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Defamation Bill receives final approval from the House of Lords


The House of Lords has approved the final wording of the new Defamation Bill following the inclusion of new amendments by the House of Commons.

Earlier this week, MPs agreed to prevent businesses from bringing a case for defamation against critics unless they were able to show that "the publication of the words of matters complained of" caused, or is likely to cause, "serious financial loss".

The final Bill will now be formally approved by the House of Commons, with no possibility of further amendments.

During the House of Lords debate, Lord May said that the new Bill would go some way towards preventing "libel tourism". Although foreigners will still be able to bring claims for defamation in the High Court, the Bill will stop cases being brought in the UK against journalists, academics or individuals who live outside the country.

The new financial loss requirement now "links explicitly" to the Bill's "serious harm" test, in order to "raise the bar for bringing a defamation claim", according to Lord McNally, one of the architects of the Bill. "The use of the phrase 'serious financial loss' makes it absolutely clear that the financial loss required to meet the serious harm test must itself be serious," he said.

He also backed a compromise arrangement which will allow private companies carrying out public functions, such as those running schools, prisons or healthcare under a tendering arrangement, to sue in defamation. This had been challenged by Labour peers, who had argued that this could prevent consumers and users from commenting on services provided by these companies as well as give private contractors a competitive advantage over public bodies when tendering.

However, media law expert Ian Birdsey of Pinsent Masons, the law firm behind Out-Law.com, said that there were "fundamental differences" between local authorities and private companies, even when the latter were providing public services.

"This will create a disparity and 'unlevel playing field' because local authorities, for example, will not be able to sue in libel whereas a company carrying out the same or similar public function can," he said. "However, there are fundamental differences between the two and it would be unfair to leave such companies without protection if they were prevented from protecting their reputations from unjustified and defamatory allegations."

He added that the new financial loss test which businesses must satisfy to be able to bring a defamation claim would make it more difficult for companies to use defamation laws for "reputation management purposes".

"Including a serious financial loss threshold is sensible given that a company is entirely different from an individual in terms of reputation and any defamation," he said. "It is right to recognise the different standing an individual has from a company; and welcome if it encourages freedom of expression on important scientific, medical and other issues of public interest."

Labour peers had proposed an absolute bar on "any non-natural person performing a public function" from bringing a claim in relation to allegedly defamatory statements concerning that function. Labour's Baroness Hayter had suggested this as an extension of "the democratic principle that government bodies should be open to uninhibited public criticism". However, Lord McNally said that to remove this right from businesses would be "excessive and disproportionate".

"Although the amendment focuses on criticisms in connection with the exercise of a public function, that criticism could have a wider impact on the reputation of the business more generally," he said. "It is important to recognise that unjustified and defamatory allegations can cause considerable damage which affects all those connected to a business, including shareholders and employees."

Separately, the House of Commons has refined proposed penalties for publishers that do not sign up to a new system of independent self-regulation of the press to make sure that 'micro business' blogs will not be affected. The proposals are being taken forward as part of the Crime and Courts Bill, following the recommendations of the Leveson Inquiry into press standards.

Under the scheme, publications classed as a 'relevant publisher' will be subject to incentives to join a new press self-regulator. These incentives relate to exemplary damages and the awarding of costs in civil legal cases. The amendments will exempt blogs that are classed as 'micro-businesses' under the Government's usual definition, meaning that they have fewer than 10 employees and an annual turnover below £2 million. Exempt publications can still choose to join the regulator, allowing them to use a new form of arbitration to resolve disputes.

"The new arbitration scheme will carry significant costs advantages over litigation in the courts," media law expert Ian Birdsey said. "It is important that micro-publishers are encouraged to opt in, and the proposals are a sensible first step towards this aim."

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