Vicarious Liability and Liability Insurance
Bangladesh Beverage v Rowshon Akhter (2016) was one of the first instances where tortious damages for vicarious liability were awarded in Bangladesh, firmly entrenching a significant precedent in the realm of constitutional torts in general. Vicarious liability refers to the liability of one person or company for the act of another done on behalf of the former. Although Bangladesh Beverage was indeed a landmark, some crucial aspects for cases involving vicarious liability have remained unanswered— this includes guidance on assessment and quantification of damages and the need for a liability insurance framework.
The vicarious liability doctrine may differ on a case-to-case basis. The main element that is considered in every such case is the course of employment. The court examines primarily whether the wrongful act has occurred within the course of employment. For instance, in this case, the driver was a direct employee of the Bangladesh Beverage. While driving a vehicle of the company, the driver ran over the respondent, and he died. Hence, Bangladesh Beverage was held responsible as the action of the driver fell within the scope of his employment and the Appellate Division (AD) awarded compensation of 1,71,47,008 Taka to the deceased's family.
In this case, the company was capable of paying the hefty amount of compensation. However, most small and medium enterprises (SMEs) may need help in paying damages in such situations. The doctrine of vicarious liability is mainly implemented in legal systems where there is an established framework and practice of liability insurance. In countries with well-established liability insurance frameworks, the burden of compensation mostly falls upon the insurer. This not only results in victims receiving adequate compensation but also keeps economic stability by safeguarding businesses from bankruptcy. Moreover, such a system promotes responsible business practices and fosters a culture of accountability among the employers. However, in Bangladesh, in absence of the practice of liability insurance, being held vicariously liable may result in smaller companies facing significant financial hardships and therefore, the issue of liability insurance needs to be brought to attention.
Furthermore, in the judgment, the AD mentioned that the assessment of damages in such cases must necessarily be to some extent of a rough and approximate nature, based more or less on guesswork. In countries with established practice of vicarious liability claims, while assessing the damages, judges frequently rely on the data and statistics of reputed organisations. Awarding compensations based on guesswork alone can hardly result in fair judgments. This shows that our current justice system needs to be better equipped in terms of assessing and quantifying damages for tortious claims.
Another key critical observation on the judgment is the fact that the judges could have also taken into account (and discussed briefly) the economic consequences of prolonged litigation— indeed, the family had waited 27 long years seeking 'justice'. Failing to consider the impact of inflation over 27 years is also a grave injustice to the bereaved family. The family's need for reparation must have significantly changed over time. Hence, it raises the question as to whether the compensation awarded was sufficient or not.
In a nutshell, there is no doubt that the 2016 judgment was quite a leap in the right direction as it opened the scope for bringing in claims on vicarious liability to courts. However, without a proper liability insurance framework and adequate legal guidance on the quantum of compensation in place, it may be cumbersome to implement the mechanism.
The writer is a student of Law at North South University.