New regulations regarding damages for pain and suffering and compensation for loss suffered

The second book of the new Civil Code governing the law regarding persons enters into force from 1 May 2010. It regulates the legal capacity and capacity to act of natural persons, foundations, general provisions relating to juristic persons, personal rights and infringements of these, the protection of copyright and intellectual property rights. From a business point of view, particularly in the area of personal rights infringement, important new regulations have been introduced. The regulations regarding damage compensation have also been partially revised. These will only become effective as of 1 January 2011, however.
The new Civil Code continues to give great importance to the protection of personal rights. The scope of personal rights has been enlarged in the new Civil Code by including the protection of disabled people, the right to a healthy environment, and the right to a fair trial. Trade secrets are also included in personal rights, if the beneficiary takes  reasonable precautionary measures. Expertise will also be considered a trade secret.

Compensation for infringement of personal rights

For personal rights infringements a kind of damages for pain and suffering may be demanded in lieu of the previous compensation for non-material damages. The main difference is that the damaged person is no longer obliged to prove the occurrence of damage or prejudice.
Therefore, a considerable increase in compensation claims for infringement of personal rights can be expected. From a business point of view, this aspect will play a major role, for example in dealings with employees or in connection with trade secrets. It is nevertheless of major importance that the assessment of damages will still be based on the gravity of the infringement of personal rights, which must be proven by the claimant. Moreover, in cases of infringement of intellectual property rights, damages can be demanded without evidence of damage or prejudice, provided that the protection of such rights is not governed by a special law. In either case only infringements of rights occurring after 1 May 2010 will substantiate a damages claim.

Compensation for breach of contract

From 1 January 2011 the regulations based on defaulting parties’ damages payments will be modified. According to the new provisions, a defaulting party will only be exempted from liability if the named party proves that the damage resulted from circumstances outside the control of the defaulting party that could not have been foreseen at the conclusion of contract, and if the party was not obliged to avoid or prevent these circumstances. Meanwhile the amount of compensation is limited, in principle only to the damage caused to the object of the contract. The liability for consequential damages is restricted to a limited number of cases. The damaged party is also entitled to demand the conclusion of an alternative transaction, in which case the defaulting party has to compensate for the value difference to the initial transaction. Moreover, the liability of the defaulting party is increased by the fact that the court may not reduce the amount of compensation for reasons of equity any more. The new regulations are applicable to agreements concluded after 1 January 2011.

Compensation beyond contractual relations

 
As to damages outside of a contractual relationship after 1 January 2011, the position of the damaged person will improve due to the fact that the he or she is no longer required to prove the illegality of the cause of damage. Furthermore, the damaged person is not required to prove that the person responsible for the damage acted culpably. It is in fact the person responsible for the damage who must prove that he acted lawfully (as expected). If the damaged person benefited from the damage, it must be deducted from the compensation amount, meaning that the damaged person cannot demand the compensation of a damage which has otherwise been offset. The change in value due to time passing must be considered when fixing the compensation amount.
However, these principles have already been taken into consideration by the jurisprudence, and through the new Civil Code they have now been implemented into legal norms. The position of the damaged persons is also imposed where damage has been caused by several persons. The damaged person must not prove for the joint and several liability of the actors that they knew of each other. The new Civil Code also contains provisions on product liability, compensation for environmental damages and liability of corporate person for damages caused by its shareholders in certain cases. The new regulations apply to damages occurring after 1 January 2011.

Andreas Köhler, partner
Law firm Kõvári Tercsák Salans
www.salans.com

Only registered users can write comments.
Please login or register.

Powered by AkoComment Tweaked Special Edition v.1.4.6
AkoComment © Copyright 2004 by Arthur Konze - www.mamboportal.com
All right reserved