February 13, 2008

Changing Views on Punitive Damages in Europe

Historically, European countries did not permit the award of punitive damages. A new article by John Gotanda, Charting Developments Concerning Punitive Damages: Is The Tide Changing?, suggests that change is in the works.

Here is an abstract of the article which can be found in the Columbia Journal of Transnational Law:

This essay discusses a number of developments outside of the United States concerning punitive damages, which may ultimately signal a change in the way other countries view American awards of such damages.

To date, courts in many countries have refused to recognize and enforce American punitive damages awards on the ground that they violate the host country's public policy. In most civil law countries, such as France and Germany, penal damages can only be ordered in criminal proceedings; a civil award of such damages has been viewed as contrary to ordre public. In common law countries, while punitive damages generally may be awarded in civil suits, there is no agreement on the circumstances warranting punitive damages, and courts differ on the appropriate amount of such an award.

While traditionally American awards of punitive damages have been difficult to enforce abroad, this practice may be about to change. Recently developments in France, Germany and the European Union, as well as decisions in Australia, Canada and Spain point toward greater receptivity to punitive damages and enforcement of foreign awards of these damages. In France, proposed revisions to the French Civil Code call for awarding punitive damages in certain cases. In Germany, a study by a prominent scholar finds that German courts are beginning to award penal damages in civil actions. In the European Union, a European Commission Green Paper raises the possibility of allowing the doubling of damages in certain antitrust cases. In Australia, a recent decision by the Supreme Court of South Australia opines that Australian courts would enforce large punitive damages awards ordered by American courts. Moreover, in Canada and Spain, appellate courts affirm decisions to enforce American judgments that included punitive damages. While these developments do not point toward clear sailing for American punitive damages abroad, when viewed together they may foreshadow a change in the wind that may ultimately lead to greater enforcement of these damages.