August 2025
Non-Pecuniary Damages for Injury to a Legal Person’s Reputation or Credit (Taiwan)
On June 20, 2025, the Civil Grand Chamber of the Supreme Court rendered its Ruling No. 544, (Tai-Shang-Da-Zi-544 [2023]), hereinafter referred to as “the Ruling,” affirming that when a legal person’s reputation or credit is infringed, which caused harm that significantly affected the purposes for which the legal person was established and could not be monetarily quantified, the legal person may seek compensation for such non-pecuniary injury pursuant to the first part of Article 195, Paragraph 1 of the Civil Code. This Ruling aims to balance the protection of a legal person’s personality rights with the legislative intent of preventing abusive claims, and to deter the recurrence of similar infringements. This Ruling is intended to strike a balance between safeguarding the personality rights of legal persons and the prevention of frivolous or abusive claims, as well as deterring the recurrence of similar infringements.
I. Factual Background of the Ruling
The facts underlying the Ruling are as follows: the Company A alleged that in 2019, the Company B purchased a batch of LED aluminum-plastic light bulbs (hereinafter “the Disputed Goods”) from Company A. Company A fulfilled its contractual obligations by delivering the Disputed Goods to Company B. However, Company B failed to pay the purchase price in the amount of NT$1,386,000. Consequently, Company A filed a lawsuit pursuant to the sales contract, demanding Company B pay the purchase price plus statutory interest for late payment.
Company B answered that certain other goods previously delivered by Company A (but not the Disputed Goods) were defective and constituted incomplete performance, which compelled Company B to recall those goods from the market. Furthermore, due to extensive media coverage, Company B claimed that its business reputation had been damaged. Accordingly, pursuant to Article 227-1 of the Civil Code applying Article 195, Paragraph 1 of the same mutatis mutandis, Company B sought NT$2,000,000 in compensation from Company A for its non-pecuniary injury to be set off against its payment obligation for the Disputed Goods.
Upon appeal to the Supreme Court, a legal issue was raised: “Where a legal person suffers damage to its reputation or credit due to another party’s incomplete performance, may it claim compensation for non-pecuniary injury under Article 227-1 of the Civil Code applying Article 195, Paragraph 1 of the same mutatis mutandis ?”
Due to divergent prior rulings on this issue by the Supreme Court, the matter was referred to the Civil Grand Chamber for determination.
II. Reasoning of the Ruling
With regard to the aforementioned legal issue, the Supreme Court Civil Grand Chamber rendered the Ruling, holding that a legal person may claim compensation under Article 195, Paragraph 1 of the Civil Code only when its reputation or credit has been impaired to the extent that it caused significant adverse effects on the realization of the purposes for which the legal person was established, and such harm cannot be quantified in monetary terms.
The reasoning is as follows: Article 18, Paragraph 2 of the Civil Code has remained unamended since its enactment in 1929 nearly a century ago, and it has been over 25 years since the last amendment of Article 195, Paragraph 1 in 1999. During this period, the nature of social life and commercial transactions, the structure of mass media, and the methods and speed of information dissemination have changed drastically. As the business operations of legal persons have become increasingly international and diversified while their organizational scale has continued to expand, the extent of damage resulting from harm to reputation or credit has also significantly increased in terms of both magnitude and duration. In some cases, such damage may even hinder the full realization of the purposes for which the legal person was established, thereby making the protection of a legal person’s reputation and credit under law even more essential.
It is noteworthy that Swiss law was amended to allow legal persons, under certain conditions, to claim monetary compensation for non-pecuniary harm. Similarly, court decisions in France, Japan, Poland, the European Union, and the European Court of Human Rights have recognized such claims, reflecting a growing global trend.
Furthermore, reference may be made to the legislative language and rationale behind the addition of Article 514-8 of the Civil Code in 1999, which does not require a traveler to suffer emotional distress as a prerequisite for claiming damages, nor does it restrict the assignment or inheritance of such claims. This demonstrates the legislature’s willingness to recognize in alignment with the development of a civilized society that loss of time is a form of non-pecuniary harm distinct from emotional distress, and that travel operators should be held liable for such losses. This clear expansion of the scope of non-pecuniary harm meant that it should no longer be solely synonymous with emotional distress.
A legal person, established pursuant to the Civil Code or other legal provisions, is an organization that possesses certain rights and obligations; the law should properly protect its personality rights in its endeavor to fully realize the purposes for which it was established. Therefore, although a legal person lacks sensory perception and cannot experience emotional distress, when its reputation or credit is harmed, the evolving nature of social life and commercial practices has rendered it no longer necessary to equate non-pecuniary harm with emotional distress. Accordingly, where a legal person’s reputation or credit is harmed, it should be allowed to claim a commensurate amount of compensation under Article 195, Paragraph 1 of the Civil Code only for the extent such harm has significantly impaired its realization of the purposes for which it was established and cannot be quantified in monetary terms. This approach strikes a balance between the protection of personality rights and the prevention of abusive claims, while also deterring the recurrence of similar violations.
III. Dissenting Opinions in This Ruling
Justice Wei Da-Liang, in his dissenting opinion, argued instead that statutory interpretation must not entirely deviate from the original legislative intent and the societal values at the time of enactment. When Article 195 of the Civil Code was enacted in 1930, it clearly designated as its object of protection “emotional distress suffered by natural persons resulting from infringements of personality rights.” Even when new elements are incorporated in applying objective interpretation, it does not alter the “protection of emotional harm” core of the subject provision; the Swiss law would not have required a formal legislative amendment otherwise to allow legal persons to claim compensation for non-pecuniary harm. Under German law, compensation for pain and suffering is not limited to redressing emotional distress but also encompasses non-pecuniary harm resulting from infringement of bodily integrity, health, and personal liberty. Regardless of whether the harm arises from emotional distress, psychological dissatisfaction, mood fluctuations, or frustration of legitimate expectations, all such forms of non-pecuniary harm are closely tied to sensory and emotional perception, which is a capacity unique to natural persons. Legal persons, by their very nature, do not possess subjective emotional perception and thus cannot experience emotional downturns or frustration of expectations.
Accordingly, the proper approach should be either to adopt explicit legislative provisions permitting such claims, or only allow relief in exceptionally egregious cases in reference to Swiss law on obligations, such as where ongoing malicious and substantial attacks on a legal person’s commercial reputation are threatening the purpose of its existence, to maintain proper growth of law.
Justices Li Bao-Tang and Cheng Chun-Hui, in thedissenting opinion, stated that the majority opinion in the Ruling relied solely on societal changes and the passage of time as justification for its expansive interpretation, which is clearly insufficient in terms of legal reasoning. Furthermore, the Swiss law’s recognition of a legal person’s right to claim compensation for non-pecuniary harm was a legislative amendment rather than a judicial interpretation. Thus, it is inappropriate for Taiwan to directly invoke such law as the basis for such interpretive expansion. Secondly, the majority opinion cited Article 514-8 of the Civil Code on compensation for loss of travel time as support, but that provision still pertains to emotional harm in its essence, as the loss of time involves subjective experience—feelings of frustration, disappointment, or depression arising from a sense of wasted time—all of which are fundamentally emotional distress in nature. Moreover, the Grand Chamber’s reference to “significantly impairing the realization of a legal person’s purposes for which it was established” is a vague legal concept that is bound to lead to interpretation issues. In practice, harm suffered by for-profit legal persons are typically pecuniary and thus quantifiable, making it difficult to satisfy the requirement of non-quantifiable harm. Therefore, although the Ruling aimed to strengthen the protection of personality rights of legal persons, its practical effect in individual cases may be quite limited.
Additionally, the dissenting justices further pointed out that goodwill represents intangible advantages such as brand value, customer relationships, managerial competence, and employee quality, which demonstrate their economic benefit and commercial value in business operations and transfers. The proprietary nature of economic value from goodwill is expressly recognized under Article 50, Paragraph 1 of the Business Accounting Act and Article 21 of the Business Accounting Standards. So rather than entangling to no avail with non-pecuniary damages, it would be more appropriate to re-examine the binary classification of property rights versus non-property rights, and to thoroughly analyze the rights arising from a legal person’s goodwill; then once the economic interests involved in a loss of business reputation or goodwill is properly defined, compensation may be directly made based on the valuation of such interest (pursuant to Articles 214 and 215 of the Civil Code.
IV. Conclusion
The author is of the view that the criterion of "significantly impairing the realization of [a legal person’s] purpose for which it was established" is too vague. In today’s commerce, most forms of injury can, in fact, be assessed through market mechanisms or valuation methods, so it will be very difficult for legal persons to prove that their injury was "incapable of monetary quantification." As a result, the practical utility of this remedy would be rather limited.
Recent civil judgments by the Supreme Court have tended to recognize that personality rights, particularly the right to reputation and right to goodwill, are no longer merely spiritual interests, but also carry economic value [1] . Accordingly, they should be regarded as possessing the characteristics of property rights as well and therefore merit legal protection. From this perspective, since a legal person’s rights to reputation and goodwill—being the foundation of its business and social activities—have already been recognized as having a clearly ascertainable proprietary nature, when a legal person suffers harm to its reputation or goodwill, it may quantify the diminution in value through forensic accounting, goodwill valuation, or similar methods and seek monetary compensation. In such cases, if the legal person can prove that it has suffered harm but is unable to determine the exact amount of loss, or faces significant difficulty in doing so, it may invoke Article 222, Paragraph 2 of the Code of Civil Procedure, which allows the court to determine the amount of damages at its discretion based on the totality of the circumstances.
[1] See the Supreme Court Civil Judgment No. 1114 (2024), and Supreme Court Civil Judgment No. 1407 (2015).
I. Factual Background of the Ruling
The facts underlying the Ruling are as follows: the Company A alleged that in 2019, the Company B purchased a batch of LED aluminum-plastic light bulbs (hereinafter “the Disputed Goods”) from Company A. Company A fulfilled its contractual obligations by delivering the Disputed Goods to Company B. However, Company B failed to pay the purchase price in the amount of NT$1,386,000. Consequently, Company A filed a lawsuit pursuant to the sales contract, demanding Company B pay the purchase price plus statutory interest for late payment.
Company B answered that certain other goods previously delivered by Company A (but not the Disputed Goods) were defective and constituted incomplete performance, which compelled Company B to recall those goods from the market. Furthermore, due to extensive media coverage, Company B claimed that its business reputation had been damaged. Accordingly, pursuant to Article 227-1 of the Civil Code applying Article 195, Paragraph 1 of the same mutatis mutandis, Company B sought NT$2,000,000 in compensation from Company A for its non-pecuniary injury to be set off against its payment obligation for the Disputed Goods.
Upon appeal to the Supreme Court, a legal issue was raised: “Where a legal person suffers damage to its reputation or credit due to another party’s incomplete performance, may it claim compensation for non-pecuniary injury under Article 227-1 of the Civil Code applying Article 195, Paragraph 1 of the same mutatis mutandis ?”
Due to divergent prior rulings on this issue by the Supreme Court, the matter was referred to the Civil Grand Chamber for determination.
II. Reasoning of the Ruling
With regard to the aforementioned legal issue, the Supreme Court Civil Grand Chamber rendered the Ruling, holding that a legal person may claim compensation under Article 195, Paragraph 1 of the Civil Code only when its reputation or credit has been impaired to the extent that it caused significant adverse effects on the realization of the purposes for which the legal person was established, and such harm cannot be quantified in monetary terms.
The reasoning is as follows: Article 18, Paragraph 2 of the Civil Code has remained unamended since its enactment in 1929 nearly a century ago, and it has been over 25 years since the last amendment of Article 195, Paragraph 1 in 1999. During this period, the nature of social life and commercial transactions, the structure of mass media, and the methods and speed of information dissemination have changed drastically. As the business operations of legal persons have become increasingly international and diversified while their organizational scale has continued to expand, the extent of damage resulting from harm to reputation or credit has also significantly increased in terms of both magnitude and duration. In some cases, such damage may even hinder the full realization of the purposes for which the legal person was established, thereby making the protection of a legal person’s reputation and credit under law even more essential.
It is noteworthy that Swiss law was amended to allow legal persons, under certain conditions, to claim monetary compensation for non-pecuniary harm. Similarly, court decisions in France, Japan, Poland, the European Union, and the European Court of Human Rights have recognized such claims, reflecting a growing global trend.
Furthermore, reference may be made to the legislative language and rationale behind the addition of Article 514-8 of the Civil Code in 1999, which does not require a traveler to suffer emotional distress as a prerequisite for claiming damages, nor does it restrict the assignment or inheritance of such claims. This demonstrates the legislature’s willingness to recognize in alignment with the development of a civilized society that loss of time is a form of non-pecuniary harm distinct from emotional distress, and that travel operators should be held liable for such losses. This clear expansion of the scope of non-pecuniary harm meant that it should no longer be solely synonymous with emotional distress.
A legal person, established pursuant to the Civil Code or other legal provisions, is an organization that possesses certain rights and obligations; the law should properly protect its personality rights in its endeavor to fully realize the purposes for which it was established. Therefore, although a legal person lacks sensory perception and cannot experience emotional distress, when its reputation or credit is harmed, the evolving nature of social life and commercial practices has rendered it no longer necessary to equate non-pecuniary harm with emotional distress. Accordingly, where a legal person’s reputation or credit is harmed, it should be allowed to claim a commensurate amount of compensation under Article 195, Paragraph 1 of the Civil Code only for the extent such harm has significantly impaired its realization of the purposes for which it was established and cannot be quantified in monetary terms. This approach strikes a balance between the protection of personality rights and the prevention of abusive claims, while also deterring the recurrence of similar violations.
III. Dissenting Opinions in This Ruling
Justice Wei Da-Liang, in his dissenting opinion, argued instead that statutory interpretation must not entirely deviate from the original legislative intent and the societal values at the time of enactment. When Article 195 of the Civil Code was enacted in 1930, it clearly designated as its object of protection “emotional distress suffered by natural persons resulting from infringements of personality rights.” Even when new elements are incorporated in applying objective interpretation, it does not alter the “protection of emotional harm” core of the subject provision; the Swiss law would not have required a formal legislative amendment otherwise to allow legal persons to claim compensation for non-pecuniary harm. Under German law, compensation for pain and suffering is not limited to redressing emotional distress but also encompasses non-pecuniary harm resulting from infringement of bodily integrity, health, and personal liberty. Regardless of whether the harm arises from emotional distress, psychological dissatisfaction, mood fluctuations, or frustration of legitimate expectations, all such forms of non-pecuniary harm are closely tied to sensory and emotional perception, which is a capacity unique to natural persons. Legal persons, by their very nature, do not possess subjective emotional perception and thus cannot experience emotional downturns or frustration of expectations.
Accordingly, the proper approach should be either to adopt explicit legislative provisions permitting such claims, or only allow relief in exceptionally egregious cases in reference to Swiss law on obligations, such as where ongoing malicious and substantial attacks on a legal person’s commercial reputation are threatening the purpose of its existence, to maintain proper growth of law.
Justices Li Bao-Tang and Cheng Chun-Hui, in thedissenting opinion, stated that the majority opinion in the Ruling relied solely on societal changes and the passage of time as justification for its expansive interpretation, which is clearly insufficient in terms of legal reasoning. Furthermore, the Swiss law’s recognition of a legal person’s right to claim compensation for non-pecuniary harm was a legislative amendment rather than a judicial interpretation. Thus, it is inappropriate for Taiwan to directly invoke such law as the basis for such interpretive expansion. Secondly, the majority opinion cited Article 514-8 of the Civil Code on compensation for loss of travel time as support, but that provision still pertains to emotional harm in its essence, as the loss of time involves subjective experience—feelings of frustration, disappointment, or depression arising from a sense of wasted time—all of which are fundamentally emotional distress in nature. Moreover, the Grand Chamber’s reference to “significantly impairing the realization of a legal person’s purposes for which it was established” is a vague legal concept that is bound to lead to interpretation issues. In practice, harm suffered by for-profit legal persons are typically pecuniary and thus quantifiable, making it difficult to satisfy the requirement of non-quantifiable harm. Therefore, although the Ruling aimed to strengthen the protection of personality rights of legal persons, its practical effect in individual cases may be quite limited.
Additionally, the dissenting justices further pointed out that goodwill represents intangible advantages such as brand value, customer relationships, managerial competence, and employee quality, which demonstrate their economic benefit and commercial value in business operations and transfers. The proprietary nature of economic value from goodwill is expressly recognized under Article 50, Paragraph 1 of the Business Accounting Act and Article 21 of the Business Accounting Standards. So rather than entangling to no avail with non-pecuniary damages, it would be more appropriate to re-examine the binary classification of property rights versus non-property rights, and to thoroughly analyze the rights arising from a legal person’s goodwill; then once the economic interests involved in a loss of business reputation or goodwill is properly defined, compensation may be directly made based on the valuation of such interest (pursuant to Articles 214 and 215 of the Civil Code.
IV. Conclusion
The author is of the view that the criterion of "significantly impairing the realization of [a legal person’s] purpose for which it was established" is too vague. In today’s commerce, most forms of injury can, in fact, be assessed through market mechanisms or valuation methods, so it will be very difficult for legal persons to prove that their injury was "incapable of monetary quantification." As a result, the practical utility of this remedy would be rather limited.
Recent civil judgments by the Supreme Court have tended to recognize that personality rights, particularly the right to reputation and right to goodwill, are no longer merely spiritual interests, but also carry economic value [1] . Accordingly, they should be regarded as possessing the characteristics of property rights as well and therefore merit legal protection. From this perspective, since a legal person’s rights to reputation and goodwill—being the foundation of its business and social activities—have already been recognized as having a clearly ascertainable proprietary nature, when a legal person suffers harm to its reputation or goodwill, it may quantify the diminution in value through forensic accounting, goodwill valuation, or similar methods and seek monetary compensation. In such cases, if the legal person can prove that it has suffered harm but is unable to determine the exact amount of loss, or faces significant difficulty in doing so, it may invoke Article 222, Paragraph 2 of the Code of Civil Procedure, which allows the court to determine the amount of damages at its discretion based on the totality of the circumstances.
[1] See the Supreme Court Civil Judgment No. 1114 (2024), and Supreme Court Civil Judgment No. 1407 (2015).
