The Bill has to tackle complex issues, such as whether damages claimed for pain and suffering caused by a death should be restricted only to direct dependents.

The government is committed to introducing legislation establishing the concept and scope of non-pecuniary damages following incidents, based on the idea that these cause not only economic losses such as loss of earnings but also pain and suffering, either to the victim or to his or her descendants in the case of death.

Parliamentary Secretary for Justice Owen Bonnici told The Sunday Times of Malta: “The present government is committed to examine the current situation together with the previous failed reform attempts and to make a proposal for reform taking into account the interests of all interested parties, developments in other jurisdictions, and also taking into account developments at European Union level in the sphere of motor insurance legislation as interpreted by the European Court of Justice. We have already met practitioners in field to discuss a concrete way forward.”

Unlike the situation in many other European jurisdictions, non-pecuniary damages (NPD) are currently only awarded in Malta in the case of libel, human rights disputes and very specific cases such as breach of promise in broken engagements.

However, other jurisdictions have legislation covering the pain and suffering caused by everything from motor accidents to industrial accidents.

Following lobbying by the Malta Insurance Association, a bill was first presented in Malta in 2004 but Parliament was dissolved soon after for the general election and the issue was not raised again until 2011, when a new Bill was drafted with some changes – although neither version had ever been fully endorsed by both parties.

“The 2004 Act was never brought into force due to its various shortcomings. The second attempt in 2011 was subject to criticism and did not progress further.

“Although the Bill recognised non-pecuniary or moral damages, many considered that its overall effect was to limit the damages payable to claimants, particularly in the cases of death, and many felt that in certain cases, victims may be prejudiced,” Dr Bonnici said.

The 2011 Bill had set the cap on NPD at €200,000 (or a pro rata percentage of that based on the disability involved). It is not clear what the current government view would be.

“There are always going to be controversial aspects but the government and the insurance sector have been trying to find fair and appropriate solutions as this will eventually benefit all the stakeholders,” Adrian Galea, the director general of the Malta Insurance Association said.

Legislation would reduce uncertainty for the insurance sector, which has to calculate potential claims into its premiums, create a level playing field for the claimants, reduce litigation and speed up claim settlement.

The issue has been given fresh impetus by recent judgments at the European Court of Justice relating to motor insurance claims, which said that insurance policies should cover not only pecuniary damages but also compensation for pain and suffering – as long as covered by national law.

Although compensation for NPDs has been around since Babylonian laws, it was not awarded by Maltese courts until 2003 and was rare until a few years ago.

Dr Bonnici noted that there were two recent judgments of the First Hall Civil Court which tried to award non-pecuniary damages in damages claims.

“It is yet to be seen whether the Court of Appeal will accept this development given that the Civil Code does not expressly recognise this head of damages,” he said.

The amounts awarded also fluctuate dramatically, making it a bit of a gamble for both victims and insurance companies.

“Although there are legal caps on the amounts of pecuniary damages that can be paid, there are no guidelines at all for NPDs,” Mr Galea said.

“The insurance sector wants clarity because at the moment the amounts being awarded depend on the interpretation of each particular judge, which are then often challenged – and sometimes revised – at appeal.

“There is broad acceptance but, of course, the devil is in the detail,” Mr Galea said.

A few examples demonstrate the complexity of the issues. Take, for example, an accident resulting in death, and the concept of whether the pain and suffering is caused only to direct dependents or to anyone who might inherit – including a cousin in Australia who hardly had any contact with the deceased, a case which actually occurred.

Another complex aspect is calculating compensation for permanent disability. The European Parliament had prepared a report in 2003 quantifying the impact of loss of everything from hearing to a limb, which was never accepted by the European Commission. But this was anyway only the start as the formula was only meant to help calculate loss of earnings.

“What about pain and suffering resulting from permanent injury?” Mr Galea asked. “Does the loss of a finger for a musician have the same impact as that of a hairdresser? Doctors would benefit from having an established formula for disabilities for the purpose of pecuniary damages but the judiciary would need more leeway for NPDs.”

There are also cases where NPDs might be more appropriate than loss of earnings.

“Say you have someone who gets a permanent injury but it does not affect their job. These victims should get NPDs as there is no loss of earnings but the courts tend to give pecuniary damages as a way to ensure the victims get something. If there were NPDs, this anomaly would not need to exist, which is the case in other jurisdictions,” Mr Galea said.

Calculating damages

“Take another example: Can you compensate for loss of earnings when the victim is a pensioner who no longer works?” he added, pointing about that even pecuniary damages had anomalies, such as the fact that loss of earnings were calculated on a gross basis and not net of tax.

Of course, over the years, other compensation concepts have been accepted and are being awarded more frequently. For example, the cost of future medical treatment and care is now being added to the loss of actual earnings.

“The government seems to be in favour of reviving the 2011 draft and reviewing it so we are hopeful that things will finally get moving,” he said.