文章分類Article
Can a Company Claim Compensation for Emotional Distress Due to Damage to Its Reputation?
When a company's reputation or credit is infringed, can it claim non-pecuniary damages under Article 195 of the Civil Code? Supreme Court Grand Chamber Civil Ruling No. 544, 2023 (Year 112).
Regarding whether a company (a juridical person), whose reputation or credit has been harmed due to a tort or breach of obligation, may claim non-pecuniary damages pursuant to the first paragraph of Article 195 of the Civil Code, this is an important issue in judicial practice. We must first examine the wording of Article 195, paragraph 1, which states: “Where a person’s body, health, reputation, liberty, credit, privacy, chastity, or other personality rights are unlawfully infringed upon and the circumstances are serious, the injured party may claim reasonable compensation even if the damage is non-pecuniary. If reputation is infringed, appropriate measures to restore reputation may also be requested.”
Under Chapter II of the Civil Code, the term “person” includes both natural persons and juridical persons. Therefore, based solely on the wording of Article 195, paragraph 1, the provision applies to “persons” without excluding juridical persons, suggesting that it is not limited to natural persons. However, Article 26 of the Civil Code provides: “A juridical person has the capacity to enjoy rights and assume obligations within the limits of laws and regulations; however, rights and obligations that are exclusively personal to natural persons are excluded.” Thus, the key issue is whether the right to claim non-pecuniary damages for infringement of reputation or credit is exclusively reserved for natural persons.
Is non-pecuniary damage equivalent to consolation damages (compensation for emotional distress)? If such compensation is intended to soothe mental suffering, can a juridical person, which lacks the capacity to experience emotional pain, claim such damages?
The Supreme Court has previously held both affirmative and negative views on this issue.
Negative view：A juridical person cannot experience emotional distress and therefore cannot claim consolation damages. A company, as a juridical person, does not suffer mental pain when its reputation is harmed and thus cannot claim damages under Article 195, paragraph 1 (see Supreme Court Judgments 104 Tai-Shang No. 599 and 103 Tai-Shang No. 2434).
However, it is arguable whether non-pecuniary damages are necessarily equivalent to consolation damages. Article 195 does not explicitly use the term “consolation damages” but rather provides that “reasonable compensation may be claimed even if the damage is non-pecuniary.” Therefore, the interpretation that juridical persons cannot claim such damages solely because they cannot experience emotional distress may not fully align with the statutory language and legislative purpose.
Affirmative view：Infringement of a juridical person's reputation affects its social evaluation, and infringement of its credit affects its economic evaluation. Broadly speaking, reputation rights include credit rights. If damage to a company's goodwill undermines its reputation and business credit, it is questionable whether merely publishing an apology is sufficient to restore its reputation. It is insufficient to deny non-pecuniary damages solely because the plaintiff is a juridical person (see Supreme Court Judgment 90 Tai-Shang No. 2109).
Unified view of the Supreme Court
To resolve the conflicting views, the Supreme Court Grand Chamber issued Civil Ruling No. 544, 2023 (Year 112) on June 20, 2025 (Year 114), adopting the affirmative view.
Personality rights are fundamental rights protected under Article 22 of the Constitution, and are further regulated and implemented by the legislature through provisions such as the Civil Code. Article 18, paragraph 2 of the Civil Code provides a general rule that when personality rights are infringed, compensation for damages or consolation damages may be claimed only where there are specific legal provisions. Articles 19, 194, and 195, paragraph 1 of the Civil Code further particularize and concretize personality rights, and constitute the specific provisions referred to in Article 18, paragraph 2. In addition, pursuant to Article 227-1 of the Civil Code, these provisions apply mutatis mutandis where a debtor’s non-performance of obligations results in infringement of the creditor’s personality rights.
A juridical person is an organization established in accordance with the law and possessing legal capacity (personality). Except where restricted by law or by its nature, it may enjoy rights and assume obligations (see Articles 25 and 26 of the Civil Code). Among the specific personality rights enumerated in Article 195, paragraph 1, some—such as life, body, health, liberty, and image—are, by their nature, exclusive to natural persons and cannot be enjoyed by juridical persons; however, rights such as reputation and credit are not exclusive to natural persons and may also be enjoyed by juridical persons.
Furthermore, under the civil law system of damages in Taiwan, damages are categorized into pecuniary and non-pecuniary damages based on whether they can be quantified in monetary terms. Academic opinions and prior judgments of the Supreme Court have generally regarded the non-pecuniary damages referred to in the first sentence of Article 195, paragraph 1 as emotional distress. Since juridical persons are incapable of experiencing emotional distress, they have been considered unable to claim monetary compensation for non-pecuniary damages (with Supreme Court Judgment 62 Tai-Shang No. 2806 serving as a representative precedent; hereinafter referred to as the “negative view”). This position is primarily based on the legislative reasoning of the provision, which refers to “consolation damages,” as well as the German legislative models and scholarly opinions referenced at the time of enactment, and was consistent with the social conditions at that time.However, since the enactment of Article 18, paragraph 2 of the Civil Code in 1929 (Year 18 of the Republic of China), it has remained unamended for nearly a century, and more than 25 years have passed since the amendment of Article 195, paragraph 1 in 1999 (Year 88). During this period, social life, transaction patterns, the landscape of mass media, and the methods and speed of information dissemination have all changed significantly from those at the time of legislation. Moreover, with the increasing internationalization and diversification of corporate operations, the scale of juridical persons has expanded considerably. The extent of damage caused by infringement of reputation or credit—whether in scale or duration—has far exceeded that of the past, and may even affect the fulfillment of their organizational purposes. Therefore, legal protection of the reputation and credit of juridical persons has become increasingly important.
In addition, the Swiss law from which Article 18 of the Civil Code was derived has since been amended to allow juridical persons, under certain conditions, to claim monetary compensation for non-pecuniary damage (Article 49 of the Swiss Code of Obligations). Similarly, judicial decisions in France, Japan, Poland, the European Union, and the European Court of Human Rights have largely recognized such claims, gradually forming a global trend.
Furthermore, Article 514-8 of the Civil Code, added in 1999, provides that where, due to reasons attributable to a travel agency, a trip is not carried out as agreed, the traveler may claim reasonable compensation on a daily basis for the loss of time, provided that the daily amount does not exceed the average daily portion of the total travel cost paid. Neither the wording of this provision nor its legislative reasoning treats emotional distress as a prerequisite for claiming damages, nor does it restrict the assignability or inheritance of such claims. This demonstrates that, in response to the development of modern society, the legislature has recognized that loss of time constitutes a form of non-pecuniary damage distinct from emotional distress, and that travel agencies should be held liable for such damage. It is therefore evident that the scope of non-pecuniary damage has been expanded, and that it need not be equated with emotional distress.
As for the “consolation damages” referred to in Article 18, paragraph 2 of the Civil Code, although the term “consolation” indeed refers specifically to monetary compensation intended to alleviate emotional distress, the provision itself does not limit damages to pecuniary losses. Therefore, as a matter of interpretation, it should be understood to include other forms of non-pecuniary damages beyond consolation damages, including restoration in kind and monetary compensation. Otherwise, there would be no legal basis for restoring non-pecuniary damage.
Based on the foregoing, it is difficult to conclude that, under Taiwan's Civil Code, juridical persons are categorically barred from claiming monetary compensation for non-pecuniary damage arising from infringement of their personality rights.A juridical person is an organizational entity established pursuant to the Civil Code or other laws, possessing certain rights and obligations. In order to ensure the full realization of its organizational purposes, the law should also provide it with comprehensive protection of personality rights. When the reputation or credit of a natural person is infringed, the resulting non-pecuniary damage consists of emotional distress arising from the violation of human dignity—that is, a form of mental suffering—thus the tortfeasor should be liable to compensate the victim for such non-pecuniary damage in monetary terms.
In contrast, when the reputation or credit of a juridical person is infringed, since it lacks the capacity for sensory perception, it differs in nature from a natural person, and the content of its non-pecuniary damage is likewise different. Accordingly, based on its nature, compensation should be limited to harm that has a significant impact on the achievement of its organizational purposes and cannot be quantified in monetary terms, and the juridical person should be permitted to claim reasonable compensation pursuant to Article 195, paragraph 1 of the Civil Code. This approach balances the protection of personality rights with the legislative intent to prevent excessive or abusive claims, and helps deter the continuation of such infringements.
The negative view fails to recognize the evolution of societal conditions and instead rigidly limits non-pecuniary damage under Article 195, paragraph 1 to the emotional distress of natural persons. This is inconsistent with the legislature's expansion of the scope of non-pecuniary damage and the contemporary trend toward strengthening the protection of personality rights of juridical persons, and therefore should not be adopted.Damage suffered by a juridical person due to infringement of its reputation or credit arising from a tort or breach of obligation is, in principle, mostly pecuniary in nature and capable of being quantified in monetary terms; this is especially true where the injured party is a profit-seeking entity. Even where the juridical person is unable to prove the exact amount of such damage, or where proving it is evidently subject to significant difficulty, the court shall, pursuant to Article 222, paragraph 2 of the Code of Civil Procedure, consider all circumstances and determine the amount based on its conviction.
If the juridical person has additionally suffered damage that has a significant impact on the achievement of its organizational purposes and cannot be quantified in monetary terms, it is not precluded from claiming monetary compensation. However, it must still bear the burden of proving the existence of such damage. This differs from the case of a natural person, where emotional distress is presumed to accompany the harm and does not require proof, and this point is hereby clarified.
From the above ruling, the following conclusions can be drawn
The rights to reputation and credit are not personality rights exclusive to natural persons. They are also of significant importance to juridical persons and should be protected, as they fall within the scope of personality rights guaranteed under Article 22 of the Constitution.
In light of modern social developments, non-pecuniary damage should no longer be equated with emotional distress. In other words, compensation for non-pecuniary damage is not limited to consolation for mental suffering. Therefore, it is no longer appropriate to deny a juridical person's right to claim non-pecuniary damages solely on the ground that it cannot experience emotional distress.
When the reputation or credit of a juridical person is infringed, it may claim reasonable compensation under Article 195, paragraph 1 of the Civil Code, provided that the damage has a significant impact on the achievement of its organizational purposes and cannot be quantified in monetary terms.
Where a juridical person can prove that its reputation or credit has indeed been infringed, and that such damage constitutes harm which significantly affects the achievement of its organizational purposes and cannot be monetarily quantified, the court shall, even if the specific amount of damage cannot be proven or is extremely difficult to prove, determine the amount of damages at its discretion in accordance with Article 222, paragraph 2 of the Code of Civil Procedure.
With respect to the above four points, they appear to establish a landmark, affirmative, and unified position recognizing that a juridical person may claim non-pecuniary damages when its reputation or credit is infringed. However, how this will be developed and applied in subsequent judicial practice remains to be seen. In particular, how the requirement of “damage that has a significant impact on the achievement of the entity's organizational purpose and cannot be quantified in monetary terms” should be interpreted, and how Article 222, paragraph 2 of the Code of Civil Procedure should be applied in specific cases, will become key points of legal argument and litigation strategy. These issues will require further refinement through practical reasoning and debate by judges, attorneys, and legal professionals.
Accordingly, where legal issues involving infringement of a juridical person's reputation or credit arise, it is advisable to consult with a lawyer for further discussion and analysis. This will help ensure that, following the issuance of this Grand Chamber ruling by the Supreme Court, the juridical person's rights to reputation and credit can be effectively asserted and properly protected in judicial proceedings with the assistance of professional legal counsel.