Compensation for non-pecuniary losses for personal injury in legal systems based on judicial discretion with specific reference to traffic accidents

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LLM European Private Law

Compensation of non-pecuniary losses for personal injury in legal systems based on judicial discretion with specific reference to traffic accidents

Master Thesis

Patricia Piticas (11208902) 2016

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2 Table of Contents

Introduction ... 3

Chapter I: Overview of damages for non-pecuniary loss ... 5

1. German Law ... 5

1.1 General rules for the compensation of non-pecuniary damages ... 6

1.2 Specific regulation regarding the compensation of non-pecuniary loss in cases of traffic accidents ... 8

2. Romanian Law ... 9

2.1 General rules for the compensation of non-pecuniary damages ... 9

2.2 Specific regulation regarding non-pecuniary damages in cases of traffic accidents ... 11

Chapter II: Assessment of damages for non-pecuniary loss ... 13

1. German Law ... 13

1.1 The functions of damages for non-pecuniary loss ... 13

1.2 Criteria for the assessment of damages for non-pecuniary loss ... 15

2. Romanian Law ... 19

2.1 The functions of damages for non-pecuniary loss ... 19

2.2 Criteria for the assessment of damages for non-pecuniary loss ... 20

Chapter III: The Risks of the legal systems based on judicial discretion ... 25

1.1 Dealing with the risks in Germany ... 27

1.2 Dealing with the risks in Romania ... 30

Chapter IV: Comparative Analysis ... 35

Conclusion ... 39

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3 Introduction

The compensation of non-pecuniary losses represents a crucial issue for most tort law systems. Specifically in the case of traffic accidents, the compensation of non-pecuniary damages for personal injury is highly subjective and raises the issue of how to assess it properly.

Most legal systems struggle between having standardized rules for the assessment of non-pecuniary damages and having more flexibility within their compensation practice. The objective criteria facilitate legal certainty and equal treatment for individuals. In contrast, a flexible compensation system allows efficient protection for individuals and thus is desirable, as the one-size-fits-all approach sometimes fails to address the individualities of each case. Nonetheless, this approach might fail to deliver consistent and predictable outcomes.

A flexible approach to compensation also contains additional risks when it comes to non-pecuniary damages for personal injury as a result of traffic accidents. Since the compensation of non-pecuniary damage for personal injury will mostly be covered by mandatory insurance policies – i.e. motor third-party liability (MTPL) insurance, these risks will have to be borne by the insurance industry. In this sense, the lack of uniformity in the compensation practice and thus the unpredictability will determine insurance companies to hedge against it by increasing insurance premiums. As we will see in this paper, this might even lead to a crisis in the insurance industry.

The aim of the paper is to examine how legal systems based on judicial discretion regarding the compensation of non-pecuniary loss in traffic accidents deal with the risks that come with a flexible compensation practice.

In this context, the present paper asks the question to what extent it is possible for a legal system that is based on judicial discretion concerning the compensation of non-pecuniary losses in traffic accidents to ensure consistency in the compensation practice and not to interfere with a functioning insurance market.

For this purpose, the German and the Romanian legal systems were chosen. These legal systems were eligible for selection, since both countries leave the assessment of non-pecuniary damages

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4 to the discretion of the judge, but deal with the aforementioned risks in a different manner. Additionally the author was already familiar with the relevant Romanian law and the necessary research of German law was facilitated by the author’s proficiency in the German language. In order to answer the main research question I will structure the paper into four parts.

The first part of the paper describes the legal framework based on which compensation for non-pecuniary losses is possible in personal injury cases in the German and Romanian legal system. The present paper will not discuss liability issues and thus I will presume that liability is established on the side of the tortfeasor. I will only mention aspects of liability rules, if they are relevant for the aim of the paper.

The second part of the paper focuses on the assessment of damages for non-pecuniary losses in cases of traffic accidents where the victims suffered personal injury. In this sense, the focus is on the principles and criteria, based on which courts assess the non-pecuniary damages.

For the purpose of the paper, I will presume in all cases that the insurance company will substitute the tortfeasor and will therefore exclude circumstances where the tortfeasor is not insured or where the insurance company is not liable.

The third part of the study describes the possible risks that come within a judicial based system when it comes to the assessment of non-pecuniary damages. After describing the general risks, I examine how each country deals with the risks, respectively.

The fourth part briefly analyses the findings in a comparative fashion in order to draw a conclusion.

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5 Chapter I: Overview of damages for non-pecuniary loss

In order to get an overview on the compensation of non-pecuniary loss for personal injury in the German and Romanian legal system, it is important to first explain the terminology behind both these notions.

First, the concept of non-pecuniary loss or non-pecuniary damages refers to a loss which does not result in a decrease of a person’s wealth, income or assets and thus cannot be quantified in money as to a market value1_.

Under German law, this type of loss is known as ‘immaterieller Schaden’ and the compensation for these damages is referred to as ‘Schmerzensgeld’. The latter encompasses compensation for the pain suffered as a result of the physical injury but also any other mental suffering that stems from this injury, such as loss of amenities or expectations of life2_.

Scholars in Romania use a variety of terms for this type of damages ˗ moral damages, moral prejudice, non-pecuniary damages, or extra-patrimonial damages3_{. However, most academic}

writers refer to non-pecuniary losses as ‘moral damages’. Similarly to German terminology, this term includes both the pain caused by physical injuries as well as any psychological harm caused by the incident4_.

Secondly, the term personal injury will refer to both bodily injuries as well as fatal ones.

1. German Law

The German Law of damages, which is generally regulated under the provisions of the German Civil Code (BGB), was reformed in 2002 when the Second Act on the Amendment of the Provisions on Damages entered into force5_{. In reference to the compensation practice one major}

1_{W.V. Horton Rogers, Damages for Non-pecuniary Loss in a Comparative Perspective (Austria, Wien: Springer}

Verlag, 2001), p. 246.

2_{Basil Markesinis, Michael Coester, Guido Alpa and Augustus Ullstein, Compensation for Personal Injury in}

English, German and Italian Law: A Comparative Outline (Cambridge U.K.: University Press, 2005), p. 4.

3_{Ioan Adam, Reglementare din Drept civil. Obligatiile. Faptul jurdic (Editura C.H. Beck, prima editie, 2013), vezi}

punctul 2.2.2.2. Notiune si Terminologie (www.legalis.ro).

4_{Paul Vasilescu, Drept civil. Obligatii (Editura Hamangiu, 2012), p. 576; Ilie Urs, Repararea daunelor morale}

(Editura Lumina Lex, 2001), p. 9-11.

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6 improvement was made, namely that compensation for non-pecuniary losses was no longer limited to actions based on tort liability6_{. Hence, after 2002 it was possible to claim damages for}

immaterial harm also in cases of breach of contract or in cases of strict liability. This progress was particularly welcomed in the field of traffic accidents where a full protection of the victims was enabled7_{. In this sense the compensation system was adapted to the modern needs and to}

some degree to European standards8_{. As a result, the reticent approach regarding the award of}

non-pecuniary damages was abandoned and thus the compensation for immaterial harm was extended.

1.1 General rules for the compensation of non-pecuniary damages

The core rules of the compensation system in relation to non-pecuniary losses are §249 and §253 of the German Civil Code – ‘Bügerliches Gesetzbuch’ (BGB).

In this sense, §249 BGB introduces two important principles for the German compensation system, namely the concept of reparation in kind ‘Naturalrestitution’ and the principle of full reparation ‘Totalreparation’9_{. According to the first principle, the compensation should place the} victim in the position she was in before the damage occurred and thus the aim is to restore the ‘status quo ante’10_{. Only where reparation is not possible or insufficient, a monetary award will}

be granted as compensation in accordance with the latter principle11_.

As regards the compensation for non-pecuniary losses, it is mostly the case that restitution in kind is not sufficient12_{. Nevertheless, given the special nature of this head of damages not even a}

monetary compensation would be sufficient, as non-pecuniary damages have no market value, and thus a return to the ‘status quo ante’ or full reparation is not really feasible13_{. Hence, the}

6_{Ulrich Magnus, The Reform of German Tort Law, (Working Paper No: 127, April 2003), p. 4.} 7_{Idem, p. 11.}

8_{Idem, p. 3.}

9_{Cees Van Dam, European Tort Law, (Oxford University Press Publishing, 2013), p. 356.}

11_{Cees Van Dam, European Tort Law, (Oxford University Press Publishing, 2013), p. 356.} 12_{Idem, p.60.}

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7 monetary compensation serves in this case as an indemnification for the harm done and thus the concept of adequate indemnification overcomes the principle of ‘restitutio in integrum’14_.

In this context, the most important norm on the compensation for non-pecuniary losses is laid down in § 253 BGB as a rule-exception model. The first paragraph of § 253 BGB states the basic rule, namely that there is no right to compensation for immaterial harm unless the law provides so. The second paragraph of § 253 BGB allows the compensation for non-pecuniary loss as an exception when it is based on an injury regarding the body, health, freedom or sexual self-determinations. As mentioned, in contrast to the former regulation (§ 847 BGB), the right to compensation for immaterial harm can be claimed on the basis of contractual, tort or strict liability15_.

Ricochet victims

Another important aspect regards the ricochet victims, which are persons who may also suffer non-pecuniary losses as a result of the death or sever injury of a close relative or a loved one. However, the German law does not provide secondary victims a right to claim compensation for bereavement16_{. In this context, the German approach faced severe criticism}17_{giving that}

compensation for grief and sorrow is generally acknowledged and particularly important for parents and children based on a recognition and vindication function18_.

As an alternative, the relatives of the victim have the possibility to claim compensation based on § 823 I BGB whenever a nervous shock affects their health as a consequence of hearing or seeing the death of the beloved one19_{. However these so-called ‘Schockschäden’ are granted}

14_{See Basil Markesinis and Hannes Unberath, The German Law of Torts: A comparative Treatise (Oxford, U.K.:}

Hart Publishing, 4th_{edition, 2002), p. 981.}

17_{Walter Odersky, Schmerzensgeld bei Tötung naher Angehöriger (Munich: Beck Publishing, 1989), 10 ff and}

Annina Schramm, Haftung für Tötung (Tubingen: Mohr Siebeck, 2010).

18_{Cees Van Dam, European Tort Law, (Oxford University Press Publishing, 2013), p. 349.} 19_{Idem, p. 371.}

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8 under strict circumstances (i.e. the health impairment has to be very serious) and therefore the burden of proof is more difficult20_.

The transmissibility of the victim’s own claim

Under the German law, whenever the victim dies as a result of a severe injury, his right to claim compensation for non-pecuniary loss is transmissible and thus can be inherited21_{. Nevertheless, it}

is important to mention that if the victim dies right after the accident, respectively if the injury and death have almost the same occurrence, compensation will not be granted since there is no distinguishable non-pecuniary loss22_.

1.2 Specific regulation regarding the compensation of non-pecuniary loss in cases of traffic accidents

Along with the general framework for compensation of non-pecuniary loss stipulated in the BGB, provisions from special statues are also relevant in reference to traffic accident cases. The German Insurance Act (VVG)23_{and the Compulsory Insurance Law (PflVG)}24_{impose on all}

drivers of motor vehicles participating to the public road traffic to have third-party liability insurance. Hence, if a third party is injured in a traffic accident it will be in principle the insurance company that will indemnify the victim and not the driver25_{. In this sense, according to}

Section 115 of the VVG, the claimant has a direct claim against the driver’s insurance company for the compensation of the loss.

20_{See more in W.V. Horton Rogers, Damages for Non-pecuniary Loss in a Comparative Perspective (Austria, Wien:}

Springer Verlag, 2001), p. 111.

21_{Raymond Youngs, English, French & German Comparative Law (London, U.K: Routledge Publishing, 2014), p.}

533.

22_{BGH, 12.05.1998, 1998 NJW, 2741 (2742).}

23_{The German Insurance Contract Act of 2008, BGBI. I 3044.} 24_{Law on compulsory insurance of vehicle owners, BGBI. I 213.}

25_{However the mandatory insurance does not cover cases in which the tortfeasor has caused the damage}

intentionally. There are also exceptional cases where the liability of the insurance company is excluded (i.e. in cases of force majeure) or where the tortfeasor has no (valid) insurance. As a reminder to the observation made in the introduction, the topic of the paper is limited to the cases where the damages are covered by the insurance company.

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9 In reference to strict liability, a compensation claim for non-pecuniary loss can be based on the Road Traffic Act (StVG)26_{, even if the owner of the vehicle was not at fault. According to}

Section 7(1) StVG, in cases of personal injury the holder of the vehicle that caused the damage is liable even if he was not at fault, under the condition that he had knowledge or approved the use of his vehicle. However, in contrast to claims based on fault-liability which are not limited, the compensation under strict liability rules is according to Section 12 (1) StVG subject to a maximum cap of €600,000.

2. Romanian Law

Under the influence of the communist regime, back in 1952, a very famous decision of the Supreme Court stated that no monetary compensation is allowed for moral damages27_{. According}

to the communist ideology, granting a monetary compensation for moral damages would mean acknowledging a bourgeois concept, which was incompatible with the socialist principles28_.

However, after the fall of the communism the traditional practice was readopted and thus the award of damages for pecuniary loss was acknowledged by both monetary and non-monetary means.

2.1 General rules for the compensation of non-pecuniary damages

The general framework regarding the compensation of moral damages is now explicitly regulated in the Romanian Civil Code (CC) under Article 253 (4), which stipulates that the injured person is entitled to an amount of money as compensation for non-pecuniary damages subject to fault-liability and limitation period rules. In this context, the mentioned provision represents the general rule in relation to any type of non-pecuniary loss, as long as it results from an infringement of a right or any other legitimate interest29_.

In relation to the general rule, the Romanian CC stipulates additional rules for the compensation of non-pecuniary loss where the victim has suffered a health, life or bodily injury. In this sense,

26_{The Road Traffic Act 2003, BGBl. I 310, 919.}

27_{Decizia de indrumare a Plenului fostului Tribunal Suprem nr. 7, 29.12.1952, publicata in Culegerea de decizii}

1952-1954, vol. I, p. 25-26.

28_{Ilie Urs, Repararea daunelor morale (Editura Lumina Lex, 2001), p. 6.}

29_{Ioan Adam, Reglementare din Drept civil. Obligatiile. Faptul jurdic, (Editura C.H. Beck, prima editie, 2013), vezi}

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10 according to Article 1391 (1), the injured person is also entitled to a compensation for the restrictions of family opportunities and social life. Although the phrasing of the article was criticized among scholars and practitioners as being ambiguous30_{, both the literature and the}

judicial practice agreed that the article is a supplementary provision to the general rule31_{. As a}

result, the provision is interpreted in unanimity as covering the compensation for the loss of enjoying a normal life, but also of other harm (i.e. pain and suffering, disfigurement etc)32_.

Ricochet victims

Pursuant to the fall of communism, the judicial practice in Romania acknowledged the right of ricochet victims to claim compensation for the suffering endured as a consequence of learning about the death of a relative or another close person33_{. The main challenge was to determine who}

was eligible to claim the compensation and thus who qualified as a secondary victim.

The new provisions of the Romanian CC - which entered into force in 2011, regulated expressly the persons entitled to these types of damages. Under article 1391 (2) of the CC, the ascendants, descendants, brothers, sisters and spouses are presumed to be secondary victims on one hand and any other persons who can prove the suffering caused by the death of a close person on the other hand. That is to say, the line between these relatives and other persons who may qualify as secondary victims is relevant as regards the burden of proof.

The transmissibility of the victim’s own claim

The only person entitled to claim compensation for non-pecuniary loss in case of bodily, health or life injury is the victim herself. In cases where the victim dies after the accident, the right to claim compensation is in principle not transmissible to the heirs34_{. However, if she already}

30_{It was not clear whether it was an exception or an additional stipulation of the general rule stipulated under Art.}

253 (4).

31_{Liviu Pop, Tratat de Drept Civil. Obligatii (Editura Universul Juridic, 2012), p. 424.} 32_Ibidem.

33_{Lacrima Rodica Boila, Noul Cod Civil, Comentariu pe articole (Editura C.H. Beck, editia 2, 2014), vezi}

comentariul articolului 1931, punctul 2.

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11 claimed the right before her death, it is allowed for the heirs to continue the action in Court on behalf of her35_.

2.2 Specific regulation regarding non-pecuniary damages in cases of traffic accidents

Relevant for the award of damages for non-pecuniary loss in cases of traffic accidents are the aforementioned rules of the Civil Code and additionally the rules on insurance law regarding motor third party liability (MTPL).

The Governmental Emergency Ordinance (GEO) no. 54/2016 on MTPL provides that all motor vehicles taking part in the road traffic are subject to third party liability insurance for traffic accidents36_{. For the compensation practice, this means that the insurance company will in}

principle indemnify the victim for the loss suffered on behalf of the insured tortfeasor37_.

According to Article 21 (4) of GEO no. 54/2016, the compensation for personal injury, including the award for non-pecuniary loss, is established either in Court or through a claim settlement between the victim and the insurance company.

A relevant aspect to be mentioned is that in September 2016 when the GEO no. 54/2016 entered into force, the former legislation on MTPL was abolished38_{. A relevant change for the}

compensation practice was that statutory criteria were fixed for extra-judicial settlements.

Under the current law, where the parties choose an out-of-court settlement, the assessment of non-pecuniary damages will be based on several evaluation criteria listed under Article 21 (5) of the GEO. In this sense, in personal injury cases the awarding method is based on a point system developed by the National Institute of Legal Medicine in collaboration with the Financial Supervisory Authority (ASF)39_{. However, the point system presumes an average level of}

35_Ibidem.

36_{The Governmental Emergency Ordinance no. 54/2016 concerning compulsory motor third party liability for}

damages caused to third parties by motor vehicle accidents and trams, in force since 19.09.2016, published in the Official Journal of Romania, Part I, No. 723.

37_{See observation from footnote 25.}

38_{See the former Law no. 136/1996 on insurance and reinsurance in Romania, published in the Official Journal of}

Romania, Part I, No. 303.

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12 suffering and provides a basis only for the assessment of physical pain40_{. In this regard, if the}

victim can prove the mental trauma and suffering or a higher degree of physical pain, the compensation will be adapted to the particularities of the case41_{. Furthermore, monetary}

guidelines are also provided for in this system, taking into account the minimum wage in Romania42_.

Where parties do not agree on an out-of-court settlement, no evaluation criteria are listed and therefore the assessment of non-pecuniary damages is solely based on judicial discretion.

40_{Article 21 (5b).} 41_{Article 21 (5e).} 42_{Article 21 (5c).}

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13 Chapter II: Assessment of damages for non-pecuniary loss

1. German Law

In Germany the method of awarding damages for non-pecuniary loss is based on principles developed over the years by the German Federal Court. Of crucial importance is the landmark decision of the ‘Bundesgerichthof’ (BGH) on 6th_{July 1995}43_{, which established both the}

functions of this type of damages within the compensation system and the guiding criteria for their assessment.

1.1 The functions of damages for non-pecuniary loss

According to the aforementioned fundamental judgment of the BGH, the award of damages for non-pecuniary loss is based on the compensation function (‘Ausgleichsfunktion)’ and satisfaction function (‘Genugtuungsfunktion)’. In this context, the court stated that the damages for non-pecuniary loss are not ordinary damages, but are of a particular nature with a dual function44_.

Mainly they are intended to provide the victim with an adequate compensation for the immaterial harm caused and on a secondary level to take into consideration that the tortfeasor owes the victim satisfaction for the harm that he has done to her45_.

In this light, the primary role of damages for non-pecuniary loss is to counterbalance the loss suffered, ensuring the victim a fair compensation. Consequently, the scope of the award is to provide the victim the possibility to buy other amenities in compensation for the ones that she can no longer enjoy as a result of the injury suffered46_.

However, among certain scholars47_{there is the view that in particular cases the award of}

damages cannot be fully based and explained by this function. For instance, in cases where the

43_{BGH, 06.07.1995, GSZ 1/55, (1955); NJW, 1675.}

44_{BGH 06.07.1955, BGHZ 18, 149, 154 ff; BGH, NJW 1993, 781, 782.} 45_Ibidem.

Verlag, 2001), p. 111

47_{See Basil Markesinis, Michael Coester, Guido Alpa and Augustus Ullstein, Compensation for Personal Injury in}

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14 victim is a wealthy person and thus can afford to buy any other alternative comforts without the money of the tortfeasor, the concept of fair compensation fails to fulfill its purpose48_.

The secondary role of this type of damages is to provide the victim a certain degree of satisfaction for the wrong that the tortfeasor has done to her. The focus is rather on the relationship between the victim and tortfeasor than the degree of injury, taking into account factors such as the degree of fault on the side of the tortfeasor, his financial situation and third-party insurance49_.

This latter function has generated considerable criticism among academic writers, since it was understood as including a punitive element of private penalty in civil law50_{, which was peculiar}

and unknown for the German law51_{. In this sense, the BGH denied the punitive character of the}

function by arguing that it only concerned the victim’s private interest, being exclusively of private law nature in contrast to the punishment which concerns only the public interest52_.

In addition, the ‘satisfaction element’ was questioned in cases where compensation for non-pecuniary loss was not based on fault liability53_{. Particularly, in cases of traffic accidents where}

damages for non-pecuniary losses can be awarded under strict liability rules, the satisfaction function is left with no foundation, as insurance companies pay the compensation54_.

Nevertheless, in cases of severe injuries where the victim has lost almost all senses, the award for damages for non-pecuniary loss could not be fully explained on the basis of either these functions. In such cases, the victims are unaware of the physical or mental injuries and can

48_Ibidem.

Verlag, 2001), p. 113.

50 BGH 6.07.1955, BGHZ 18, 149, 155; BGH 29 November 1994, BGHZ 128, 117, 122.

51_{Helmut Koziol, Basic Questions of Tort Law from a Germanic Perspective (Wien, Austria: Jan Sramek Verlag,}

2012), p.77.

53_{Even though generally the German Tort Law is based on fault-liability, we saw that in cases of traffic accident}

also strict liability is possible.

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15 neither feel satisfaction in relation to the ‘Genugtuungsfunktion’ nor enjoy any other pleasures or ameliorate their health in relation to the ‘Ausgleichsfunktion’55_.

The first approach of Courts was to award a symbolic atonement56_{. However the practice has}

changed when the Supreme Court overruled the previous decisions and decided that a substantial compensation is required, due to the fact that the victim no longer has the possibility to develop her personality57_{. As a consequence, an additional function of damages for non-pecuniary loss}

was developed, namely the dignity function (‘Würdefunktion’), used as a basis to explain cases of partial or total destruction of personality58_.

1.2 Criteria for the assessment of damages for non-pecuniary loss

In accordance with the functions of damages for non-pecuniary loss, the Supreme Court established guiding criteria for assessing this type of damages. In line with the primary role of non-pecuniary damages – to provide the victim a fair compensation, the amount of damages relies first of all upon factors like the type, degree and duration of the injury and pain suffered59_.

Additionally, pursuant to the satisfaction role where the focus is rather on the relationship between the parties than on the injury, the assessment of damages for non-pecuniary loss should reflect all circumstances of the case, including factors on both the side of the tortfeasor and victim60_.

a. The type, degree and duration of the injury and pain suffered

According to the German procedural law, the assessment of damages is based on the discretion and conviction of the judge, who has to take into account all the circumstances of the case61_{. As}

there are no statutory tariffs for the compensation of different types of injuries, judges use non-statutory tables – ‘Schmerzensgeldtabellen’ as guidelines when determining the amount of

55_{BGH 16.02.1993, NJW 1993, 1531-1532.} 56_{OLG Stuttgart, 02.05.1994, 1994 NJW, (3016).} 57_{BGH 13.10.1992, NJW 1993, (781-784).}

Verlag, 2001), p. 113.

59_{BGH 6.07.1955, BGHZ 18, 149, 157.}

60_{The Supreme Court’s wording – “dem Fall ein besonderes Gepräge geben’ could be translated as “leaving a}

particular mark on the case”, in this sense see BGH 6.07.1955, BGHZ 18, 149, 157.

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16 compensation62_{. In this sense, the tables compile a systematic collection of previous judgments,}

providing a comprehensive overview on the level of awards granted for different types of injuries63_.

In traffic accidents, the highest amounts were granted for severe injuries, which were usually related to brain damage or cases where the victim was paralyzed and thus could no longer take care of herself64_{. In one case, the court awarded an amount of €350,000 to a 19-year-old boy who}

needed intensive care after a car accident from which he suffered severe brain damage, being unable to take care of himself anymore65_.

However, even for the severest types of brain damage, the amounts awarded varied between €100,000 and € 400,000 depending on the particularities of each case 66_.

Among the highest amounts that the court awarded for non-pecuniary loss was €500,000 in a car accident where the victim was a three-year-old boy, who was paralyzed from the first cervical vertebra downwards 67_{. Nevertheless, there are only few other cases of traffic accidents where the}

award of damages was so high68_{and thus these values are by no means representative}69_.

The assessment of damages for non-pecuniary loss also depends on the degree of the injury70_.

For instance, courts awarded up to double the amounts for severe femur fractures which presented amputation risks (between €63,000 and €130,000) than for average femur fractures with nerve damage (between €55,000 and €65,000)71_.

63_{See for instance the ADAC Schmerzensgeldtabellen by Susanne Hacks, Wolfgang Wellner}_{and Frank Häcker,}

Schmerzensgelbeträge: the 34th_{edition, 2016.}

65_{LG Detmold, 15. 05. 2003 - 9 O 265/98, NZV (2004/198),}_{www.beck-online.beck.de}_.

66_{See Schmerzensgeldtabelle}_{http://www.rechtsanwalt-lattorf.de/Schmerzensgeldtabelle-Kopf.html}_. 67_{LG Kiel, 11.07.2003, Az.: 6013/03 VersR 2006 Heft6, 279-281, (}_{www.dejure.org}_).

68_{In other cases, the court has granted even €600,000 (OLG Jena, Az. 4 U 459/09) and €500,000 along with a}

monthly rent of €650 (Urteil Kammergericht Berlin, Az. 35 O 157/10).

69_Ibidem.

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17 The indemnification granted for close relatives who suffered nervous shocks as a consequence of hearing or seeing the death of the beloved one are comparatively small, generally without exceeding €5,00072_{. Nevertheless there are exceptional cases where higher amounts were}

granted. For example, the amount of €10,000 was awarded for a father who suffered a “medium” depression when he heard that his 17-years-old (adopted) daughter died in car accident73_{. In}

another case, an award of €35,000 was granted for the severe depression of the parents, who lost their three children in a traffic accident because of the negligence of the defendant74_.

The duration of suffering also plays a decisive role in assessing damages for non-pecuniary loss. In one case, the court granted different awards (€14,000 and €1,500) for the heir’s parents, who died in the same traffic accident. In its decision, the court explained that different amounts are awarded because one parent died after ten days, while the other died within an hour. As a consequence, the indemnification is higher for the parent who lived longer as he suffered more time75_.

In this context, a distinction has to be made between cases where the victim died later after the accident and where the injury and death have almost the same occurrence. Where the victim died later after the injury, as we have seen the duration of the pain is important, respectively the longer the victim survives the higher will be the award. However, if the injury and death occur almost at the same time, no compensation for non-pecuniary loss will be awarded76_.

b. Particular factors regarding the parties

Factors on the side of the injured person such as the age, the impairment of the possibility to continue professional activities or to engage in leisure activities and psychological consequences may justify an increase in damages for non-pecuniary loss.

Hart Publishing, 4th_{edition, 2002), p. 922.} 73_{OLG Oldenburg, 01.12.1998, 5 U 127/98.} 74_{OLG Nürnberg, 01.08.1995 - 3 U 468/95.} 75_{BGH, 12.05.1998 - VI ZR 182/97.}

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18 The youthful age of the victim - up to the age of thirty-three years, may constitute a factor for increasing the amount of non-pecuniary damages77_{. Nevertheless, this factor can also lower the}

amount of damages if the judge appreciates that the victim is able due to her young age to adapt more quickly to the new circumstances78_.

There is also a tendency to increase the awards in cases where victims had to quit or change their job. A relevant case is the one where a professional cook, who suffered serious nose injuries due to a car accident, was granted an increased award after losing his sense of smell79_{. The particular}

factors taken into account for the assessment of the damages were the young age of the victim and the fact that the loss of the sense of smell was of crucial importance for her job, which she eventually had to quit80_.

The impossibility to engage in leisure activities is also taken into account when assessing damages for non-pecuniary loss, depending on how important the hobby was for victim. In this sense, most of the courts take into consideration the time and effort devoted for the activity to determine whether it was important for the victim or not81_{. In this context, open to discussion is a}

judgment where the court granted an increased award of non-pecuniary damages based on the argument that the victim would not be able to run in the future, even though she did not use to practice this sport in the past82_.

The psychological consequences after a physical injury also represent an important factor for the calculation of damages. In one case, the victim of a traffic accident healed without any long-lasting physical effects. However, the victim suffered psychological harm which caused a change of behavior and character, speech disorder and diminution of the sexual urge83_.

77_{KG, 16.04.1991 - 9 U 3177/90.}

78_{OLG Saarbrücken, 16.05.1986 - 3 U 103/84, NJW-RR 1987, 984.} 79_{OLG Frankfurt, 25.02.1986 - 8 U 87/85.}

80_Ibidem.

82_{OLG Köln, 20.05.1992 - 2 U 191/91.}

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19 Other factors such as the contributory negligence or risk and pre-existing damages have also an influence on the award of non-pecuniary damages84_.

As concerning the tortfeasor, factors such as the degree of fault, the financial situation and whether he had insurance or are relevant for the assessment of non-pecuniary damages.

The degree of fault on the side of the tortfeasor is an important factor, especially if it regards intentional torts as the relationship between the victim and the tortfeasor has to be taken into consideration regarding the satisfaction element85_{. Since in cases of traffic accidents most of the}

time there is no intention on the side of the tortfeasor, gross negligence can also be taken into account for the assessment of damages86_.

Regarding the financial situation of the tortfeasor, a wealthy tortfeasor might pay a higher compensation. In this context, if the tortfeasor is insured, he will be considered a ‘wealthy tortfeasor’87_.

2. Romanian Law

In the Romanian legal system the starting point for the assessment of non-pecuniary damages is the evaluation of the loss88_{. In this sense, judges first establish the importance and severity of the}

non-pecuniary loss in relation to the victim, as well as the impact of the negative consequence on her life. Subsequently, the assessment of non-pecuniary damages is made in line with the principle of equity, taking also into consideration the purpose of this head of damages89_.

2.1 The functions of damages for non-pecuniary loss

The compensation of non-pecuniary damages by monetary means was questioned in the legal doctrine by scholars who argued that money cannot suppress grief and pain90_{. Moreover, in their}

84_{Cees Van Dam, European Tort Law, (Oxford University Press Publishing, 2013), p. 375.} 85_{BGH, 29.11.1994 - VI ZR 93/94 (online).}

86_{OLG Nürnberg, 25.04.1997 - 6 U 4215/96 (online).}

88_{Ilie Urs, Repararea daunelor morale (Editura Lumina Lex, 2001), p. 41-44.} 89_Ibidem.

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20 view the immaterial harm cannot be evaluated in money and would therefore only offend the victim by trying to measure it91_.

However, most scholars agree that damages for non-pecuniary loss should be explained on the basis of the compensation function, even though the purpose is not completely in line with the traditional principle of restoring the victim to the same position she was in before the loss occurred92_{. In this sense, the role of non-pecuniary damages is not meant to repair the injury as}

understood under the traditional ‘restitutio in integrum’ principle, but to alleviate the pain and suffering of the victim and thus provide for her more comfortable living conditions93_.

In addition, the compensation for non-pecuniary loss is meant to offer the victim an equitable satisfaction of both pecuniary nature in the sense mentioned before and moral nature for the harm that tortfeasor has caused94_.

Regarding comatose victims, the absence of a befitting function has triggered criticism among scholars, as these victims are not compensated for the non-pecuniary loss suffered95_.

2.2 Criteria for the assessment of damages for non-pecuniary loss

In line with the aforementioned functions, the assessment of damages is based on the evaluation of the loss. In order to assess the non-pecuniary loss, judges take into consideration criteria such as the significance of the injury for the victim and the repercussions on the social, professional and personal life, as well as the intensity and duration of injury96_{. Subsequently, the quantum of}

indemnification is based on this evaluation and the equity criteria97_.

91_{Ilie Urs, Repararea daunelor morale (Editura Lumina Lex, 2001), p. 41-44.}

92_{Liviu Pop, Tratat de Drept Civil. Obligatii (Editura Universul Juridic, 2012), p. 421.}

2.2.2.3. Reglementare- (www.legalis.ro).

94_{Ilie Urs, Repararea daunelor morale (Editura Lumina Lex, 2001), p. 50-51.} 95_{Idem, p. 227.}

96_{Liviu Pop, Tratat de Drept Civil. Obligatii (Editura Universul Juridic, 2012), p. 422.} 97_Ibidem.

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21 a. Assessment of the loss

The importance of the injury for the victim is an important criterion for the assessment of the loss, which has to be established concretely in every case98_{. The focus is on the psychological}

consequences and how the victim perceives the severity of the injury suffered.

Depending on the sex, age or even the personality of the victim, injuries can have a particular importance for the wounded one99_{. In this regard, the court held in one case that the injury}

caused to a 33-years-old woman had a significant impact on her, giving the sex and age of the victim100_{. The court emphasized that the accident left the victim with multiple scars, especially}

on her face and thus took into consideration when assessing the loss that aesthetic values are of particular importance for young women101_.

Similarly, courts take into account the consequences of the injury on the social, professional and personal life of the victim102_{. In this sense, the same injury can have different meanings among}

persons and thus be felt at a higher or lower magnitude. For example, the loss of a finger has usually an increased importance for painters or pianists than for others and thus it will have a bigger impact on their life103_.

Other important criteria for assessing the loss are the duration and intensity of the injury. The duration of the injury is established objectively, based on a medical expertise and refers to whether the injury has caused the victim a permanent or temporary incapacity104_{. The medical}

expertise also indicates the number of days necessary for medical care, which means that the injury is estimated in terms of forensic severity105_{. In this sense, ‘the number of days necessary}

for medical care’ is a sui generis legal concept, based on the medical diagnostic (type, location, size and number of injuries), the recovery prognostic and medical history of the victim.

2.2.2.6. Repararea daunelor morale prin masuri patrimoniale - (www.legalis.ro).

99_{Ilie Urs, Repararea daunelor morale (Editura Lumina Lex, 2001), p. 203.} 100_{Tribunalul Cluj, decizia penala nr. 666/A/22 1997 (nepublicata).}

101_Ibidem.

2.2.2.6. Repararea daunelor morale prin masuri patrimoniale - (www.legalis.ro).

103_{Ilie Urs, Repararea daunelor morale (Editura Lumina Lex, 2001), p. 203.} 104_{Idem, p. 204.}

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22 A relevant case is where the court awarded the same amount (€18,000) to three victims of the same traffic accident, even though two of the victims needed only 55, respectively 30-35 days of medical care, while the other 120 days106_{. The court explained that the same amount is granted}

for all victims because the first two had to have a splenectomy and thus suffered a permanent infirmity from the injury. In contrast to these consequences, the victim who suffered a more intense injury and needed 120 days of medical care was able to recover fully107_.

In another case, the court awarded in a traffic accident €6,000 to a victim, who needed according to the medical expertise 100-120 days of medical care108_{. The Court of Appeal reversed this}

judgment, considering that the award was not proportional to the intensity of the injury and its repercussions on the victim’s professional life and increased the award to €25,000109_.

The intensity of the injury refers to the degree of pain experienced from the injury itself, but also to other circumstances which can amplify the suffering after the injury110_{. Relevant factors are}

for instance the age and the sex of the victim, as well as the nature of the treatment or the time spent in the hospital111_{. In this sense, the court decided in one case that even though the physical}

injury was not severe, the pain experienced was very intense as the victim had to follow a long and agonizing treatment in order to recover112_.

In comparison with primary victims, ricochet victims generally receive higher awards for the loss of the loved ones113_{. In this sense, the court awarded in one case €70,000 to each of the two}

families who lost their child in a traffic accident, while granting the surviving victim only €5,000 where 150 days of medical care were necessary114_{. Even though the primary victim appealed the}

106_{Curtea de Apel Timisoara, Secţia a II-a civilă, Decizia nr. 162 din 3. 10.2012.} 107_Ibidem.

108_{Judecatoria Sectorului 3 Bucuresti, Sentinta penala nr. 736 din 18.10.2011.} 109_{Curtea de Apel Bucuresti, Sectia I Penala,Decizia nr. 418 din 24.02.2012.}

2.2.2.6. Repararea daunelor morale prin masuri patrimoniale.

111_Ibidem.

112_{Judecatoria Cluj-Napoca, sentinta civila nr. 4199, din 04.04.1997 (nepublicata).}

113_{Vezi Sorin Greceanu, Mihai Necrelescu, Gidul pentru solutionarea daunelor morale, editura UNSICAR, 2012, p.}

26-30.

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23 decision asking for €70,000 (the same amount as awarded for the two victims who died), the Court of Appeal only increased the award to €15,000115_.

In another case, the court awarded €1,700,000 to a family for the loss of their son in a traffic accident116_{. However the Court of Appeal reversed the decision and lowered the sum to}

€150,000117_.

Nevertheless there were also cases in which the court awarded significantly lower sums for the suffering caused by the death of a close person. A relevant case is where the court awarded €12,000 to four children (€3,000 for each one), who lost their father in a traffic accident118_.

Also in a very recent case, one of the highest sums (€1,000,000) was awarded to a primary victim, a 24-year old boy, who remained after a traffic accident immobilized in a wheel chair119_.

Moreover, this award was also maintained by the Court of Appeal120_.

As regards the relevance of the insurance coverage, it was noticed that in cases of personal injuries caused intentionally, the amounts awarded for the same injuries were approximately 52% higher than in cases of negligence, where the insurance company is substituting the tortfeasor121_.

b. The principle of equity

Along with the evaluation of the loss, judges have to decide the quantum of indemnification in accordance with the equity principle122_{. In this sense, the compensation has to be just and}

correspond to the gravity of the loss, avoiding the unjust enrichment of the victim123_.

115_{Curtea de Apel Timisoara, sectia comerciala, decizia nr. 272 din 8.12.2011.}

116_{Tribunalul Satu Mare, sentinta civila nr. 111 din 20.05.2013 (dosar 11451/83/2011) (nepublicata).} 117_{Curtea de Apel Oradea, hotarare 84/2013 din 05.11.2013.}

118_{Judecatoria Iasi, sentinta civila nr. 7509 din 09.10.2015 (}_{www.portaljust.ro}_). 119_{Tribunalul Iasi, sentinta civila nr. 651 din 02.06.2016.}

120_{Curtea de Apel Iasi, hotararea nr. 879 din 23.11.2016.}

121_{Vezi Sorin Greceanu, Mihai Necrelescu, Gidul pentru solutionarea daunelor morale, editura UNSICAR, 2012, p.}

24-25.

122_{Ilie Urs, Repararea daunelor morale (Editura Lumina Lex, 2001), p. 217.}

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24 In line with this principle, courts also take into account the contributory negligence of the victim and thus adjust the award accordingly124_.

124_{Ioan Albu, Victor Ursa, Raspunderea civila pentru daunele morale, editura Dacia, Cluj-Napoca, 1979, p.262-265;}

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25 Chapter III: The Risks of the legal systems based on judicial discretion

The compensation culture in reference to non-pecuniary loss can be broadly divided into two approaches, namely into legal systems where the assessment of non-pecuniary damages is primarily based on statutory intervention and legal systems where the awarding method is mainly left to the discretion of the judge125_.

Countries opting for the former approach establish within the legislation objective criteria for the assessment of non-pecuniary damages, such as statutory compensation schemes, caps or ceilings. These criteria are legally binding and thus the judge has to apply them as such, leaving little room for deviations. These systems strive to ensure equal treatment and uniformity, but risk over-schematization and thus sometimes fail to respond to the particularities of each case126_.

In contrast to this approach, other countries choose a more flexible system, where judges have the discretionary power to decide what amount would represent an appropriate compensation for each case. Departing from the one-size-fits-all technique, this approach facilitates a high level of individualization and aims to achieve a high level of protection for victims127_.

In developing a fair compensation system, two important concepts have to be taken into account, namely vertical and horizontal equity128_{. On the one hand vertical equity presupposes that more}

severe losses should be compensated with higher awards than less severe ones and on the other hand horizontal equity implies that similar cases should be treated equally129_.

125_{Stephen D. Sugarman, Tort Damages for Non-economic Losses (in case of physical injury to the person) in ‘A}

Chapter from Comparative Tort Law Research Handbooks in Comparative Law M. Bussani and A. Sebok eds. Edward Elgar, 2013, p. 255, (www.law.berkeley.edu).

126_{Ernst Karner (Deputy Director of the Institute for European Tort Law), Quantification of Moral Damages in}

Personal Injury Cases – Compensation Schemes in Selected Foreign Jurisdictions.

127_{Mark Geisfeld, Placing a Price on Pain and Suffering: A Method for Helping Juries Determine Tort Damages for}

Nonmonetary Injuries, California Law Review, Vol. 83, Issue 3, 1995, p.784.

128_{Giovanni Comandé, Doing away with inequality in loss of enjoyment of life – Studies in Comparative and}

National Law, Opinio Juris in Comparatione, Vol. 1/2009, Paper n. 2, p. 5.

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26 A flexible approach, where compensation is mainly based on judicial assessment, enables an ideal degree of vertical equity, as all circumstances of a case can be taken into account, but risks lack of uniformity and thus sometimes fails to achieve horizontal equity130_.

As the nature of this head of damages is strongly subjective, two different judges may assess the same loss differently131_{. Moreover, in the absence of any guidance on how to convert the severity}

of the injury into monetary values, there is a risk that different amounts are awarded, even if the assessment of the loss in terms of severity would be relatively similar.

In addition, where the level of awards is determined solely by the judicial power, concerns of overcompensation, but also undercompensation may arise. In this sense, the awarding trend intended to achieve an appropriate compensation for the victim should be established in reference to the national wealth132_{. For instance, courts might fail to take inflation into account}

when rendering an award133_{. At the same time, the level of awards can be excessively high if the}

court does not take into account the prosperity of a country.

In relation to the compensation of non-pecuniary loss in traffic accidents, the element of unpredictability and overcompensation can result in an increase of insurance premiums and even cast the insurance market into crisis134_{. Depending on the extent of unpredictability, insurance}

companies will adapt the premiums accordingly, in order to overcome the ‘risk ambiguity’135_.

These risks are not always problematic for the ‘big players’ on the insurance market, as third-party liability insurance is mandatory everywhere in Europe. In this sense, the burden is shifted

Chapter from Comparative Tort Law Research Handbooks in Comparative Law M. Bussani and A. Sebok eds. Edward Elgar, 2013, p. 217.

132_{Vezi Daunele morale ca urmare a vatamarilor corporale si/sau decesului in accidentele auto, UNSAR 2016}

(online).

133_{Idem, p. 221.}

135_{Howard Kunreuther, Robin M. Hogarth, How Does Ambiguity Affect Insurance Decisions, Contributions to}

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27 to individuals, who have no other choice than to bear the additional costs imposed136_{. However,}

in respect to smaller insurance companies, these risks may determine them to withdraw the coverage from the market, due to their limited capital137_.

1.1 Dealing with the risks in Germany

In the German legal system the assessment of damages for non-pecuniary loss is subject to the discretionary power of the judge. Even though no statutory tariffs are in place, similar cases are used as guidelines in order to ensure legal consistency and equal treatment138_{. This practice is}

based on the Supreme’s court decision of the 8th_{of June 1976}139_{. In this decision the court}

decided that the sum awarded was too high in comparison to cases where smaller amounts were granted for injuries which were even more severe. In this sense, the BGH made a reference to the ‘Schmerzensgeld’ tables140_.

Since then, courts rely on these special tables - ‘Schmerzensgeldtabellen’, which structure prior cases into a systematic collection, indicating the sums awarded in reference to different types of injuries. These tables also specify the relevant criteria taken into account when determining the level of award141_.

A well-known and also one of the most important ‘Schmerzensgeldtabelle’ is the one published by the German Automobilclub ADAC142_{. The first tables from this editor were published in 1957}

and are currently at the 34th_{edition, having the case law updated up to 2016. Other popular tables}

Chapter from Comparative Tort Law Research Handbooks in Comparative Law M. Bussani and A. Sebok eds. Edward Elgar, 2013, p. 205,

(online).

138_{BGH 08.06.1976, VersR 967, 968.} 139_{Idem, VersR 967 ff.}

140_{See Basil Markesinis, Michael Coester, Guido Alpa and Augustus Ullstein, Compensation for Personal Injury in}

142_{See Schmerzensgeldtabellen by Susanne Hacks, Wolfgang Wellner}_{and Frank Häcker, Schmerzensgelbeträge: the}

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28 are the ‘‘Beck’sche Schmerzensgeldtabellen: von Kopf bis Fuß’’, which structure the case law starting from different types of injuries and not by the level of awards as the ADAC tables143_.

These tables confer the compensation system’s uniformity and thus ensure legal certainty and predictability144_{. In addition, the tables enable transparency and encourage out-of-court}

settlements. However these guidelines represent a starting point for judges, who have to adjust the level of awards according to their own case145_.

In this sense, the Supreme Court made it clear that the amount has to be calculated from scratch, taking into account all the particularities of that individual case146_{. In addition, the court has to}

indicate the reasons based on which it awarded the sum147_{. In this regard, it is not sufficient to}

state that a similar amount was granted before in a relatively similar case148_.

Nevertheless, even though the guidelines are not legally binding, the Supreme Court pointed out that deviations from these tables in comparable cases have to be explained precisely, providing justified reasons for them149_.

In this context, the role of the BGH is also to verify how judges exercise their discretionary power150_{. On the one hand the Supreme Court makes sure that the judgment is not arbitrary and}

on the other hand that all relevant factors of the individual case are take into consideration151_.

For example, in one case the German Federal Court reversed a decision of the Appeal Court as the judicial discretion was misused152_{. The lower court required the insurance company of the}

defendant to pay the claimant €15,000 and a monthly pension of €150 for the non-pecuniary loss suffered. The sum was based on the fact that the severe injury reduced the victim’s earning

143_See_{https://beck-online.beck.de/?vpath=bibdata%2Fkomm%2FIMMDAT%2Fcont%2FIMMDAT%2Ehtm#A}_. 144_{See Basil Markesinis and Hannes Unberath, The German Law of Torts: A comparative Treatise (Oxford, U.K.:}

Hart Publishing, 4th_{edition, 2002), p. 919.} 145_Ibidem.

146_{BGH 08.06.1976, VersR 1976, 967.} 147_Ibidem.

148_{BGH 24.05.1988, NJW 1989, 733.} 149_{BGH, 08.06.1976, VersR 1976, 967-968.}

151_Ibidem.

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29 capacity and that a future development of epilepsy was also to be taken into account. In this sense, the Supreme Court argued that the criteria were wrongly applied in the assessment of the loss and thus that the amount should not exceed €10,000. For instance, it criticized that the eventual risk of epilepsy should have not been taken into account at that point. The court pointed out that for future effects, the claimant has the possibility to file a petition according to 323 of the Civil Procedure Code (ZPO) to adjust the sum awarded.

In reference to the trends regarding awards for non-pecuniary damages, over time a clear tendency of the courts to substantially increase the size of the awards is noticeable153_.

Nevertheless, courts have to take into account this aspect and the inflation rate when referring to older cases. In this sense, the court pointed out that the sums awarded in decisions that are older than 10 years are devaluated and thus have to be adjusted to the actual awarding trend154_.

In reference to the insurance industry, the risk of a market crisis was never present in Germany as the compensation culture was predictable and moderate as to the nation’s wealth. In this sense, an analysis among practitioners has shown that 95% of the judges use the tables when establishing the award for non-pecuniary losses155_.

As regards the trend of the courts to increase the size of awards, the judges also factored in the ramifications for the insurance premiums. The German law-maker initially intended to exclude trivial damages for non-pecuniary loss within the reform of the law on damages in 2002. The purpose was to avoid any rise in insurance premiums156_{. Nevertheless this exclusion was}

controversial as a monetary cap would have to be established in reference to what is considered to be insignificant damage and therefore was no included in the reform157_{. However, the issue}

has been left to the courts, which have the discretion to deny compensation where the harm

153_{See for instance Claus Ott und Hans-Bernd Schäfer ‘ Schmerzensgeld bei Körperverletzung – Eine ökonomische}

Analyse’, JZ (1990), 563.

154_{OLG München, 21.05.2010 (10 U 1748/07), 91ff (}_{www.openjur.de}_).

155_{Hans-Joachim, Musielak, Zur gerichtlichen Praxis bei der Bemessung des Schmerzensgeldes. Ergebnisse einer}

Befragung von Richtern (1982) VersR, 613.

Verlag, 2001), p. 119.

157_{See BT-Drucks. 14/7752,16, 25 in Basil Markesinis, Michael Coester, Guido Alpa and Augustus Ullstein,}

Compensation for Personal Injury in English, German and Italian Law: A Comparative Outline (Cambridge U.K.: University Press, 2005), p. 67.

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30 represents an insignificant inconvenience158_{. Hence judges can be assumed to be aware of the}

fact that they can create an inefficient result in terms of the overall coverage of the insurance holders, i.e. little compensation for the individual, but eventually taking a large toll on the insurer’s capital.

In respect to the extended protection offered to victims of traffic accidents, who were able to claim compensation for non-pecuniary losses even if the owner of the vehicle was not at fault, a maximum cap of €600,000 for both pecuniary and non-pecuniary damages minimizes the risk of increase in insurance premiums. Additionally, even the scholars who were in favor of a higher awarding trend paid attention and analyzed the risk of a rise in insurance premiums159_.

Additionally, the involvement of institutions like the ADAC may have contributed to the modest development in awarding non-pecuniary damages.

In this context, even though over time a rise in the awards was noticed, the amounts awarded were kept reasonable, without constituting a danger for the insurance market160_.

1.2 Dealing with the risks in Romania

In the Romanian legal system the assessment of non-pecuniary losses is solely based on judicial discretion. The subjective nature of non-pecuniary damages and thus the dilemma of their assessment have determined the legislator to abstain from any regulatory intervention161_{. In this}

sense, courts are considered to be in the best position to evaluate the non-pecuniary loss in relation to the particularities of each case162_.

The question arises whether courts in Romania use any guidelines when establishing the level of awards in order to ensure a general level of uniformity and thus to enable an equal treatment in similar cases.

160_{Gerhard Wagner, Tort Law and Liability Insurance Vol. 16 ( Sprinter Publisher Wien) 2005, p. 101.} 161_{Ilie Urs, Repararea daunelor morale (Editura Lumina Lex, 2001), p. 196.}

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31 It is important to mention here that in two relevant cases it was pointed out that courts are not obliged to indicate the grounds based on which indemnification in respect to non-pecuniary losses were awarded163_{. Hence, most of the judges only indicate the criteria used as to determine}

the severity of the loss, but do not offer any explanation as to how they established the amounts awarded and thus make no reference to prior cases.

In this context, the former regulation on motor third-party liability insurance is relevant, as it stated in its application norms that the compensation for non-pecuniary losses had to be in accordance with the legislation and jurisprudence in Romania164_{. However, the wording of the}

regulation was not interpreted in the way that some people might have hoped for and was ultimately criticized as being ambiguous and confusing165_.

In this sense, there was an important case166_{where an insurance company based its appeal}

against a decision where the court ordered the defendant to pay a high amount of non-pecuniary damages on the ground that the compensation was not in line with the legislation and jurisprudence in Romania. However, the Court of Appeal rejected this argument, arguing that the national legislation and jurisprudence do not impose any objective criteria and thus are not relevant for courts, which have to evaluate the loss in reference to the particularities of each case. In relation to this judgment, the High Court of Cassation and Justice (ICCJ) pointed out that the wording of the regulation referes to the treaties which Romania has signed and thus became part of the national legislation. In this context, both the jurisprudence of the Court of Justice of the European Union (CJEU) and the case-law of the European Court of Human Rights (ECHR) had to be taken into account. However, the Supreme Court did not make any observation as to any specific criteria that were not taken into account by the Appeal Court, nor did it say whether the award was excessive or not.

163_{Tribunalul Cluj, sentinta penala nr. 34 din 15.02. 1996 si sentinta penala nr. 68 din 02.04. 1996 (nepublicta) vezi}

in Ilie Urs, Repararea daunelor morale (Editura Lumina Lex, 2001), p. 197.

164_{See Article 50 of the former Regualtion nr. 23/2014 on the mandatory insurance in traffic accidents, which was}

applicable along with the Law nr. 136/1995 on MTPL until September 2016.

(online).