The Defamation Bill [2] is close to becoming the law in England and Wales. 

However, a last-minute amendment in the House of Lords appears to jeopardise the whole Bill and so it may never become law at all.  After five years of struggle and hard work by the libel reform campaign [3], there may not now be a Defamation Act 2013.

The Bill is packed with good things.  It requires a claimant to show that the alleged defamation causes or could cause serious harm, thus ridding the law of the ridiculous sitaution that a libel claim could be made or even threatened without there being any actual or potential damage at all.  It makes it far harder for corporations to bring libel claims.  It provides an explicit public interest defence.  It abolishes the legal rule which held that each download of a website is a seperate publication.  Articles in scientific and academic journals will have a special defence.  All these changes needed this statutory intervention, and once they have legal effect then the law of libel will be in a far better shape.

So why is the Bill at risk? 

The reason is that the government may decide not bring the Bill to the House of Commons for final approval because of an amendment promoted (perhaps with the best of intentions) by certain Lords, including Labour peer David Puttnam.  And if this is not done before Easter - or May at the latest -  then it will be too late to bring the Billl.  The Bill will be lost; and a legislative process which has lasted over two years would have to start again, if it ever starts again at all.

The controversy about the amendment has so far been about the motives of those promoting it.  Its supporters are "pro-Leveson", by which one means that they want the recommendations of the Leveson Report translated into law promptly and without material change. 

Here, it is important that in the executive summary of his report [4], Lord Justice Leveson noted:

65. I now turn to the very difficult question of participation and underline that it is almost universally accepted that all major newspapers should be covered by a new regulatory regime. I have had to address the question of how that can be achieved. By far the best option would be for all publishers to choose to sign up to a satisfactory self-regulatory regime and, in order to persuade them to do so, convincing incentives are required. The incentives proposed by Lord Black could be adopted but I am not satisfied that they would be sufficient or, in some cases (such as the proposal to limit press cards to members of the body) even desirable.

 

66. The need for incentives, however, coupled with the equally important imperative of providing an improved route to justice for individuals, has led me to recommend the provision of an arbitration service that is recognised and could be taken into account by the courts as an essential component of the system, not (as suggested by Lord Black) simply something that could be added at a later date. The service could be administered comparatively easily within the regulator and be staffed by retired judges or senior lawyers with specialist knowledge of media law whose fee would be met by the publisher but who would resolve disputes on an inquisitorial model, striking out unmeritorious claims and quickly resolving the others.

 

67. Such a system (if recognised by the court) would then make it possible to provide an incentive in relation to the costs of civil litigation. The normal rule is that the loser pays the legal costsincurred by the winner but costs recovered are never all the costs incurred and litigation is expensive not only for the loser but frequently for the winner as well. If, by declining to be a part of a regulatory system, a publisher has deprived a claimant of access to a quick, fair, low cost arbitration of the type I have proposed, the Civil Procedure Rules (governing civillitigation) could permit the court to deprive that publisher of its costs of litigation in privacy,defamation and other media cases, even if it had been successful.After all, its success could have been achieved far more cheaply for everyone.

Instead of waiting for a dedicated Bill for this particular Leveson reform, their Lordships have deftly appropriated the Defamation Bill for their purpose, even though the Bill was never intended to have anything to do with the Leveson report.  The scope of the Bill means that it can only provide for defamation and not for other forms of media law, such as privacy.

The government opposes the "Puttnam amendment", and it is right to do so.  But it would seem that unless the government is certain that the amendment will be voted down by the House of Commons then the entire Bill will not be brought forward for final approval.   It would seem also that Labour (which had libel reform as a manifesto commitment) is refusing to say that it will support the amendment's removal, even if without it the whole of the Defamation Bill is lost.  Thus the Bill appears to have become part of a wider game of political poker, with both the government and the opposition signalling to the other that they are prepared to lose libel reform to get their way on Leveson.

In all this, there has been little consideration of the merits of the amendment on its own terms.  Given what seems to be at stake, consideration of what the amendment actually says is clearly needed.  And for the reasons set out below, the amendment is bad on its own terms, and it would be a misfortune if the amendment was passed.  Indeed, one could go so far to say that clause 2 could render the rest of the statute as having little beneficial effect.

Clause 2 of the Bill (note - Bills before Parliament have 'clauses', which become 'sections' on enactment) starts off as follows:

(1) The Lord Chief Justice shall establish a Defamation Recognition Commission.

(2) Schedule 1 makes provision relating to the Defamation Recognition Commission.

(3) The Defamation Recognition Commission shall certify bodies as Independent Regulatory Boards in accordance with the criteria in Schedule 1.

(4) An Independent Regulatory Board shall provide a recognised arbitration service as set out in Schedule 2.

These four provisions set the scene.  A "Commission" will be established with statutory underpinning.  Schedule 1 [5] to the Bill provides for what the Commission will do.  There will also be "a recognised arbitration service" in accordance with Schedule 2 [5].

So, in essence, some new bodies are created.  In terms of the law of defamation, there is no need whatsoever for any such bodies.  The Bill could provide for arbitation in defamation cases without any bureaucratic innovation. 

But, of course, these bodies are not really for the law of defamation: they are the embryos from which the amendment's supporters want a full statutory press regulator to grow.  They are the seeds of Leveson.

However, as the Defamation Bill is supposed to be dealing only with defamation matters (and so any amendments outside of scope of the Bill cannot be accepted)  then the new bodies are being framed in a defamation context.

The amendment then moves on to its more illiberal aspects.  There will be very painful sticks to litigants who do not use this "arbitration" service, and these provisions cover both claimants and defendants.

(5) A court shall take into account when awarding costs and damages whether either party, claimant or defendant in a dispute has chosen not to use the recognised arbitration service of an Independent Regulatory Board.

(6) A court shall award costs under subsection (5) on an indemnity basis unless the interests of justice require otherwise.

(7) A court may order a successful party to pay all the costs of proceedings if such party has unreasonably refused to use an available recognised arbitration service.

(8) A court awarding in its judgment exemplary damages where a defendant is guilty of a flagrant breach of a defendant’s rights can also take into account whether—

(a) a claimant refused to use a recognised arbitration service;

(b) defendant refused to use or join a recognised arbitration service.

The impact of these provisions would be to make the "arbitration" service effectively compulsory.  No sensible person - either claimant or defendant - would use the court system when exposed to such costs and damages risks.  The right of access to a court is thereby curtailed in real terms.

For example, "indemnity costs" are the exceptional means by which the courts police the behaviour of all litigants. The presumption is that costs are awarded on a standard basis, unless there is a reason to inflict indemnity costs.  But clause 2(6) reverses this presumption, just for defamation cases.  If you dare to use the courts for libel you will face exposure to costs which other litigants generally do not have to face.

Similarly "exemplary" damages are rare in the law of England and Wales, and since 1964 are available at common law only where there has been outrageous conduct by a public official or cynical behaviour by a defendant.  But this amendment creates a statutory exceoption to this restraint, just for the law of libel.  And the "exemplary damages" will not be awarded because the libel is especially vile or that the defendant is bang out of order.  A defendant faces exemplary damages as well as indemnity costs just because the envisaged "arbitration" service is not used.

Lord Justice Leveson may well have suggested "exemplary" damages for media (ie, free speech) cases, but their introduction needs far more public consideration than this amendment.  it would be a potentially dangerous developemnt and should not be done lightly.

The amendment then slides from being illiberal to being misconceived; for the proposed "arbitration" service makes little legal sense in the context of an action for defamation.

The proposed schedule 2 to the Bill which accompanies clause 2 provides the following:

1. An Independent Regulatory Board must provide an arbitration service in relation to defamation and related civil legal claims drawing on

independent legal experts on a cost-only basis to the subscribing member.

2 The arbitration rules must provide for a fair, quick and inexpensive process, which is inquisitorial and free for complainants to use (save for a power to make an adverse order for the costs of the arbitrator if proceedings are frivolous or vexatious).

3 The arbitrator shall have the powers set out in section 48(3) to (5) of the Arbitration Act 1996.

4 The arbitrator must be able to hold hearings where necessary or dispense with them where not necessary.

5 The process must include provision for frivolous or vexatious claims to be struck out at an early stage.

You will see that this is heavily based on the proposal of Lord Justice Leveson.

There are a number of issues with this proposal.

First, Lord Justice Leveson proposed such a scheme as an incentive for newspapers to participate in a wider regulatory regime,  but what is presented here is just the scheme.  Lord Justice Leveson did not propose the scheme as having merit in itself.

Second, an "inquisitorial" system means that the arbitrator has a wide margin of appreciation in what he or she can do. Any such scheme thereby needs to have safeguards as to what arbitrators can and cannot do.  Here there are no safeguards.  Arbitrations are all very well when they work effectively (as is the case with any legal process, or indeed with the PCC), but arbitrations mean it can be especially difficult for the unsuccessful party to rely on their legal rights when an arbitrator gets things wrong.  There is no automatic right of appeal. The only challenges can be on a point of law or a "serious" irregularity, but not on the merits of the case.  Therefore the "complanaint" will be in the hands of the arbitrator with no real check on what the arbitator will do with the complaint.  (And, on a technical point, it is uncertain the extent to which various parts of the Arbitration Act can apply when there are no arbitartion agreements.)

A complainant entirely in the hands of an "inquisitorial" arbitrator has no beneft from the precise terms of the various defences which are contained in the Defamation Bill, and nor has the defendant.  For practical purposes, a good deal of the substantive changes contained in the Bill may well not be there. 

Third, what are "related civil legal claims"?  Does this mean privacy?  But that would be outside the scope of a Defamation Act.  Lord Justice Leveson envisaged the scheme for all media cases, not defamation alone.   And just what - if anything - is meant by a "fair, quick" process, beyond an exclamation of hopeful intent?  The language of an executive summary is not precise enough for a statutory scheme.  What is to be missed out of the libel litigation process?  Working out what the words complained of mean?  Working out which defences can apply?  Omitting the relevant evidence from consideration?

Finally, there is also a more fundamental problem with arbitrations in respect of defamation.  Uniquely in the law of England and Wales, the law of defamation is (or should be) about vindication: the goal of the wronged claimant is a public declaration that the defamation was unfounded.  Damages are awarded to demonstrate this vindication, and statements can be made in open court.  Whilst arbitrations can be suited to contractual disputes - or even privacy disputes - they are not well geared for defamation.  Schedule 2 does not show how the successful complainants will get their public vindication in the closed setting of an arbitration.  What is needed in respect of defamation is not to make it harder for complainants to get their rightful vindication in open court, but to make it easier and cheaper to rely on their substantive legal rights.  That is what most of the Bill provides, and that is what clause 2 threatens to take away.

There are many other problems with clause 2 and schedule 2: they can be fisked by any competent media lawyer.  This was not the sort of amendment which was supposed to be enacted; it was one to send a message to a reluctant government.

There are noises that if enacted, the provision will not really be commenced by the appropriate stautory instrument.  But this is a dangerous game: legislation which has not been commenced still can be recognised by the court in quashing other legislative and policy initiatives.  A 1995 case [6]held that a government cannot use other means to circumvent a statutory scheme passed by parliament even if that scheme has never been commenced.  Passing the clause will thereby limit the government's legal room to manouvre on Leveson, even if it is never enacted (and this is possibly someone's clever intention). 

***

The Lords' amendment was promoted by Lord Puttnam, a Labour peer.  It seems to be now supported by the Labour Party.  The Hacked Off campaign have provided firm and categoric assurances that they were not instigators or drafters of the amendment, and there is no reason to doubt them.  However, their stance is that as the clause is now part of the Bill, it is better to have some part of the Leveson proposals enacted rather than none.

The Hacked Off campaign and the Labour Party should re-think their position.  There are many who are not hostile to better media regulation, but this important defamation legislation should not be put at risk for that goal.  There is good reason for the government not to enact clause 2.  The point has been made by their Lordships that the Leveson proposals should be considered seriously; but this amendment is both wrong in principle and detail, and it should not be part of the struggle for Leveson.

Clause 2 should now be voted down by the Commons, and the rest of the Defamation Bill be enacted without any delay. 

David Allen Green is legal correspondent of the New Statesman.  He was a witness at the Leveson Inquiry and an early supporter of Hacked Off.  His Jack of Kent blog followed the early part of the campaign for libel reform.

You can support the libel reform campaign's attempt to remove clause 2 here [3].

Hat-tip to Ed Poulton [7] of Baker & McKenzie for a steer on arbitration law.