Clare Connellan, Elizabeth Oger-Gross and Angélica André, White & Case LLP
This is an extract from the fourth edition of GAR’s The Guide to Damages in International Arbitrations. The whole publication is available here.
Compensatory damages, as the name indicates, are intended to compensate a claimant for losses suffered as a result of the other party’s (wrongful) conduct. Those losses can be pecuniary (e.g., costs, loss of profit, related expenses) or non-pecuniary (e.g., for pain and suffering, loss of reputation). The basic rule, in one common law formulation, is that a claimant is entitled to ‘that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation’. This rule is formulated in similar terms in civil law jurisdictions – for example, French law recognises the principle of full compensation, the objective of which is to put the injured party in the position in which it would have been had the act that gave rise to the damage not occurred.
This chapter provides a comparative overview of the legal principles and elements of compensatory damages in civil law and common law jurisdictions, with a focus on contractual damages. There are several reasons why such a comparative analysis is important for international arbitration practitioners. It is common for disputes underlying international arbitrations to be governed by a range of applicable national laws, so it is important to be familiar with the broad principles of their substantive content – or, at least, of two of the main legal traditions, though the differences among national laws within those traditions should not be underestimated. While there is certainly a lot of common ground in relation to the legal principles and elements of compensatory damages claims in common and civil law jurisdictions, there are also differences, as described in more detail in the sections below. As arbitrators or advocates, it can be useful to be attuned to these differences when drafting awards or formulating written or oral pleadings, particularly where the arbitral tribunal is of mixed legal backgrounds.
While certainly less prevalent than national laws in international arbitration, transnational principles can also play a role in damages analyses in international arbitration, either where parties have agreed to apply them or where tribunals have cited them as a means of reinforcing or supplementing the applicable law. These principles may be influential even where not directly applicable and include, for example, those codified in instruments such as the 2016 UNIDROIT Principles of International Commercial Contracts (the UNIDROIT Principles), which ‘reflect concepts to be found in many, if not all, legal systems’. Understanding the origin of these transnational principles is important preparation for their application.
As a final note, arbitration clauses often contain broadly worded consents to arbitration that may be interpreted to include non-contractual (i.e., tortious or delictual) claims. However, the focus of this chapter is on compensatory damages arising out of contractual claims. In addition, we do not consider non-compensatory damages, damages principles under the Convention on Contracts for the International Sale of Goods (CISG), contractual limitations on damages, damages in investment arbitration, interest and costs. These topics are addressed in other chapters of this publication.
At the end of this chapter, a flowchart sets out the steps to follow to determine whether a party may be entitled to compensatory damages, and a table sets out the main issues developed in this chapter.
The law applicable to damages
The law applicable to damages can have a significant impact on the assessment of damages, as it determines the conditions under which damages may be obtained and the categories of damages available and provides guidance regarding the amount of damages to be awarded.
The parties’ agreement is paramount in international arbitration. In the absence of a statement to the contrary, the right to damages, the categories and the amount of damages recoverable and the nature of the proof required are first and foremost governed by the parties’ agreement. Parties often choose to specify the conditions for the recovery of damages, as well as the categories and the amount of damages recoverable (e.g., with liquidated damages, penalty clauses or limitation clauses), broadening or limiting the rights available under national laws. However, parties do not always agree on such arrangements, and, in any event, their agreement is unlikely to be exclusive of all provisions of the applicable rules of law. Further, some national law rules and principles, such as public policy rules and principles, are of mandatory application.
In the absence of, or to supplement, the parties’ agreement relating to damages, arbitral tribunals have to determine the applicable rules of law. The tribunal first has to determine whether damages-related issues are substantive or procedural issues. Most damages-related questions are usually analysed as issues of substance. However, certain aspects, such as the standard of proof, are sometimes analysed as procedural matters, so that different laws or rules of law can apply to different aspects of damages.
The arbitral tribunal will again be guided by the parties’ agreement and, without such agreement, by the relevant rules for determining the applicable rules of law. Some arbitration rules and laws favour a ‘direct’ approach to determining the applicable rules of law (i.e., without considering conflict of laws rules), referring to the rules of law that the arbitral tribunal considers appropriate or those that have the closest connection to the dispute. Others rely on a conflict of laws approach.
The applicable rules of law can be a national law or a convention, principles or sets of rules – such as the CISG, the UNIDROIT Principles or the 2002 Principles of European Contract Law that have been developed to reflect internationally accepted rules or principles or to achieve a compromise between various legal systems. These international instruments often have to be complemented by national rules of law to the extent that they do not cover specific issues and therefore do not necessarily exclude the application of national laws in those respects.
In addition to national laws, arbitral tribunals at times take a transnational approach, referring to general principles applicable to damages in international arbitration, such as a generally recognised duty to mitigate. Such principles, however, are not uniformly identified or applied.
Assessing the proof relating to damages
The assessment of damages is driven by a factual determination and often involves complex data and economic issues, such that parties and arbitral tribunals rely on experts. Parties first have to establish their right to damages, before justifying the type and amount of damages requested. It is thus essential to determine which party bears the burden of proof and what standard should apply.
The burden of proof
In international arbitration, as under national laws, the burden of proof usually lies with the party making an assertion, in both common and civil law jurisdictions.
This rule should not, however, be understood to mean that the burden of proof necessarily lies with the claimant. Rather, the burden lies with the party making a claim, a counterclaim or any assertion. The burden of proof thus moves from one party to another depending on which party is making assertions on specific aspects of a claim. Certain Latin American legal systems have developed a dynamic burden of proof whereby the judge can redistribute the burden of proof among the parties depending on which party is in a better position to provide evidence on a particular claim.
The standard of proof
While the burden of proof determines which party should prove the relevant facts and law underlying an assertion, the standard of proof sets the level of proof required and thus goes to the heart of the case.
There is no unanimously recognised standard of proof in international arbitration – national laws vary. Yet, the standard of proof is often considered to be a ‘balance of probabilities’, ‘preponderance of the evidence’ or ‘more likely than not’ standard. The standard does not rise to the ‘beyond all reasonable doubt’ standard that applies, for instance, in criminal matters in the United States or England.
When they discuss it, arbitral tribunals usually refer, cumulatively or exclusively, to the applicable substantive national law and the applicable law of the seat of the arbitration to determine the applicable standard of proof.
Although the standard of proof varies from one legal system to another, the standard is often similar or leads to a similar analysis. In common law jurisdictions, the party making the claim for damages must meet the standard of proof for civil cases, the ‘balance of probabilities’ test.
Under Swiss law, the regular standard of proof refers to the judge’s or arbitrator’s inner conviction, whereby he or she should be convinced of a fact and have no serious doubts about its existence, although absolute certainty is not necessary. Some civil jurisdictions, however, have no defined standard of proof and instead grant judges extensive leeway to determine damages-related facts. Under French law, for instance, the judge enjoys wide discretionary powers to assess the evidence before him or her. Judges particularly make use of these discretionary powers in the allocation of damages. Likewise, under German law, the German Code of Civil Procedure grants full discretion to judges. It refers to the judge’s free conviction to decide allegations of facts in general, and with respect to the existence and scope of damages in particular. The standard of proof that the aggrieved party must meet to demonstrate its damages requires establishing the existence of loss and causation regarding the extent of the loss. In this context, a finding of a preponderant probability of the existence of damages and their extent is sufficient.
Entitlement to damages
This section outlines the conditions to be fulfilled to obtain damages and analyses, in particular, the foreseeability requirement and duty to mitigate.
Establishing entitlement to damages
Before assessing damages, the claimant first has to establish that it is entitled to damages. Under English law, for example, the requirements are as follows. First, one must prove the existence of a ‘wrong’ – that is, in the case of contractual damages, a breach of contract. Second, one must establish that the damage is not too remote and that the losses were reasonably foreseeable at the time the parties entered into the contract. Third, any damages awarded are subject to deductions for any failure to mitigate (or contributory negligence in the case of breaches of duty of care). Fourth, any damages awarded are also subject to any breaks in the chain of causation. Irrespective of factual causation, English law can treat some losses as not having been legally caused by the breach, on the basis that it is not fair to hold the defendant responsible for them due to a ‘break in the chain’ or novus actus interveniens. If the breach of contract was the ‘effective’ or ‘dominant’ cause of the loss, damages may be recoverable even if the breach was not the sole cause of the loss. Where there are competing causes, a balance of probabilities test applies.
Civil law jurisdictions include similar conditions. Where a party has not performed its contractual obligations, French law favours specific performance over damages, unless specific performance is not possible or if there is a manifest disproportion between the costs of the specific performance for the debtor and the creditor’s interest in the specific performance (Article 1221 et seq., French Civil Code ). If the aggrieved party has requested specific performance from its debtor and if the debtor does not comply, the debtor can be liable for damages, pursuant to Article 1231 of the French Civil Code. A claimant then has to show that the three conditions for the recovery of damages for breach of contract, drawn from Articles 1231 to 1231-2 of the French Civil Code, are satisfied. First, the claimant must establish that there has been a breach of contract. Second, the claimant must have suffered a loss. Third, there must be a causal link between the breach and the claimant’s loss. Article 1231-1 provides for one exception to the recovery of compensatory damages, in case of force majeure, which is defined in this context as an event that is outside of the debtor’s control that could not have been reasonably foreseen at the time of conclusion of the contract, the effects of which cannot be avoided by appropriate measures, and that now prevents the debtor from performing its obligation (new Article 1218).
As under French law, specific performance is the rule under German law (Section 241(1) of the German Civil Code). However, a party cannot request specific performance if performance is impossible for the debtor or anyone else (Section 275 of the German Civil Code). Regarding the entitlement to damages, German law has adopted similar conditions to French law. The claimant must establish three objective conditions: first, a breach of an obligation; second, the existence of a loss; and third, a causal link between the two. German law also includes a subjective element, in the form of a fault on the part of the debtor.
Similar conditions to those found in these civil law jurisdictions are found in international instruments or transnational principles. Article 74 of the CISG requires the proof of a breach of contract by one party and a loss suffered by the other party as a consequence of the breach. Article 7.4.2 of the UNIDROIT Principles entitles an aggrieved party to full compensation for harm sustained as a result of non-performance.
Where some civil law jurisdictions do depart from common law jurisdictions is on the requirement of notice. There is no notice requirement under English common law, so notice is not required unless imposed by the contract. In contrast, under French law, for example, the claimant must give notice to the respondent that it is in delay or in breach of the agreement and request performance of its obligation within a reasonable time, unless the non-performance is permanent; if the respondent does not perform upon receiving the notice, the claimant will be entitled to damages. This requirement is consistent with the emphasis that French law puts on specific performance.
The foreseeability requirement
Foreseeability refers to the notion used in common law jurisdictions that a loss must be able to be anticipated. Civil law jurisdictions do not necessarily refer expressly to foreseeability in the texts relating to damages, although courts and commentators often rely on this requirement. The notion of foreseeability acts as a limitation on the amount of damages that have to be paid in both common and civil law systems.
Under English law, as set out above, damages for breach of contract are recoverable only to the extent the loss that has occurred was reasonably foreseeable by the parties at the time they entered into the agreement. This test was first expressed in England in the 1854 case of Hadley v. Baxendale as follows:
Where two parties have made a contract, which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it.
Thus, loss is recoverable only if the type of loss that occurs is ‘in the contemplation of the parties’ (i.e., foreseeable) and ‘not unlikely’ at the date of contracting (rather than the date of breach). What is in the contemplation of the parties is assessed objectively on the basis of the ‘ordinary course of things’ and subjectively on the basis of special circumstances or knowledge attributed to the parties. If this test is satisfied, the respondent is considered to have assumed the responsibility for the loss.
In civil law systems, damages are generally recoverable only if they were foreseen or ought to have been foreseen at the time the contract was made. Under French law, the defaulting party is liable only for damages that were foreseen or foreseeable at the time of conclusion of the contract, pursuant to Article 1231-3 of the French Civil Code. The idea is that the parties should be in a position to understand the extent of their potential liability for breach of contract when entering the contract. Foreseeability is applied in abstracto – meaning what is ‘normally’ foreseeable – but this notion is flexible. This condition does not have to be examined if the parties have not put this argument forward.
However, the defaulting party cannot reduce its liability for damages on an argument that the loss was not foreseeable if it has been grossly negligent (faute lourde) or has committed an intentional breach (faute dolosive). In case of gross negligence or intentional breach, the defaulting party is liable only for damages that are the immediate and direct consequence of its breach, pursuant to Article 1231-4 of the French Civil Code. The notions of foreseeability in Article 1231-3 and direct consequence of a breach in Article 1231-4 – which refers to causation as opposed to foreseeability – are two different concepts under French law, although they are not well distinguished in practice.
Some other jurisdictions do not refer to foreseeability per se. German law provides, for example, for compensation of losses that are within the scope of protection of the contractual obligation breached, to the exclusion of damages that were not contemplated by the parties in their contract. Certain provisions expressly require a loss to have been foreseeable, such as Section 252 of the German Civil Code, which refers to lost profits that ‘could probably have been expected’ in the ‘normal course of events’ or in ‘special circumstances’, resulting from particular measures or precautions taken.
In common law jurisdictions, it is accepted that the aggrieved party is under a duty to take steps to minimise and not increase its loss. Damages may be reduced if that party has not taken steps to mitigate its loss. Mitigation and other means of reducing damages are discussed in detail in Chapter 5. Nevertheless, a brief discussion of certain comparative law aspects is presented here.
Under English law, for example, the claimant must first take all reasonable steps to minimise its loss as a result of the respondent’s breach of its obligation. The claimant cannot recover losses that it could have avoided through reasonable action or inaction. Second, as a consequence of the first rule, the claimant can recover the costs that it has incurred in taking reasonable steps to minimise its loss. This is true even if the steps taken have in fact increased the loss. Reasonable attempts to mitigate will not reduce damages payable, if they are unsuccessful. Third, where the claimant has minimised its loss, the damages owed by the respondent are reduced by the amount of the reduction achieved by the claimant. The burden of proof in this context is on the defendant. This duty is present in other common law jurisdictions as well. Further, any profit accrued as a consequence of the claimant’s mitigating steps must be credited to the defendant if causation is established. The onus is on the defendant to prove both the existence and amount of profit.
Contributory negligence is the contribution to the loss by the aggrieved party through its action or inaction and is a separate doctrine in common law jurisdictions. In a contractual context, contributory negligence can apply if there is a contractual duty of care and the contractual duty of care is concurrent with a tortious duty of care. Contributory negligence reduces the damages payable in accordance with the court’s assessment of the parties’ respective responsibilities for the loss.
Civil law jurisdictions have not necessarily developed or embraced a doctrine of mitigation. As mentioned above, civil law jurisdictions favour, contrary to common law jurisdictions, specific performance over the compensation of damages, at least in theory. Nonetheless, civil law jurisdictions have over time evolved to include mechanisms similar to mitigation. Under German law, for instance, there is no duty to mitigate per se, but a similar result is achieved through the regime on contributory negligence. Section 254 of the German Civil Code makes the entitlement and scope of damages dependent on the circumstances, in particular on the extent to which one or the other party caused the damages in full or in part. A fault will even be found where the aggrieved party has failed to avert or reduce the damage pursuant to Section 254(2). The Japanese Civil Code similarly provides that courts can take account of the claimant’s own negligence in determining the entitlement and scope of damages. Other civil law countries, such as Italy, Austria, Portugal and Finland, have similar provisions.
There are, however, exceptions where an approach similar to common law jurisdictions has been adopted. For example, the Quebec Civil Code includes an express obligation to mitigate under Article 1479, which provides that ‘[a] person who is bound to make reparation for an injury is not liable for any aggravation of the injury that the victim could have avoided.’ Similarly, Article 404 of the Russian Federation Civil Code allows a judge to reduce the scope of damages if the aggrieved party, intentionally or not, increased the amount of damages or failed to take reasonable measures to reduce it.
French law is generally presented as a legal system that does not embrace the duty to mitigate, and it is true that the French Civil Code does not include, for now, an obligation or duty to mitigate. The French Court of Cassation has confirmed that there is no obligation to minimise the damages the aggrieved party has suffered in the context of non-contractual liability. This principle is generally understood to apply to contractual liability too. Indeed, the duty of mitigation has been viewed by some as being in contradiction with the French principle of full compensation. If the aggrieved party is entitled to recovery of its damages, it should not have to minimise its loss.
However, the duty to mitigate finds its way in through the back door in French law, and several commentators have welcomed this idea. Various avenues have been considered to integrate the idea of mitigation in French law even in the absence of a stated requirement in the Civil Code. Some judges have taken into account the aggrieved party’s behaviour, in particular his or her inertia, in assessing damages, relying on the judge’s discretion in doing so. Commentators have also referred to the obligation of good faith in this context. The better legal justification appears, however, to be the requirement for a causal link to establish the damages. If the amount of damages would have been lower had the aggrieved party taken some action or, on the contrary, refrained from taking any, then the aggrieved party should not be entitled to the amount of damages that it requests. This reasoning can be easily applied in connection with the judge’s full discretion to assess damages. Further, parties can provide in their contracts that a duty of mitigation applies, without contravening French law or public policy.
In any event, arbitral tribunals applying French law in international arbitration (as opposed to French domestic arbitration) could rely on the duty of mitigation being a transnational principle or a principle of the lex mercatoria to apply this duty in any event. The duty of mitigation is indeed widely recognised as a transnational rule, part of the general principles of law, in particular, in the context of international arbitration, so much so that several international and transnational instruments refer to it (see Article 77 CISG and Article 7.4.8 of the UNIDROIT Principles). French courts would not annul or refuse to enforce an award on the ground of a violation of international public policy for referring to a duty to mitigate whether the arbitral tribunal applied French law or another law.
Assessment of the amount of damages
General approach to damages in common and civil law traditions
In common law jurisdictions, damages are seen as the primary remedy for non-performance of contract, with specific performance seen as an exception. For example, the Restatement (Second) of the Law of Contracts, a United States treatise that seeks to restate common law principles that is frequently cited in US courts, states that ‘[s]pecific performance . . . will not be ordered if damages would be adequate to protect the expectation interest of the injured party’.
This area is one in which civil and common law jurisdictions differ in a more significant manner, as the primary remedy in most civil law jurisdictions has traditionally been to have the contract performed as agreed, with damages in lieu of performance as only a secondary remedy. This remains the case in Germany, which has a strong position on the principle of pacta sunt servanda. The revised French Civil Code favours specific performance as explained above (Article 1221 of the French Civil Code).
Categories of recoverable loss
In common law jurisdictions, there are three basic categories of recoverable damages. The main category is expectation damages, according to which damages are awarded on the basis of putting the claimant in the position it would have been in, but for the breach. A claimant’s ability to recover lost profits will depend on the subject of the breach of contract. For example, it is more likely that a claimant will be able to recover lost profits in a contract for the sale of goods than in a contract for the carriage of goods, as lost profits in the latter situation are generally held to be too remote. The second is performance damages – namely, the cost of curing the defective performance. The third is reliance or ‘wasted expenditures’ damages – for instance, expenditures or other losses that have been incurred by the claimant in reliance on the contract. The purpose of reliance damages is to put the claimant in as good a position as it was in before the promise.
Within the category of expectation damages in common law jurisdictions, there are two subcategories – normal or direct damages (also known as general damages) and consequential damages (also known as special damages). Normal damages are those damages that are the natural and probable consequence of the breach. Consequential damages are those that do not flow directly from the breach; they are recoverable only in limited circumstances, they are particular to the injured party and they may be more difficult to calculate in financial terms.
In most civil law jurisdictions, there are two categories of loss – damnum emergens (actual losses or damage already suffered) and lucrum cessans (loss of profits or wasted costs) – which have their origins in Roman law. In France, for example, these two categories of loss are codified at Article 1231-2 of the Civil Code, which states that ‘[d]amages due to a creditor are, as a rule, for the loss that he has suffered and the profit of which he has been deprived’. These categories of damages roughly correspond to the common law categories of expectation and reliance damages. French law also allows the allocation of damages for a non-pecuniary loss, such as for bodily harm, lasting inconvenience after an injury and emotional distress.
Under the common law, the normal measure of damages is the difference in value between the performance that should have occurred, had the contract been performed, and the actual performance. This standard follows from the principle that compensation should put the injured party in the position it would have been in but for the wrong.
Under the civil law, the assessment of the amount of damages is also based on the principle of full compensation, the objective of which is to put the injured party in the position it would have been in if the act that gave rise to the damage had not occurred. Full compensation may be achieved through calculation of the difference in value (i.e., the normal measure of expectation damages under English law) or through the calculation of the cost of cure (i.e., as for performance damages under English law). However, French courts have a significant amount of discretion on how damages are calculated and often do not provide details in their justification of the amount of damages awarded. For example, French courts are not required to set out detailed reasoning in relation to their assessment of the amount of damages. In practice, French courts tend to use this discretion to take account of the degree of fault of the breaching party; for instance, where there is a high degree of fault, they will take a ‘heavy hand’ in relation to the assessment of damages.
Certainty of damages
Under English law, for example, a claimant must be able to prove the fact of loss and the amount of the loss on the basis of the balance of probabilities. Where it is difficult to prove the amount of loss with certainty, the wrongdoer should not be relieved of his or her responsibility to pay. Damages can also be recovered for loss of a chance, which is an inherently uncertain head of loss, and raises difficult issues of causation and quantification.
While a certainty requirement is not codified in the French Civil Code, French law requires that parties establish with certainty the fact of loss, rather than presenting the mere possibility of a loss. As to the amount of damages awarded, French judges have a significant amount of discretion when making an assessment of damages, in particular with respect to breaches other than of an obligation to pay.
In relation to international arbitration, it has been observed that, even when faced with uncertainty, ‘arbitral tribunals will find juridical ways and means to arrive at a figure which, given all the circumstances of the case, will lead to an equitable finding’.
While there are differences in the approach to compensatory damages in common and civil law jurisdictions, or among jurisdictions falling into one of those categories, they often lead to similar results, albeit through different paths, so much so that arbitrators, but also national judges and commentators, have identified and applied international principles applicable to damages, such as the duty to mitigate, particularly in international arbitration.
However, the analysis of damages is first and foremost driven by the facts of a case. While the often subtle differences from one legal system to another might not lead to different results in most cases, they might have a significant impact in specific circumstances. It is, therefore, as important to ensure a proper analysis of the facts and of the assessment of the damages, often with the help of experts, as it is to determine the applicable rules of law to which the arbitrators will refer.
All jurisdictions give substantial leeway to judges and arbitrators in the determination of damages. It is, therefore, also important to take into account the legal background of the arbitrators, which might, whether consciously or not, impact their decisions.
This flowchart sets out the steps to determine whether a party may be entitled to compensatory damages. Each step should be considered according to the applicable rules of law
This table sets out the issues that may be relevant in determining whether and to what extent damages may be granted. It should be read in conjunction with the developments in this chapter. The examples of legal systems, international instruments and arbitration institution rules provided in the table are taken from this chapter and simplified for ease of presentation; this table is in no way comprehensive. The specific regime applicable should, in any event, always be cross-checked against the rules of law applicable to making a determination.
|Civil law jurisdictions||Common law jurisdictions||Arbitration institution rules and international instruments|
|Determining the applicable rules of law||Applicable rules of law as agreed by the parties in the contract|
|Direct approach, referring to the rules of law that the arbitral tribunal considers appropriate (e.g., France, Austria, Belgium, 2010 UNCITRAL Arbitration Rules, 2020 LCIA Arbitration Rules; 2017 SCC Arbitration Rules, 2007 DIAC Arbitration Rules and 2016 SIAC Arbitration Rules)|
|Direct approach, referring to the rules of law that have the closest connection to the dispute (e.g., Germany, Switzerland, 2012 Swiss Rules of Arbitration and 2011 CRCICA Arbitration Rules)|
|Conflict of laws approach (e.g., England, UNCITRAL Model Law, Denmark, EC Regulation No. 593/2008 of 17 June 2008 on the law applicable to contractual obligations (Rome I) and 1961 European Convention on International Commercial Arbitration)|
|Burden of proof||Lies with the party making an assertion|
|Standard of proof||The judge’s wide discretionary powers (e.g., France)
The judge’s or arbitrator’s inner conviction (e.g., Switzerland)
The judge’s ‘free’ conviction (e.g., Germany)
|‘Balance of probabilities’ test (e.g., England: ‘more probable than not’; United States: preponderance of evidence)|
|Entitlement to damages||(1) existence of a breach of contract; (2) loss suffered; (3) causal link between the breach of contract and the loss suffered; (4) in Germany: fault on the part of the debtor (e.g., France; Germany)||(1) existence of a breach of contract; (2) not too remote damage and reasonable foreseeability of the losses at the time of entering the contract; (3) deduction for failure to mitigate; (4) causation between the breach of contract and the losses (e.g., England)|
|Causation||Causal link between a breach of contract and a loss suffered (e.g., France, Germany)||Causation between a breach of contract and the loss suffered (e.g., England)||Causal link between a breach of contract and a loss suffered (e.g., CISG, UNIDROIT Principles)|
|Foreseeability of the loss||Foreseeable loss at the time of entering the contract, assessed objectively (e.g., France)
Compensation of losses that are within the scope of protection of the contractual obligation breached, to the exclusion of damages that were not contemplated by the parties in their contract (e.g., Germany)
|Foreseeability requirement, at the date of contracting, assessed objectively and subjectively (e.g., England, India)|
|Notice||Notice of the breach of contract and request of performance of the relevant obligation (e.g., France)||No notice requirement (e.g., English common law)|
|Duty to mitigate||No duty to mitigate per se (e.g., France – but similar results are possibly achieved through various other ways; Germany – although a similar result is achieved through the regime on contributory negligence)||Duty to mitigate (e.g., England; United States)||Duty to mitigate (e.g., CISG, UNIDROITPrinciples)|
|Duty to mitigate (e.g., Quebec; Russia)|
|Contributory negligence||Contributory negligence or similar mechanism (e.g., Germany, Japan, Austria, Portugal, Finland, Russia)||Contributory negligence (e.g., England)|
|Categories of recoverable loss||(1) damnum emergens (actual losses or damage already suffered); (2) lucrum cessans (loss of profits or wasted costs) (e.g., France)||(1) expectation damages (possibly including lost profits), including normal, direct or general damages and consequential or special damages; (2) performance damages; (3) reliance or ‘wasted expenditures’ (e.g., England, United States)|
|Certainty of damages||No codified certainty requirement, but requirement to establish with the certainty the fact of the loss (e.g., France)||Proof of the loss and its amount on the basis of the balance of probabilities (e.g., England)|
|Available remedy||Specific performance is preferred to damages, where possible; damages as an alternative where specific performance is not possible (e.g., France, Germany)||Damages as primary remedy, with specific performance being the exception (e.g., England, United States)|
|Assessment of the amount of damages||Principle of full compensation, namely, putting the aggrieved party in the position it would have been in had the act that gave rise to the damage not occurred
Wide discretion of the judges or arbitrators in assessing the damages (e.g., France)
|Basic rule is that the aggrieved party should be put in the same position as it would have been if it had not sustained the wrong for which it is requesting compensation or reparation (e.g., England)|
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