FBK Economic Club experts: Compensation for personal injury is less than fair

On 24 September in Moscow a regular meeting of the FBK Economic Club was held on the topic of “The economics of personal injury: how it’s done in Russia.” Igor Nikolayev, director of the FBK Institute of Strategic Analysis, presented his analytical report which studied the problem of compensation for personal injury in the economic and legal aspects.
In his presentation Igor Nikolayev dwelt upon the lack of development of the institute of compensation, which might make one of the factors for improving the competitive ability of the economy in Russia. Director of the FBK Institute of Strategic Analysis inferred that the amounts of compensation are less than their fair values, and the implementation of a range of standardized methods might be conductive to more realistic compensations, particularly in view of the fact that the relevant work-outs (for example, the methods of A.M. Erdelevsky) were already available. Therefore, the inadequate amounts of compensation for personal injury do not duly contribute to the execution of the basic reparation functions: compensation and penalty.



Professor Alexander Auzan, the dean of Moscow University School of Economics, pointed out that the institute of personal injury compensation, particularly in the field of protecting the rights of consumers, played a colossal role in the development of the judicial system in Russia and the legal awareness of people who began to actively assert their consumer rights in court in the 1990ies. Professor Auzan believes that in determining the amounts of compensation the transfer to the tariff system could become a much simpler “mass” decision. And the institute of compensation, at that, should play not only the function of restraining from the unlawful acts, but also the function of encouragement for the correct behavior.

Svetlana Mukhina, deputy head of the Department for Consumer Rights Protection under Rospotrebnadzor, emphasized the fact that the law of consumer rights protection adopted as far back as in the Soviet times and then reformatted into a Russian law, became truly “people’s”; the consumers asserting their rights began to be aware of themselves as citizens. Svetlana Mukhina believes that the problem of implementation of personal injury compensation has an integrated nature which is not legal or economic only. “It is necessary to mold the culture of compensation for personal injury”, she noted.

Professor Alexander Erdelevsky from the Law Academy, the author of one of the few methods of compensation measurement used, inter alia, in the Ukraine, dwelt on the difficulties of “transferring” the non-property injury as an inflicted distress into a material form of compensation. “It is necessary to unify the approaches” he noted. When interpreting the legal category of “suffering/distress” it is necessary to proceed from the presumption of “suffering”: if some wrong acts have been made toward a person it means suffering takes places and the institute of compensation shall be activated. When determining the amount of compensation Alexander Erdelevsky recommended focusing on the practice of the European Court of Human Rights.

Alexander Ermolenko, Head of the corporate law practice of FBK Legal, emphasized that it was necessary to build up the culture of “charging much” for personal injury. “It does not boil down to the methods of calculation of compensation amounts only,” he noted. “That is also the problem of mentality of the court and participants in the legal process.”