Compensation and reimbursement as related concepts

Civil Code of the Russian Federation contains the terms reimbursement and compensation, which are often wrongly confused andidentified. When using these terms we mean a specific provision in respect of losses suffered by the injured party. However, there arecertain differences between them because of which this provision acquires certain characteristics. Applying the term reimbursementthe Civil Code focuses on the following criteria: 1) accuracy of estimation, 2) proportionality, 3) equivalence, and sometimes 4) limitednessof the provision obtained by the injured party. Under reimbursement the accuracy of provision is explained by the fact that it ispossible to set the amount of recovery precisely, clearly and unambiguously practically in all cases. The proportionality of reimbursementmeans that the amount of provision will depend primarily on the amount of the harm itself, on the losses suffered by the otherparty. Under equivalence of reimbursement we understand that the provision obtained by the injured party is always, according to thegeneral rule, equivalent to the suffered harm. The limitedness of provision is an exception to the general rule concerning the equivalenceof recompense. It is quite different, if we speak about compensation. The amount of compensation is always determined inexactly andapproximately. In addition, when determining compensation the scale of the caused damage is not the main and principal criterion, asopposed to reimbursement. Moreover there are a number of other criteria: the nature of the caused damage, consequences and their extentand duration, degree of fault of the causer. It should be noted that the fault here acquires some qualitatively different features. Itaffects the amount of civil liability. It can be recovered more or less under compensation and, as a result, it is practically impossible tobalance the interests. Therefore, for civil law this situation is unusual; it can destabilize it. In this connection, compensation, in additionto its recoverable function, has a punitive one, punishing the offender not only for the harm caused by a particular person, but, above all,for the harm to civilian traffic in general, in order to prevent and avoid this offence in the future (preventive function). Thus, applicationof compensation is a sort of punishment of the tortfeasor, and for any penalty to be effective and proportionate, we need to know thedegree of guilt of a person. It is necessary to point out that there are cases in the Civil Code where the guilt is not taken into account indetermining compensation and this is inadmissible because it makes it difficult to implement the function of the penalty effectively.

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