Courts outside the US find punitive damages alarming.
Punitive damages (called exemplary damages in the UK) are damages not awarded in order to compensate the claimant, but in order to reform or deter the defendant and similar persons from pursuing a course of action such as that which caused the injury to the claimant. Punitive damages are a settled principle of common law in the US. They are a matter of state law, and thus differ in application from state to state. They are often reported in the media because of the huge amounts which are awarded. In this respect the US is quite unique in its application of punitive damages. In recent years, punitives have become the focal point of the “tort reform” debate in the US, fueled by the fact that a number of highly-publicized multi-million dollar verdicts, which are often reduced or eliminated on appeal, have led to a fairly common perception that punitive damage awards tend to be excessive.
This is the predominant view in continental Europe where punitive damages are not awarded. It is therefore difficult, and in most cases impossible, to enforce a punitive damages award against a company in a country in Europe. The view in Europe is that the criminal justice system should punish wrongdoers in society and not private individuals. The criminal justice system is controlled by the state which provides safeguards to ensure that people are not disproportionately punished for their wrongful acts. The way in which punitive damages work means that the claimant who has suffered some form of loss is not only compensated but also gains a windfall which is not actually related to the claimant’s personal loss. In addition, in the US it is a lay jury who decides the amount of the punitive damages award. From a European perspective, the US system is seen as too discretionary and subjective. In Europe, punishments are usually based, at least to some degree, on a judge’s discretion or government regulatory authorities‘ well-founded and considered assessments of the applicable legal rules.
However, there are signs that certain European countries are becoming more willing to enforce US punitive damage judgments in Europe. For example, in Spain, the Tribunal Supremo enforced a punitive award from a Texas trademark case in 2001. Notably, there seems to be some degree of acceptance of punitive damages awards in cases where the defendant has acted in a blatantly intentional manner, although the high amounts awarded in the US are still viewed with suspicion and sometimes disdain in Europe and the rest of the world.
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