys representing one of the litigating parties, but also sometimes by the courts themselves. Names are blackened. Consulting the most commonly used tables helps parties assess their position, be it in a lawsuit or in an extrajudicial negotiation. As a consequence, in a considerable number of cases amicable settlements are brought forward. This often meets the interest of insurers, who consider the underlying facts from a rational point of view and aim at an economically reasonable solution. III. The fact that insurers are regularly involved in the settlement of claims deriving from traffic accidents is mainly due to the provisions of the Road Traffic Act and the socalled Mandatory Insurance Act by which various EU directives concerning civil liability in respect of the use of motor vehicles have been transformed into national law. The Mandatory Insurance Act also provides for a compensation body equivalent to the Romanian Street Victims Protection Fund to which an injured party can address his claim if the motor vehicle involved in the accident cannot be identified or is not subject to insurance coverage.

6 6 In contrast to the situation in general law of insurance, within the scope of the Mandatory Insurance Act the injured party has a direct right of action against the insurer. This particularity also goes back to an EU directive. As a consequence, the insurer not only assumes the extrajudicial communication with the claimant, but also regularly becomes a party in an eventual lawsuit. From the insurer s perspective it is of relevance whether and if applicable how a claim for compensation for non-pecuniary damage can be settled by agreement. The problem in this context is that it has to be made sure that the settlement is comprehensive, meaning that the risk that the injured party will be entitled to additional claims in the future will be excluded. In case of a court judgement, the general rule is that the entire claim is settled. That means that the amount awarded by the court not only compensates pain and suffering in the past, but all consequences of the injury on which the claim is based, even those occurring in the future. However, the mentioned general rule is subject to an exception. If consequences occur which were not only unknown but which not even an expert could reasonably have foreseen at the time of the last oral hearing in court, the claimant can be entitled to an additional claim. In principle, the same applies to a settlement by agreement. However, clauses explicitly excluding additional claims of the said manner have been held valid. Therefore, a settlement agreement can have an effect that exceeds that of a court ruling. Evidently, carefully drafted settlement agreements of this content can be in the insurer s interest.

7 7 Overall, there is a considerable incentive to settle claims amicably: Both parties gain legal certainty and may save high litigation costs. Moreover, the claimant will regularly receive consideration for waiving the hypothetical right to an additional claim in case of unforeseeable developments in the future. Whether this is in the claimant s interest depends on the specific circumstances of the case. IV. The compensation body mentioned above is - in principle subject to the same set of rules as the insurer whose place it takes vis-à-vis the injured party. However, if the injured party addresses the compensation body, his right to compensation for nonpecuniary damage is subject to the additional confinement that the injury suffered must be so severe that compensation is necessary to avoid a harshly inequitable result. An example would be the case that a person is hit by an unidentified car and suffers paraplegia or an injury of similar gravity. The additional confinement to the injured party s claim for compensation is justified by the fact that the compensation body other that the insurer does not join the keeper of the vehicle s obligation to indemnify the victim, but mainly renders a social service. V. In conclusion, it can be said that claims for compensation for pain and suffering deriving from bodily harm play an important role in the daily practice of civil law. In my opinion a central challenge in the future will be to coordinate the sums awarded with those granted in cases of infringement of personal rights.

8 8 In Germany, it frequently happens that prominent persons are awarded sums up to EUR 10, or more in compensation for the unauthorised publishing of a photograph. The sums awarded in average cases of physical injury tend to be significantly lower. This displays a friction, which has become more and more virulent over the past decades. Thinking of a possible harmonisation concerning compensation for non-pecuniary damage, evening out this friction will be one of the most difficult tasks. Thank you for your attention.

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