Dr. Mohamed A. Ramady, Arab News
Publication Date: 
Mon, 2008-04-28 03:00

In a comical turn of events, a UK court recently threw out a case brought by an accountant, who claimed around $600,000 because he slipped on a grape - yes one grape - in the car park of his local branch of Marks and Spencer. The ruling by the eminent judge restored some faith in the common sense rule of law in the UK and elsewhere and hopefully stems a growing tide of US style frivolous compensation claims whether caused by a single grape or an orange peel. The matter of large and frivolous compensation claims is costing business millions, and could also affect Gulf businesses if it catches on. Companies would have to set up reserve contingencies for such events, affecting shareholder value.

The British accountant in question, who had been charging around $500 an hour to his clients, claimed that the contact with the grape to his toe and the resultant fall, had led to a "loss of confidence", which in turn led to acute "adverse psychological effects and depression". This, in accountant's terms, ensured he was unable to get new clients who were happy to part with $500 an hour for his services. To compound his misery, he was, we were made to understand, unable to engage in his favorite sports such as football, tennis and skiing.

Before the judges ruling was out, many of us were busy trying to remember when or where we had sustained some psychologically adverse injuries as the one sustained by the unhappy grape man. Would a falling shopping bag from a dodgy trolley on our toes in a supermarket meet the test, or the spilling of a hot beverage on our lap because of a wobbly table do the trick, as this could result in acute pain, memory loss and fear of ever sitting down again in a coffee shop?

In the USA, corporate managers wake up in sweat each day wondering what new compensation claims would come their way - are the supermarket trolleys wheels too screechy, in which case one could suffer from disorientation and loss of normal hearing? Was the lighting not good enough to stop a short sighted shopper from bumping into stacks of watermelons and injuring oneself, when the shopper had assumed these watermelons were other shoppers standing in a queue? Such incidents are quickly, and, with ruthless efficiency filed and people even had compensation lawyers immediately flash their business cards and encouraged to claim on a "no-win-no payment" basis. With such enticement, who would not wish to participate in another free, no risk bonanza, unless of course you were a blue chip investment banker who was making even more money in selling junk subprime securities dressed up as AAA instruments?

Again, for many Western companies, this is no laughing matter as the cost of meeting such frivolous claims runs into the millions of dollars and eats up both management time and effort. In the end consumers pay for such claims as companies pass on the costs to them.

In the Arabian Gulf, the culture of compensation claims has not yet caught on. This is probably for many reasons. First, the injured or aggrieved consumer would end up as a nervous wreck in trying just to find out who to claim against and where to go and lodge the claim. Just imagining the run-around from one person to another, makes one grateful that he or she had broken only one leg due to that grape contact in the supermarket car park. Secondly, let's assume that, hobbling with one broken leg, we still had the courage to continue, the question then arises in which courts we could lodge our claim? Who was responsible - the local agent or the foreign manufacturer of the product? The local agent can always claim that, if it had not been for the foreign agent producing the commodity in the first place, then how can he be held responsible for an event outside his control?

This does not mean, of course, that local manufacturers and those dealing with public safety and hygiene can get away scot-free from legitimate claims. The Saudi and Gulf standards organizations are very stringent on safety and health quality matters, and take customer complaints seriously, especially in matters of expired products, and demand that compensation be made and some have been made. Most often the matter is solved amicably in the traditional manners of the Arabian Gulf, where an apology was given and accepted and the consumer felt he had obtained his " rights." It will take many years from now, before we read in our newspapers about frivolous claims being made for compensation, because one of our toes came into contact with a single grape in a supermarket car park.

The hysterical laughter of our close friends at the incident, and our audacity in even considering such a claim would be enough to bury the matter from the start, let alone the single grape being left on our work desktop every morning by sympathetic colleagues...

(Dr. Mohamed A. Ramady is visiting associate professor of finance and economics at King Fahd University of Petroleum and Minerals, Dhahran.)

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