On The Rationality Of Punitive Compensation System

Punitive damages system has a very long history; as such kind of provisionsappeared in some ancient laws. The system has developed into a mature and regularcivil compensation system which used in common law countries for about twohundred years, and its scope of applicable is gradually extending nowadays. However,civil law system was once opposed to it for decades, and believed that punishmentdoes not apply to traditional civil law embodying equal subjects, applies to the field oftort but not contract cases, bad for the economy, and leads to harmful effect onsociety.These issues related to rationality of punitive damages system cause disputes allalong. The phenomenon of maliciously tort and breach of contact occurs so frequentlyin this risky modern society that legislators have to reflect on the insufficient ofordinary compensatory damages that requires punitive damages system to develop itspowerful functions of compensation, punishment and containment. This system canensure victims gain amount of compensation higher than his actual loss, by aiming atoffsetting the total loss of victims, punishing intentional malice of injuring parties,and containing repeatedly illegal behavior in order to balance interests of parties,redistribute social resources and realize substantive justice of individual caseseventually. Therefore, with the development of modern law and economicglobalization, more and more civil law countries begin to recognize punitive damagessystem, even some of them have already explicitly stipulated this system in their law,what is more discussions of punitive damages’ rationality and constitutive elementshave gone deeper by jurists.As a civil law country, Chinese did not acknowledge punitive damages theory incivil law at the beginning. In recent years, some famous Chinese scholars start toadopt positive attitudes toward it; moreover, legislators also stipulated sporadicprovisions with nature of punitive damages in several specific civil laws whichembody Chinese civil law are keeping pace with the times. But, the punitive damagessystem in Chinese civil law is fragmented because it was not mentioned in the generalprinciples of civil law, and only a few in specific civil laws with incompleteconstitutive elements. So, it is necessary for China to formally establish and perfectthe punitive damages system in further steps that will contribute to socialdevelopment. Besides, common law countries become focused on the amount of punitivedamages recently by aiming at restricting the situation of overvalued amount of suchcompensation. Since legal provisions of the amount of punitive damages are unclearor excessively wide, the judge or jury intend to sentence for huge amounts ofcompensation leads to so heavy punishment which is unreasonable for injuring partiesand ill-gotten gains for victims. Thus, a certain range of the amount of compensationshould be set to limit the discretion of the judge or jury. This article emphasis onanalyzing the rationality of punitive damages system through its three functions andmajor disputes, and putting forward some suggestions about issues existed in Chinesecivil legislation.