How Liberal Democrat MPs voted against making it far harder for companies to misuse libel

The Defamation Bill is almost the law of the land.

When it is enacted and put into effect, the law of libel in England and Wales will, at a stroke, become less illiberal.  It will be harder to bring, and thereby harder to threaten, many of the libel actions which have made this jurisdiction the libel capital of the world.

But there is one outstanding issue, and it is an important one.

Many of the most notorious libel cases have been when companies have sued individuals and media organizations for libel.  It often appears that libel is used as a tool of so-called corporate “reputation management”.  There are certainly lawyers who promote such a service to corporate clients.  It is a valuable revenue stream for many City media lawyers.

Claims such as those brought by McDonalds against the McLibel 2 and by the now discredited British Chiropractic Association against Dr Simon Singh have been perceived as little more than bullying.  And such claims are only the most visible manifestation of a more general “libel chill” that which means that things are routinely not published or broadcast which would be in the public interest to publish or broadcast.

The Lords’ welcome amendment

On Tuesday, the House of Commons had the welcome opportunity to make it harder for companies to sue for libel and to threaten to sue for libel.  The Bill had returned from the House of Lords with a new amendment which consisted of three valuable elements.  The amendment was as follows:

 Non-natural persons

(1) This section applies to an action for defamation brought by—

(a) a body corporate;

(b) other non-natural legal persons trading for profit; or

(c) trade associations representing organisations trading for profit.

(2) The permission of the court must be obtained in order to bring an action to which this section applies.

(3) The court must strike out an application under subsection (2) unless the body corporate can show that the publication of the words or matters complained of has caused, or is likely to cause, substantial financial loss to the claimant.

(4) Non-natural persons performing a public function do not have an action in defamation in relation to a statement concerning that function.

In broad terms, the three main things which this clause did were:

(a) to impose a substantive legal requirement that companies had to show the libel had caused or was likely to cause “substantial financial loss” to the claimant;

(b) to provide the procedural requirement that a court must be satisfied at an early stage that a company can show such actual or potential loss, else the claim would be struck out; and

(c) to provide that companies providing a “public function” are prevented from suing for libel just as public bodies are prevented from doing so.

Of these three elements, the first was the least important.  This is the because the Bill – and, to an extent, the law as it stands –  already provide tests of seriousness before a libel claim can succeed.  In the Bill this is clause 1, and at common law it is known as the Jameel test.  They do not do the exact same job, and they are not specific to companies, but their existence means that the requirement of ”substantial financial loss” would not develop the law substantially.

However, the other two elements were radical.

The envisaged strike out would have prevented the onus being on the hapless defendant to make an application to strike out (often at a huge costs risk) a claim brought by a company.  Instead it would be for the company at a very early stage to convince the court that such a claim was in respect of substantial financial loss.  Individuals would therefore be protected by the High Court from having to face potentially ruinous litigation, if they did not shut up and settle.  The strike out provision offered real protection – effectively giving “teeth” to the requirement of seriousness.

The extension of the so-called Derbyshire principle to private companies providing public functions was an important modernising measure.  Under the Derbyshire principle, public bodies cannot sue for libel, as a matter of law.  The actual case was in respect of a statutory corporation, but the principle has been developed to cover all public bodies, whatever their legal basis.  It even now covers political parties.  But the principle does not apply to the forms of outsourced services unimaginable in 1989 when the facts of Derbyshire occurred.

This means that companies (often with lucrative payments of taxpayers’ money) performing public functions can scare off critics with the threat of libel proceedings, which simply could not be possible if they were public bodies.  This, of course, is unacceptable. Free and frank criticism of the  performance of public functions by private companies should be uninhibited for the same reasons criticism of public bodies should be.

And so it was with these important elements included that the Defamation Bill returned to the Commons earlier this week.

It just need the approval of MPs, and after all the three main parties had committed themselves to libel reform in their 2010 manifestos.  Indeed, the Liberal Democrats has explicitly promised to make it harder for companies to threaten libel actions.

But then something dreadful occurred.

What happened in the Commons

Sir Edward Garnier, the Conservative MP and libel QC, put forward a motion to strike the Lords’ amendment from the Bill.  His speech and reasons can be read in the debate here; in essence, his argument was that defendants had sufficient protections and companies should be protected from being easily defamed.

However, the Labour opposition put Sir Edward’s motion to a vote.  The shadow justice minister, the Labour MP and lawyer Sadiq Khan, made a powerful speech, explaining why all the protections of the amendment were important.  The senior Conservative MP Sir Peter Bottomley agreed with Khan, as did the Labour backbencher and journalist Paul Farrelly MP.  Their speeches and reasons can also be read here.

What was the coalition government’s position?

Would the government support or oppose the Lords’ amendment?

The minister – a Conservative – rose to give a pathetic speech.  The amendment would be opposed, even though the minster could not quite explain why.

In response to being asked by the Liberal Democrat Julian Huppert, a great supporter of libel reform, the minister seemed to give a concession:

I would also like to make the point—I can hear that there are concerns about this issue—that I am, however, aware of the strength of feeling that exists on this matter and on whether the Bill should contain a provision requiring non-natural persons trading for profit to show substantial financial loss. As we have made clear at earlier stages in the Bill, in order to satisfy the serious harm test, such bodies are likely in practice to have to show actual or likely financial loss anyway. However, I can confirm that we are prepared to consider actively that aspect of the Lords amendment further, and we will listen carefully to the views expressed in both Houses.

This concession needs to be read carefully.

First, you will see it only is in respect of the least important of the three elements of the Lords’ amendment.  There is nothing here about the procedural protection of the court being able to strike out claims.  There is also nothing about the extension of the Derbyshire principle to private companies performing public duties.  The concession goes only to “substantial financial loss” – a point which, though important, is to a large part covered by clause 1 of the Bill already as well as the Jameelprinciple.

Second, it is not a commitment to anything in particular.  It is in the vaguest possible terms.  There will be “active consideration” and the government will “listen carefully”.  But it will not commit to anything.

In fact, it is difficult to see how it is a concession.

Faced with this supposed concession, Liberal Democrat MPs were faced with a decision.

They could vote down the motion of  Garnier and accept the Lords’ amendment, thus fulfilling their manifesto commitment and, with the support of the Labour party, seek to defeat the Conservatives whipped to support the Minister.

There was nothing actually stopping them.

Or they could vote with the Conservatives to remove the Lords’ amendment in its entirety, against their own manifesto commitment, in return for the barest of concessions on just one element of an amendment that otherwise would be lost.

So what did the Liberal Democrat MPs do?

The Liberal Democrat MPs voted against the Lords’ amendment which would have made it harder for companies to sue for libel.

What happens next?

The Defamation Bill now returns to the House of Lords.  This will probably be next week.

The government has not stated the extent and form of their supposed concession.  They have promised to consider and listen, but nothing more.

I understand the Labour party is seeking to place a new amendment before the Lords, reviving the elements of the Lords’ amendment in full.  They will not force the issue to the extent that the Bill as a whole is at any risk; but they may make sure there is another vote.

If the Lords go with any Labour amendment rather than settling for whatever concession the government comes up with, then there will again be a House of Commons vote.

Liberal Democrat MPs may get to vote again.

Of course, there is party politics at play here.  The Labour party was never this liberal in office.  It is easy to pose as a progressive in opposition.

But the Lords’ amendment that was lost this week was more than a mere political toy.

It actually would have made it harder for companies to misuse libel, and it would have made it libel-safe to criticise private companies in respect of their performance of public functions.

In short, it is an important issue and it is good that the Labour party are forcing it.

It is now up to the government to see what more they can do with their concession.

But whatever it is, it will not be as far-reaching as the Lords’ amendment which was lost, and which could have been passed had the Liberal Democrats simply voted differently.

Valuable potential protections against corporate libel claimants were thrown away this week, just because the Liberal Democrats nodded along with a weak concession and voted against their own explicit manifesto promise.

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