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May 6, 2013

Defamation: A step in the right direction

Filed under: Uncategorized, Blogroll, News, ethical space editors blog, Headlines, media policy — news_editor @ 8:12 am

Barry Turner, specialist in media law at the University of Lincoln, welcomes the new restrictions placed on corporations in bringing libel actions

After three years of debate, dispute and plain old delay the Defamation Bill is passed. The UK will now see some welcome changes to a law which has brought sharp criticism of English jurisprudence and even resulted in the US refusing to enforce defamation judgments handed down by our courts.

In fact, much of the old law remains intact, including some that has been at the centre of criticism for years. The burden of proof in defamation cases will still be shouldered by the defendant, except in one or two areas, and the costs of defamation actions will remain a serious threat to the majority of those facing action by a claimant.

One area of the changes that is, however, welcome is the restriction placed on corporations in bringing libel actions. This is an area of defamation law long in disrepute and one that has been seriously abused by large corporations to stifle legitimate criticism for years.

The non-natural legal personage, as a corporation is known, has long been treated as having the rights of a claimant or defendant in litigation in the UK courts. Most of this is supported by good sense and legal reasoning. A corporation needs to be able to conduct business deals, to own property and to enter contracts just as an individual might. But debates have raged for many years about how to differentiate between a company from an individual when it comes to seeking legal redress.

Defamation law is about protecting reputations and, as much as it has been severely criticised, there has never been a legal system in any society that did not value personal reputation and give it the protection of law. Individuals have reputations and have a right to have them protected. Corporations also have reputations - but are they the same as those enjoyed by people?

The reputation of an individual is difficult to measure; we use many abstract concepts to ‘value’ a person: skill, professionalism, humour, good nature, kindness and other virtues. The reputation of a person is perceived by that person in terms of feelings or, when defamed, hurt feelings. Companies, however, are not sentient: they cannot possess virtues as a person can and have no feelings to be damaged.

Corporate managers have argued for a long time that a corporation has a reputation just as much as an individual does. They have argued that corporate goodwill is a balance sheet asset that can be damaged by defamatory comments. Profits, too, may be injured just as a person’s feeling might be so, the argument goes, corporations should be treated no differently than individuals defamed.

The legislators have disagreed and when the new Defamation Act comes into force a corporation will be treated differently to an individual in defamation law. As the law currently stands an individual does not have to prove damage to sue in libel. A potentially damaging statement is enough, providing it fulfills the necessary legal requirements of libel.

Corporations have for many years now used libel law to stifle criticism of their affairs and this had led to some remarkable abuses of the law to silence legitimate criticism. Seminal cases such as McDonald’s Corporation v Steel and Morris and British Chiropractice Association v Singh have shown how corporate bodies can use their might to halt inconvenient stories about their activities.

With the passing of the Bill corporations no longer enjoy the same legal rights as individuals. A corporation must now demonstrate that it has suffered actual quantifiable damage. This makes perfect sense. A corporation can measure its reputation on its balance sheet. While a person cannot say, for instance, their kindness is worth £10,000 and their sense of humour £5,000, a corporation can and will value its ‘reputation’ in cash.

It is quite correct, then, that in future a corporation cannot say they have been defamed unless it can quantify it. If a corporation wants to bring an action to stifle criticism in future it must show its loss. Declaring a loss, even one allegedly caused by an outside third party, is difficult for any corporation. Indeed, it is difficult to imagine any corporation writing down an asset value on its balance sheet simply to bring a libel action.

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