Must a foreign company show financial loss for a libel claim?

Mr Justice Eady recently provided a timely reminder of the purpose of defamation damages. In Jameel and Others v The Wall Street Journal Europe [2003] EWHC 2945 it was argued that the rule confirmed in Shevill v Presse Alliance SA [1996] AC 959, that claimants are entitled to presume damage once a libel has been published, needed modification to be compatible with Article 10 of the European Convention on Human Rights, which safeguards the right to free speech. The presumption relieves the libel claimant from having to prove that it has suffered damage.

In Jameel, the second claimant was a Saudi Arabian company, which claimed that it had been libelled by the newspaper, which challenged the second claimant’s standing to sue.

The newspaper argued that Article 10 required a modification to the presumption of damage principle, at least to the extent that a foreign corporation must prove some actual, measurable damage to its trading or business reputation in order to recover. It was argued that foreign companies which did not trade within the jurisdiction or carry on business here would have no reputation here and so would not suffer any financial loss as a result of being libelled. For the claimants, it was submitted that people should be free to bring defamation claims here in order to ensure that English law afforded sufficient protection to reputations.

As Lord Hobhouse stated in Reynolds v Times Newspapers [2001] AC 127, “a democratic society has no interest in the dissemination of untruths”. If a person was unable to bring a defamation claim merely because it was unable to prove that damage had been caused, the false allegations – however serious – could remain uncorrected and the public would be misled.

As Mr Justice Windeyer also stated in Uren v John Fairfax and Sons Pty 117 CLR 115, “a man defamed does not get compensation for his damaged reputation. He gets damages because he was injured in his reputation, that is simply because he was publicly defamed.”

Mr Justice Eady decided that the European Convention “gives a high priority to the protection of reputation”. He saw nothing inherent in the convention which required foreign corporations to be deprived of the right to bring a claim merely because they were unable to establish actual financial loss. Article 10 required a balancing exercise to be conducted, considering on the one hand the media’s right to free speech and, on the other, the restrictions which are necessary in a democratic society for the protection of reputation.

To have allowed the argument to succeed would have resulted in it being safe to libel certain corporations, but not UK-based ones.

Such a distinction could not be justified merely on the basis of free speech, especially considering that it would simply protect journalists who may well be guilty of libel by depriving the would-be claimant of the opportunity to sue.

So, Mr Justice Eady re-emphasised that libel damages are to compensate the claimant for having been libelled, as opposed to actually compensating that person for any financial loss suffered as a consequence of being defamed. The presumption of damage remains intact.

Ruth Moss is a lawyer in the technology, media and communications department at Lovells

Ruth Moss

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