Continued from page 1
What can
UK learn from
USA?
The USA is an obvious example of a country that is widely held to demonstrate a ‘Compensation Culture’ in
extreme. The gloomiest predications imply
cost of compensation (tort costs) could increase twice as fast as
economy, possibly rising to 2.4% of GDP by 2005, from around 1.8% in 2000. This potential increase is fuelled by increasing asbestos-related claims, increasing medical costs and additional claims following
destruction that took place on September 11th 2001.
There are a number of class actions against big food and drink companies, seeking compensation for
adverse effect food and drink have had on
claimants’ health. For example, diets containing too much saturated fats and sugar. McDonalds and other manufacturers/outlets of convenience foods have been in
public eye as
number of US children, teenagers and adults suffering health and obesity-related problems continue to grow.
Table 1. Monetary costs of compensation in a selection of countries (tort costs)
CountryUS$ million
United States124.0 Switzerland10.8 Australia 7.3 Germany 7.2 Belgium 5.9 UK 5.8 France 5.5 Canada 5.0 Italy 4.3 Spain 3.4
Figure 1 demonstrates
considerable difference in tort costs between
USA and other countries throughout
world. Many legal scholars are concerned with
apparent Americanisation of European law and
arrival of large corporate law firms, with more aggressive approaches to litigation and dense, defensively-worded American-style contracts.
To many, America has taken their litigation and compensation rights too far and it’s American shareholders and taxpayers who are paying
real price. Europe and
USA have very different legal systems and practices, which if preserved, will prevent a further shift towards
American style of compensation.
The distinguishing feature of
American legal system is
use of juries to decide cases. In
UK civil actions are tried by a judge rather than a jury, with a much less hard-line approach towards pursuing large amounts in damages.
In addition to this, in
USA ‘punitive damages’ are imposed to serve as a punishment for
defendant and a deterrent to others who may be negligent in similar circumstances. Punitive damages are a modern phenomenon of
U.S. judicial system and enable individuals to claim compensation amounts far in excess of
realistic economic compensation for loss or injury. The problem is that
potential size of a punitive damages award is variable, and
process of arriving at it is arbitrary. There are no maximums and no minimums –
jury alone determines
amount. Problems arise because juries view
case subjectively without regard of
broader implications of their decisions.
Punitive damages do not feature in
UK legal system. Instead, only
need to establish a fault is required. This suggests that
compensation culture in
UK is less likely to accelerate to excessive levels as
USA.
The way forward
A general awareness of corporate responsibility over
last decade has increased employees/a citizen’s access to justice and raised health and safety standards within many organisations. The need to exercise these rights with responsibility is more pertinent than ever. It is important to take stock and be aware of
consequences of resorting to litigation to resolve problems when mediation and negotiation would be a more effective, economical and productive route to resolution. We have witnessed how
‘compensation culture’ in
USA has resulted in a change in
behaviour for many Americans and whilst many countries will follow where America has led, it is important for countries such as ours to do everything possible to prevent
replication of
American model.
The differing legal systems and practices highlighted in this article are thought to be
main checks and balances preventing
UK adopting
American judicial style of compensation. It is therefore likely that
UK’s biggest challenge in
coming years will be in trying to prevent
adoption of American policies and influences on European legal systems. If
lessons learnt from experiences in America inform Parliament and legal decision makers in
UK, one can only hope that a balance between
advantages and disadvantages of
rising number of people claiming personal injury compensation will have been achieved.

Paul Johnson YouClaim paul@youclaim.co.uk
www.youclaim.co.uk is a UK based litigation company providing a no-cost, no-risk compensation claim service for people who have been injured or become ill due to someone else’s negligence.