Tort Law and Economic Development: Strict Liability in Legal Practice

Abstract

“The last two hundred years of the evolution of Western societies has been a story of developing countries, a story in which tort law has played a rather important role” (Mattei, 1998, p. 241). As an instrument par excellence for correction of negative externalities, tort law has a high impact on the economic system. Tort law also provides fertile ground for law and economics comparative studies. More advanced tort law systems register the existence of a dualistic system of liability, performing the coexistence, in "relative harmony", of the basic rule of negligence with the strict liability, applicable in cases specifically provided for. In legal practice, however, it is a complex issue, revealing the existence of a "gray area" that makes it difficult to establish a clear and consistent dividing line. Among the few attempts to establish a "clear cut test", highlight those performed by Landes and Posner (1981, p. 907-908; 1987, p. 180) that use economic analysis, specially the fundamentals crystallized in the Hand formula: "high expected accident cost" and "impracticality of avoiding accidents through exercising greater care". This paper adheres to the research paradigm proposed by Mattei, considering that tort law has a high impact on the economic system and that comparative law and economics studies are relevant in order to improve tort law systems, especially in developing countries and countries in transition to the market economy. The paper also adheres to the theoretical guidelines proposed by Landes and Posner, aiming the application of strict liability in legal practice, especially in order to apply one of the main institutional innovations carried out in the Brazilian system of liability, the general clause of strict liability for highly dangerous activities of the sole paragraph of the Article 927 of the Brazilian Civil Code of 2002, legal provision that significantly expanded the role of the courts, which were explicitly authorized to qualify some activities as dangerous, making them subject to strict liability. The paper is structured in two parts. The first part explores the traditional legal theory in comparative perspective and the contribution of economic analysis of law. The second part presents empirical evidence of the application of strict liability for risky activities in comparative law and in Brazil. In conclusion, first, it is highlighted the fact that, although the doctrinal convergence around the risk theory and around the factors of application of strict liability proposed by the economic analysis, in legal practice the systems examined do not present a uniform list of risky activities. It is suggested the existence of multiple efficient equilibrium solutions, result of process of "adaptive efficiency" in implementing strict liability by the risk of the activity. Second, considering Legislative and Judiciary actions in the process of defining what risk activities are subject to strict liability, three categories of legal systems are identified, namely: open system (e.g. United States), closed system (e.g. Germany) and hybrid system (e.g. Brazil). It is suggested, pragmatically, that the hybrid systems harmonize the actions of Legislative and Judiciary, allowing make use of "the best of both worlds". Third, considering the experience of harmonization and unification of European tort law and the institutional innovations carried out in the Brazilian system of liability, it is stated that the establishment of a secure institutional base to make the choice between negligence and strict liability is of fundamental importance to developing countries and countries in transition to the market economy.

Keywords: Law and development, Economic analysis of law, Tort law, Strict liability, Comparative law, Brazil

JEL Classification: K13