An Analytical Look at the Impact of Inflation on Monetary Compensation in Civil Liability with a Comparative Study

Articles in Press

Document Type : Research Paper

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Department of Private Law, Faculty of Law and Political Science, University of Tehran, Tehran, Iran

Abstract

The destructive impact of rampant inflation on legal relations, particularly within the domain of civil liability, has become indisputable. Numerous existing legal institutions have, in the face of inflation, lost their anticipated effectiveness, becoming significantly diminished or even obsolete. Among these, monetary compensation—long regarded as the principal and most prevalent remedial mechanism in civil liability—has been profoundly affected. This study examines the extent of inflation's influence on the functioning of monetary compensation, critiques the manner in which existing legal analyses have addressed this issue, and proposes a novel approach informed by comparative legal doctrines. An examination of prevailing views in Iranian law reveals that certain analyses suffer from methodological flaws and inconsistencies with the underlying philosophy of civil liability. Employing a descriptive-analytical method and relying on library-based sources, the research concludes, first, that the appropriate temporal point for damage assessment is the date of judgment issuance; second, that in order to mitigate the depreciation of awarded compensation, in addition to invoking delay damages, the potential of Article 3 of the Civil Liability Act must be fully utilized; and third, that in determining compensation for future damages, in addition to awarding annuities, adjustment mechanisms such as inflation indices should be systematically applied.

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Journal of Legal Studies

Articles in Press, Accepted Manuscript
Available Online from 02 July 2025

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