Defamation Bill now set to become law - but MPs reject bid to stop companies suing

It now looks likely the a Defamation Bill will be on the statute books next month – but it may be without a key amendment aimed at preventing companies from suing for libel.

Following the cross-party deal on the creation of a Royal Charter-backed press regulator, the Puttnam House of Lords amendment adding a Leveson-law on to the Defamation Bill has been removed.

This means it can now proceed through Parliament.

But the House of Commons rejected another amendment requiring that companies must show substantial financial harm before they can sue for libel and which prevented private companies performing public functions from suing.

This means the Bill now enters the Ping Pong stage and goes rapidly back and forth between the Commons and Lords until agreement is reached.

The Government has indicated that it will “actively consider” coming up with a new form of words for the amendment which does restrict the ability of companies to sue.

Campaigners are hopeful now that this final hurdle will be cleared and that the bill will reach the statute books within the next month.

A vote on the motion to disagree with the Lords' amendment  was won by 298 votes to 230 last night.

Justice Minister Helen Grant said: "I am aware of the strength of the feeling that exists on this particular issue and whether or not there should be specific provision in the Bill requiring non-natural persons, trading for profit, to show substantial financial loss.

"As we have made clear at earlier stages of the Bill, in order to satisfy the serious harm test, such bodies are likely in practise to show some actual or likely financial loss anyway.

"But I can confirm that we are prepared to actively consider that aspect of the amendment further and we will of course listen very carefully to the views expressed in both houses."

Grant said she did not agree with the Lords' amendment that public bodies should not be able to sue for defamation. Instead, she said, the decision about whether a public body, such as a council, had a case should be left to the courts.

She said: "Although the provision focuses on criticisms in connection with the exercise of public functions, that criticism could of course have a wider impact on the reputations of a business more generally.

"Our view is that rigid, restrictive statutory provision, which would remove the right to claim from a wide range of bodies does not represent a proportionate approach."

Labour MP Paul Farrelly (Newcastle-under-Lyme) said he was worried about the spread of libel tourism, where companies come to the UK to bring defamation claims.

The Lords amendment was the only part of the Defamation Bill which gave the courts the power to strike out cases at the earliest possible opportunity, he said.

Senior Tory Sir Peter Bottomley (Worthing West) said firms should not be allowed to bring abusive claims in the first place.

But Sir Edward Garnier – who was leading the bid to strike out the amendment – said the legislation already existed to protect individuals from abusive claims.

Shadow Justice Secretary Sadiq Khan said the Defamation Bill was a step forward in modernising outdated defamation legislation but it was not perfect.

On the rules regarding a corporation's ability to pursue defamation against an individual, he said that the broad consensus "breaks down".

He said: "We were led to believe there would be concessions made by the Government this afternoon which would buy off the Liberal Democrats and ourselves. It does not do so, these are inadequate and give a lie to the word concession by what the minister has said."

The Lords amendment, he argued, brought equality to an area of law characterised by a strong inequality.

He said: "The current law has seen a chilling effect, corporations using their financial and legal might intimidating their critics often leading to their silence."

He added: "The Bill as amended doesn't prevent corporations pursuing defamation actions against individuals, it just introduces an initial hurdle before reaching that stage. A court must first be satisfied that the likelihood of substantial financial harm has been proven before the action can proceed."

Sir Edward said it was not a question of being right or wrong, adding: "This is a matter of judgment and opinion and we're perfectly entitled to have different views about how best to order the law relating to defamation."

Other provisions were not contested and are now effectively locked in to the bill.

These include:

  • The requirement for claimants to show that they have suffered serious harm before suing for defamation
  • Removal of  the current presumption in favour of a jury trial
  • A new defence of "responsible publication on matters of public interest"
  • Increased protection to operators of websites that host user-generated content, providing they comply with the procedure to enable the complainant to resolve disputes directly with the author of the material concerned
  • New statutory defences of truth and honest opinion to replace the common law defences of justification and fair comment.

Robert Sharp of English Pen said: “We are confident that there will be a Defalation Act now, but we want it to be the best possible Defamation Act with the best possible free speech provisions that allow citizens to criticise public services and debate matters in the public interest.”

He said it was crucial that restrictions about companies suing individuals for libel were spelled out in the bill to stop abuses like the case involving British heart doctor Peter Wilmshurst who was dragged through the libel courts for four years by a US company after he pointed out that one of their heart devices was potentially dangerous.

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