Guidelines of the Czech Supreme Court Relating to Compensation for Non-pecuniary Loss as a “Trendsetter”?

Klára Vítková

1. Introduction

One day during the summer holidays, a family is driving on a highway. The sun is shining and music is playing. Suddenly, a truck swerves in front of the family’s car. There is no space to move aside. The tires squeal and the car crashes. The father dies, the mother suffers many severe fractures of her ribs and arms, the daughter suffers third-degree burns on her face, and the son’s right leg has to be amputated.

Why am I describing such a horrifying car accident? I want to show, from the beginning, how complicated the issue of compensation for non-pecuniary loss is. A fair legal solution must be accompanied by a moral, medical, and economic point of view.

There are some costs which could be easily quantified and compensated, e.g. medical payments or loss of earnings. However, the legislator must also set rules for non-pecuniary loss, which includes pain, other similar harm, and deteriorated social position.

I give the mother as an example above for a clear illustration. The costs of her operation, medication, and loss of earnings belong to the first category. Moreover, she had long-term problems such as no sleeping without pain and she will never be able to use her arm fully again – the compensation for the effects on her life is an example of compensation for non-pecuniary loss.

The question is how should non-pecuniary loss be compensated. How much does pain cost? How much does a life cost? How much does shock cost?

The Guidelines of the Czech Supreme Court (the “Guidelines”) attempt to present answers to these matters. The aim of the article is to initially analyse whether the solution itself is fair and meets the requirements of Act No. 89/2012 Coll., the Civil Code (the “Civil Code”), secondly, whether the solution is the right one, and thirdly, whether the Guidelines are appropriate in comparison with the German approach.

2. Development of compensation for non-pecuniary loss in the modern Czech civil law

Compensation for non-pecuniary loss is primarily regulated in the Civil Code. In particular, Section 2894(2) must be taken into consideration. This provision states that “if the duty to provide compensation to another for non-pecuniary harm has not been expressly stipulated, it affects the tortfeasor only where specifically provided by a statute”[1]. Under Section 2956, compensation for bodily harm and death belongs to such statutory provision; this means that there is no need for an explicit stipulation. The extent of compensation is specified in Section 2958: It should be “fully compensating for the pain and other non-pecuniary harm suffered […] and the deteriorated social position”. The Civil Code does not define explicitly what “fully compensation” means, and thus it is left up to judicial practice.[2] Moreover, Section 2957 states that “the manner and amount of adequate satisfaction must be determined so as to also compensate for the circumstances deserving special consideration” with a few examples of these circumstances given. The wording of these sections gives extensive powers to the judicial branch. This solution was chosen as a reaction to the previous regulation, as described further.

In accordance with Section 444(2) of Act No. 40/1964 Coll., the Civil Code (the “1964 Civil Code”), the extent of compensation for bodily harm and death was determined by Regulation No. 440/2001 Coll., on compensation for bodily harm and the deteriorated social position (the “Regulation”). The Regulation contained the so-called “tables” – almost every conceivable injury was appraised by a fixed amount of points (e.g. 20 points for a nose fracture), and the value of a point was set at CZK 120 (about EUR 4.50[3]). Compensation was thus calculated as an amount of points multiplied by the value of the point (CZK 2,400 (EUR 90) for the nose fracture mentioned above). Classification of the specific harm was made by a medical expert, and the judge’s role was strongly limited. He was only entitled to increase the amount of compensation pursuant to Section 7 of the Regulation under “circumstances deserving special consideration”.

Such regulation definitely did not comply with the modern conception of the value of a human life as well as with the separation of powers:

(1) The value of the point has not changed since 2001, so positive economic development was not followed, and the new economic reality was not taken into consideration.[4]

(2) The amount of points assigned to each injury could not provide sufficient compensation for pain and deteriorated social position (for a better illustration, a single ticket to the public transport in Prague costs CZK 32 – EUR 1.20); in my opinion, non-pecuniary loss was not considered as comparable with pecuniary loss.

(3) Compensation for bodily harm is a complicated moral, economic, and legal problem, and as such, should not be regulated at the level of an implementing regulation. The legislators of the Civil Code reacted explicitly to this objection: “We abandon the idea that compensation for bodily harm and death should be determined a priori by law or an implementing legislation in order to simplify the decision-making of courts.”[5]

(4) Moreover, the wording of Section 7 of the Regulation mentioned “circumstances deserving special consideration” without any detailed description (in contrast to Section 2957 of the Civil Code). The Czech Supreme Court stated only that it “is left to the court to consider in each individual case, which increase of compensation for the deteriorated social position is in the particular case proportional[6]. The problem is that “proportionality” is a vague term, and as such, without any specific guidelines, it could suspend the predictability of judicial decisions – every judge assesses proportionality differently. Section 7 is thus too narrow and at the same time too wide.

The Civil Code accepted this criticism and solved the problem by giving broader powers to the courts in the way explained above. However, such solution has its “dark side” – it is a danger for a fundamental principle of the entire legal system – the concept of legal certainty. The Guidelines try to fix this imperfection.

3. Guidelines of the Czech Supreme Court as a reaction to the new Czech Civil Code

The authors of the Civil Code have invited the judicial branch to prepare a methodology.[7]

The Czech Supreme Court used an a priori technique and justified the necessity of guidelines with the following wording: “A fair and reasonable interpretation of such regulation [Section 2958 of the Civil Code], which lacks any detailed criteria for determination of extent of compensation, requires further concretization and setting of basis, so that judicial praxis could find some comparable and at the same time predictable decisions.”[8]

As a pre-step for the analysis of the Guidelines, it should be stressed that the Supreme Court is not the author[9], even though the document is usually cited as the “Guidelines of the Czech Supreme Court relating to Compensation for Bodily Harm”. The Civil and Commercial Collegium of the Supreme Court only recommended its use to the judges.[10] Under such circumstances, the Guidelines are not a legally binding document.[11] However, the document does have a factual binding character.

Hence, the goal of the Guidelines is to eliminate legal insecurity connected with the Civil Code coming into effect; it should serve as a modern standardised “manual”.

4. “Highlights” of the Guidelines

The Guidelines are divided into two main thematic units: The first is focused on compensation for pain, and the second concentrates on compensation for deteriorated social position.

4.1 Compensation for suffered pain

The Guidelines set the same technical system for compensation for pain as the Regulation. With the word “technically”, I want to emphasise that the framework is similar, but not the background or the result. The Guidelines are thus based on a “point system” – there is a fixed amount of points assigned to each injury (the amounts express proportionality between single injuries).[12] Although it looks identical to the Regulation, the amounts of assigned points are doubled, e.g. 40 points for a nose fracture compared to 20 in the Regulation.

The methodology also determines the value of the point, which is the second main difference. The value is, in fact, firmly connected with average wages per capita in the Czech Republic – one point stands for 1% of average monthly wage per capita in the Czech Republic[13] for the calendar year prior to the year of injury.[14] It is quite a complicated system, but it definitely contributes to the flexibility of the Guidelines. This system allows the value of one point to be automatically adapted to a changing economic situation.[15]

Moreover, the Guidelines contain a well worked-out system for the possible increase of compensation based on four levels of complications (from light complications = + max. 5% to severe complications = + max. 20%). The Regulation regulated only two levels (hard treatment = + max. 50%, or extraordinary treatment = + max. 100%).[16] An obvious reduction in the possible percentage increase is, in my view, sufficiently compensated by the amount of points and the value of the point.

The key question is if the assigned amount of points provides sufficient compensation. I generally think it does not. Under Section 2958 of the Civil Code, it should be fully compensational, complying with the principle of decency. Let me give an example – a victim gets approximately CZK 5,300[17] for a mild concussion, which I do not think is sufficient for a brain injury. Thus, I would prefer a higher amount of points.

4.2 Compensation for deteriorated social position

Although the system of compensation for pain is technically almost the same as in the Regulation, the framework in the part devoted to compensation for deteriorated social position has been completely changed and modernised. The Guidelines are based on the methodology of the World Health Organisation.[18]

The Guidelines come with a limitation of participation in certain life situations.[19] The limitation (from 0% for no limitation to 100% for total limitation) is determined for certain groups of human activities (e.g. learning, general tasks, communication). The system is complicated, but can, on the other hand, cover the variability of life.

Such a system requires a base. The base for compensation for deteriorated social position is the price of human life.[20] The Guidelines decided for 400 times the average monthly wage in the Czech Republic[21] (currently about CZK 10,500,000). You could think that this was not sufficient, and if you see it as a single statement, you may be right. However, compared to the Regulation, it is an enormous increase (according to the Regulation, the highest compensation a victim could get was CZK 360,000 for becoming completely deaf). From this point of view, the Guidelines represent a big step forward.

The compensation could be modified under exceptional circumstances (in particular, age). Compared to the Regulation, the Guidelines provide more detailed and specific rules, which leads again to a higher level of legal certainty and predictability.

The Guidelines recommend a doubled “basic” compensation as the maximum. Such limitation should help “to eliminate subjectivism and arbitrariness and to contribute to unification of judicial praxis[22]. It could be objected that, if legislators wanted to set a limitation, they would decide to do so. But this statement cannot be approved – the corrective measure strengthens the well-known principle of legal certainty.

5. Criticism of the Guidelines – “Highway to Hell”?

I explained the major positive changes relating to the Guidelines in chapter 3. The Guidelines definitely contribute to the predictability of judicial decision-making. Nevertheless, the Guidelines cannot be without criticism:

(1) The first reproof questions the whole concept, because “firmly assigned generalized compensation […] appears being unmoral […] and unfair[23]. On one hand, such standardisation of compensation can lead to the situation in which not all specific circumstances of the case will be considered. On the other hand, it strengthens the principle of legal certainty. Without the Guidelines, Section 2958 of the Civil Code could lead to a world in which each judge takes into consideration all conceivable circumstances – and each case is decided in a completely different manner. Wouldn’t this be more unfair? Moreover, it must be noted that the Guidelines are a manual, not a dogma.[24]

(2) The second objection criticises the way the Guidelines do not comply with the theory of the separation of powers. Some lawyers state that the Czech Supreme Court excelled in judicial praxis and thereby suppressed both legislative and executive praxis.[25] I cannot agree: The Explanatory Memorandum left the question of compensation for non-pecuniary loss specifically and only to the courts. The Guidelines are supported by the authority of the Czech Supreme Court. The critics are right that it was a priori, but, as I argued above several times, such methodology promotes the predictability of judicial decisions, one of the key principles of a modern legal state. And of course, the Guidelines must not be followed blindly.

6. German approach

As mentioned in chapter 1, Section 2958 of the Civil Code stipulates three types of compensation for non-pecuniary loss: for (1) (suffered) pain, (2) other non-pecuniary harm, and (3) deteriorated social position. There is no such provision in the German Civil Code (the “BGB”) – this means that there is no entitlement to compensation for non-pecuniary loss in such a case expressis verbis.[26] However, the right to such compensation is derived from Section 253 BGB, which states in subsection 1 that “money may be demanded in compensation for any damage that is not pecuniary loss only in the cases stipulated by law[27]. Under Section 253(2), injury to body and health belong to such cases.

Thus, there seems to be three different types of compensation in the Civil Code compared to only one (Schmerzensgeld) in the BGB. But in reality, Schmerzensgeld includes also compensation for deteriorated social position[28] (and compensation for other non-pecuniary harm in my point of view as well)

6.1 Schmerzensgeld and its understanding in the case law of the German Supreme Court (the “BGH”)

In comparison to the compensation for “normal” non-pecuniary loss, which is focused on fair compensation for non-pecuniary loss (Ausgleichsfunktion), Schmerzensgeld also has a second function[29]: It should become satisfaction for violation of an object protected under law (Genugtuungsfunktion). This doctrine has an enormous impact on determination of the amount of compensation, because it results in an imperative of the BGH that “all possible circumstances of the case must be considered[30] – thus, compensation is significantly higher than it would be in the case of the mere Ausgleichsfunktion.

The approach of the BGH is sometimes criticised: The Genugtuungsfunktion is seen as an unfair condition in cases where the compensation is not paid by the tortfeasor, but by e.g. an insurance company.[31] In my opinion, such argument must be rejected, because the right of the injured cannot be restricted only because of the insurance of the tortfeasor – the very sense of the compensation law would be denied.

  1. 2 Determination of the amount of compensation – Schmerzensgeldtabellen

Based on the two functions of Schmerzensgeld and using the strong influence of the German courts, Schmerzensgeldtabellen were made as a specification of “reasonable compensation” set out in Section 253(1) BGB. I explained in detail the Czech point “table” system in the first three chapters, so one can surely imagine a similar German “table” system. Nothing could be farther from the truth. Schmerzensgeldtabellen are collections of many judicial judgements about compensation for pain with awarded compensation and a brief reasoning, usually segmented according to the type of injury of the medical branch.

Source: Luckey, J. (2013). Personenschaden: Ersatzansprüche, Regulierung, Checklisten, Schriftsatzmuster. 1st Ed. Köln: Luchterhand, mar. 1346.

The amount of compensation is thus determined by the judicial practice, not by the legislature (as was the case of compensation for death in the 1964 Civil Code) or by executive practice (as was the case of compensation for pain and deteriorated social position in the 1964 Civil Code).

Schmerzensgeldtabellen limit judicial excesses, comply with legal certainty, and make it possible to take into consideration all of the specific circumstances of a single case. This is exactly the desired result of the Guidelines.

As I argued above, the key reason for creating the Guidelines is to avoid the “chaotic situation connected with the unpredictability of judicial decisions”[32]. The Guidelines also set limits for compensation (see chapter 3.2). In addition, they take into account special circumstances.[33]

The crucial difference is that Schmerzensgeldtabellen have been developing for years, whereas the Guidelines were prepared a priori. One could object that a system based on the Guidelines might unfortunately be faulty due to its unnatural development (in contrast to the German one).

I must admit that this objection is partly viable – the courts have their hands tied, and they do not have time to create their own system. Natural development has been suspended.

However, this criticism does not take into account the tough situation the Czech Supreme Court was forced to face. It is true that the Court could wait years for judicial praxis which would lead, I assume, to a solution similar to the German one. But it does not take into consideration the possible price – years of legal chaos, uncertainty, and unpredictability. Under such circumstances, the Court chose an a-priori methodology, and I support such a decision even with some reservation.

To conclude, I find the German solution better, but unfortunately, it is not applicable to the Czech environment.

7. Conclusion

As I stated in the particular question above, I consider the Guidelines to be a well-done document which appropriately completes the wide regulation of compensation for non-pecuniary loss in the Civil Code. The “point system” should serve as a good manual for judges, and it guarantees a certain level for the predictability of judicial decisions. The truth is that it is not able to cover all conceivable situations in life. But the Civil Code enables an increase in compensation under exceptional circumstances; for this, the Guidelines set limits for judicial arbitrariness.

Furthermore, the value of a point is firmly connected with average monthly wages in the Czech Republic, which means that the Guidelines are flexible and reflect real economic development. The amount of points assigned to each injury has also risen, but I still find them insufficient.

I definitely think that the use of the international classification system made by WHO as a base for evaluating the level of deterioration of social position brings the Czech legal system of compensation for non-pecuniary loss closer to a modern western democracy.

Ideally, I would prefer the German decision (collections of judicial judgements developed throughout the years) as an a-posteriori solution, but in the current situation, I would give priority to the principle of legal certainty, thus a-priori guidelines.

To summarise, I believe that the Guidelines are an adequate step in the right direction, although there is no rose without a thorn.

 

Klára Vítková is a student of Faculty of Law of Charles University and at the same time, she does her Ph.D. at Faculty of International Relations of University of Economics, Prague. She worked as an Assistant for Online Marketing in Austrian National Tourist Office. She will start to teach at the university this year. The area of her academic interest is mainly medical, civil and commercial law.

[1] All translations of the Czech Civil Code come from the Official Website of the Czech Ministry of Justice [online]. Available at: http://obcanskyzakonik.justice.cz/images/pdf/Civil-Code.pdf [Accessed 14 Sep. 2016].

[2] With a reference to other modern civil codes, such as the French or Swiss civil codes. (Source: The Ministry of Justice (2011). The Explanatory Memorandum to Act No. 89/2012 Coll., the Civil Code, p. 577 [online]. Available at: http://obcanskyzakonik.justice.cz/images/pdf/Duvodova-zprava-NOZ-konsolidovana-verze.pdf [Accessed 14 Sep. 2016]).

[3] EUR 1 = CZK 27.025. (Source: The Official Website of the Czech National Bank. [online]. Available at: http://www.cnb.cz/cs/financni_trhy/devizovy_trh/kurzy_devizoveho_trhu/denni_kurz.jsp[Accessed 14 Sep. 2016]).

[4] Average monthly wage in the Czech Republic has increased from CZK 14,750 in 2001 to CZK 26,476 in 2015. (Source: The Official Website of the Czech Statistical Office [online]. Available at: https://www.czso.cz/documents/10180/32955062/32018116_0506.pdf/d91f0d74-a290-4de9-bed5-afee5d698ae4?version=1.2 [Accessed 13 Sep. 2016]).

[5] The Explanatory Memorandum, op. cit., note 2, p. 577.

[6] Decision of the Czech Supreme Court, dated 27 April 2006, ref. no. 25 Cdo 759/2005.

[7] Explanatory Memorandum, op. cit., note 2, p. 577.

[8] Czech Supreme Court (2014). Guidelines of the Czech Supreme Court relating to Compensation for Bodily Harm [online]. Available at: http://www.nsoud.cz/JudikaturaNS_new/ns_web.nsf/Metodika [Accessed 14 Sep. 2016].

[9] Such (mis)information could affect the public’s attitude to the material – the Czech Supreme Court is seen as a board of experts, so its opinion has a stronger effect. See Vrcha, P. (2014). Metodika k náhradě nemajetkové újmy na zdraví podle § 2958 občanského zákoníku. 23 Tempus Medicorum, p. 34–36.

[10] The Czech Supreme Court, op. cit., note 8.

[11] Ibid.

[12] Part A of the Guidelines of the Czech Supreme Court relating to Compensation for Bodily Harm– Preamble, section V.

[13] Average monthly wage in the Czech Republic was CZK 26,467 in 2015 and CZK 25,067 in 2014. (Source: The Official website of the Czech Statistical Office [online]. Available at: https://www.czso.cz/csu/czso/pmz_cr [Accessed 13 Sep. 2016].).

[14] Part A of the Guidelines – Preamble, section VI.

[15]Vítová, B., Dohnal, J. and Kotula, J. (2015). Náhrada majetkové a nemajetkové újmy v novém občanském zákoníku. Komentář k § 2894 až § 2971. Metodika Nejvyššího soudu k náhradě nemajetkové újmy na zdraví. 1st Ed. Olomouc: ANAG Publishing, p. 226.

[16] Part A of the Guidelines – Preamble, section VI.

[17] The basic amount of points is 20, but the real amount could be higher because of facial injuries and their compensation, etc.

[18] Part A of the Guidelines – Preamble, section VIII.

[19] The solution of the Regulation (a classification based on impairment of an organ/sense) was denied.

[20] Part A of the Guidelines – Preamble, section X.

[21] Ibid.

[22] Ibid.

[23] Doležal, T. (2015). Jak odškodňovat nemateriální újmy na zdraví? Principy a východiska. 5 Časopis zdravotnického práva a bioetiky, p. 40.

[24] Editors (2014). Government to the interpretation of compensation for bodily harm and death. 22 Právní rozhledy II.

[25] See further Křístek, L. (2014). Nejvyšší soud nahrazuje judikaturu a obchází moc zákonodárnou i výkonnou. Jiné právo [online]. Available at: http://jinepravo.blogspot.de/2014/04/lukas-kristek-nejvyssi-soud-nahrazuje.html [Accessed 14 Sep. 2016].

[26] Section 253 does not form a basis for a claim (it is not an independent Anspruchsgrundlage). As a part of the general part of the BGB, it only defines the extent and form of the compensation. (Medicus, D. and Lorenz, S. (2014). Schuldrecht II. Besonderer Teil. 17th Ed. München: C.H. Beck, p. 465.).

[27] All translations of the German Civil Code come from the Official Website of German Federal Ministry of Justice and Consumer Protection [online]. Available at: http://www.gesetze-im-internet.de/englisch_bgb/german_civil_code.pdf [Accessed 26 Sep. 2016].

[28] According to the constant case law of the BGH, “all possible circumstances of the case must be considered” (BGH 6.7.1955, GSZ 1/55, NJW 1955, pg. 1675-1678). Such circumstances are classified e.g. as permanent disability, violation of social relations, or restraint related to sport activities or a job choice – these terms define the extent of compensation for deteriorated social position in the Civil Code. (Bielitz, A. and Riese, K.-J. (2014). Arzt- und Krankenhaushaftung – Urteile zum Schmerzensgeld. 1st Ed. Düssledorf: Deutsche Krankenhaus Verlagsgesellschaft, p. 20.).

[29] BGH 6.7.1955, GSZ 1/55, NJW 1955, p. 1675-1678.

[30] Ibid.

[31] Medicus, D. and Lorenz, S. (2010). Schuldrecht I. Allgemeiner Teil. 19th Ed. München: C.H. Beck, p. 337.

[32] Part A of the Guidelines – Preamble, section II.

[33]Ibid., section X.