The research project, funded by the Daimler and Benz Foundation with € 40,000, brings together international developments in case law and empirical research on punitive damages with recent developments in German and European law. Specifically, it seeks to answer the question of whether and to what extent the strict refusal of recognition of foreign punitive damage awards by German courts is still tenable.

Background

Ever since the the fast-food chain McDonald's has famously been ordered to pay almost 3 million US dollars to the buyer of a coffee brewed too hot, seemingly astronomical amounts of damages have been among the most prominent features of US law. Of course, damage awards that go beyond merely compensating the victim for their loss and also aim to disincentive wrongoing by punishing the defendant also exist in other legal systems, mainly those influenced by English law.

In contrast, punitive damages are foreign to German law. According to the Federal Court of Justice's landmark decision from 1992 (BGHZ 118, 312), the sole purpose of damages is to compensate for loss; any preventive or punitive effects are at most "a useful consequence". Thus, German courts are not only prevented from awarding anything beyond what is strictly necessary to restore the status quo ante, even in cases of intentional infringements; they must also refuse to recognise foreign judgments awarding punitive damages because they are "obviously incompatible with essential principles of German law".

Through two complementary symposia, the project aims to answer the question of whether this restrictive approach to foreign punitive damage awards needs to be re-evaluated. This might be the case for three reasons: First, the fear that the seemingly disproportionately amounts of foreign punitive damages awards threatens to "blow up all domestic standards of liability" appears hardly tenable in light of the more recent case law of the US Supreme Court (see eg Philip Morris USA v. Williams, 549 U.S. 346 (2007)) as well as of current empirical research (see eg Goudkamp/Katsampouka, OJLS 38 (2018), 90): in fact, even in the US, the median ratio between the amounts awarded for compensation and punishment is less than 1:1. Second, damages in German law, too, have long ceased to be strictly limited to mere compensation but increasingly contain behavioural, if not penal, elements, often as a consequence EU law (see most recently CJEU, Case C-100/21). Third, the courts of numerous other states, where foreign punitive damages awards are also traditionally refused recognition, have meanwhile moved away from this fundamental position (e.g. the Italian Corte Suprema di Cassazione, decision of 5 July 2017 – No. 16601) and started to assess whether the amount awarded is disproportionate to the actual damage in the individual case.

Conferences

The first, international conference will have a comparative focus and discuss the aforementioned developments, presumably in March 2024. It will reflect, on the one hand, the perspective of those legal systems where punitive damages are awarded and will address the recent empirical research from those systems. On the other hand, it will also reflect the perspective of those legal systems whose courts do not award punitive damages, but may recognise such awards, at least in individual cases, or – as the Supreme Court of Japan confirmed most recently (judgment of 25 May 2021) – continue to not recognise them.

The second, German conference will build on the findings of the first conference and discuss recent develeopments in German and European law, presumably in October 2024. It will focus on the growing number of cases and provisions that continued to cast doubt on the idea that damages "in the modern system of German private law" have the sole purpose of compensating damage (BGHZ 118, 312, paras. 73, 75). On this basis, it will raise the question of if, and if so, to which extent, the time has come for a reevalution of the courts' refusal to recognize and enforce foreign punitive damage awards.

Publication

Thanks to the support of the Daimler Foundation, the results of both conferences will be published open access shortly thereafter.